High Hopes on Ariad (ARIA, MRK)
Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) is seeing elevated trading today after a presentation and ahead of earnings. The difference here is that Ariad’s increased trading is in both the stock and in the bonds.
Joe Kunkle of OptionsHawk.com noted, “implied volatility is 10% higher to 87.8% as shares gain 2.7%, 4,140 calls trading, 4X average, with buyers of April $3 and May $3.50 calls. Shares are at 52 week highs and breaking a long term downtrend, trading as high as $7.50 in 2005. The Company is expected to announce earnings on March 16th and presented at the Cowen Healthcare Conf. This morning. Ariad’s leukemia drug recently received orphan drug status adn is expected to announce Phase 3 results for its soft tissue and bone sarcoma drug, ridaforolimus. Ariad has a $1B+ collaboration agreement with Merck & Co. (NYSE: MRK), potentially making it a takeover target.” (NOON EST)
Ariad’s shares are higher by 4.4% at $3.09 on over 3 million shares with more than an hour to the close. Average volume is only about 1.7 million shares per day and the 52-week trading range is $1.15 to $3.48. Today’s added gain may be as there was another biotech merger as well.
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Contribution from optionshawk.com
ARIAD (ARIA) Up 5% On Court Ruling
ARIAD Pharmaceuticals, Inc. (ARIA) and its co-plaintiffs today announced that the U.S. Court of Appeals for the Federal Circuit has granted their petition for rehearing en banc and has vacated its April 2009 decision in the appeal that Eli Lilly and Co. filed in 2008.
All twelve judges of the Federal Circuit will now rehear and reassess the merits of Lilly’s appeal. This decision by the Federal Circuit concerns a judgment holding Lilly liable for infringement of U.S. Patent No. 6,410,516 licensed to ARIAD by Harvard University, Massachusetts Institute of Technology and the Whitehead Institute for Biomedical Research. ARIAD is the exclusive licensee of the technology and patents.
Douglas A. McIntyre
Interest Growing in ARIAD Cancer Medicine (ARIA, MRK)
In the coming weeks, ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) will have some key drug data that could make or break the perception of the company. There is a mixed opinion on this stock, but it is being well received today after an analyst gave a call that would imply a double in share price. There have been several issues contributing to the interest here. Today’s major interest comes as Oppenheimer’s analyst team gave it an “Outperform” rating with a $4.00 price target.
This is ahead of interim data analysis for Ariad’s Phase III trial for ridaforolimus, its mTOR inhibitor therapeutic indicated for soft tissue and bone cancers. These are aggressive sarcomas and are less common forms of cancer which attack healthy connective tissue.
Oppenheimer believes that this past positive Phase II data and pending Phase III data may lead to an approval late in 2010. The Phase II data showed almost a doubling of survival rates and Merck & Co. (NYSE: MRK) is a partner on this one and details can be found here.
It appears that some believe that ridaforolimus has the ability to become a blockbuster drug, but the number proposed by Oppenheimer was eventually annual sales of about $350 million.
ACCORDING TO BioMedReports.com…. “Based on my analysis of past outcomes from other successful cancer drugs, I am willing to wager that the Phase 3 results will confirm that rida is a safe and effective oral cancer treatment. From all existing data, there is a high probability that rida will obtain FDA approval after initial review. Absent any regulatory delays, rida could be made available for underserved Americans suffering from soft tissue and bone sarcomas by the end of 2010. Fingers crossed.”
Some are not so optimistic. Merriman Curhan Ford issued a SELL rating at the end of July on this one. Also worth note is that the short interest ahead of the data has seen a massive increase from the Mid-July report to the end of July reports. Short sellers had the following short interest based on these settlement dates:
Settlement.. Short Interest
7/31/2009. 4,281,466
7/15/2009. 3,992,899
6/30/2009. 3,480,434
ARIAD does have stock options that trade, but that is nearly of no use because of the $2.00 share price. There is an open interest of over 13,000 contracts for the Jan-2010 $2.50 CALLS. The problem is that these options are thinly traded and at $2.00 a share it already looks and acts like a call option.
It was earlier this month that ARIAD sold shares at $1.75 and raised approximately $35.6 million after underwriting discounts and commissions and estimated expenses when you consider the overallotment shares that were also included. Guess who the lead underwriter was on this offering….. Oppenheimer. Lazard Capital Markets was co-manager.
