Pfizer will use cash on hand to fund the acquisition, which secured approval from the boards of directors of both the companies.
Arena focuses on developing new treatments for various immuno-inflammatory ailments.
Its portfolio comprises varied and encouraging treatment candidates in the gastroenterology, dermatology and cardiology areas.
The company’s oral, selective sphingosine 1-phosphate (S1P) receptor modulator, etrasimod, is presently being developed to treat gastrointestinal and dermatological immuno-inflammatory diseases.
The drug is being evaluated in two Phase III clinical trials for ulcerative colitis (UC), a Phase II/III programme for Crohn’s Disease and Phase II studies in eosinophilic esophagitis and alopecia areata.
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Arena also intends to commence a Phase III programme of etrasimod to treat atopic dermatitis.
Data from a Phase II OASIS trial of etrasimod in subjects with moderate to severe UC showed that most patients attained clinical response, clinical remission, or endoscopic improvement at week 12.
In addition to etrasimod, the pipeline of Arena comprises two cardiovascular assets in the developmental stage, temanogrel and APD418.
Pfizer Inflammation and Immunology global president and general manager Mike Gladstone said: “The proposed acquisition of Arena complements our capabilities and expertise in Inflammation and Immunology, a Pfizer innovation engine developing potential therapies for patients with debilitating immuno-inflammatory diseases with a need for more effective treatment options.
“Utilising Pfizer’s leading research and global development capabilities, we plan to accelerate the clinical development of etrasimod for patients with immuno-inflammatory diseases.”
Last month, Pfizer acquired all outstanding shares of Trillium Therapeutics for nearly $2.22bn in cash.