Ariad Pharmaceuticals Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotech Ariad Pharmaceuticals (Nasdaq: ARIA  ) surged more than 10% after new data showed that an experimental cancer treatment extended the lives of sarcoma sufferers.

So what: Ariad and marketing partner Merck (NYSE: MRK  ) say the pill-based drug -- called ridaforolimus -- preserves the benefits of chemotherapy for those suffering from bone and soft issue cancers (i.e., sarcomas). The companies plan to file for approval in the U.S. and Europe this year, Bloomberg reported.

Now what: We don't yet know what ridaforolimus could do for Ariad in the way of revenue, but in an interview with Bloomberg, a Cowen & Co. analyst estimated $300 million by 2015. Even so, Ariad has rallied more than 160% over the past year, and it commands $1.15 billion in market value as of this writing. Investors taking a position here need to realize that they're basically speculating on a buyout bid from Merck or another of the Big Pharma bunch.

Interested in more info on Ariad Pharmaceuticals? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader.

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Read/Post Comments (11) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On June 07, 2011, at 4:28 PM, Toast2012 wrote:

    I think the writer of this article does not realize Ariad has a VERY, VERY hot new drug in Phase 3 that is expected to be approved in 2012 by the name of Ponatinib! Which has shown to be aggressively effective in CML and AML and blocks the 315i mutation 100% of the time.

    People that own Ariad own it for Ponatinib.....Ridaforolomous is just a cool little extra.

    A shame a guy would right the article about a company's market cap not knowing the company!

  • Report this Comment On June 07, 2011, at 6:20 PM, TMFMileHigh wrote:

    @Toast2012,

    Your comments conflict with Ariad's published pipeline data:

    http://www.ariad.com/wt/page/ariad_pipeline

    If you're really betting on Ponatinib then you're valuing it at roughly $800 million. You're assuming it will become a billion-dollar drug. I hope you're right, but let's please not pretend this is a high-probability outcome.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On June 07, 2011, at 7:11 PM, biotechnique wrote:

    TMFMileHigh...the site you pasted does not conflict with what Toast has stated. Pona is a stage 2 regerstration trial, and results for this trial will be presented at ASH later this year. An NDA will follow a few months later, with approval by the end of 2012...this gives ARIAD the distintion of having two drugs on the market by the end of 2012!

    Both Rida and Pona have multiple indications...and therefore HUGE market potential.

    Mr. Beyers Please do some DD on ariad before you embarrass yourself and Motley Fool any further.

  • Report this Comment On June 07, 2011, at 9:29 PM, TMFMileHigh wrote:

    @biotechnique,

    >>TMFMileHigh...the site you pasted does not conflict with what Toast has stated.

    Yes, it does. Stage 2 is not the same thing as Phase 3 and approval is never, *ever* assured when the FDA is involved.

    So as before: as much as I'd love to see investors win with this stock, I refuse to mute the risks.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On June 07, 2011, at 9:40 PM, portefeuille wrote:

    http://www.ariad.com/wt/tertiarypage/AP24534

    http://phx.corporate-ir.net/phoenix.zhtml?c=118422&p=iro...

    ---------

    Clinical results from the ongoing Phase 1 trial of ponatinib, taken together with the preclinical data that characterize ponatinib as a potent, pan-BCR-ABL inhibitor, provide a strong rationale for advancing directly to a pivotal trial of ponatinib in a population of patients who have extremely limited, if any, treatment options

    ---------

    so no phase 3 here ...

  • Report this Comment On June 07, 2011, at 10:13 PM, Toast2012 wrote:

    TMFMileHigh - your little "what you should know" article makes Ariad look like a one trick pony --- which it is most certainly not.

    If DNDN gets over 5x sales for Provenge -- I think it is kind of silly of you to throw out Ariad would be fully valued at todays price if Ponatinib was a $800 million drug - which it just may well be.

    Your stupid FOOLISH QUOTE:

    "f you're really betting on Ponatinib then you're valuing it at roughly $800 million. You're assuming it will become a billion-dollar drug."

    If Ponatinib is an $800 million drug Ariad will be a $40 stock.....if apples are apples....ex. DNDN

  • Report this Comment On June 07, 2011, at 10:23 PM, tktom wrote:

    Ponatinib is in a PIVOTAL phase 2 REGISTRATION trial for CML (in other words, they will file an NDA based on the success of this trial). Look it up for the differences. Ariad plans to file the NDA in the second half of 2012 with ponatinib for CML, so potentially, Ariad will have TWO drugs on the market at the end of 2012. This is all explained on their web site. Also, as announced at ASCO this week, Pona appears to work in AML, and Ariad is looking to formulate an approach to enter clinical trials for Pona in AML targeting a specific mutation as in CML. In addition, their ALK inhibitor, '113, will enter phase one trials in the middle of this year (soon!) for a mutation that PFE's Criz can't treat for NSCLC. In addition, results for new cancer indication will be released FOR EACH OF THEIR THREE COMPOUND latter this year ( Ponatinib for AML is one) . You really need to look at the pipeline chart on the Ariad web site to better understand the depth of their pipeline.. So the depth of this article leaves a lot of valuable information out of the equation in valuating Ariad..

  • Report this Comment On June 07, 2011, at 10:28 PM, tktom wrote:

    portefeuille and TMFMileHig, please take the time to understand what a pivotal phase 2 registration trial is. I do not think you understand..

    Thanks..

  • Report this Comment On June 07, 2011, at 11:04 PM, portefeuille wrote:

    I do. That is why I wrote what I wrote. It is a pivotal phase 2 trial, so no phase 3 trial here ...

  • Report this Comment On June 07, 2011, at 11:04 PM, portefeuille wrote:

    I am pretty sure he does not though, hehe ...

  • Report this Comment On July 24, 2011, at 1:31 PM, Toast2012 wrote:

    So - are you going to write an article stating how wrong you were with your post scaring investors when Ariad was at 8 and change?????

    Left $5 on the table !

    It would be nice to see The Fool be responsible.

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