Management says Ariad is Well-Prepared for Ponatinib Launch

On the heels of ponatinib’s Priority Review announcement, Ariad Pharmaceuticals (NASDAQ:ARIA) reported 3Q financial results Wednesday, and on its related conference call emphasized the preparation of a ponatinib-specific sales force. Pending ponatinib’s approval for treatment of resistant or intolerant chronic myeloid leukemia (CML), Ariad believes they are fully prepared for a U.S. commercialization (PDUFA slated for March 27, 2013), and efforts are underway in the E.U. to assemble a similar sales force. Management expects European approval and launch in the third quarter of next year, and is committed to being launch-ready by July 1, 2013.

Ariad’s net loss for the quarter was $53.2 million, or $0.32 per share, in tandem with consensus estimates despite a miss in revenue expectations, $.85M vs estimates of just under $1M. Last year the company reported a 3Q net income of $13.9 million, or $0.10 per share, and comparative decreases are due to growth of R&D and SG&A expenses, and higher licensing revenue in the previous year's quarter. Management said that costs related to sales representative training and hiring are a fourth quarter expense, and we expect SG&A expenses to continue rising through the end of the year. Ariad reported cash, equivalents, and investments of $206.7M. If the company successfully executes ponatinib’s launch by the second quarter of next year, Ariad could swiftly move towards positive cash-flow.

Management briefly discussed recent entrants into the field of CML treatment, specifically Synribo from Teva (NYSE:TEVA) and Pfizer’s (NYSE:PFE) Bosulif, both of which were approved in the second half of this year. The company does not expect either drug to pose a major threat to ponatinib based on superior efficacy and broader labeling potential for Ariad’s drug. Management also noted that Gleevec’s possible patent extension through 2019 would be positive for ponatinib; Gleevec, by Novartis (NYSE:NVS), is set to lose patent protection in 2015 unless Intellectual Property protection improves, and as the leading first-line CML treatment, a cheaper generic stands to make a major dent in the market for branded products. Ariad is also pursuing a first-line indication for ponatinib with the ongoing Phase III EPIC trial, which could release interim results in early 2014 depending on enrollment speed.

Analysts are quite interested in Ariad’s dual ALK/EFGR inhibitor AP26113, for which the company presented Phase I data at ESMO 2012. Read more about the non small-cell lung cancer treatment here. Shares of ARIA are off 3% in morning trading, but expect interest in the stock to drive shares higher as the March PDUFA date approaches. Ponatinib is widely expected to gain approval, and although expectations are largely baked into the company’s current valuation, recent weakness (16% off previous highs) and a major catalyst upcoming allow for entrance into either a swing trade or long-term investment.