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ARIAD Pharmaceuticals (Nasdaq: ARIA ) has more than doubled over the past year. Can it double again? Maybe. Eventually. Here are three things to watch in the hopes of seeing the drugmaker climb higher.
An decision date for ponatinib
ARIAD took advantage of the Food and Drug Administration's rules for drugs with fast-track designation and started submitting the data for ponatinib before the entire package was all complete. At the end of last month, the company said it had completed the process. The FDA has 60 days or so to accept the application and give the company a PDUFA date, the agency's goal for completing the application.
ARIAD is applying for approval in patients who have failed Novartis' (NYSE: NVS ) Tasigna, or Otsuka (NASDAQOTH: OTSKF.PK) and Bristol-Myers Squibb's (NYSE: BMY ) Sprycel, or who have a mutation that doesn't allow them to be treated with those drugs, so there's a clear unmet need. I think there's an excellent chance the drug gets a priority review, which would give the drug a six-month review period.
But given the rolling submission, investors should probably not wait to buy ahead of the FDA decision. The FDA has been pushing out decisions on some cancer drugs well ahead of its goals. Approvals for Medivation's (Nasdaq: MDVN ) Xtandi and Bayer and Onyx Pharmaceuticals' (Nasdaq: ONXX ) Stivarga both came in a month or more before the PDUFA date.
Return of ridaforolimus?
In June, the FDA turned down ridaforolimus, which ARIAD licensed to Merck (NYSE: MRK ) . The agency wants an additional clinical trial, or maybe more than one, to assess the safety and efficacy before approving the drug for maintenance therapy for patients with metastatic soft tissue or bone sarcoma.
I haven't heard anything one way or another about what Merck's plans are to try and gain approval in sarcoma, but Merck appears to be continuing to test the drug in multiple other solid tumors, including breast and lung cancer.
Ridaforolimus is still years away from approval in the U.S., but early-stage data in other cancers would be a positive because investors would have confidence that Merck won't drop the program. A phase 2 trial in breast cancer is expected to be completed around the end of this year.
Development of early-stage pipeline
Beyond ponatinib and ridaforolimus, ARIAD has two other drugs in clinical development. AP26113, which it owns full rights to, and AP1903, which is licensed to Bellicum Pharmaceuticals. The former is obviously more important to ARIAD because it owns the entire rights to the molecule.
Early -- and I mean really early -- data indicate that AP2113 has some activity in lung cancer patients. It looks worthy of going into a phase 2 trial, which seems to be ARIAD's plan. Like with ridaforolimus, it's about making progress and getting through the milestones along the marathon of drug development than anything else.
Even further back, ARIAD has the capability of developing more drugs through its computer-aided drug design. Essentially, the company uses the structure of proteins to help design drugs that will inhibit the protein's function.
It sounds all well and good, and having multiple shots on goal is nice, but drugs cost a lot to develop. As Exelixis (Nasdaq: EXEL ) -- which also had a solid drug discovery program -- discovered, getting that lead drug onto the market and generating revenue is the most important step
After the run-up, ARIAD is a $4 billion company. I have a hard time seeing it double again as quickly as it did recently.
Ponatinib is the near-term future of ARIAD, but I don't think it has much potential for increasing the stock price; it looks to me like the approval of ponatinib is mostly priced in. There's probably some upside left -- no approval is a sure thing -- but I wouldn't count on a huge jump on the approval.
A strong launch of ponatinib next year could drive the stock higher, but I think ridaforolimus and the rest of the pipeline have just as much influence over the valuation of ARIAD, since going from one approved drug to two approved ones can have a huge influence on revenue and profits.
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