This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

I Was Wrong About Ariad Pharma and Here's Why

Stocks in this article: ARIA NVS

CAMBRIDGE, Mass. ( TheStreet) -- I missed the call on Ariad Pharmaceuticals (ARIA). While it's true that no one is right with all their stock picks, it's little comfort because I greatly dislike being wrong and losing money. The only positive that can come out of missing Iclusig's toxicity and getting Ariad wrong is learning from the mistake and trying not to repeat it in the future.

What did I miss with Ariad?

I fell prey to confirmation bias. In general, when you're long a stock, you're more likely to dismiss neutral and negative news and/or spin it positively. The opposite is true when you're shorting a stock. In other words, once you make a decision to buy or short a stock, you tend to see all additional information as confirming your position.

Obviously, investors should try to minimize confirmation bias but one can never completely escape its effects. This is why I like engaging the bear thesis when I'm long. It forces you to rethink or re-evaluate your investment thesis.

There were certainly bits of information about Iclusig's safety profile that in retrospect were more serious than I originally believed. The changes made to the protocol of the phase III front-line EPIC study -- excluding more patients with pre-existing cardiovascular conditions -- was probably the most important signal I overlooked.

I interpreted the changes made to the EPIC study as Ariad trying to get a cleaner test of the "dirty drug" hypothesis. I also felt the changes were not out of line relative to changes made to studies involving similar CML drugs.

Interpreting these changes to the most important Iclusig clinical trial as relatively benign was a mistake. More skepticism was clearly needed.

The lower dose of Iclusig introduced into the "Cortes" study at MD Anderson could have confirmed the elevated safety risk, but again, I saw nothing wrong because competing CML drugs are also often dosed lower than their labels prescribe. The changes made to the "Cortes" study should have given me more pause.

What really threw me, however, was the lack of adverse events reported in the FDA's adverse event database. I assumed if Iclusig's safety risk was really significant, it would have showed up in the FDA database, but it wasn't (yet.) Instead, Iclusig-related adverse events showed up in the long-term followup from patients enrolled in the pivotal PACE study used to get the drug approved. I was looking in the wrong place for clues to Iclusig's safety.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs