Late last year, United Therapeutics Corporation (NASDAQ:UTHR) agreed to acquire ralinepag, a drug candidate created by Arena Pharmaceuticals, Inc. As part of the agreement, United would pay Arena $800 million in upfront licensing fee for ralinepag. In return, United Therapeutics would have the latitude to produce and commercialize the product globally.

Before the licensing agreement, ralinepag was in its third phase of trials. Notably, the product is a next generation prostacyclin receptor agonist that is both potent and selective for treating pulmonary arterial hypertension (PAH). Notably, patients will need to ingest the drug just once in a day. Interestingly, Arena internally discovered and developed the product which inhibits the proliferation of smooth vascular cells.

An arena is eligible to a milestone payment

Further, the product inhibits aggregation of platelets which is instrumental in causing PAH. Also, the drug has an extended half-life which means it has a higher capability for dealing with PAH. Nevertheless, the drug is still under investigation and there no country that recognizes it. This is to say that United Therapeutics will have to take the drug through Phase 3 and FDA approval.

Interestingly, once the firm commercializes the drug, Arena will be eligible for “low double-digit tiered royalties.” This is to say that United will pay a certain amount of the total revenue from ralinepag to Arena. Further, Arena will receive up to $400 million in milestone payment for every milestone that ralinepag will hit.

Health Canada accepts Unituxin

If United Therapeutics succeeds in commercializing ralinepag, the product will become the second most recent approved drug candidate. Last year, Health Canada approved Unituxin for the treatment of high-risk neuroblastoma in pediatric patients. Interestingly, the U.S. FDA had already approved the product back in 2015, but it lacked widespread acceptance. As such, Canadian patients will now gain access to the product that Americans have used for the last three years.

As Martine Rothblatt, Ph.D., CEO of United Therapeutics commented at the time, “We are delighted that Health Canada has approved our novel therapy, which has now provided hundreds of American children with freedom from cancer for over five years and counting.”

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