This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Ariad Pharma Falls On Weak Leukemia Drug Prescriptions

CAMBRIDGE, Mass. ( TheStreet) -- Ariad Pharmaceuticals (ARIA - Get Report) has been hit with a wave of selling in the past two weeks tied to investor concerns about the commercial launch of the company's leukemia drug Iclusig. The selling has erased all the gains made in the Ariad since the beginning of the year.

For the past two weeks, Iclusig scripts have been soft, up 8% for the week ended March 8 and down 17% for the week ended March 15, according to IMS Health. Say what you will about the reliability and meaningfulness of a week's worth of prescription data, but Wall Street follows this stuff closely. A down week in scripts for a drug like Iclusig -- with high sales expectations already baked into Ariad's $3.4 billion market valuation -- raises alarm bells.

Ariad shares have closed in the red for eight straight trading days -- a streak that finally appears to be ending Wednesday. Still, Ariad is down 17% during this time period.

I spoke with a healthcare investor Wednesday who's short Ariad and believes the stock is still significantly over-valued because Iclusig's peak sales will never match current expectations. On average, analysts are projecting Iclusig sales to grow from $47 million in 2013 to $611million in 2016.

According to this fund manager's checks with doctors, Iclusig is being prescribed primarily for the small percentage of chronic myeloid leukemia (CML) patients no longer treatable with first generation ( Novartis' (NVS - Get Report) Gleevec) and second-generation (Novartis' Tasigna and Bristol-Myers Squibb's (BMY - Get Report) Sprycel) drugs. The small number of CML patients with the T315I mutation -- specifically targeted by Iclusig -- are also receiving the drug.

Ariad's efforts to position Iclusig as a first or second-line CML treatment -- necessary to capture enough market share to meet sales expectations -- are failing because of the drug's significant side effects, the fund manager believes.

"Iclusig is a dirty drug. Patients get all of the toxicities of the competing CML drugs without any meaningful improvement in efficacy," he said.

FDA approved Iclusig with a black box warning alerting doctors to watch for blood clots that have caused fatal heart attacks and strokes, and liver toxicity including reports of liver failure and death.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ARIA $6.41 0.00%
BMY $67.01 0.00%
NVS $85.24 0.00%
AAPL $118.30 0.00%
FB $104.24 0.00%


Chart of I:DJI
DOW 17,719.92 -78.57 -0.44%
S&P 500 2,080.41 -9.70 -0.46%
NASDAQ 5,108.6660 -18.8590 -0.37%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs