ADAM strikes agian only ask the BEARS never a bull same ole BS
BY Adam Feuerstein | 09/13/13 - 06:00 AM EDT
Stock quotes in this article: ARIA, NLNK, ZGNX, ONCY, CNDO, RNA, SRPT, AMRN, ARNA, VVUS Tweet Comment 0Find out if (ARIA) is in Cramer's Portfolio.BOSTON (TheStreet) -- Welcome back to this week's Biotech Stock Mailbag.
$ARIA Can someone remind me of that short thesis again? Favus? Bueller? Anyone?— Colfax (@ColfaxCapital) September 6, 2013
I described the Ariad Pharmaceuticals (ARIA_) short thesis in March and it hasn't changed significantly. Shorts continue to believe Iclusig's cardiac and other toxicities will prevent the chronic myeloid leukemia (CML) drug from generating the blockbuster sales already baked into the company's current $4 billion market valuation.
Earlier this week, I connected with a couple of institutional investors shorting Ariad for an update.
Iclusig total (TRx) script growth is flattening out while new (NRx) scripts are trending down, suggesting Ariad has saturated the T315I CML patient population (third line) and isn't attracting significant numbers of second-line CML patients to Iclusig therapy. Ariad is likely to deliver Iclusig sales this year that meet Street expectations, but next year's consensus sales forecast will come down.
Ariad and its supporters are betting on Iclusig becoming the go-to therapy for front line (newly diagnosed) CML patients. To make that happen, the company is conducting the EPIC study, which compares Iclusig to Novartis' (NVS_) Gleevec -- head to head. Ariad shorts believe the EPIC study will fail and may even be stopped early because Iclusig's safety and tolerability will be significantly worse than Gleevec.
Recall, FDA approved Iclusig with a black box warning alerting doctors to watch for blood clots that have caused fatal heart attacks and strokes, and liver toxicity including reports of liver failure and death.
Supporting their argument that Iclusig is too toxic for widespread use in CML, the Ariad shorts point to changes made to the EPIC study in July to exclude more patients with pre-existing heart problems.
Here's a link to the ClinicalTrials.gov posting for the EPIC study. And here's a link to the restrictions to patient enrollment made in July.
Previously, newly diagnosed CML patients were excluded from the EPIC study if they had a heart attack, unstable angina or congestive heart failure within three months prior to enrollment. In July, Ariad extended these enrollment restrictions to six months prior.
Ariad also added new exclusion criteria which eliminate CML patients from the EPIC study with 1) a history of ventricular arrhythmia; 2) "Cerebrovascular accident or transient ischemic attack" within 6 months; 3) "any history" of clogged arteries requiring revascularization; and 4) "any history" of blood clots.
Oh, one more: Ariad also made it more difficult for patients with high blood pressure to be eligible for EPIC enrollment.
"All of these new exclusion criteria tell me that the [heart-safety] risk with Iclusig is real," one of the investors shorting Ariad told me.
More evidence Iclusig is too toxic for use in front-line CML patients comes from M.D. Andersen Cancer Center, which lowered the Iclusig dose to 30 mg from 45 mg (the FDA approved dose) in the single-arm "Cortes" frontline CML study.
Ariad CEO Harvey Berger addressed the lowered dose in the Cortes study on the company's second-quarter earnings call:
"... they started at 45 milligrams as in the EPIC trial and completely enrolled a cohort at 45, and then wanted to study an additional group of patients at 30, so that they have data at both of the -- starting at each of those dose levels. It -- what happened was the 45-milligram cohort where 45-milligram patients enrolled quickly and they got through the enrollment of those patients, and now we're enrolling 30-milligram patients so they can do some comparison of the 2 groups."
Sounds like spin to Ariad shorts I spoke with this week. "Again, the reason to lower a drug's dose is usually because of unacceptable toxicity."
An interim analysis of the EPIC study is expected about one year from now in the third quarter of 2014 -- unless independent data safety monitors stop the study early because Iclusig is too toxic.
"The EPIC study is a ticking time bomb," one of the Ariad shorts told me.
There's more to the Ariad short thesis, including the expected launch soon of a cheap, generic version of Gleevec in CML and the limited commercial potential of cancer drug AP26113, but I'll stop here.