Pfizer wraps up Arena buyout following brief FTC delay

USA – Pfizer has announced the completion of its US$6.7 billion acquisition of Arena Pharmaceuticals ending a slightly lengthy regulatory review that raised doubts about whether the deal would be cleared as planned.

Pfizer stated in December that the acquisition would “complement” its existing immuno-inflammatory capabilities by adding development-stage candidates in gastroenterology, dermatology, and cardiology, including the next-generation oral Sphingosine-1-phosphate (S1P) receptor modulator etrasimod.

The companies notified the US Federal Trade Commission (FTC) about the proposed merger in early January, giving the antitrust regulator 30 days to conduct its investigation.

Pfizer, on the other hand, voluntarily withdrew the submission and refiled it about a month later. Arena explained the withdrawal and subsequent refiling as “procedural steps” to give the FTC another 30 days to complete its review in a February filing with the Securities and Exchange Commission (SEC).

FTC’s tough stance

The delay raised concerns in some circles about whether the FTC would eventually approve the deal, given the agency’s tougher stance on pharmaceutical industry buyouts.

Last year, the FTC announced the formation of a working group with counterparts in the EU, UK, and Canada to update how they evaluate these takeovers, amid concerns that such deals could drive up drug prices and stifle innovation.

FTC Commissioner Rebecca Kelly Slaughter noted at the time how some recent deals, including the US$74 billion takeout of Celgene and the US$63 billion purchase of Allergan, didn’t seem to get comprehensive enough reviews.

“The impact of pharmaceutical mergers isn’t just about the respective size of the two companies, because pharma is an area that depends so heavily on innovation and entry of new products often developed by small competitors,” Slaughter said last year.

“We’re really looking at these questions about innovation and what’s going to get new treatments and new drugs to the market,” she added, “so that consumers have access to them and, importantly, have access to them at prices that they can afford.”

This apparent step-up in regulatory scrutiny raised questions about whether smaller biotech acquisitions, like Pfizer’s buyout of Arena, would also be affected.

However, Arena stated in a more recent SEC filing that the “waiting period” for the FTC to raise any concerns it had about the proposed Pfizer deal expired on March 9, allowing the companies to complete the merger on Friday.

The most advanced of Arena’s drug programs is in clinical testing for ulcerative colitis, Crohn’s disease, and eczema — conditions that Pfizer is already targeting with an experimental medicine called ritlecitinib and a recently approved product called Cibinqo.

Xeljanz, a blockbuster anti-inflammatory drug from Pfizer, is also approved to treat ulcerative colitis.

Furthermore, even after Pfizer announced that it would pay US$100 per Arena share, the smaller company’s stock price remained around US$90, indicating that investors were concerned as well.

Neither Pfizer nor Arena stated that any divestitures were required as a condition for the company’s closure.

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