February 25, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Cambridge, Mass.-based Ariad Pharmaceuticals, Inc. ’s new president and chief executive officer, Paris Panayiotopoulos, had a chance to bolster investors’ confidence in the company at yesterday’s fourth-quarter financial conference call but it didn’t seem to work. Company dropped about 5 percent shortly after the conference call, although it corrected by end of close.
Ariad’s fourth-quarter financials revealed total yearly revenues of $118.8 million, up from $105.4 million in 2014. That’s good news. But what’s causing the company problems are operating expenses. The company’s total operating expenses for 2015 were $336.1 million, up from $265.6 million in 2014. This resulted in a net loss in 2015 of $231.2 million, much greater than 2014’s loss of $162.6 million.
Investors and analysts were clearly hoping that when Panayiotopoulos gave his presentation, it would include specific plans for the company, particularly in terms of cost-cutting. He did indicate he plans to increase revenues for its only approved cancer drug, Iclusig. His projections were a 75 percent increase, to between $190 million and $200 million from last year’s $112.5 million.
Iclusig is also involved in several clinical trials to expand its clinical indications. Those include the OPTIC-2L trial, a Phase III study in patients with chronic-phase chronic myeloid leukemia (CP-CML) who did not respond to imatinib. It is also currently enrolling patients in the OPTIC trial of Iclusig to evaluate three different doses of the drug in patients with refractory CP-CML.
In addition, Ariad’s commercial partner for Iclusig in Japan and other Asian countries, Otsuka Pharmaceutical Co., Ltd., submitted a new drug application (NDA) to the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) in hopes of getting Iclusig approved for the treatment of resistant or intolerant CML and Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ALL). Results are expected by the end of this year.
Ariad also indicated it will probably increase the drug’s price this year. Marty Duvall, Ariad’s chief commercial officer, said at the conference call, “At this point in time, we have not had pushback from payers regarding the pricing of Iclusig,” although he added, “our emphasis is really going to be on driving demand,” not on hiking prices.
Panayiotopoulos, although not citing specific cost-cutting measures, did repeatedly cite “shareholder value” as a priority. “I’ve made a point to state during each of my meetings with shareholders and industry investors that one of my very first actions would be to embark on a company-wide strategic review aimed at increasing shareholder value,” he said during the conference call.
Although not providing details, Terence Flynn, an analyst at Goldman Sachs asked Panayiotopoulos if he had a scenario where expenses would be lower than last year’s. “I can tell you that it’s very unlikely that it will be higher than 2015,” Panayiotopoulos answered. “We’re looking at reallocating resources to the parts of the business that are going to drive the most value.”
There were also a few hints that the company might consider commercial partnerships or mergers. There have been rumors of a company sale for the last year. What seems to make that a real possibility are a few recent actions.
Alex Denner, a hedge fund manager who was previously a member of Ariad’s board, was appointed chairman of the board in January. The first action the board took after Denner’s appointment was to eliminate its “poison pill” rule, which was designed to fend off takeover attempts. In an interview with CNBC’s Meg Tirrell, Denner said, “Our near-term plan is not to try to sell the company, but I would say that over the long term, Ariad will probably be working with, or be part of, a bigger company.”
Denner is an activist investor who most analysts believe was behind the retirement of Ariad’s founder and former chief executive officer, Harvey Berger. Denner has a reputation for coming into troubled biotech companies and arranging for profitable sales.
