UPDATE: Citigroup Initiates Ariad Pharmaceuticals at Buy on Ponatinib Data

Citigroup initiated coverage on Ariad Pharmaceuticals ARIA with a Buy rating and a $31 price target. Citigroup noted, "We believe ARIA's ponatinib is "best in class" in the ~$5bn WW leukemia (CML) market and our outlook is higher than consensus. Initial FDA/EU ponatinib approvals are widely expected by 1Q:13 and 2H:13 respectively, but a potential broader drug label would be upside to consensus, in our view. We expect ponatinib's Ph3 1st-line CML trial will stop early (2014) adding an additional ~$400M in 1st-line sales by 2018. We believe ARIA's lung cancer drug AP26113 is superior to PFE's Xalkori (crizotinib). Its dual mechanism also targets other lung cancer populations >3X crizotinib's market. With crizotinib `15 consensus estimates reaching ~$700M, our 2017 risk-adjusted AP26113 sales estimate of $240M is not a stretch." Ariad Pharmaceuticals closed at $21.97 on Thursday.