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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ariad Pharmaceuticals, Inc. | NASDAQ:ARIA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 23.99 | 23.80 | 22.88 | 0 | 01:00:00 |
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Delaware
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22-3106987
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
|
|
|
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26 Landsdowne Street, Cambridge, Massachusetts
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02139-4234
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(Address of principal executive offices)
|
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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|||
Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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PART I.
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Item 1:
|
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Item 2:
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Item 3:
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Item 4:
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PART II.
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Item 1:
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Item 1A:
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Item 2:
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Item 6:
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June 30,
|
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December 31,
|
||||
In thousands, except share and per share data
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
273,047
|
|
|
$
|
230,888
|
|
Marketable securities
|
5,497
|
|
|
11,407
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|
||
Accounts receivable, net
|
14,106
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|
|
15,686
|
|
||
Inventory, net (Note 5)
|
903
|
|
|
1,096
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|
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Other current assets
|
13,567
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16,120
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Total current assets
|
307,120
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275,197
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Restricted cash
|
10,874
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|
|
11,308
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Property and equipment, net (Note 6)
|
300,962
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|
|
254,082
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|
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Intangible and other assets, net (Note 7)
|
5,411
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|
6,105
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Total assets
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$
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624,367
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$
|
546,692
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
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||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
8,111
|
|
|
$
|
17,013
|
|
Current portion of long-term debt
|
24,522
|
|
|
13,872
|
|
||
Accrued compensation and benefits
|
8,828
|
|
|
25,331
|
|
||
Accrued product development expenses
|
22,063
|
|
|
22,132
|
|
||
Other accrued expenses
|
21,292
|
|
|
22,849
|
|
||
Current portion of deferred revenue
|
10,550
|
|
|
6,763
|
|
||
Other current liabilities (Note 8)
|
5,297
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|
|
24,324
|
|
||
Total current liabilities
|
100,663
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|
|
132,284
|
|
||
Long-term debt (Note 9)
|
466,757
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|
429,220
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|
||
Other long-term liabilities
|
6,086
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|
|
11,244
|
|
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Deferred revenue
|
88,750
|
|
|
77,085
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|
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Total liabilities
|
662,256
|
|
|
649,833
|
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||
Commitments (Note 10)
|
|
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||||
Stockholders’ equity (deficit):
|
|
|
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||||
Preferred stock, $.01 par value, authorized 10,000,000 shares, none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value, authorized 450,000,000 shares; issued and outstanding 192,121,405 shares in 2016 and 189,662,148 shares in 2015
|
192
|
|
|
190
|
|
||
Additional paid-in capital
|
1,350,697
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|
1,338,585
|
|
||
Accumulated other comprehensive (loss) income
|
912
|
|
|
3,835
|
|
||
Accumulated deficit
|
(1,389,690
|
)
|
|
(1,445,751
|
)
|
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Total stockholders’ equity (deficit)
|
(37,889
|
)
|
|
(103,141
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
624,367
|
|
|
$
|
546,692
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
In thousands, except per share data
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Product revenue, net
|
$
|
65,326
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$
|
27,818
|
|
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$
|
98,960
|
|
|
$
|
51,719
|
|
License, collaboration and other revenue
|
2,799
|
|
|
1,420
|
|
|
4,763
|
|
|
1,510
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|
||||
Total revenue
|
68,125
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|
29,238
|
|
|
103,723
|
|
|
53,229
|
|
||||
Operating expenses:
|
|
|
|
|
|
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||||||||
