Arena Pharmaceuticals Enters Into Strategic Agreements for the Manufacture of Pharmaceutical Material, Including Lorcaserin
SAN DIEGO, Dec. 18 /PRNewswire-FirstCall/ -- Arena Pharmaceuticals, Inc.
(Nasdaq: ARNA) announced today that it entered into strategic cooperation
agreements with Siegfried Ltd., an affiliate of Siegfried Holding AG
(SWX: SFZN). The agreements primarily relate to the manufacturing of
lorcaserin hydrochloride, which is expected to be necessary for Arena's
planned New Drug Application (NDA) submission to the U.S. Food and Drug
Administration (FDA) and for commercialization of lorcaserin after regulatory
marketing approval. Lorcaserin is Arena's Phase 3 oral drug candidate being
developed for the treatment of obesity. Arena expects that this transaction
will close on January 8, 2008 and believes that it has the potential to:
-- Reduce manufacturing related risks to the lorcaserin NDA registration
lots and submission of its planned lorcaserin NDA.
-- Secure a long-term supply of lorcaserin active pharmaceutical
-- Reduce the overall manufacturing costs for lorcaserin and other Arena
-- Lead to significant future tax benefits, which may result from a
favorable tax ruling Arena received from Switzerland.
The agreements with Siegfried include the following:
-- A long-term supply agreement for Arena's purchase of lorcaserin API at
competitive rates for a period of 15 years after FDA approval.
-- An asset purchase agreement for Arena's purchase of certain finishing
facility assets and technology, including the transfer of certain
equipment, fixtures and real estate assets used in converting API into
tablet form, the expected finished drug product (FDP) of lorcaserin.
Approximately 70 employees that are trained in the operations of the
purchased assets are expected to be transferred from Siegfried to Arena
in connection with the transaction.
-- A contract manufacturing agreement under which Siegfried will pay for a
significant portion of the costs associated with maintaining the
facility. Under this agreement, Siegfried will sub-contract from Arena
services to finish API currently manufactured by Siegfried into final
commercial tablet forms for Siegfried's customers for at least three
-- A services agreement under which Siegfried will provide at its cost
various technical and business services to Arena related to the
operation of the facility.
"The relationship with Siegfried is an important strategic development
that supports our efforts to optimize lorcaserin's economic potential," said
Jack Lief, Arena's President and Chief Executive Officer. "It also allows us
to better proactively manage manufacturing related risks and costs, and may
facilitate commercialization with a partner."
The purchase price of the acquired assets is CHF 32 million in cash and
approximately 1.5 million shares of Arena common stock. The cash is payable
CHF 22 million at closing and CHF 10 million payable in three equal
installments in the third, fourth and fifth years after closing. The stock is
subject to a lock-up agreement for a period of three years from closing. The
agreements with Siegfried are not expected to increase the total lorcaserin
pre-launch manufacturing related cash out-flows when compared to the
alternative of outsourcing all manufacturing related activities. Arena
estimates that substantially the entire purchase price paid to Siegfried will
be recouped through reduced manufacturing related costs within one year post
launch of lorcaserin.
The agreements, entered into between Arena's Swiss subsidiary, Arena
Pharmaceuticals GmbH, and Siegfried, will replace a significant part of
Arena's previous plans to outsource manufacturing related activities for
lorcaserin. However, Arena will continue to manage manufacturing related risks
by working with multiple suppliers for API and the processing of API into FDP.
Arena expects to use the acquired assets for the manufacture of other Arena
drug candidates for clinical or commercial use.
Further, the acquired facility could be a source of commercial product for any
lorcaserin commercialization partner.
