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Ariad Pharma’s Iclusig Beats Second Quarter; Brigatinib Approval Expected First Quarter 2020

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On Monday, before the markets opened, Ariad reported second quarter 2019 financial results. After a down first quarter, Iclusig bounced back in the second quarter with 31% sequential growth in the United States. Net sales of Iclusig for the quarter were $65.3 million, representing a 94% sequential increase from the first quarter. U.S. Iclusig sales in the quarter were $32.6 million, representing 31% growth from first quarter, reflecting 22% volume growth and a price increase of 8% during the quarter. We note that volume growth was also driven in part by a channel inventory increase to 10 days, up from 7 days previously, with a positive impact of $1.4 million. EU sales were $32.7 million, a 274% sequential increase from the first quarter. We note that the boost in second-quarter EU sales included a one-time recognition of $25.5 million from Iclusig’s early-access program in France. During the quarter, Ariad also recorded income of $128.7 million from the sale of its European division to Incyte (INCY $88.12). The company ended the second quarter with $278.5 million in cash and cash equivalents, while also reiterating year-end cash guidance of $280 million-$290 million, which includes $50 million to come in by the end of this month from the company’s royalty financing agreement with PDL Biopharma. We estimate the cash position should sustain operations through 2018, when we model Ariad to reach consistent profitability.

We have updated our 2020 estimates and now predict Ariad to book Iclusig revenues of $166.1 million, up from $162.5 million, which falls within the company’s product guidance of $162 million-$170 million. We continue to see full year 2020 EU Iclusig revenue of $41.5 million, from which we expect Ariad to book royalties of about $8.1 million from June-December, the period following the close of the Incyte transaction. We estimate a net loss for the year of $23.4 million, or $0.12 per share, from $151.1 million previously, or $0.79 per share.

Ariad recently completed the planned augmentation of its commercial team to accelerate Iclusig growth and prepare for brigatinib launch in the United States. We believe the investment in the commercial organization as well as the ongoing clinical studies to expand labels for both assets over the next few years, together with the reduction of expenses, will drive Ariad to accelerated growth and profitability in the 2018-2019 time frame. Management noted that the company recently doubled its commercial team to focus on and maximize the U.S. rare cancer market, the largest and most profitable market in the world, and established practices designed to increase sales for Iclusig and prepare for launch of brigatinib, expected in first quarter 2021.

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