LCI Lannett CO

Ariad Pharmaceuticals, Inc. (ARIA) reported fourth quarter loss of 36 cents per share, compared with the year-ago loss of 23 cents per share. The Zacks Consensus Estimate for the fourth quarter was in line with the company’s report.

The company’s fourth quarter 2012 revenues decreased 5.2% to $0.07 million much below the Zacks Consensus Estimate of $1 million.

Research and development (R&D) expenses climbed 52.5% to $37.6 million in the final quarter of 2012. The increase was attributable to the company’s efforts to develop its pipeline. General and administrative (G&A) expenses jumped 227.1% to $22.9 million in the fourth quarter of 2012. The massive increase was primarily attributable to the expenses incurred by the company in preparation of the launch of Iclusig.

We note that in Dec 2012, the US Food and Drug Administration (FDA) granted accelerated approval to Iclusig (ponatinib) for use in heavily pretreated patients, suffering from resistant and refractory chronic myeloid leukemia (CML) and Philadelphia chromosome-positive acute lymphoblastic leukemia (Ph+ ALL).

Full year 2012 loss was $1.24 per share, wider than the year-ago loss of $0.58 per share, but narrower than the Zacks Consensus Estimate of a loss of $1.33 per share. Full year revenues came in at approximately $0.6 million compared with $25.3 million in 2011. The Zacks Consensus Estimate for the full year was $1 million.

2013 Guidance

Apart from releasing its financial results, Ariad Pharma also provided guidance for 2013. Ariad Pharma expects R&D expenses in the range of $238−$248 million ($144.7 million in 2012). The guidance reflects the increase in development expenditure related to Iclusig and pipeline candidates including AP26113, which is being developed for the treatment of non-small cell lung cancer and other tumors.

Ariad Pharma expects G&A expenses in the range of $108−$116 million ($60.9 million in 2012). The increased guidance reflects the company’s efforts to expand further.

Our Take

We are pleased by the U.S. approval of Iclusig. Ariad Pharma is looking to get Iclusig approved in additional markets. The drug is under accelerated assessment review in the EU for treating adults with resistant or intolerant CML or Ph+ ALL.

Ariad Pharma expects Iclusig to be approved in the EU in the third quarter of 2013. The company expects to seek Iclusig’s approval in Canada, Switzerland and Australia in the second half of 2013. Japanese approval of the drug is expected to be sought in Japan in mid-2014. Ariad pharma also intends to expand the label of Iclusig into additional indications such as gastrointestinal stromal tumors, molecular lung cancers, acute myeloid leukemia and other solid tumors.

Ariad Pharma currently carries a Zacks Rank #3 (Hold). Pharma stocks, which currently appear to be more attractive, include United Therapeutics Corporation (UTHR), Lannett Company, Inc. (LCI) and SIGA Technologies, Inc. (SIGA). All three companies carry a Zacks Rank #1 (Strong Buy).

 
ARIAD PHARMA (ARIA): Free Stock Analysis Report
 
LANNETT INC (LCI): Free Stock Analysis Report
 
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UTD THERAPEUTIC (UTHR): Free Stock Analysis Report
 
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