Why Ariad Pharmaceuticals Shares Were Annihilated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: The shares of Ariad Pharmaceuticals , a biopharmaceutical company focused on developing therapies to treat acute and chronic forms of leukemia and other hard-to-treat cancers, plunged as much as 77% after updating its clinical development pipeline with regard to leukemia drug Iclusig.

So what: Following a meeting with the Food and Drug Administration, Ariad and the FDA are temporarily halting enrollment in new studies of the drug, and reducing the dosage of patients currently in existing trials, due to an elevated number of serious arterial thrombosis events after a two-year follow-up of patients with Philadelphia chromosome-positive leukemias. Today's clinical hold does not affect the standing of Iclusig as it relates to its late 2012 FDA approval for resistant or intolerant chronic myeloid leukemia (CML) and Philadelphia chromosome-positive acute lymphoblastic leukemia, although the FDA will be issuing a drug safety communication later this week on the drug.


Now what: This clearly isn't good news for shareholders or CML patients, but the potential warning signs have been there since Ariad was approved. If you recall, the FDA placed a black-box warning on Iclusig's packaging in December, because the drug had been shown to cause liver toxicity and arterial thrombosis in more than a handful of patients in trials. Rarely does a drug with high toxicity potential really take off, and it certainly makes it much tougher for Iclusig to expand its indications as it's currently trying to do in trials. I'm keeping my bearish stance on the company, even at these levels, until the data, or Ariad's pipeline, proves otherwise.

Consider following this two revolutionary biotech stocks instead
The best way to play the biotech space is to find companies that shun the status quo and, instead, discover revolutionary, groundbreaking technologies. In the Motley Fool's brand-new FREE report, "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

The article Why Ariad Pharmaceuticals Shares Were Annihilated originally appeared on Fool.com.

Fool contributor  Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle  @TMFUltraLong . Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights  makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

What are Penny Stocks

The lucrative and dangerous world of penny stocks.

View Course »

Goal Setting

Want to succeed? Then you need goals!

View Course »

Add a Comment

*0 / 3000 Character Maximum