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ARIAD's Q4 Loss Narrower-Than-Expected

Zacks Equity Research

ARIAD Pharmaceuticals Inc. (ARIA) reported fourth quarter 2013 loss of 40 cents per share, wider than the year-ago loss of 36 cents per share but narrower than the Zacks Consensus Estimate of a loss of 46 cents per share.

Fourth quarter revenues were $8.4 million, compared to $0.07 million in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $6 million.

In 2013, ARIAD reported a loss of $1.49 per share, wider than the year-ago loss of $1.34 per share but narrower than the Zacks Consensus Estimate of a loss of $1.56 per share.

Revenues were $45.6 million in 2013 as against $0.6 million in the previous year. Revenues surpassed the Zacks Consensus Estimate of $43 million.

Quarterly Details

Iclusig generated sales of $8.3 million, down 50.3% sequentially. This was due to the temporary suspension of the drug in the U.S. following instructions from the FDA due to a higher-than-expected incidence of blood clots and narrowing of blood vessels.

Iclusig was relaunched in the U.S. in Jan 2014. The company said that about 180 of 305 patients from the single patient IND program have switched to commercial supply. An additional 50 patients are expected to transition to commercial supply by March.

As far as the EU is concerned, Iclusig is currently being sold in several countries with additional launches expected through the course of 2014. In Feb 2014, ARIAD received approval for Iclusig in Switzerland and expects to launch the product there by mid-2014.

Additionally, ARIAD said that its license agreement with Merck & Co. Inc. (MRK) for the development and commercialization of ridaforolimus will be terminated, effective Nov 2014.

Research and development (R&D) expenses declined 4.9% year over year to $35.8 million.

Selling, general and administrative (SG&A) expenses increased 64.2% year over year to $37.6 million.

Pipeline Updates

In the second half of 2014 ARIAD will commence a post-marketing study on Iclusig according to the FDA’s requirements. The randomized multi-arm study will also evaluate the safety profile of Iclusig at doses lower than the currently approved dose (45 mg daily). ARIAD will continue patient follow up in the phase II study on Iclusig for gastrointestinal stromal tumors (:GIST). The company expects to re-open patient enrolment in this study once the partial hold is withdrawn in the second quarter.

Meanwhile, ARIAD will commence a phase II pivotal study on AP26113 for ALK+ non-small cell lung cancer (:NSCLC) in patients resistant to treatment with Xalkori later this quarter.

2014 Guidance

The company expects R&D expenses in the range of $140 million–$150 million. Nearly 75% of the total R&D expenses are for the development of Iclusig. SG&A expenses are expected in the range of $135 million–$145 million for 2014. Nearly 50% of the SG&A expenses will be allotted to the commercialization of Iclusig in the U.S. and Europe.

Cash, cash equivalents and marketable securities in 2014 are expected to lie in the rage of $60 million–$70 million.

ARIAD currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the health care sector include Auxilium Pharmaceuticals Inc. (AUXL) and Shire plc (SHPG). Both these stocks carry a Zacks Rank #1 (Strong Buy).

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