Pfizer is the next big pharmaceutical company to enter the cannabis space

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Pharmaceutical giant Pfizer Inc. enters cannabis space through $ 6.7 billion acquisition of Arena Pharmaceuticals, Inc. The two publicly traded companies confirmed on Monday that they have signed a definitive agreement under which Pfizer will acquire all of the outstanding shares of Arena for $ 100 per share. in an all-cash transaction.

Pfizer expects to fund the transaction with existing liquidity upon obtaining all necessary approvals.

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The agreement

Arena Pharmaceuticals, based in San Diego, California, is a biotechnology company with a segment of its drug portfolio dedicated to cannabinoid-type therapies. The core of its cannabis biotechnology operations is the research and development of its investigational drug candidate called Olorinab (APD371). It is a complete oral cannabinoid receptor 2 agonist that is being investigated for the treatment of a variety of symptoms, primarily focused on visceral pain associated with gastrointestinal disease.

Other parts of Arena’s drug pipeline focus on non-cannabinoid drugs, with a primary focus on developing innovative potential therapies for the treatment of several immuno-inflammatory diseases. Arena’s portfolio includes diversified and promising therapeutic candidates in the development phase in gastroenterology, dermatology and cardiology.

“The proposed acquisition of Arena complements our capabilities and expertise in inflammation and immunology, an innovation driver for Pfizer developing potential therapies for patients with debilitating immuno-inflammatory diseases in need of options.” more effective treatments, ”said Mike Gladstone, global president and CEO, Pfizer Inflammation and Immunology. “Using Pfizer’s leading global research and development capabilities, we plan to accelerate the clinical development of etrasimod for patients with immuno-inflammatory diseases. Etrasimod is Arena’s drug candidate for the treatment of immune-mediated and inflammatory diseases.

Amit D. Munshi, President and CEO of Arena, said they are delighted to be acquired by Pfizer, which has recognized “the potentially best-in-class S1P molecule and our contribution to meeting the needs. unsatisfied in immune-mediated inflammatory diseases. Pfizer’s capabilities will accelerate our mission to get our important medicines to patients. We believe this transaction represents the best next step for patients and shareholders. “

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Big pharma enters the cannabis space

This is not the first time that one of the world’s largest pharmaceutical companies has taken a stake in a cannabis-related company. In February 2021, Jazz Pharmaceuticals purchased cannabinoid pharmaceutical company GW Pharmaceuticals, known for developing Epidiolex, the first CBD drug cleared by the FDA for the treatment of children with severe forms of epilepsy. The drug was first approved for the treatment of seizures related to Lennox-Gastaut syndrome and Dravet syndrome, and last July for the treatment of seizures related to tuberous sclerosis of Bourneville. Epidiolex sales generated over $ 500 million last year.

In 2018, Canadian cannabis giant Tilray entered into a medical marijuana supply and distribution agreement with pharmaceutical giant Novartis AG. Johnson & Johnson is another large pharmaceutical company that got into cannabis when in 2017 it accepted cannabis company Avicanna into its Innovation JLABS @ Toronto – a 40,000 life science innovation hub. square feet located in the MaRS Discovery District. The labs provide a flexible environment for start-ups looking for new technologies and research platforms to advance healthcare, without Johnson & Johnson taking a stake in these companies.

Price action

Pfizer shares were trading 5.02% higher at $ 55.43 per share at the time of writing on Monday morning.

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