Ariad Pharmaceuticals Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotech Ariad Pharmaceuticals (NAS: ARIA) are plunging by as much as 13% today after a phase 2 study showed serious side effects from its experimental ponatinib drug.

So what: The American Society of Hematology released an abstract showing that 17% of chronic myeloid leukemia patients using the drug experienced serious side effects. As a result, roughly 15% of the patients stopped using the drug.

Now what: With as many studies, trials, and regulatory approvals any drug faces on the long and winding road to market, running up against any roadblock can have serious consequences. With only three drugs currently in the pipeline, the company has a lot riding on ponatinib. Last quarter's revenue totaled just $25.1 million yet the company commands nearly a $1.6 billion market cap; this stock deserves a little bit of bashing.

Interested in more info on Ariad Pharmaceuticals? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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