Healthcare Business

ARIAD Secures Much-Needed Capital for Trials, Commercialization, and Growth (ARIA)

ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) is raising cash to help support the commercialization of ponatinib in patients with resistant or intolerant CML and additional clinical development of its investigational targeted cancer medicines.  All of the shares are being sold by the company rather than by holders.  The pricing went off at $10.42 for some 21.5 million shares.  The total gross proceeds before the effect of any overallotment shares is about $224 million.

For all practical purposes, ARIAD is in the pre-revenue stage of operations.  As far as the full details of the funding, the capital raise will allow ARIAD to “continue treatment and follow-up of patients in the pivotal PACE trial of its investigational pan BCR-ABL inhibitor, ponatinib, in patients with chronic myeloid leukemia (CML) or Philadelphia-positive acute lymphoblastic leukemia (Ph+ALL) and, subject to further patient follow-up and data analysis in this trial, to file for marketing approval of ponatinib in the United States and Europe in the middle of 2012.”

An additional note on the funding is tha the money will allow ARIAD to continue its efforts for the commercialization of ponatinib in the United States and Europe.  The new funds should also allow for additional clinical trials of ponatinib, including a Phase 3 clinical trial in newly diagnosed CML patients, clinical trials of ponatinib in Japan, completion of the Phase I/II trial of its investigational dual inhibitor of anaplastic lymphoma kinase and epidermal growth factor receptor called AP26113.  Another potentiality is the funding (dependent upon the outcome of the trials) of a pivotal trial of AP26113 in patients with non-small cell lung cancer.

J.P. Morgan Securities, Cowen & Co., and Jefferies are the joint book-running managers; co-managers are listed as BMO Capital Markets, Leerink Swann, Oppenheimer & Co., and also Rodman & Renshaw.  These underwriters will be granted a 30-day option to purchase up to an additional 3.225 million shares as an overallotment option. 

ARIAD shares are actually up 3.45% at $10.78 and the 52-week trading range is $4.45 to $13.50.  Usually shares fall on secondary offerings hurt stocks, but this one had already been discounted.  This $10.42 price is down from as high as $11.75 just as recently as last week.  Before the effects of the offering, ARIAD’s market capitalization is $1.4 billion.

If ARIAD shares remain higher like this, it is almost certain that the overallotment will be exercised by the underwriters.  If so, then the gross proceeds before underwriting fees will be more than $257 million in new capital raised.  As of September 30, 2011, the company had a mere $86.3 million in cash on the books and its total liabilities were $73.9 million.