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PropThink: Phase I/II Data On New Candidate Supports Higher Valuation For ARIA

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By David Moskowitz

With Wall Street Analyst price targets on Ariad Pharmaceuticals (NASDAQ: ARIA) averaging $24.75 through this morning, new data for an early-stage pipeline candidate is causing price targets to rise. At least 3 analysts have raised their price objective for shares of ARIA this morning, and most are calling for the stock to trade into the $30 range, sending the shares higher. Fueling the excitement is the company's weekend presentation at cancer meeting, ESMO (European Society for Medical Oncology), where it reported positive results from a Phase I dose escalation study for AP26113, the company's experimental 'dual ALK/EFGR inhibitor' for cancer.

Results focused on 29 patients with advanced non-small cell lung cancer (NSCLC) taking 6 different doses of the drug. There were 14 patients enrolled that were ALK+, and 11 patients that were EGFR+. These are markers typically expressed in lung cancer patients, and AP26113 is known to target and kill cancer cells that have these characteristics. Importantly, ARIA reported an Objective Response Rate (ORR) of 73% in evaluable ALK+ patients (8 out of 11 evaluable), which is impressive given that this is just a small dose-finding trial. Additionally, the company saw an ORR of 67% (6 out of 9) in patients resistant to Pfizer's Xalkori treatment, and an ORR of 100% (2 out of 2) in patients naïve to Xalkori. Also, in 6 evaluable patients that were EGFR+ and resistant to Tarceva, a common lung cancer treatment, 1 partial response (PR) was observed, and 2 patients showed stable disease (SD) resulting in a disease control rate (DCR) of 50%.

Analysts were most impressed with the ALK+ results, with some noting that the data so far in EGFR+ patients look competitive, but not yet better than seen with other treatments. The ALK inhibitor class is getting significant attention these days with Xalkori on the market, and interesting candidates in development by Novartis (NYSE: NVS), Chugai Pharmaceuticals (OTC: CHGCY), and now Ariad.

Data for AP26113 are still early, however, analysts see the data as evidence that this compound could make its way all the way to the market, hence the increase in value being assigned to ARIA today. Most of the value in ARIA thus far is being driven by lead compound, Ponatinib, undergoing FDA review for Chronic Myelogenous Leukemia (CML), a significant treatment market. Expect shares to continue to rise as more analysts publish on the AP26113 data, and as the company moves closer to potential approval for Ponatinib (expected 1Q 2013).


About PropThink

PropThink is an intelligence service that delivers long and short trading ideas to investors in the healthcare and life sciences sectors. Our focus is on identifying and analyzing technically-complicated companies and equities that are grossly over or under-valued. We offer daily market coverage, weekly feature stories, and a newsletter to investors who subscribe on PropThink.com. To learn more, follow us on Twitter or visit us at http://www.propthink.com.







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