FDA Hold on Ariad Kills $2 Billion in Value (Updated)

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Ariad Pharmaceuticals Inc. (ARIA) is getting crushed on Wednesday due to a clinical hold placed by the U.S. Food & Drug Administration. The company confirmed that the FDA has placed a partial clinical hold on all new patient enrollment in clinical trials of Iclusig. Please note: Due to the severity of this drop and the severe losses, this article has been updated to show the severity of prices and losses and to show updates before, during, and after Ariad's conference call.

Ariad announced on Wednesday morning that patient enrollment in all clinical studies of Iclusig is being paused. The company said that enrollments would be resumed with anticipated changes in dose and other modifications, but that is subject to agreement with the FDA.

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Iclusig is a kinase inhibitor, and the primary targets are abnormal tyrosine kinase that is expressed in chronic myeloid leukemia and Philadelphia-chromosome positive acute lymphoblastic leukemia.

Ariad's stock value based on a $17.14 close as of Tuesday was $3.17 billion. Unfortunately, this was originally indicated to be wiping out more than 63% of the value in the early trading. That plunge alone translated to a loss in market capitalization of $2 billion against Ariad's shareholders. That loss went from atrocious to even more atrocious.

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With a median follow up of 24 months, serious arterial thrombosis occurred in 11.8% of Iclusig-treated patients: cardiovascular events 6.2%, cerebrovascular events 4.0% and peripheral vascular events 3.6% (some patients had more than one type of event). This compares to 8.0% after 11 months of follow up reflected in the current U.S. prescribing information.

Also at 24 months, serious venous occlusion occurred in 2.9% of Iclusig-treated patients, compared to 2.2% in the current U.S. prescribing information. The incidence rate of the arterial thrombotic events when normalized to duration of treatment exposure has not increased. Non-serious and serious arterial and venous adverse events combined occurred in approximately 20% of Iclusig-treated patients.

Ariad said that patients currently receiving Iclusig in clinical trials will continue on therapy, but dose reductions from 45 mg daily will be implemented on a trial-by-trial basis down to 30 mg daily or even down to 15 mg daily. Ariad said that the Data Monitoring Committee of the EPIC trial has endorsed these changes and that the eligibility criteria for the trials will be modified to exclude patients who have experienced prior arterial thrombosis resulting in heart attack or stroke.

If you want to know just how bad this $2 billion translates to, we saw more than 18 million shares trade even before the market opened, and an average daily volume is about 2.8 million shares. On last look, shares were down more than 69% at $5.26. The prior 52-week trading range was $15.35 to $25.40. It sure seems as if there were concerns brewing here, although the consensus price from Wall Street analysts target prior to this implosion was right at $25.00.
UPDATE at 12:15 PM EST: Ariad shares have started coming back and the stock is now down "only" 68% at $5.40. We have seen more than 78 million shares trade hands with almost 4 hours to go. We would expect trading volume to be close to 120 million shares , but that could even be higher if no mid-afternoon trading lull takes place.

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UPDATE at 10:30 AM EST: Ariad shares were down 72% at $4.77, and shares apparently traded as low as $4.00. Some 55 million shares traded hands after only one hour of market trading, combined with the pr-market trading session. The loss for shareholders is now a total of more than $2.2 billion.

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