JMP Securities Downgrades Ariad, Cites Limited Near-Term Upside In Light Of Prescription Trends

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JMP Securities’ Michael G. King, Jr. believes there is limited near-term upside for Ariad Pharmaceuticals, Inc. ARIA, given the prescription trends and the ongoing scrutiny of Iclusig's pricing.

King downgraded the rating on the company from Market Outperform to Market Perform.

The analyst believes that Iclusig metrics would most be in line with the estimates and “key catalysts from the brigatinib ESMO data and Japanese approval of Iclusig are in the rear-view mirror; value-driving catalysts are also limited, in our view, with only FDA approval of brigatinib remaining in 2016.”

Political Scrutiny

King also believes the recent scrutiny of Ariad’s pricing policies by members of the U.S. Senate and House of Representatives could have a “two-fold” effect of capping the premium multiple that the market was willing to assign to Iclusig revenues, while leading to the risk of adverse publicity for the company or a potential modification of Iclusig’s pricing.

“In our opinion, either outcome does not bode favorably for share performance near term; hence, we believe shares are fairly valued at current levels,” the analyst stated.

King pointed out that given the potential for continued political scrutiny, any additional increase in pricing to a “higher equilibrium” would be “a risky strategy at best.”

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Posted In: Analyst ColorDowngradesAnalyst RatingsJMP SecuritiesJr.Michael G. King
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