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In the world of cancer treatment, small increments of time and comfort are of magnified importance for those with few or no options left. Knowing this helps explain why a Food and Drug Administration advisory panel evaluating two similar drugs came up with such different decisions.

Both drugs were developed to treat sarcomas, cancers that start in soft tissue or bone. Neither was claiming to cure this rare type of cancer, or even to prolong life -- only to delay the spread of the disease. But that is where the similarities end. And per usual, it came down to efficacy versus side effects.

Ridaforolimus, the drug Ariad Pharmaceuticals (Nasdaq: ARIA  ) developed in partnership with Merck (NYSE: MRK  ) , was voted down 13 to 1 by the panel because the side effects such as liver, kidney, and heart problems were deemed to be too egregious compared with its benefits -- a three-week increase at keeping the cancer at bay. GlaxoSmithKline's (NYSE: GSK  ) entry, Votrient, was judged to be of much more use to patients who were out of treatment options thanks to its three-month extension of progression-free survival. The panel voted 11 to 2 that its benefits far outweighed the risks involved in its use.

Although the FDA is not required to follow the advice of the advisory panel, it usually does, especially when the panel overwhelmingly votes "no." What does this mean for the fortunes of Merck, Glaxo and Ariad? Given their size, not too much for the first two, but potentially quite a lot for Ariad, which has yet to join the ranks of drug companies with FDA-approved treatments.

 A late bloomer in the biotech business
For a company that's been struggling to develop viable, marketable cancer drugs for 20 years, this decision must have come as quite a disappointment. But the persistent biotech has one more trick up its sleeve: the drug ponatinib, for the treatment of acute lymphoblastic and chronic myeoloid leukemia. Investor confidence in the company has been surprisingly steadfast, and the stock value has more than doubled over the past year. For a company with no products on the market, that is truly remarkable.

What is it about this company that inspires such faith? Ariad has been setting its sights on FDA approval of its two targeted cancer drugs for many years now. Because of its alliance with Merck and that company's complete funding of the project, Aria would have garnered only a portion of ridaforolimus' profits over time, estimated around 18%. Ponatinib, however, is owned exclusively by Ariad, and this where experts expect the company to make its mark.

A good bet?
Despite the possible blockbuster status of ponatinib, this scenario looks like one where a company's stock performance doesn't tell the whole story. Investors seem to be putting all their eggs in ponatinib's basket, but this drug has problems, too: Last fall, a report from the American Society of Hematology warned of side effects serious enough for 15% of phase 2 participants to end therapy. Compare that with the 14% who dropped out of the ridaforolimus study because of side effects, and you can see trouble brewing. Little more than one month later, the company released much more positive results, but I remain concerned that a command performance may be in store for Ariad. And if the unfortunate were to happen, investors need to wonder what's next for Ariad.

Pharmaceuticals and biotech are huge movers and shakers in the health-care industry, but they aren't the only ones taking the sector by storm. To find out how you can get in on the ground floor with a company that promises to break all the rules and pad investors' wallets too, grab our free report now.

Fool contributor Amanda Alix owns no shares in the companies mentioned above. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On April 01, 2012, at 8:35 AM, mabtkinvestor wrote:

    Amanda: This is a good story with a major oversight at the end of the article. Ponatinib's pivotal trial (PACE) was featured at 2011 ASH, and included patients with CML and ph+ ALL. It is important to note that CML is the primary market that ARIA is pursuing - and the one where BCR-ABL drugs are best tolerated. ALL patients have major complications at presentation - and tend to have more toxicity due to the nature of their disease.

    You point out that there is a 15% discontinuation rate for ponatinib. This number is misleading to investors since you provided NO CONTEXT. If you read the abstract, among the 15% d/c - there were 6% (more than a 1/3 of this amount) that discontinued b/c their disease had progressed. Another 2% had died and 4% "other" (often times lost to follow-up). There were only 3% of patients that discontinued due to adverse events or side effects. This is a much smaller amount than the 15% that you reference in your article. Furthermore, most of the patients that had AEs in the study (and most of the patients that progressed too), were patients with ph+ ALL, a much more difficult to treat disease versus CML. The CML patients responded much better, and tolerated the drug much better than the ALL patients. This is EXPECTED since the trial is primarily focused on CML patients - and offers Ariad the bigger market opportunity (remember, Gleevec is the fourth biggest selling cancer theraputic in the world today).

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