It was also just in early August that ARIAD announced that its partner had initiated a Phase I/II clinical trial in advanced prostate cancer using its technology:
- Bellicum Pharmaceuticals, Inc. announced dosing of the first patient in a Phase I/II clinical trial of BP-GMAX-CD1, a novel pharmacologically regulated dendritic cell vaccine for the treatment of prostate cancer. The disease-specific trial is being conducted under a Bellicum Investigational New Drug Application allowed by the FDA in 2008.
Shares are up 3.5% at $2.02 mid-day. We have also seen 5.8 million shares trade today, well above the 1.8 million on average. The 52-week trading range is $0.72 to $3.55 and the market cap today is listed as roughly $175 million.
JON C. OGG
BioHealth Companies Keep Raising Cash (MNKD, IDIX, ISPH, ARIA, ONTY, NBY, SOMX, ARNA, OXGN)
The appetite for biotech and emerging pharmaceutical companies to raise cash is almost a never ending line of companies. We have some offerings today and have seen many offerings and filings from companies to offer shares. These are just some of the filings and offerings we have seen.
MannKind Corporation (NASDAQ: MNKD) priced a secondary offering this morning of 7,400,000 shares of its common stock, and while the press release did not say what price the deal came at the syndicate group told us this went out at $7.35 per share. Chairman, CEO, and principal stockholder Alfred E. Mann is purchasing 1,000,000 of these shares from the underwriters, which brought in over $54 million before fees and commissions. MannKind shares are down 9.5% at $7.37. Its 52-week trading range is $2.00 to $9.25.
Idenix Pharmaceuticals Inc. (NASDAQ: IDIX) priced a secondary offering this morning of 7,248,936 shares of common stock at $3.14 per share to clear roughly $22 million before fees and commissions. Its shares are down over 14% at $3.15 today and its 52-week range is $1.86 to $10.10.
Inspire Pharmaceuticals, Inc. (NASDAQ: ISPH) priced a 22.2 million share secondary offering of common stock this morning at a price of $4.50 per share. This raised close to $100 million. Share are down 6% at $4.66 and the 52-week trading range is $1.68 to $5.80.
Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) on Tuesday priced its public offering of 19,000,000 shares of common stock at $1.75 per share; the company said net proceeds after fees and commissions was roughly $30.9 million.
Oncothyreon Inc. (Nasdaq: ONTY) announced on Tuesday that it had obtained commitments from several investors for $15 million in a direct offering. The agreement was to purchase approximately 2.28 million shares of common stock and warrants to purchase approximately 684,000 shares of common stock for gross proceeds of approximately $15.0 million. The company noted that investors agreed to purchase the shares and warrants for $6.5775 per unit with each unit being one share of common stock and a warrant to purchase 0.30 shares of common stock and an exercise price of $6.5775 per share.
NovaBay Pharmaceuticals, Inc. (NYSE: NBY) filed this week with the SEC to offer up to $20,000,000 of any combination of common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon the exercise of warrants. It market cap is a mere $48 million.
Somaxon Pharmaceuticals, Inc. (NASDAQ: SOMX) filed this week to cover for the resale of up to 10,212,750 shares of common stock (roughly $23 million) from time to time for existing security holders and certain transferees of the selling security holders. Roughly 5.1 million of these shares were issued in a private placement that closed on July 8, 2009; the additional 5.1 million shares are issuable upon a warrant exercise sold in the private placement which expire on July 8, 2016. If sold, none of the proceeds go back to NovaBay.
Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) filed on Monday to allow the resale from time to time of up to 28,000,000 shares of common stock by the selling stockholders from a July private placement. We will not receive any of the proceeds from the sale of these shares. If sold, none of the proceeds go back to Arena.
OXiGENE, INC. (NASDAQ: OXGN) filed this week for the resale of up to 10,000,000 shares of common stock from time to time by Symphony ViDA Holdings LLC. This was via an amendment dated as of July 2, 2009. If sold, none of the proceeds go back to OXiGENE.
JON C. OGG
AUGGUST 5, 2009
Cash worries we raised about Ariad now look even worse (ARIA, MRK)
The cash situation we were worried about at Ariad Pharmaceuticals Inc. (Nasdaq: ARIA) looks even worse after its second-quarter earnings report.
Earlier this week, we raised concerns about the cash burn at Ariad that threatened to derail the optimism for early-stage candidates that were igniting a rally in the stock. We warned about the potential of a secondary stock offering, and how that might hurt the stock price.
Now, partner Merck & Co. (NYSE: MRK) does not want to proceed with a Phase III trial of Ariad’s lead candidate in combination with Herceptin in breast cancer patients. As a result, a $27 million milestone payment expected from Merck in the first half of 2010 likely will be delayed, making an already tight cash situation significantly tighter.
The company used up about $19 million in operating activities in the second quarter, more than the $11.7 million average it used in the previous five quarters. Now, the company has about $39.5 million in cash left.
Even at a conservative cash burn, it’s likely enough for only the next three quarters. A secondary offering or some type of cash-raising now appears much more likely.
The company is still moving ahead with its Phase III trial of its lead candidate ridaforolimus for the treatment of sarcoma. Data is expected in the first half of 2010. But now, it appears that Ariad will have to do something to raise cash ahead of that trial data.
Other than a secondary, the company could theoretically get funds if it were to start a partnership for its less-mature candidates such as the investigational compound that showed anti-cancer activity in drug-resistant blood cancer patients earlier this week. But that particular candidate is fairly early stage; prospective partners might want to see more data before jumping in.
Another possibility is that the company taps a credit facility from Merck that could help keep it going, although living on credit probably isn’t likely to inspire much Wall Street confidence. Also, that credit facility only applies to what they are developing in partnership, so it could not be used for other candidates or for general corporate purposes.
Then there’s always a secondary — something that would have been more appealing to the company a few days ago, when the stock was juiced. — Mike Tarsala
Positive Ariad data may soon have Wall Street asking, what's next?
Ariad Pharmaceuticals Inc (Nasdaq: ARIA) shares are up more than 40 percent on on more than 10 times normal volume after it released positive Phase I trial results of an investigational compound that showed anti-cancer activity in drug-resistant blood cancer patients.
Now that the shares are up so strongly, the Street may soon be asking about the next catalyst for the stock.
The trouble is, there doesn’t appear to be one on the horizon for the rest of the calendar year. If there is one, it might be a possible secondary stock offering — something that may be all the more likely now that the shares are worth much more than they were a few hours ago.
Ariad is not in a severe cash crunch. But it has used an average of about $11.7 million a quarter over the past five quarters to fund operating activities. At the end of the first quarter, it had about $50 million in cash on hand, not counting $10 million it was expected to receive in the second quarter.
The trouble is that the company announced on its last earnings conference call that a $27 million milestone payment from partner Merck & Co. (NYSE: MRK) would be delayed until the second half of 2010. All told, the company appears to have enough to wait out its Merck milestone payment, but not very much more.
A secondary offering may help provide a cushion for development of its lead candidate.
The next big data catalyts for Ariad are not expected until 2010, when it begins to show additional data for its lead candidate, called ridaforolimus, a potent mTOR inhibitor for the treatment of solid tumors, including sarcomas.
The company is expected to release a second interim analysis in a Phase III trial in sarcoma patients in the first quarter of 2010. The interim analysis may or may not include clinical data. The company is expected to follow up with trial data later next year.
The Phase I trial Ariad announced today were promising. Of the 23 chronic myeloid leukemia (CML) patients studied, 19 of them in the four highest dosing groups, are still on the drug and are not seeing disease progression.
What is particularly attractive is that all patients were previously treated with other drugs for chronic myeloid leukemia.
With that out of the way, there now could be a data lull ahead. And with the stock more than doubling since March, the February highs near $2.86 may prove to be stubborn share resistance — Mike Tarsala.
Weekend of Cancer and Ocology Data at AACR; semi-preview for ASCO (ALTH, AMGN, ARIA, ARRY, AZN, BIIB, CELG, CRIS, IMMU, IMGN, INFI, MEDX, MNTA, ONCY, PFE, PCYC, SUPG, TELK, THLD)
This weekend will kick off a rather important oncology meeting, and it has a chance of setting the expectations for the highly anticipated ACSO (American Society of Clinical Oncology) annual meeting next month. The American Association for Cancer Research Meeting will take place in Denver, CO. and many of the smaller and larger cancer and disease biotech and drug companies will be presenting data. Amazingly enough, this will be the 100th annual meeting.
Allos Therapeutics, Inc. (NASDAQ: ALTH) will present data from an in vitro study examining the potency of pralatrexate in colon, breast, ovarian, lung, prostate, and head and neck cancer cell lines.
Amgen (NASDAQ: AMGN) had industry news earlier this week about its experimental drug called AMG 479 shows promise against pancreatic cancer. Amgen will also be presenting lung cancer data.
ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) will offer new preclinical data on deforolimus, its investigational mTOR inhibitor, AP24534, its investigational multi-targeted kinase inhibitor, and its investigational anaplastic lymphoma kinase (ALK) inhibitor.
Array BioPharma, Inc. (ARRY) has eighteen abstracts being presented at the meeting and will disclose findings in 7 new anti-cancer programs. Lung and colon cancer data are in these presentations.
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