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ARIAD Pharmaceuticals Inc. Reports Operating Results (10-K)

February 29, 2012 | About:
10qk

10qk

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ARIAD Pharmaceuticals Inc. (ARIA) filed Annual Report for the period ended 2011-12-31.

Ariad Pharma has a market cap of $2.32 billion; its shares were traded at around $14.35 with and P/S ratio of 13.

Highlight of Business Operations:

We recorded total revenue of $25.3 million for the year ended December 31, 2011, compared to $179.0 million for the year ended December 31, 2010. Total revenue in 2011 consisted primarily of a $25 million milestone payment received pursuant to our License Agreement with Merck for the acceptance of an application for regulatory approval in Europe of ridaforolimus for the sarcoma indication. Total revenue in 2010 consisted of license and collaboration revenue of $174.5 million and service revenue of $4.5 million. License and collaboration revenue in 2010 included the $50 million up-front payment and a $12.8 million payment for our share of ridaforolimus costs incurred from January 1, 2010 to May 4, 2010 from Merck pursuant to the terms of the License Agreement. License and collaboration revenue in 2010 also included $111.5 million representing the recognition in 2010 of revenue deferred as of December 31, 2009 under our accounting for the Collaboration Agreement, which was recognized upon execution of the License Agreement. Service revenue of $4.5 million in the year ended December 31, 2010 consisted of transition services that we provided to Merck pursuant to the License Agreement.

We reported a loss from operations of $76.8 million in 2011 compared to income from operations of $104.9 million in 2010, an increase in loss of $181.7 million. This change is due primarily to the decrease in revenue as a result of the accounting impact of the License Agreement entered into with Merck in May 2010 and the increase in operating expenses discussed above. We also reported a net loss of $123.6 million in 2011 compared to net income of $85.2 million in 2010, an increase in net loss of $208.8 million reflecting the change in loss from operations noted above plus the revaluation of the warrant liability. We expect that our loss from operations will increase in 2012 due to expected increases in research and development expenses and general and administrative expenses as described above. Our actual results of operations for 2012 will depend on a number of factors, including the status of regulatory reviews and timing of potential regulatory approvals of our product candidates, the costs to prepare for potential commercial launch of ponatinib in the United States and in Europe, the progress of our product development programs, the progress of our discovery research programs, the receipt of milestone payments, the exercise of warrants, and changes in the valuation of our warrant liability, among other factors. The extent of operating losses in future years may also depend on the sufficiency of funds on hand or available from time to time, which will influence the amount we will spend on operations and capital expenditures as well as the development timelines for our product candidates.

We recorded total revenue of $179.0 million for the year ended December 31, 2010, compared to $8.3 million for the year ended December 31, 2009. Total revenue in 2010 consisted of license and collaboration revenue of $174.5 million and service revenue of $4.5 million. License and collaboration revenue in 2010 included the $50 million up-front payment and a $12.8 million payment for our share of ridaforolimus costs incurred from January 1, 2010 to May 4, 2010 from Merck pursuant to the terms of the License Agreement. License and collaboration revenue in 2010 also included $111.5 million representing the recognition in 2010 of revenue deferred as of December 31, 2009 under our accounting for the Collaboration Agreement, which was recognized upon execution of the License Agreement. Service revenue of $4.5 million in the year ended December 31, 2010 consisted of transition services that we provided to Merck pursuant to the terms of the License Agreement.

We reported income from operations of $104.9 million in 2010 compared to a loss from operations of $72.0 million in 2009, an increase in income of $176.9 million. The increase in income from operations was primarily due to the recognition of approximately $174 million in license and collaboration revenue as a result of the accounting impact of the License Agreement entered into with Merck in May 2010, and a decrease in our share of the costs of development of ridaforolimus. We also reported net income of $85.2 million in 2010 compared to a net loss of $80.0 million in 2009, an increase in net income of $165.2 million. The increase in income was largely due to the impact of the License Agreement with Merck, offset in part by the revaluation of our warrant liability described above.

On February 25, 2009, we sold 14,378,698 shares of our common stock in a registered direct offering to institutional investors, at a purchase price of $1.69 per share, resulting in net proceeds after fees and expenses of $22.8 million. The investors also received warrants to purchase an additional 10,784,024 shares of our common stock exercisable at a price of $2.15 per share in cash or pursuant to the net exercise provisions of the warrants. The warrants became exercisable on August 25, 2009 and expired on February 25, 2012. In the year ended December 31, 2010, 1,220,414 warrants were exercised for proceeds to us of $2.6 million. In the year ended December 31, 2011, 3,757,767 warrants were exercised for proceeds to us of approximately $8.1 million. Prior to exercise, the warrants were recorded at fair value, with the adjustment to carrying value recognized in earnings upon exercise. The sum of the fair value of the exercised warrants and the proceeds received were credited to additional paid-in-capital and totaled $25.0 million and $4.7 million for the years ended December 31, 2011 and 2010, respectively. At December 31, 2011, there were 5,805,843 warrants outstanding which were exercised in January and February 2012 for proceeds to us of approximately $12.5 million.

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