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Analyst sees problems for Ariad's leukemia pill

NEW YORK (AP) -- Shares of Ariad Pharmaceuticals Inc. fell Tuesday after a Credit Suisse analyst said sales of the company's cancer pill Iclusig may not live up to market expectations.

THE SPARK: Analyst Jason Kantor said Iclusig works well but it may be used as only a third or fourth option after more established drugs. Kantor said patients with chronic myeloid leukemia are generally treated for a long time, and doctors don't switch drugs often.

That may also be the case for Ariad's most advanced experimental drug, AP26113, which is being studied as a treatment for lung cancer.

THE BIG PICTURE: The Food and Drug Administration approved Iclusig in December to treat two rare types of leukemia. European Union regulators approved the drug earlier this month.

Kantor said Iclusig could get approval as a primary treatment for the disease in 2015 and 2016, but it may have trouble competing against Novartis AG's drug Gleevec, and lower-cost generic versions of Gleevec could also reach the market in the next couple of years. Generic versions of other cancer drugs like Bristol-Myers Squibb Co.'s Sprycel, Novartis' Tasigna and Pfizer Inc.'s Bosulif could also hurt sales and affect the price of Iclusig, he said.

In the first quarter of 2013 Ariad reported $6.4 million in revenue from Iclusig, deferred another $3.3 million in revenue for shipments that had not been received by clients, and an additional $2.1 million of the drug was shipping in France through an early-access program.

Kantor said he thinks sales of Iclusig will peak at $1.44 billion in 2023.

THE ANALYSIS: Kantor assigned the stock a "Neutral" rating and a price target of $22.

SHARE ACTION: Ariad Pharmaceuticals shares lost $1.22, or 5.8 percent, to close at $19.76. The stock has risen 13 percent in July.