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

March 15, 2011 | About:

ARIAD Pharmaceuticals Inc. (NASDAQ:ARIA) filed Annual Report for the period ended 2010-12-31.

Ariad Pharmaceuticals Inc. has a market cap of $733.4 million; its shares were traded at around $5.78 with a P/E ratio of 8.1 and P/S ratio of 4.1. Ariad Pharmaceuticals Inc. had an annual average earning growth of 1.5% over the past 10 years.

Highlight of Business Operations:

Under the terms of the Collaboration Agreement, Merck paid us an initial up-front payment of $75 million in July 2007, and agreed to pay up to $652 million in milestone payments, of which $53.5 million had been paid up to May 4, 2010, based on the successful development of ridaforolimus in multiple potential cancer indications, and achievement of specified product sales thresholds. Merck had also agreed to provide us with up to $200 million in interest-bearing, repayable, development cost advances to cover a portion of our share of global costs, after we had paid $150 million in global development costs and had obtained regulatory approval to market ridaforolimus from the FDA in the United States or similar regulatory authorities in Europe or Japan.

Under the License Agreement, Merck paid us an initial up-front fee of $50 million in May 2010 and has agreed to pay us up to $514 million in regulatory and sales milestone payments, based on the successful development of ridaforolimus in multiple potential cancer indications and upon achievement of specified product sales thresholds. These potential milestone payments include up to $65 million associated with potential regulatory filings and approvals for the sarcoma indication, for which we announced positive Phase 3 results in January 2011 and for which Merck has indicated its intention to file for marketing approval in 2011 (consisting of $25 million for acceptance of filing of a new drug application by the FDA, $25 million for marketing approval in the United States, $10 million for marketing approval in Europe, and $5 million for marketing approval in Japan), up to $249 million associated with potential regulatory filings and approvals for other cancer indications, and up to $200 million associated with the achievement of certain sales thresholds. These milestone payments replace the remaining unpaid milestone payments provided for in the Collaboration Agreement.

Pursuant to this License Agreement, in addition to the $50 million up-front payment from Merck, we have also received from Merck approximately $12.8 million for its share of costs incurred in the period from January 1, 2010 to May 4, 2010 related to development, manufacture and commercial activities for ridaforolimus in accordance with the cost-sharing provisions of the Collaboration Agreement as in effect during that period.

The agreement provides for the payment by Medinol to us of up to $39.3 million, which includes an upfront license fee and payments based upon achievement of development, regulatory and commercial milestones, if two products are developed. Through December 31, 2010, we have received $750,000 under the agreement. In addition, we are eligible to receive tiered single-digit royalties based on various minimum levels of stents or other medical devices sold under the agreement. As of December 31, 2010, no products have been approved by regulatory authorities for sale under this agreement.

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