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Pfizer's AU$9.4 billion acquisition of Arena "shows big pharma's interest in cannabinoid medicines"

Arena was CBDX's fourth-largest holdings at the end of November, at 11.8%.

Pfizer Inc's (NYSE:PFE) agreed acquisition of Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) for almost double the closing price of the stock in the previous trading sessions, is just the latest case of big pharma's confidence to get into cannabinoid-based research, said the manager of an ETF focused on the sector.

Nawan Butt, portfolio manager of The Medical Cannabis and Wellness UCITS ETC (CBDX) says it is also another example of the huge growth potential for the medical cannabis sector and how it is becoming more mainstream.

Pfizer announced on Monday a definitive agreement to acquire all the outstanding shares of Arena for US$100 per share in an all-cash deal, valuing Arena for about US$6.7bn.

The main driver of the acquisition, says Butt, is Arena's lead asset, Etrasimod, which is being developed for the treatment of ulcerative colitis and Crohn's Disease, and is currently in late-stage development.

Arena is also developing a cannabinoid type 2 receptor (CB2) antagonist as it paves the way in cannabinoid research with a focus on visceral pain associated with gastrointestinal disorders.

“This acquisition displays the interest big pharma is taking in the fast-evolving world of cannabinoids. We are encouraged by the acquisition as it provides more resources and a wider platform for pharmaceutical development of cannabinoids. Overall, this transaction is in line Pfizer's long-term focus on innovative research and a great win for our investors.”

The CBDX fund was the first ETF to give access to the medical cannabis space in Europe, and now has $32mln of assets under management as of 12 December.

Arena was CBDX's fourth-largest holdings at the end of November, at 11.8%. Originally published here:

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