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

August 10, 2009 | About:
10qk

ARIAD Pharmaceuticals Inc. (ARIA) filed Quarterly Report for the period ended 2009-06-30.

Ariad Pharmaceuticals is engaged in the discovery and development of novel pharmaceuticals based on intracellular signaling technology. The Company has established highly integrated capabilities in functional genomics molecular cell biology structure based drug design combinatorial chemistry and pharmacology. The company is developing small-molecule drugs that block signal transduction pathways in cells responsible for osteoporosis and immune and inflammatory diseases. ARIAD Pharmaceuticals Inc. has a market cap of $165.02 million; its shares were traded at around $1.9 with and P/S ratio of 23.3. ARIAD Pharmaceuticals Inc. had an annual average earning growth of 12.1% over the past 5 years.

Highlight of Business Operations:

As of June 30, 2009, we had cash, cash equivalents and marketable securities of $39.5 million, working capital of $17.6 million, deferred revenue of $115.8 million related to non-refundable up-front and milestone payments from Merck, and total stockholders deficit of $88.3 million. On August 7, 2009, we completed an underwritten public offering and sale of 21,850,000 shares of our common stock at $1.75 per share. Estimated net proceeds of this offering, after underwriting discounts and commissions and expenses, are $35.6 million.

Our clinical programs consist of ridaforolimus, our lead product candidate, and AP24534, our kinase inhibitor program. The direct external expenses for ridaforolimus reflect our share of such expenses pursuant to the cost-sharing arrangements of our collaboration with Merck. Direct external expenses for ridaforolimus were $7.5 million in the three-month period ended June 30, 2009, an increase of $3.3 million, as compared to the corresponding period in 2008. This increase is due to an increase in clinical costs of $3.1 million and contract manufacturing costs of $1.1 million, offset in part by a decrease in supporting non-clinical costs of $523,000, and an increase in Merck s share of expenses of $2.9 million in the three-month period ended June 30, 2009, as compared to the corresponding period in 2008. In addition, costs for Merck s services provided to the collaboration increased by $1.3 million in the three-month period ended June 30, 2009, as compared to the corresponding period in 2008 as a result of an increase in Merck s activities under the global development plan. Clinical trial costs and contract manufacturing costs increased due primarily to increasing enrollment in our Phase 3 clinical trial of ridaforolimus in patients with metastatic sarcomas and the initiation of enrollment in Phase 2 clinical trials of ridaforolimus in patients with breast cancer, endometrial cancer, prostate cancer and non-small cell lung cancer. Costs of non-clinical studies decreased due to the completion of toxicology studies of ridaforolimus required to support regulatory filings with the FDA. We expect that our direct external costs for ridaforolimus, net of Merck s share of such costs, will decrease slightly during the remainder of 2009 as no additional Phase 2 or Phase 3 clinical trials are expected to be initiated this year, impacting clinical trial costs as well as the related manufacturing costs for drug product for clinical trial purposes.

General and administrative expenses decreased by $2.2 million, or 32%, to $4.8 million in the three-month period ended June 30, 2009, compared to $7.0 million in the corresponding period in 2008. Professional fees decreased by $2.4 million to $2.3 million in the three-month period ended June 30, 2009, compared to $4.7 million in the corresponding period in 2008, due primarily to reduction in activities and costs related to corporate and commercial development initiatives, and to our patent infringement litigation against Eli Lilly and Company, or Lilly, and Amgen Inc., or Amgen. We expect that our general and administrative expenses will decrease slightly over the remainder of the year, reflecting a decrease in activity related to our patent infringement litigation and certain corporate consulting initiatives.

We reported a loss from operations of $18.5 million in the three-month period ended June 30, 2009 compared to a loss from operations of $17.4 million in the corresponding period in 2008, an increase of $1.1 million, or 6%. We also reported a net loss of $21.0 million in the three-month period ended June 30, 2009, compared to a net loss of $17.3 million in the corresponding period in 2008, an increase in net loss of $3.7 million or 21%, and a net loss per share of $0.24 and $0.25, respectively. We expect that our loss from operations and our net loss will decrease during the remainder of 2009 due to the various factors discussed under “Revenue” and “Operating Expenses” above, including reductions in spending we have implemented in 2009, as noted in Note 1 and under the caption “Liquidity and Capital Resources – Liquidity”, below. Actual losses will depend on the progress of our product development programs, the progress of our discovery research programs, the impact of commercial and business development activities and developments in our legal proceedings, among other factors. The extent of such losses will also depend on the sufficiency of funds on hand or available from time to time, which will influence the amount we will spend on R&D and the development timelines for our product candidates.

Direct external expenses for ridaforolimus were $16.4 million in the six-month period ended June 30, 2009, an increase of $8.2 million, as compared to the corresponding period in 2008. This increase is due to an increase in clinical costs of $8.2 million and contract manufacturing costs of $1.7 million, offset in part by an increase in Merck s share of expenses of $5.4 million in the six-month period ended June 30, 2009, as compared to the corresponding period in 2008. In addition, costs for Merck s services provided to the collaboration increased by $1.9 million in the six-month period ended June 30, 2009, as compared to the corresponding period in 2008 as a result of an increase in Merck s activities under the global development plan. Clinical trial costs and contract manufacturing costs increased due primarily to increasing enrollment in our Phase 3 clinical trial of ridaforolimus in patients with metastatic sarcomas and the initiation of enrollment in Phase 2 clinical trials of ridaforolimus in patients with breast cancer, endometrial cancer, prostate cancer and non-small cell lung cancer.

We reported a loss from operations of $38.5 million in the six-month period ended June 30, 2009 compared to a loss from operations of $34.9 million in the corresponding period in 2008, an increase of $3.6 million, or 10%. We also reported a net loss of $41.2 million in the six-month period ended June 30, 2009, compared to a net loss of $34.3 million in the corresponding period in 2008, an increase in net loss of $6.9 million or 20%, and a net loss per share of $0.50 and $0.49, respectively.

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