$ARIA Can someone remind me of that short thesis again? Favus? Bueller? Anyone?— Colfax (@ColfaxCapital) September 6, 2013I described the Ariad Pharmaceuticals ( ARIA) short thesis in March and it hasn't changed significantly. Shorts continue to believe Iclusig's cardiac and other toxicities will prevent the chronic myeloid leukemia (CML) drug from generating the blockbuster sales already baked into the company's current $4 billion market valuation. Earlier this week, I connected with a couple of institutional investors shorting Ariad for an update. Iclusig total (TRx) script growth is flattening out while new (NRx) scripts are trending down, suggesting Ariad has saturated the T315I CML patient population (third line) and isn't attracting significant numbers of second-line CML patients to Iclusig therapy. Ariad is likely to deliver Iclusig sales this year that meet Street expectations, but next year's consensus sales forecast will come down.
BOSTON ( TheStreet) -- Welcome back to this week's Biotech Stock Mailbag.
Ariad and its supporters are betting on Iclusig becoming the go-to therapy for front line (newly diagnosed) CML patients. To make that happen, the company is conducting the EPIC study, which compares Iclusig to Novartis' ( NVS) Gleevec -- head to head. Ariad shorts believe the EPIC study will fail and may even be stopped early because Iclusig's safety and tolerability will be significantly worse than Gleevec. Recall, 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. Supporting their argument that Iclusig is too toxic for widespread use in CML, the Ariad shorts point to changes made to the EPIC study in July to exclude more patients with pre-existing heart problems. Here's a link to the ClinicalTrials.gov posting for the EPIC study. And here's a link to the restrictions to patient enrollment made in July. Previously, newly diagnosed CML patients were excluded from the EPIC study if they had a heart attack, unstable angina or congestive heart failure within three months prior to enrollment. In July, Ariad extended these enrollment restrictions to six months prior. Ariad also added new exclusion criteria which eliminate CML patients from the EPIC study with 1) a history of ventricular arrhythmia; 2) "Cerebrovascular accident or transient ischemic attack" within 6 months; 3) "any history" of clogged arteries requiring revascularization; and 4) "any history" of blood clots.