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ARIAD Pharmaceuticals Inc.

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ARIAD reported a narrower-than-expected loss in the third quarter of 2016, while its revenues surpassed estimates. It’s cancer treatment, Iclusig, is performing well - sales should be driven by field team expansion, label expansion, increasing clinical experience and patient retention programs. Importantly, FDA’s full approval of Iclusig, in Nov 2016 was a major positive for the company. Meanwhile, ARIAD finished filing a rolling NDA for its most advanced pipeline candidate, brigatinib in Sep. Moreover, longer-term growth could be driven by AP32788 and new opportunities including immuno-oncology. ARIAD share price has outperformed that of the Drugs market this year. However, we remain concerned about ARIAD’s dependence on a single product, Iclusig, for near-term growth. Additionally, concerns regarding tougher label warnings could remain an overhang. Competition in the oncology market is also high.