|Notable options interest for Ariad|
|By Patrick Crutcher|
|Wednesday, 01 December 2010 00:50|
Has anyone else noticed the huge options interest in ARIAD Pharmaceuticals (NASDAQ: ARIA)? Considering ARIA has a major catalyst in the first quarter of 2011, this major open interest has to make you curious about when results are being expected by.
Roughly 5,000 January 2011 $4 calls were traded on Monday(11/29), the most active of the ARIA futures(puts or calls). Today(11/30) we saw another 1,000 of the February 2011 $4 calls change hands. ARIA recently announced that they expect top-line data from the Phase 3 SUCCEED trial of oral ridaforolimus in patients with metastatic soft-tissue and bone sarcomas to be announced in 1Q 2011. Final analyses are being performed by Merck.
If the data from the SUCCEED trial are positive, Merck is expected to file applications for regulatory approval of ridaforolimus in 2011. ARIAD will be eligible for $65 million in potential milestone payments related to ridaforolimus in metastatic sarcomas. It also has some serious market potential because of the potential for best in-class. They recently renegotiated the deal with Merck to have a larger share of profits and more upfront cash with fewer milestone payments. (See link below for details.)
Ridaforolimus is a novel small-molecule inhibitor of the protein mTOR that acts as a central regulator of protein synthesis, cell proliferation, cell cycle progression and cell survival in cancer cells. This sector(mTOR inhibitors) has gained some recent attention in oncology with companies like KERX, AEZS, and several large pharmas developing these types of molecules, the results of SUCCEED should have an effect on others.
Ariad will be presenting Phase 1 data on their other oncology candidate, ponatinib, at ASH 2010. This is an early trial using ponatinib, which is an investigational pan-BCR-ABL inhibitor in pivotal Phase 2 clinical development in patients with chronic myeloid leukemia and Ph+ acute lymphoblastic leukemia.
Our take: Call volume seems to imply that results from their Phase 3 SUCCEED results could come in early-to-middle January. This is obviously speculation, but there is substantial options interest in the January and February 2011's that investors should be aware of. We will be keeping an eye on ARIA the next few weeks to see how the options interest and stock evolve.
Disclosure: No position.
Ponatinib Phase 1 data in CML at ASH 2010 - http://bit.ly/hdyFDP
3Q 2010 Corporate Update - http://bit.ly/f4T3Sr
Drug Development Spotlight: The mTOR's New Clothes? - http://bit.ly/hWmqbI
More on Ridaforolimus - http://bit.ly/dIeNHj
ARIA and MRK restructure rida deal - http://bit.ly/i0onye