Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) reported financial results for the second quarter and first half of 2016, including revenue from sales of Iclusig® (ponatinib). The Company also provided an update on corporate developments.

“We had a strong second quarter, during which we initiated a rolling NDA submission for brigatinib based on our data from the ALTA pivotal trial, presented four-year data from the PACE clinical trial for Iclusig, and advanced AP32788 for EGFR/HER2 exon 20 non-small cell lung cancer patients into a Phase 1/2 trial,” said Paris Panayiotopoulos, president and chief executive officer of ARIAD. “We also strengthened our financial position through our agreement with Incyte and the strong sales performance of Iclusig. Our teams are focused on Iclusig growth, preparations for the potential launch of brigatinib in the U.S. and driving forward our promising pipeline.”

Financial Results for the Quarter and Six Months Ended June 30, 2016

Revenue

  • Net product revenue from sales of Iclusig were $65.3 million for the second quarter of 2016, compared to $27.8 million in the second quarter of 2015; and $99.0 million for the first half of 2016, compared to $51.7 million for the first half of 2015. Net product revenue in the quarter and six months ended June 30, 2016 includes one-time revenue of approximately $25.5 millionrelated to cumulative shipments of Iclusig in France that were recorded upon obtaining pricing and reimbursement approval in May 2016.
    • U.S. sales of Iclusig were $32.6 million for the second quarter of 2016, compared to$21.7 million in the second quarter of 2015, representing growth of 50 percent; and$57.6 million for the first half of 2016, compared to $40.4 million for the first half of 2015, representing growth of 43 percent.
  • European sales of Iclusig were $32.7 million for the second quarter of 2016, compared to $6.1 million in the second quarter of 2015, representing growth of 436 percent; and $41.4 million for the first half of 2016, compared to $11.3 million for the first half of 2015, representing growth of 266 percent. European sales for the second quarter of 2016 included the one-time French revenue of $25.5 million noted above and approximately $7.2 million of product revenue in the first two months of the second quarter of 2016. On June 1, 2016, ARIAD out-licensed the rights to Iclusig in Europe to Incyte Corporation (Incyte). From June 1, 2016, ARIAD records royalty revenue based on tiered royalty rates from Iclusig sales in Europe recognized by Incyte.

GAAP and Non-GAAP Net Income (Loss)

GAAP net income for the quarter ended June 30, 2016 was $109.8 million, or $0.57 and $0.56 per basic and diluted share, respectively, compared to GAAP net loss of $63.2 million, or $0.33 loss per basic and diluted share, for the quarter ended June 30, 2015. GAAP net income for the six months ended June 30, 2016 was $56.1 million, or $0.29 per basic and diluted share, compared to GAAP net loss of $115.8 million, or $0.62 loss per basic and diluted share, for the six months ended June 30, 2015. During the 2016 periods, the Company recorded $128.7 million of gain related to the Incytetransaction under other income (expense) related to closing the sale of the Company’s European operations and out-license of Iclusig rights in Europe.

Non-GAAP net income for the quarter ended June 30, 2016 was $114.1 million, or $0.59 per diluted share, compared to non-GAAP net loss of $52.5 million, or $0.28 per diluted share for the quarter ended June 30, 2015. Non-GAAP net income for the six months ended June 30, 2016 was $69.9 million, or $0.36 per diluted share, compared to non-GAAP net loss of $96.8 million, or $0.51 per diluted share, for the six months ended June 30, 2015.

Non-GAAP net loss excludes stock-based compensation, restructuring charges for a reduction in force in March 2016 and transaction costs for the Incyte transaction. See “Use of Non-GAAP Financial Measures” below for a description of non-GAAP financial measures and the reconciliation between GAAP and non-GAAP measures at the end of this press release.

Operating Expenses

  • R&D expenses were $42.9 million for the second quarter of 2016, an increase of $4.2 million or 10.6 percent, compared to $38.7 million for the second quarter of 2015. R&D expenses were$86.9 million for the first half of 2016, an increase of $8.7 million or 11.2 percent compared to$78.2 million for the first half of 2015.
  • Selling, general and administrative expenses were $34.2 million for the second quarter of 2016, a decrease of $14.4 million or 29.6 percent, compared to $48.6 million for the second quarter of 2015. Selling, general and administrative expenses were $70.2 million for the first half of 2016, a decrease of $12.0 million or 14.5 percent, compared to $82.2 million for the first half of 2015.

Other income (expense), net

  • For the second quarter and half year ended 2016, other income (expense), net includes a recorded gain on the Incyte transaction of $128.7 million.

Cash Position

  • As of June 30, 2016, cash, cash equivalents and marketable securities totaled $278.5 million, compared to $168.3 million at March 31, 2016 and $242.3 million at December 31, 2015.

Recent Progress and Key Objectives

Business Development

  • On June 1, 2016, ARIAD completed the sale of its European operations to Incyte Corporation, as well as an exclusive license under which Incyte will commercialize Iclusig in Europe and other select countries. ARIAD received approximately $140 million at the closing and will receive 32-50 percent of European net sales going forward.
  • ARIAD also completed two distribution agreements for Iclusig outside of the U.S. In Latin America, our agreement with Pint Pharma International S.A. covers Argentina, Brazil, Chile, Colombia andMexico. In the Middle East and North Africa (MENA), our agreement with Biologix FZCo. coversSaudi Arabia, the Gulf Coast countries, Lebanon, and selected other countries in the region. Under these agreements ARIAD will receive more than 50 percent of Iclusig net sales moving forward.

