Arena lands $1.3B weight drug pact with Eisai

With an FDA panel review looming in the fall, Arena Pharmaceuticals has finally hammered out a U.S. licensing pact for its weight drug lorcaserin with Japan's Eisai, and the big payoff is slated to arrive after a potential approval. Arena's stock price (ARNA) surged 20 percent on the news this morning, giving investors a chance to register their satisfaction with the numbers, which arrive late in the development game.

The complex deal package includes $50 million up front, up to $160 million in various milestones through approval and on to product delivery, with a potential $1.16 billion in one-time sales-related payments and a purchase price for the drug that slides from 31.5 percent of net sales to 36.5 percent as it nears blockbuster status. San Diego-based Arena, which has worked for 13 years on positioning its first product for a launch, will manufacture the product at its facility in Switzerland and can bargain for more licensing deals to cover the rest of the world.

"Additionally, by building on our expertise and success in the primary care and specialty areas, with strong synergy in our gastrointestinal franchise, this arrangement for the marketing of lorcaserin will enable Eisai to establish a strong presence in the United States for the medical management of obesity," said Eisai CEO Lonnel Coats. Eisai has a U.S. sales force of 500.

Lorcaserin is one of three closely-tracked weight drugs that go up for panel reviews by the end of this year, with Orexigen and Vivus racing Arena towards a market that could be worth billions. Decision Resources has estimated that the U.S. market for weight drugs could be worth $2 billion in five years. Big Pharma partners, though, have been content to sit it out on the sidelines so far, unwilling to pay big bucks upfront to partner on the new wave of obesity drugs after being burned in the past on would-be blockbusters that posed serious safety issues.

- here's the Arena release
- here's the story from Bloomberg