Here’s Why JPMorgan Turned Bearish on Ariad Pharmaceuticals, Inc. (ARIA)

Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) shares tumbled nearly 7% today, after J.P. Morgan analyst Anupam Rama turned bearish on the cancer drug maker. The analyst downgraded ARIA from Neutral to Underweight with a $7.00 price target, which reflects a potential downside of 27% from last closing price.

Rama explained, “We do not expect to see resolution of these political / pricing headlines, nor clarity on the appropriate dose for Iclusig in the near term. As a result, on the former point, the reality is that now headlines on drug pricing (related to Iclusig or not) have the potential, at a minimum, for incremental downside risk for ARIA shares. Importantly, on the latter point, the key update from the OPTIC study (assessing the optimal go-forward dosing regimen) is anticipated in 4Q17 (likely at ASH 2017) and we do believe that flat pricing across all dose options will ultimately become a reality, putting ~20%+ of US Iclusig revenues at risk (which we believe may be an underappreciated point by the Street).”

“We note that a central point to the bull thesis for many on the Street has been the strategic attractiveness of the company (source: Bloomberg). That said, while we understand commercial oncology companies have historically been strategically attractiveto big-pharma / biotech and acknowledge that brigatinib is perhaps more central to this is thesis than Iclusig, we DO NOT see a high likelihood of a potential acquirer stepping up in the midst of a congressional inquiry / climate of ongoing pricing scrutiny. Finally, we do not see any clinical catalysts in the next 6-9 months that are not already widely anticipated to be positive by the Street,” the analyst continued.

As usual, we recommend taking analyst notes with a grain of salt. According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Anupam Rama has a yearly average loss of 4.4% and a 35% success rate. Rama is ranked #3538 out of 4190 analysts.

Out of the 6 analysts polled by TipRanks (in the past 3 months), 4 rate Ariad stock a Buy, while 2 recommend a Sell. With a return potential of nearly 63%, the stock’s consensus target price stands at $15.67.


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