It's an epic failure for Ariad Pharmaceuticals . Literally.

The company announced that it's canceling a late-stage study called EPIC. This study focused on comparing Ariad's drug Iclusig against Novartis' Gleevec in treating newly diagnosed chronic myeloid leukemia, or CML.

Ariad's decision came after the U.S. Food and Drug Administration placed a clinical hold on patient enrollment for the study last week because a number of patients taking Iclusig developed serious arterial blood clotting. That news caused shares to plunge nearly 80%. The stock sank even further with Friday's study cancellation, with shares down another 40% in early trading.


Is this the end of the road for Ariad? Not necessarily.

Source: Ariad Pharmaceuticals. 

Certainly, many are concerned that these issues could seriously hurt Iclusig's sales -- or even lead to it being pulled from the market. The drug gained approval in December 2012 as a treatment for CML and Philadelphia chromosome positive acute lymphoblastic leukemia, or Ph+ ALL. The FDA gave the green light then more than three months ahead of schedule as part of the agency's accelerated approval program, which required that only a single clinical trial be conducted.

Iclusig already contains a boxed warning that alerts patients and physicians that the drug can lead to blood clots and liver toxicity. Ariad is now working with the FDA to change labeling to reflect the latest safety findings. Neither the company nor the FDA have mentioned any actions beyond label changes.

A key question, though, is whether physicians will now be more reluctant to prescribe Iclusig. There's at least one reason for Ariad to have hope that this won't be the case.

JPMorgan polled 50 hematologists and oncologists after the news broke about the FDA's clinical hold on Inclusig. Most of those contacted don't plan to change prescribing patterns. Based on those results, the investment firm concluded that physicians "may be far less spooked by the safety update than the investor community."

Some of these clinical professionals' reasoning could simply be that there aren't many effective treatments to choose from. Novartis' Gleevec is the primary drug that doctors prescribe for CML. The pharmaceutical company also markets Tasigna as a treatment option for the disease. However, Tasigna isn't without its own safety concerns. The drug carries a black box warning for potential heart problems.

Physicians can also prescribe Sprycel, which is marketed by Bristol-Myers Squibb . Like some of the other CML treatments, though, Bristol's drug also comes with potential safety issues. The FDA issued a safety announcement in 2011 about an increased risk of pulmonary arterial hypertension for patients taking Sprycel.

If JPMorgan's assessment is correct and physicians continue to prescribe Iclusig, it's definitely not the end of the road for Ariad. However, it will without question continue to be a bumpy road for the beleaguered company. If you're an intrepid investor waiting for some kind of rebound for this stock, make sure you have good shock absorbers.

Smoother travels
Ariad's predicament isn't uncommon with smaller biotechs and pharmaceutical companies. That's why diversifying with dividend stocks is a great idea. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article End of the Road for Ariad? originally appeared on Fool.com.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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

Investing Like Warren Buffett

Learn from one of the world's best investors.

View Course »

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »

Add a Comment

*0 / 3000 Character Maximum