Siegfried and Arena sign contract manufacturing deal

Previously, Arena had planned to outsource all manufacturing related activities for lorcaserin, but the new agreement with Swiss pharmaceutical manufacturer Siegfried has replaced this.

"The relationship with Siegfried is an important strategic development that supports our efforts to optimise lorcaserin's economic potential.

It also allows us to better proactively manage manufacturing related risks and costs, and may facilitate commercialisation with a partner," Arena president and chief executive Jack Lief said.

According to a statement released by Arena, the contract with Siegfried was 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 statement said.

Arena pharmaceutical development vice president Paul Maffuid said: "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 realise significant benefits from this transaction."

The contract aimed to reduce manufacturing related risks and costs and lead to future tax benefits.

Under the terms of the agreement, Siegfried will supply lorcaserin active pharmaceutical ingredient (API) for a period of 15 years after US Food and Drug Administration (FDA) approval.

As part of the deal, Arena acquires finishing facility assets and technology located in Zofingen, Switzerland, along with the transfer of approximately 70 staff currently employed there.

Besides the production of lorcaserin, the company is expected to use the assets for the manufacture of other Arena drug candidates for clinical or commercial use.

Siegfried will pay for a significant portion of the costs associated with maintaining the facility and will provide various technical and business services to Arena related to the operation of the plant.

Arena would continue to manage manufacturing related risks by working with multiple suppliers of API and the processing of API into finished drug product.

The transaction is expected to close on January 8.