Iclusig

  • Long-term safety and efficacy data from the PACE clinical trial were presented in June at theEuropean Hematology Association (EHA) meeting. The study shows that Iclusig continued to demonstrate anti-leukemic activity in chronic phase chronic myeloid leukemia (CP-CML) patients treated with Iclusig, with a median follow-up of 4.0 years. Additionally, 96 percent of CP-CML patients who underwent Iclusig dose reductions while in response maintained their responses (major cytogenetic response [MCyR]) at the four-year time point.
  • ARIAD has submitted the four-year PACE data to the FDA and other health authorities as a label supplement, with an FDA action date in the fourth quarter of this year.
  • Patient enrollment is ongoing in the OPTIC and OPTIC-2L clinical trials in patients with resistant CP-CML.
  • Otsuka Pharmaceutical Co., Ltd. (Otsuka) submitted a new drug application (NDA) to theJapanese Pharmaceuticals and Medical Devices Agency (PMDA) seeking approval for Iclusig for the treatment of resistant or intolerant chronic myeloid leukemia (CML) and Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ALL). This marketing application was submitted in early 2016, with an anticipated action date in third quarter 2016, and reimbursement and launch expected in late 2016 or early 2017.

Brigatinib

  • ARIAD initiated the New Drug Application (NDA) submission for brigatinib to the FDA for patients with ALK+ non-small cell lung cancer (NSCLC) who are resistant to crizotinib. The Company will be seeking accelerated approval for brigatinib from the FDA and plans to request a priority review of the application. We anticipate completion of the rolling submission in the third quarter of this year.
  • Clinical data from the Phase 2 ALTA trial of brigatinib were the subject of an oral presentation at the annual meeting of the American Society of Clinical Oncology (ASCO). The data show that, of patients on the 180 mg regimen (Arm B) with a median follow-up of 8.3 months, 54 percent achieved a confirmed objective response, the trial’s primary endpoint. In this arm, the median progression free survival (PFS) exceeded one year (12.9 months) in this post-crizotinib setting. Additionally, a 67 percent confirmed intracranial objective response rate (ORR) was achieved in patients with measurable brain metastases.
  • Other brigatinib data presented at ASCO included more mature efficacy and safety data from the long-term Phase 1/2 trial follow-up, with median time on treatment now at 17 months in ALK+ NSCLC patients and the longest time on treatment now more than 3.5 years. Also, clinical data were presented from molecular analysis of ALK+ NSCLC patients in both the ALTA and Phase 1/2 trials, showing confirmed responses in patients with different secondary ALK mutations, including one G1202R case. There are no currently approved ALK treatments that have demonstrated activity against the G1202R mutation.
  • The ALTA 1L randomized, front-line clinical trial of brigatinib opened to patient enrollment in early April and patient enrollment is underway. This global, Phase 3 trial is designed to compare brigatinib and crizotinib in patients with ALK+ NSCLC who have not received prior ALK inhibitors. Full enrollment is expected in 2018.
  • In the U.S. an Expanded Access Program is now open to provide brigatinib access to eligible patients with ALK+ NSCLC who are resistant or intolerant to at least one prior ALK TKI. In Europe, an Early Access Program is being established.

Advancing the Pipeline

  • At ARIAD’s Analyst and Investor Day in June, the Company detailed its decision to invest in potential new opportunities in immuno-oncology, which leverages its core competency in kinase inhibitors for precision therapies to explore the potential for small molecules in immuno-oncology. ARIAD has achieved genetic and pharmacologic validation on an initial target kinase, with the program anticipated to enter lead optimization by the end of 2016.
  • The Phase 1/2 trial of ARIAD’s investigational kinase inhibitor AP32788 is now enrolling patients at multiple sites in the U.S. AP32788 targets tumors driven by EGFR or HER2 kinases and was designed to achieve selective inhibition of exon 20 mutations in these kinases. ARIAD estimates that there are approximately 6,000 patients in the U.S. living with EGFR exon 20 or HER2 point mutations.

Upcoming Medical Meetings

  • European School of Haematology (ESH)/ International Chronic Myeloid Leukemia Foundation(iCMLf), Houston, September 15 to September 18, 2016
  • European Society for Medical Oncology (ESMO), Copenhagen, Denmark, October 7 to October 11, 2016
  • Japanese Society of Hematology (JSH), Yokohama City, Japan, October 13 to October 15, 2016. (Original Source)

Shares of Ariad are up nearly 5% to $8.86 in pre-market trading. ARIA has a 1-year high of $10.07 and a 1-year low of $4.37. The stock’s 50-day moving average is $7.63 and its 200-day moving average is $6.73.

On the ratings front, Ariad has been the subject of a number of recent research reports. In a report issued on July 5, JMP analyst Michael King maintained a Buy rating on ARIA, with a price target of $9, which represents a potential upside of 6.9% from where the stock is currently trading. Separately, on June 22, Jefferies Co.’s Eun Yang maintained a Buy rating on the stock and has a price target of $13.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Michael King and Eun Yang have a total average return of -2.6% and -0.9% respectively. King has a success rate of 47.7% and is ranked #3231 out of 4087 analysts, while Yang has a success rate of 58.5% and is ranked #3059.

The street is mostly Bullish on ARIA stock. Out of 6 analysts who cover the stock, 4 suggest a Buy rating , one suggests a Sell and one recommends to Hold the stock.

ARIAD Pharmaceuticals, Inc. operates as an oncology company which engages in the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. Its products includes Iclusig (ponatinib), Brigatinib (previously known as AP26113), and AP32788.