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Ariad Pharmaceuticals, Inc. Q1 Loss Wider than Estimates; Iclusig Grows (ARIA)

Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) reported a first-quarter 2015 loss of 28 cents per share, a penny wider than the Zacks Consensus Estimate and the year-ago loss of 27 cents.

First-quarter revenues shot up 103.6% from the year-ago quarter to almost $24 million but fell short of the Zacks Consensus Estimate of $25.7 million.

The Quarter in Detail

In the reported quarter, Iclusig generated sales of $23.9 million, up 12% sequentially. Iclusig sales were $18.7 million in the U.S., up 10% sequentially. ARIAD intends to launch a lower dose of Iclusig (30 mg) in mid-15.

The company reported revenues of $5.2 million from the EU, up 18% sequentially. The company attributed the increase to strong Iclusig uptake in the EU countries following the completion of the Article 20 review of the drug. In Jan 2015, the European Commission endorsed the Committee for Medicinal Products for Human Use’s recommendation regarding the use of Iclusig for all approved indications in the EU.

On the first-quarter call, ARIAD informed that at the end of the quarter, there were 750 prescribers of Iclusig, up 14% from the preceding quarter. Meanwhile, almost 120 new patients were treated with Iclusig in the U.S. during the first quarter of 2015.

Research & development (R&D) expenses increased 38.1% year over year to $39.4 million. This was primarily due to increased costs related to brigatinib’s ongoing phase II study and new drug application (NDA)-enabling non-clinical studies.

Selling, general & administrative (SG&A) expenses increased 6.2% year over year to $33.6 million. This increase was essentially due to an increase in professional services and other expenses related to the ongoing commercialization of Iclusig in the U.S. and EU as well as other legal and proxy-related matters.

ARIAD is working on studying Iclusig in earlier lines of therapy and is on track to initiate three studies in 2015. In addition to this, ARIAD and Otsuka are working on Iclusig’s NDA in Japan with the filing expected in the second half of 2015.

Meanwhile, ARIAD expects to complete patient enrolment in the ALTA study on brigatinib in the third quarter of 2015. Preliminary data from the study is expected in the second half of 2015 with regulatory filing slated for 2016. Brigatinib is being evaluated for the treatment of patients suffering from locally advanced or metastatic non-small cell lung cancer who have been previously treated with Pfizer Inc. (NYSE:PFE)’s Xalkori.

Our Take

Although ARIAD’s first-quarter loss and revenues failed to surpass expectations, we are encouraged by Iclusig’s steady performance in the U.S. and EU. The launch of Iclusig in additional EU countries should drive sales further.

We expect investor focus to remain on Iclusig’s performance and other pipeline related updates.

ARIAD currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) and Hyperion Therapeutics Inc (NASDAQ:HPTX). Both hold a Zacks Rank #1 (Strong Buy).

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