ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) today reported financial results for the third quarter of 2013, including revenue from Iclusig ® (ponatinib). The Company also announced actions it is taking to reduce cash used in operations over the next two years and to better align its resources to areas of narrowed strategic focus. The plan includes a previously disclosed reduction of approximately 40 percent of the Company’s U.S. workforce. “Following recent corporate developments, we have taken swift action to significantly reduce operating expenses and extend our cash runway,” said Harvey J. Berger, M.D., chairman and chief executive officer of ARIAD. “Additionally, we have refocused and reprioritized our investments around near-term, shareholder-value creating activities. Taken together, we have extended our cash runway to mid-2015, while supporting the ongoing European commercialization of Iclusig, further development of Iclusig in patients with refractory Philadelphia-chromosome positive (Ph+) leukemias, advancement of AP26113 into a pivotal trial, and designation of our next clinical development candidate.” 2013 Third Quarter Financial Results Product Revenues Net sales of Iclusig were $16.7 million for the quarter ended September 30, 2013. We currently use the sell-through method of accounting for recognition of product revenues. As of September 30, 2013, we had deferred revenue of $4.9 million in the U.S., representing Iclusig inventory at specialty pharmacies and specialty distributors, which had not yet shipped to the end customer. In addition, in the quarter ended September 30, 2013, we shipped $2.9 million of Iclusig to patients in France through Autorisation Temporaire d’Utilisation (ATU), or Temporary Authorization for Use. Shipments under the French ATU will be recorded as revenue when the list price in France is determined, which we anticipate will now occur in the first quarter of 2014. Net Loss Net loss for the quarter ended September 30, 2013 was $66.3 million, or $0.36 per share, compared to net loss of $53.2 million, or $0.32 per share, for the same period in 2012.
Research and development expenses increased by $6.3 million from the third quarter of 2012 to the third quarter of 2013, predominantly reflecting costs to support clinical development activities for Iclusig and AP26113.Selling, general and administrative expenses increased by $22.9 million from the third quarter of 2012 to the third quarter of 2013, reflecting investment in the commercial launch of Iclusig in the U.S. and Europe, and related activities. Cash Position As of September 30, 2013, cash, cash equivalents and marketable securities totaled $294.4 million, compared to $351.9 million at June 30, 2013. Updated Financial Guidance Taking into account our previously announced U.S. workforce reduction and other actions we are taking to reduce operating expenses, we now anticipate cash used in operations in 2013 of $240 million to $245 million, compared to our previous range of $245 million to $255 million. We expect research and development expenses of $175 million to $180 million and selling, general and administrative expenses of $150 million to $155 million for 2013. We now expect cash, cash equivalents and marketable securities at December 31, 2013 in the range of $215 million to $220 million. Our revised operating plan reflects our goal of reducing operating expenses and extending our cash runway while prioritizing the Company’s resources and investments to focus on shareholder-value creation. Based on our revised operating plan, we expect significant reductions in operating expenses in all major departments, including reductions in costs related to:
- Marketing and commercial distribution of Iclusig in the U.S. so long as such activities remain suspended,
- Development and manufacturing activities for Iclusig (specifically reductions related to discontinuation of the EPIC trial and certain other trials) and AP26113,
- Discovery research, and
- General and administrative activities due to the reduction in overall business activities.
Strategic Areas of FocusWe have prioritized the Company’s resources and investments to focus on shareholder-value creation in the following areas:
- Re-start of marketing and commercial distribution of Iclusig in the U.S. through revision of the U.S. prescribing information and implementation of a risk mitigation strategy.
- Commercialization of Iclusig in 15 European countries, based on staged achievement of pricing and reimbursement approvals in each country.
- Focused clinical development of Iclusig in patients with refractory Ph+ leukemias, gastrointestinal stromal tumors, and certain other cancers.
- Advancement of AP26113 to a pivotal Phase 2 trial in ALK+ non-small cell lung cancer patients who are resistant to crizotinib. This trial is expected to begin in the first quarter of 2014 upon confirmation of the safety and efficacy profile of the selected dose of AP26113 in the ongoing Phase 1/2 trial.
- Important clinical data presentations on Iclusig and AP26113 at major medical meetings, including the American Society of Hematology in December 2013 and the American Society of Clinical Oncology in June 2014.
- Nomination of a potential best-in-class development candidate in the second half of 2014 by virtue of focusing our core drug-discovery expertise.
- 55th Annual Meeting of the American Society of Hematology (ASH), New Orleans, December 7 to 10, 2013.
|ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|In thousands, except per share data||Three Months Ended September 30,||Nine Months Ended September 30,|
|Product revenue, net||$||16,658||$||---||$||36,956||$||---|
|Cost of product revenue||415||---||913||---|
|Research and development||45,145||38,822||127,076||107,021|
|Selling, general and administrative||37,395||14,482||108,977||37,994|
|Total operating expenses||82,955||53,304||236,966||145,015|
|Other income (expense), net||(6)||6||18||(15,888||)|
|Provision for income taxes||110||---||255||--|
|Net loss per common share:|
|-- basic and diluted||$||(0.36||)||$||(0.32||)||$||(1.09||)||$||(0.98||)|
|Weighted-average number of shares of common stock outstanding:|
|-- basic and diluted||185,238||166,296||182,859||164,378|
|CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION|
|In thousands||September 30, 2013||December 31, 2012|
|Cash, cash equivalents and marketable securities||$||294,443||$||164,414|
|CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS INFORMATION|
|In thousands||Nine Months Ended September 30,|
|Net cash used in operating activities||$||(170,313||)||$||(112,590||)|
|Net cash provided by (used in) investing activities||23,243||(69,024||)|
|Net cash provided by financing activities||312,157||16,977|
|Effect of exchange rates on cash||(30)||---|
|Net increase (decrease) in cash and cash equivalents||$||165,057||$||(164,637||)|