Given the volatility and the spotlight that biotechnology has received, this may be a good company to place a small amount of your hard-earned money for a speculative investment.
Ariad Pharmaceuticals (ARIA) is known for its lead compound called Ridaforolimus. It's a small-molecule compound for treating cancer, which makes it very compatible and attractive as a pharmaceutical business model. As it stands today, ARIAD is collaborating with Merck & Co., Inc. to globally develop and commercialize Ridaforolimus. It's not an outright licensing, but a co-development, co-commercialization agreement: so a lot of the revenue upside is retained within the company. More details can be found here.
Although this is a very primitive way of analyzing the feasibility of the science behind the drug, it is an easy way for non-industry investors: Merck has partnered on the drug. Merck has previous experience with cancer drugs through its blockbuster Gardasil for cervical cancer, Emend for chemotherapy side effect treatment, and Quadramet for bone cancer. Quadramet received approval in 1997 so it is either about to, or already a fall off patent. Rida is in phase 3 for soft tissue and bone sarcoma, so we can certainly expect Merck's commitment to getting the drug to market to recycle its existing sales and marketing force, patient advocacy group, etc. Additionally, Rida is also being explored in metastatic breast cancer; it is currently in phase 2 with positive preliminary data.
The interim results from the Phase 3 trial in soft tissue and bone sarcoma should arrive some time next month, so there is a rally potential for short-term investors.
The company also does have more substance than just Rida - Merck slogan: "second oncology product candidate, AP24534, is an internally discovered novel oral multi-targeted kinase inhibitor that we believe has broad potential applications in cancer. AP24534 is currently being evaluated in a Phase 1 clinical study for the treatment of patients with hematological (blood-based) cancers." [excerpt from Ariad website]
As an investment confidence booster, the CEO of Ariad Pharmaceuticals, Harvey Berger and CMO (Chief Medical Officer) Pierre Dodion purchased $3m and $9999 worth of shares on August 4, 2009. This could be a bold statement from the insiders.
They have set themselves up nicely for either 1) an acquisition by Merck, or 2) another biotech phenomenon, or 3) an ultimate test of investor patience. I think this is a completely speculative investment that is extremely risky, but given a stock price at $1.80, investors can certainly limit their loss.
Disclosure: the author owns shares of ARIA
