Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) released yesterday morning the FDA’s decision approving the firm’s pipeline drug Iclusig (ponatinib), used in the treatment of chronic myeloid leukemia (CML) and Ph+ Acute lymphoblastic leukemia (ALL), as well as a label update. The full approval and label update follow 48 months of long-term follow-up data form the pivotal Phase II PACE trial, presented at the 2016 American Society of Clinical Oncology Meeting (ASCO) and the European Hematology Association (EHA) Meeting.

On the basis that shares are fairly valued, JMP analyst Michael King reiterates a Market Perform rating on shares of ARIA without listing a price target.

After four years of study, the biotech firm’s drug indicates to be well-tolerated, and progression-free survival (PFS) circles 56% with four-year overall survival (OS) approximately 77%.

King asserts, “We believe ARIAD is still an investable name, not only for Iclusig but for the pipeline as well, although time will need to pass before investors are comfortable returning to the name. In the company’s defense, it is undertaking two Phase III trials (OPTIC and OPTIC-2L) with the objective of proving superiority in head-to-head trials against Gleevec (imatinib) and Tasigna (nilotinib). If successful, the trial results could potentially justify an even greater premium than Iclusig currently carries vs. the competition.”

However, the drawback lies in timing, as the data read-out for OPTIC is not due until December 2017, with OPTIC-2L not anticipated for release until December 2022, as discussed by clinicaltrials.gov.

“Finally, additional data regarding the company’s third proprietary drug candidate, AP32788 (‘788), should become available during 2017. While we are excited about this molecule and foresee a potential fast track to approval in certain forms of Exon 20 mutated NSCLC, we are dubious as to investors’ willingness to ascribe value to this asset. For the time being, we would step aside until the current situation is clarified,” King contends.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, three-star analyst Michael King is ranked #1,834 out of 4,241 analysts. King has a 46% success rate and earns 1.2% in his annual returns. When recommending ARIA, King yields 3.5% in average profits on the stock.

TipRanks analytics demonstrate ARIA as a Buy. Out of 9 analysts polled by TipRanks in the last 3 months, 5 are bullish on ARIAD stock, 2 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 7%, the stock’s consensus target price stands at $12.79.

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