(Updates with closing shares in sixth paragraph.)
Oct. 18 (Bloomberg) -- Ariad Pharmaceuticals Inc. is working on a new financial plan after increased risks of blood clots stopped a study aimed at expanding use of its only approved drug. The shares sank.
The study, called Epic, was testing Ariad’s Iclusig against Novartis AG’s Gleevec in newly diagnosed chronic myeloid leukemia. Iclusig is still on the market and the company is working with regulators on changing the drug’s labeling to reflect the safety findings, Cambridge, Massachusetts-based Ariad said today in a statement.
“It’s the end of Ariad as we know it,” Mike King, an analyst with JMP Securities, said in a telephone interview today. The risks will relegate Iclusig to “break glass in case of emergency” use only, said King, who predicted the company may fire workers and halt plans to expand its headquarters.
Ariad will work in the next few weeks to put a new financial and operating plan in place, Chief Executive Officer Harvey Berger told analysts and investors on a conference call. It’s premature to discuss the potential for a partnership or sale of the company, he said in response to a question.
“We are working as a team on a substantially revised financial plan that will extend out our cash runway substantially beyond where we are today,” Berger said. “We’re taking a fresh look at every component of our budget, every near- and long-term expenditure,” he said, citing clinical trials, facilities and people.
Ariad plunged 41 percent to $2.67 at the close in New York, extending a record drop that started when the study enrollment was first halted earlier this month. The shares have lost 86 percent this year.
Ariad will focus on opportunities for Iclusig as well as the experimental drug AP26113 in its pipeline, Berger said. The company had $351.9 million in cash, equivalents and marketable securities as of June 30, according to its second-quarter financial statement. Iclusig drew $13.9 million in second- quarter sales.
The company said Oct. 9 that the U.S. Food and Drug Administration had placed a hold on enrollment of all trials of Iclusig because of the increased risks of blood clots. The drug was approved last year for two rare blood cancers based on an accelerated process that relied on a single trial showing it helped patients. Companies that gain accelerated approval must conduct additional study to prove the medicine is effective; further results showed the increased safety risks.
“It’s important to refine the use of the drug as we go,” Timothy Clackson, Ariad’s chief scientific officer, said in a telephone interview. “We believe there are many settings for Iclusig where the drug offers a unique and lifesaving benefit for patients.”
Ariad will make decisions about plans to refocus the company and will discuss those on its third-quarter conference call in November, Clackson said.
Cory Kasimov, an analyst with JPMorgan Chase & Co., downgraded his rating of Ariad stock today to “neutral.”
“After last week’s safety update/implosion, and now this, we can’t in good faith continue to tell people to buy this name,” Kasimov wrote in a research note. We “are stepping to the sidelines until we can get more clarity on the future of this drug.”
--Editors: Angela Zimm, Andrew Pollack