Ariad Loads Up With $200M Stock Deal, After Big Medical Meeting

12/15/11Follow @xconomy

Cambridge, MA-based Ariad Pharmaceuticals was one of the stars of the show at a recent blood cancer meeting, and now it’s striking while the iron is hot to raise more than $200 million in new cash.

Ariad (NASDAQ: ARIA) said today it has agreed to sell 21.5 million new shares of common stock at $10.42 apiece, meaning it will pull in gross proceeds of at least $224 million from the new offering. The company also granted its underwriters a 30-day option to purchase another 3.2 million shares.

J.P. Morgan, Cowen & Co., Jefferies & Co., are acting as joint book-running managers and underwriters for the offering while BMO Capital Markets, Leerink Swann, Oppenheimer & Co., and Rodman & Renshaw are acting as co-managers for the offering.

Ariad captured attention from investors in the past week at the American Society of Hematology meeting in San Diego, where it presented clinical trial data for ponatinib, its experimental treatment for certain types of chronic myeloid leukemia. We wrote about the data in an ASH preview story last month. Ariad also has another cancer drug in the works, ridaforolimus, which is in late-stage development under a collaboration with Merck.

The Ariad leukemia drug, ponatinib, is designed specifically to work for patients who don’t respond to the standard imatinib (Gleevec) treatment from Novartis. Data presented at the ASH meeting showed that patients with the T315i mutation responded well to the new therapy. The Novartis drug, a tyrosine kinase inhibitor, is well-established as the standard of care in chronic myeloid leukemia, but investors are betting there is room for more entrants in this market. Patients with the T315i mutation don’t respond to the existing therapy.

“Thinking about this from a commercial standpoint, CML currently represents a greater than $5B market opportunity, and it’s estimated that 10-15% of patients harbor a T315i mutation,”  said Cory Kasimov, an analyst with JP Morgan, in a note to clients on Dec. 12. “Thus, that segment of the market alone represents at least a $500-$750M opportunity for ponatinib, and that does not even begin to include other low hanging fruit (patients refractory to 2-3 prior tyrosine kinase inhibitors) or future expansion opportunities (into earlier lines of therapy).”

Ariad had about $86 million in cash and investments in the bank as of Sept. 30, according to its most recent quarterly report. Ariad stock climbed 3 percent today to $10.75 at 9:57 am Eastern time.

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