Arena Strikes Deal with Eisai to Market Obesity Drug in U.S., Pocketing $50M Upfront
Arena Pharmaceuticals has raised $1 billion to get an obesity drug candidate on the doorstep of FDA approval, and now it has found someone else to commercialize it. The San Diego-based company has struck a deal with Japan-based Eisai Pharmaceuticals to sell lorcaserin in the U.S.
This isn’t the usual transaction you see between a little biotech with an innovative product and a Big Pharma company with the necessary marketing and manufacturing muscle to make it a hit. Arena is pocketing a $50 million upfront payment, and stands to receive another $160 million if it hits certain milestones. What’s unusual is that Arena will manufacture the drug itself at a facility in Switzerland, and sell the drug to Eisai at an escalating rate of between 31.5 percent and 36.5 percent of Eisai’s estimated annual U.S. sales.
The deal comes at a critical moment for Arena (NASDAQ: ARNA). The company has two very big days circled on the calendar, which will dictate the future of its lorcaserin weight loss drug. Arena will argue that the benefits of its drug outweigh the risks in front of a panel of expert advisors to the FDA on September 16, and the FDA’s deadline to complete its review of the drug is October 22. If Arena can get the green light from U.S. regulators, it will have a new drug to sell with the potential to be taken by millions of people afflicted by one of the leading threats to public health.
Arena is locked in a fierce three-way competition with San Diego-based Orexigen Therapeutics (NASDAQ: OREX) and Mountain View, CA-based Vivus (NASDAQ: VVUS) to capture this huge opportunity with new treatments. So if Arena wants to win, it had better be ready to roll when the approval letter arrives.
“The timing is important,” says Arena CEO Jack Lief. “We can leverage our Swiss manufacturing facility, improve our cash flow, and it allows us to focus on the approval of lorcaserin. It also gives Eisai sufficient time to prepare for a robust and timely launch.”
Steve Sembler, the senior vice president and chief commercial officer for Eisai, said his company looked at this opportunity for a long time. “One of the things we look for is ‘does this compound have the potential to be the best-in-class product in an unsatisfied market?’ We think it does.”
These guys knew I was going to ask ‘why Eisai?’ since it’s not one of the usual suspects in the top 10 of Big Pharma (actually No. 23 worldwide in revenues, according to this list on Wikipedia.)
The answer is that Eisai already markets rabeprazole sodium (Aciphex) for chronic heartburn, a market that overlaps quite a bit with obesity. This will enable Eisai’s sales force of 500 reps in the U.S. to pitch a weight loss drug to a lot of heartburn patients that could use some help dropping some pounds, Sembler says. But beyond the army of sales reps, Eisai is going to handle the marketing strategy, reimbursement, and other pieces of the commercial strategy in the U.S., Sembler says.
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