Pfizer stock heads toward record after $6.7 billion takeover of Arena; deal ‘makes strategic sense to us,’ says analyst

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Pfizer Inc. said Monday it has agreed to get Arena Pharmaceuticals Inc. successful a woody with a worth of astir $6.7 billion, sending some stocks sharply higher.

Arena shares ARNA, +80.46% were past up 82%, portion Pfizer PFE, +4.19% was up much than 5% and connected way for a grounds close, if those gains hold. Arena’s banal was enjoying its second-biggest percent summation ever.

Pfizer was besides enjoying an upgrade from UBS analysts who are expecting the cause elephantine to garner income of $50 cardinal successful 2022 from its COVID-19 vaccine, which was developed with German spouse BioNTech SE BNTX, +7.78%.

Read now: ‘The days you were considered afloat vaccinated with 2 shots are going to beryllium a happening of the past’

 Today’s woody “makes strategical consciousness to america arsenic a mode to boost Pfizer’s inflammation and immunology (I&I) pipeline, diversify it distant from oral JAK inhibitors that person travel nether accrued scrutiny by the FDA successful caller months, and adhd an charismatic maturation operator that tin help Pfizer’s 2026-2030 maturation outlook,” Mizuho analysts led by Vamil Divan wrote successful a enactment to clients.

See: FDA authorizes BioNTech, Pfizer’s COVID-19 booster for 16- and 17-year-olds

Arena’s pb cause candidate, etrasimod, is presently successful Phase 2 and 3 trials arsenic a attraction for the chronic inflammatory bowel illness ulcerative colitis, and is besides being reviewed arsenic a attraction for Crohn’s disease, irritable bowel syndrome and eosinophilic esophagitis. It is besides being investigated arsenic a attraction for the tegument illness atopic dermatitis and hairsbreadth nonaccomplishment upset alopecia areata.

 “In addition, Arena’s Phase 2 assets, specified arsenic temanogrel, APD418 and RIST4721, could acceptable successful nicely into Pfizer’s Internal Medicine and/or Rare Disease businesses, if they are capable to successfully marque it to the market,” said Mizuho’s Divan.

See: A caller survey finds that astir COVID-19 boosters fortify immunity, though determination is nary winning shot

Under the presumption of the deal, Pfizer volition wage $100 per Arena share, treble the stock’s closing terms of $49.94 connected Friday. The banal had mislaid 35% successful the twelvemonth to date, earlier Monday’s news. The woody is expected to adjacent successful the archetypal fractional of 2022, pending regulatory approvals.

San Diego-based Arena’s shares deed an all-time debased successful May of 2017, a fewer months aft the institution scrapped an anti-obesity attraction called belviq, its lone FDA-approved cause astatine that time, aft it failed to summation immoderate traction successful the market. Arena sold the cause to Eisai Co., which pulled it from the marketplace successful 2020 implicit information risks.

Arena past reoriented its pipeline toward inflammatory diseases.

“We presumption PFE arsenic a logical spouse for ARNA arsenic the second continues to advancement its gastroenterology, dermatology, and cardiology focused platform, which should payment from the executional expertise of a ample pharmaceutical company,” SVB Leerink expert Joseph Schwartz told analysts successful a probe note. “

PFE’s commercialized model tin capitalize connected etrasimod’s best-in-class potential,” wrote RBC Capital Markets’ Kennen MacKay.

But immoderate analysts questioned Pfizer’s determination to execute a woody earlier the upcoming readout of Phase 3 objective proceedings information for Arena’s etrasimod arsenic an ulcerative colitis treatment. That information is expected aboriginal adjacent year.

BMO Capital Markets expert Evan Seigerman said this could beryllium the archetypal of a question of caller deals for Pfizer, which helium estimates has $132 cardinal successful firepower to beryllium utilized done 2022.

“Pfizer is making bully usage of the deluge of currency from COVID-19 vaccines/boosters to further bolster its pipeline,” Seigerman wrote successful a note.

Pfizer shares person gained 50.5% successful 2021 to date, portion the Dow Jones Industrial Average DJIA, -0.66% has gained 16.5% and the S&P 500 SPX, -0.54% has gained 25%.

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