"This transaction immediately establishes a key supply chain link in our
manufacturing process. Given the high regard of Siegfried as a pharmaceutical
supplier, including its professional and highly knowledgeable employees, I'm
confident we will be able to realize significant benefits from this
transaction," commented Paul W. Maffuid, Ph.D., Arena's Vice President,
Siegfried has over 130 years of pharmaceutical and chemical manufacturing
experience and its facilities are approved by the United States, Swiss and
other European regulatory authorities to produce API and FDP for these
markets. The finishing facility assets being acquired by Arena are located in
Zofingen, Switzerland and are situated within Siegfried's campus where it also
manufactures API. The finishing facility assets are GMP compliant and capable
of producing large scale quantities of lorcaserin and other Arena drug
candidates for use in clinical trials or commercially if approved for
About Arena Pharmaceuticals
Arena is a clinical-stage biopharmaceutical company focused on
discovering, developing and commercializing oral drugs in four major
therapeutic areas: cardiovascular, central nervous system, inflammatory and
metabolic diseases. Arena's most advanced drug candidate, lorcaserin, is being
investigated in a Phase 3 clinical trial program for the treatment of obesity.
Arena's broad pipeline of novel compounds targeting G protein-coupled
receptors, an important class of validated drug targets, includes compounds
being evaluated independently and with its partners, Merck & Co., Inc. and
Ortho-McNeil Pharmaceutical, Inc.
Arena Pharmaceuticals® and Arena® are registered service marks of the
company. "APD" is an abbreviation for Arena Pharmaceuticals Development.
Active in Life Science markets, the Siegfried Group is a global
manufacturer of pharmaceutical products. With production facilities located in
Switzerland, Germany, Malta and the United States Siegfried currently has
approximately 950 employees and achieved annual sales of approximately CHF 300
million in 2006.
Siegfried integrates two pharmaceutical divisions. Siegfried Actives
develops and produces both exclusive active pharmaceutical ingredients (API)
and cGMP and non cGMP intermediates for the pharmaceutical industry as well as
standard APIs. Siegfried Generics produces generic products.
Siegfried Holding AG is listed on the Swiss Exchange in Zurich
Many statements in this press release are forward-looking statements that
involve a number of risks and uncertainties. Such forward-looking statements
include statements about lorcaserin's development, FDA submission and
commercialization; the cost savings, efficiencies, reductions in risk,
potential tax and other benefits, and expectations relating to the agreements
and relationship with Siegfried, including the anticipated activities
thereunder, the transfer of employees, the potential for partnering lorcaserin
and the use of the acquired assets in connection with a lorcaserin
partnership; use of multiple suppliers; the breadth of Arena's pipeline;
Arena's strategy, preclinical and internal and partnered clinical programs;
and about Arena's ability to develop compounds and commercialize drugs and
other statements that are not historical facts. For such statements, Arena
claims the protection of the Private Securities Litigation Reform Act of 1995.
Actual events or results may differ materially from Arena's expectations.
Factors that could cause actual results to differ materially from the
forward-looking statements include, but are not limited to, Arena's ability to
operate the acquired assets, Arena's planned clinical trials and studies may
not proceed at the time or in the manner Arena expects or at all, the results
of preclinical studies or clinical trials may not be predictive of future
results, Arena's ability to partner lorcaserin, APD125, APD791 or other of its
compounds or programs, the timing, success and cost of Arena's research,
out-licensing endeavors and clinical trials, Arena's ability to obtain
additional financing, Arena's ability to obtain and defend its patents, and
the timing and receipt of payments and fees, if any, from Arena's
collaborators. Additional factors that could cause actual results to differ
materially from those stated or implied by Arena's forward-looking statements
are disclosed in Arena's filings with the Securities and Exchange Commission.
These forward-looking statements represent Arena's judgment as of the time of
this release. Arena disclaims any intent or obligation to update these
forward-looking statements, other than as may be required under applicable
SOURCE Arena Pharmaceuticals, Inc.
CONTACT: Jack Lief, President and CEO, or David Walsey, Director,
Corporate Communications, both of Arena Pharmaceuticals, Inc.,
+1-858-453-7200, ext. 1682; or Mary Claire Duch of WeissComm Partners, Media