Ariad Pharmaceuticals Shares Rise On Upbeat Note

NEW YORK (AP) — Shares of Ariad Pharmaceuticals Inc. rose on Monday even as the broader markets fell after an analyst said the company's lead drug candidate has good prospects.

Bret Holley of Oppenheimer initiated the stock with an "Outperform" rating and a $4 price target, implying he expects shares to more than double from Friday's close of $1.95.

Cambridge, Mass.-based Ariad, which focuses on cancer treatments, has no products on the market. Its lead candidate, which Aria is developing with partner Merck & Co., is indicated for sarcoma. The product is currently in late-stage testing with study data due in the first half of next year.

Holley said that based on strong data in midstage tests, he expects a "good probability" of positive data and eventually marketing approval from the Food and Drug Administration for the drug, called ridaforolimus.

The analyst estimated the drug could eventually bring in annual sales of about $350 million worldwide, and possibly better, based on its testing in other cancers.

"Aria's ridaforolimus partnership with Merck increases our confidence in the drug's ultimate success," Holley noted. "Ridaforolimus is in phase II testing in multiple cancer settings, demonstrating Merck's commitment to the drug. Despite near-term cost concerns, we view the 50/50 partnership positively for Ariad, based on meaningful near-term milestone payments and substantial longer-term revenue upside."