UPDATE: Bank of America Reiterates on Ariad Pharmaceuticals Following News of Iclusig Re-Launch

In a report published Monday, Bank of America analyst Rachel McMinn reiterated an Underperform rating on Ariad Pharmaceuticals ARIA, and raised the price target from $2.00 to $3.00. In the report, Bank of America noted, “ARIA announced on Friday that it and the FDA have agreed on a revised product label for the company's leukemia drug Iclusig, and that a re-launch of the product would begin early next year. The timing of the product re-launch was quicker than we had anticipated, but the end result was as expected: warnings around the safety profile have been further strengthened, the patients for whom Iclusig is recommended are significantly narrowed compared to the original label, and the FDA is mandating a risk mitigation plan (REMS) to limit access to the drug. While we are increasing our 2014 sales estimates to include US Iclusig sales (we had previously removed pending clarity on market re-entry), our overall outlook for Iclusig is not materially changed. We are increasing our PO modestly from $2 to $3 to include a higher probability of success in reaching our projections. We believe the recent steep rise in ARIA shares over-values the co, and expect shares to decline once the euphoria of bringing Iclusig back to market fades and investors realize that the co is unlikely to be cash flow positive in the next several years (and will likely need additional funding in 12 months) and that Iclusig has limited external strategic appeal.” Ariad Pharmaceuticals closed on Friday at $6.43.
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Posted In: Analyst ColorPrice TargetAnalyst RatingsBank of AmericaRachel McMinn
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