Why Ariad Pharmaceuticals Inc. Shares Were an Epic Failure

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 Ariad Pharmaceuticals , a biopharmaceutical company focused on developing therapies to treat cancer, were rocked again, falling as much as 42% after announcing the discontinuation of a late-stage trial known as Epic involving Iclusig for newly diagnosed chronic myeloid leukemia.

So what: The reason for the stoppage, as noted by Ariad, was because of a high number of arterial thromobotic events, which you may know better their less scientific name -- blood clots. According to Ariad's press release, the decision to stop the trial was mutually agreed upon between it and the Food and Drug Administration in light of news coming out last week that longer-term studies showed an increasing risk for blood clots in patients taking Iclusig.

Now what: Now I'd say Ariad is in some pretty hot water. Iclusig's current FDA approval gives the company only very minimal market share, and the drug's recent bad publicity about long-term safety may quite possibly shrink that further. To add, this early-stage CML study was supposed to be where the majority of its future revenue came from. With that now off the table, I'm not sure I see a way for Iclusig to ever get Ariad anywhere near profitability. Removing the Epic trial from the picture, out of the eight ongoing clinical studies in Ariad's pipeline, seven involve Iclusig! Given the ongoing toxicity concerns here I would, as an investor, suggest keeping a big distance from Ariad at the moment.

Two biotech stocks to follow instead
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In The Motley Fool's brand-new FREE report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

The article Why Ariad Pharmaceuticals Inc. Shares Were an Epic Failure originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story