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

August 09, 2012 | About:

10qk

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ARIAD Pharmaceuticals Inc. (ARIA) filed Quarterly Report for the period ended 2012-06-30.

Ariad Pharmaceuticals, Inc. has a market cap of $3.1 billion; its shares were traded at around $19.1 with and P/S ratio of 122.4.

Highlight of Business Operations:

We recorded total revenue of $318,000 in the three-month period ended June 30, 2012, compared to $66,000 in the corresponding period in 2011. Total revenue in 2012 consisted of license revenue pursuant to a license agreement related to our ARGENT technology in accordance with our revenue recognition policy. Total revenue in 2011 consisted of license revenue of $39,000 pursuant to a license agreement related to our ARGENT technology and service revenue of $27,000, reflecting services provided to Merck pursuant to our license agreement for ridaforolimus. For the remainder of 2012, we expect to record limited licensing revenue and no service revenue. We cannot predict the timing or amount of any future revenue under our license agreement with Merck.

General and administrative expenses increased by $6.0 million, or 97 percent, to $12.2 million in the three-month period ended June 30, 2012, compared to $6.2 million in the corresponding period in 2011. This increase was due primarily to an increase in personnel costs of $2.2 million due primarily to an increase in number of employees to support expanding business activities and to prepare for potential commercial launch of ponatinib, salary increases, a newly instituted cash bonus program and an increase in recruiting costs; an increase in professional services of $2.1 million as a result of an increase in corporate and commercial development initiatives to plan and prepare for the potential commercial launch of ponatinib; an increase in stock-based compensation expense of $0.9 million due to the impact of a significant increase in the market value of our common stock on the value of stock-based compensation awards in 2011 and 2012; as well as an increase in travel costs, insurance costs and other miscellaneous costs. We expect that general and administrative expenses will continue to increase in 2012 as we prepare for potential commercial launch of ponatinib in the United States and in Europe, including the hiring of sales, marketing and commercial operations personnel and the establishment of our European headquarters and operations, and support our expanding research and development activities.

We recorded total revenue of $399,000 in the six-month period ended June 30, 2012, compared to $122,000 in the corresponding period in 2011. Total revenue in 2012 consisted of license revenue pursuant to license agreements related to our ARGENT technology in accordance with our revenue recognition policy. Total revenue in 2011 consisted of license revenue of $39,000 and service revenue of $83,000, reflecting services provided to Merck pursuant to our license agreement for ridaforolimus.

We manage our marketable securities portfolio to maintain liquidity for payment of our obligations and to enhance yields. We purchase marketable securities to enhance our yield on invested funds and when such amounts are not needed for near-term payment of obligations. We generally hold our marketable securities to maturity. Upon maturity of such marketable securities, a portion may be retained as cash to provide for payment of current obligations while the remainder will be reinvested in accordance with our investment policy. For the six-month period ended June 30, 2012, we made purchases of marketable securities in the amount of $89.6 million. For the six-month period ended June 30, 2011, there were no purchases or sales of marketable securities.

The net cash used in operating activities is comprised of our net losses adjusted for non-cash expenses, changes in deferred revenue, and working capital requirements. As noted above, our net loss for the three and six-month periods ended June 30, 2012 increased by $3.5 million and $21.5 million, respectively, as compared to the corresponding periods in 2011, due primarily to the overall increases in operating expenses, offset in part by decreases in charges related to the revaluation of our warrant liability. Our net cash used in operating activities increased by $19.4 million and $32.7 million, respectively, in the three and six-month periods ended June 30, 2012 as compared to the corresponding periods in 2011, reflecting overall increases in operating expenses and changes in working capital. As noted above, we expect that we will continue to incur a net loss through the remainder of 2012 due to ongoing development of our product candidates and preparation for potential commercialization of ponatinib in the United States and Europe; and that our investment in property and equipment will increase in 2012 to support growth of our R&D and general and administrative functions.

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