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Dec 31, 2013

Stock Watch: Five Companies to Keep an Eye On

Stock prices sometimes experience volatile moves, especially as a near-term catalyst event approaches.

Stock Watch: Five Companies to Keep an Eye On

  • Ariad Pharmaceuticals

    Ariad Pharmaceuticals (ARIA) works on therapies for cancer patients. The company’s lead product is Iclusig (ponatinib) and Ariad received accelerated approval from the FDA in late 2012 to sell Iclusig for patients with chronic myeloid leukemia and Philadelphia chromosome positive acute lymphoblastic leukemia. However, on October 9, 2013, the stock took a huge hit as the FDA placed a hold on Iclusig because some patients in an ongoing clinical trial were getting blood clots.

    On October 20, 2013, a company press release stated:

    The FDA has approved revised U.S. Prescribing Information (USPI) and a Risk Evaluation and Mitigation Strategy (REMS) for Iclusig (ponatinib) that allows immediate resumption of its marketing and commercial distribution. The USPI includes a revised indication statement and boxed warning, updated safety information and recommendations regarding dosing considerations for prescribers.”

    On the day the company first announced a hold on the product, the stock was trading in the $18 range. As of December 20, the stock moved at around $6. Although not without risk, we believe the company is currently undervalued and could trend higher as people again begin to speculate on the company’s future.

    We believe the company’s next earnings call will serve as a catalyst date. Ariad will be able to discuss the resumption of sales of Iclusig and provide give additional guidance about future sales and trials.

    We expect Ariad to rally over the coming months into the large gap created by the October 9 news.

    Disclosure: I am long PGNX, SGYP.

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