Cost of product revenue
|
1,108
|
|
|
488
|
|
|
1,594
|
|
|
1,183
|
|
||||
Research and development expense
|
42,864
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|
|
38,739
|
|
|
86,943
|
|
|
78,183
|
|
||||
Selling, general and administrative expense
|
34,242
|
|
|
48,622
|
|
|
70,219
|
|
|
82,172
|
|
||||
Transaction costs (Note 3)
|
1,482
|
|
|
—
|
|
|
1,482
|
|
|
—
|
|
||||
Restructuring charges
|
92
|
|
|
—
|
|
|
3,010
|
|
|
—
|
|
||||
Total operating expenses
|
79,788
|
|
|
87,849
|
|
|
163,248
|
|
|
161,538
|
|
||||
Loss from operations
|
(11,663
|
)
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|
(58,611
|
)
|
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(59,525
|
)
|
|
(108,309
|
)
|
||||
Other income (expense), net:
|
|
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||||||||
Interest income
|
31
|
|
|
22
|
|
|
55
|
|
|
41
|
|
||||
Interest expense
|
(5,401
|
)
|
|
(3,813
|
)
|
|
(10,348
|
)
|
|
(7,668
|
)
|
||||
Other Income, net (Note 3)
|
128,664
|
|
|
—
|
|
|
128,664
|
|
|
—
|
|
||||
Foreign exchange (loss) gain
|
(29
|
)
|
|
(458
|
)
|
|
(779
|
)
|
|
615
|
|
||||
Other income (expense), net
|
123,265
|
|
|
(4,249
|
)
|
|
117,592
|
|
|
(7,012
|
)
|
||||
Income (loss) before provision for income taxes
|
111,602
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|
|
(62,860
|
)
|
|
58,067
|
|
|
(115,321
|
)
|
||||
Provision for income taxes
|
1,754
|
|
|
300
|
|
|
2,006
|
|
|
514
|
|
||||
Net income (loss)
|
$
|
109,848
|
|
|
$
|
(63,160
|
)
|
|
$
|
56,061
|
|
|
$
|
(115,835
|
)
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.57
|
|
|
$
|
(0.33
|
)
|
|
$
|
0.29
|
|
|
$
|
(0.62
|
)
|
Diluted
|
$
|
0.56
|
|
|
$
|
(0.33
|
)
|
|
$
|
0.29
|
|
|
$
|
(0.62
|
)
|
Shares used in net income (loss) per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
191,485
|
|
|
188,598
|
|
|
190,894
|
|
|
188,220
|
|
||||
Diluted
|
194,569
|
|
|
188,598
|
|
|
193,504
|
|
|
188,220
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
In thousands
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
109,848
|
|
|
$
|
(63,160
|
)
|
|
$
|
56,061
|
|
|
$
|
(115,835
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Net unrealized loss on marketable securities
|
(1,923
|
)
|
|
—
|
|
|
(5,909
|
)
|
|
—
|
|
||||
Cumulative translation adjustment, net of tax of $0
|
(12
|
)
|
|
(77
|
)
|
|
(44
|
)
|
|
159
|
|
||||
Defined benefit pension obligation, net of tax of $0
|
36
|
|
|
(495
|
)
|
|
91
|
|
|
(418
|
)
|
||||
Reclassification of cumulative translation adjustment and pension obligation adjustments to earnings upon sale of European operations
|
2,939
|
|
|
—
|
|
|
2,939
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
1,040
|
|
|
(572
|
)
|
|
(2,923
|
)
|
|
(259
|
)
|
||||
Comprehensive income (loss)
|
$
|
110,888
|
|
|
$
|
(63,732
|
)
|
|
$
|
53,138
|
|
|
$
|
(116,094
|
)
|
|
Six Months Ended
June 30, |
||||||
In thousands
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net Income (Loss)
|
$
|
56,061
|
|
|
$
|
(115,835
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation, amortization and impairment charges
|
7,300
|
|
|
5,762
|
|
||
Stock-based compensation
|
9,377
|
|
|
19,078
|
|
||
Repayment of interest related to facility lease obligation
|
(2,572
|
)
|
|
—
|
|
||
Reclassification of currency translation adjustment and pension obligation adjustments to earnings upon sale of European operations
|
2,939
|
|
|
—
|
|
||
Gain on the Incyte transaction
|
(131,575
|
)
|
|
—
|
|
||
Increase (decrease) from:
|
|
|
|
||||
Accounts receivable
|
(7,448
|
)
|
|
(6,022
|
)
|
||
Inventory
|
(1,122
|
)
|
|
(347
|
)
|
||
Other current assets
|
(1,027
|
)
|
|
12,151
|
|
||
Other assets
|
1,522
|
|
|
527
|
|
||
Accounts payable
|
(6,789
|
)
|
|
97
|
|
||
Accrued compensation and benefits
|
(10,593
|
)
|
|
(7,585
|
)
|
||
Current portion of long-term facility lease obligation
|
—
|
|
|
393
|
|
||
Accrued product development expenses
|
(69
|
)
|
|
5,484
|
|
||
Other accrued expenses
|
7,514
|
|
|
1,381
|
|
||
Other liabilities
|
(23,908
|
)
|
|
2,828
|
|
||
Deferred revenue
|
2,643
|
|
|
3,471
|
|
||
Net cash used in operating activities
|
(97,747
|
)
|
|
(78,617
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Investment in property and equipment
|
(31,504
|
)
|
|
(2,700
|
)
|
||
Proceeds from the Incyte transaction, net of $4,484 of cash transferred
|
144,847
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
113,343
|
|
|
(2,700
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of long-term debt
|
(2,889
|
)
|
|
—
|
|
||
Reimbursements of amounts related to facility lease obligation
|
26,759
|
|
|
15
|
|
||
Proceeds from issuance of common stock pursuant to stock option and purchase plans
|
4,074
|
|
|
2,620
|
|
||
Payment of tax withholding obligations related to stock compensation
|
(1,337
|
)
|
|
(174
|
)
|
||
Net cash provided by financing activities
|
26,607
|
|
|
2,461
|
|
||
Effect of exchange rates on cash
|
(44
|
)
|
|
134
|
|
||
Net increase (decrease) in cash and cash equivalents
|
42,159
|
|
|
(78,722
|
)
|
||
Cash and cash equivalents, beginning of period
|
230,888
|
|
|
352,688
|
|
||
Cash and cash equivalents, end of period
|
$
|
273,047
|
|
|
$
|
273,966
|
|
Supplemental disclosures:
|
|
|
|
||||
Capitalization of construction-in-progress related to facility lease obligation
|
$
|
8,068
|
|
|
$
|
22,911
|
|
Non-cash transaction – property and equipment included in accounts payable or accruals
|
$
|
4,054
|
|
|
$
|
587
|
|
Non-cash transaction – sublease tenant improvements related to facility lease obligation
|
$
|
11,788
|
|
|
$
|
—
|
|
Non-cash transaction – marketable equity securities recorded at fair market value
|
$
|
(5,909
|
)
|
|
$
|
—
|
|
In thousands
|
Trade
Allowances
|
|
Rebates,
Chargebacks
and
Discounts
|
|
Other
Incentives/
Returns
|
|
Total
|
||||||||
Balance, January 1, 2016
|
$
|
111
|
|
|
$
|
4,460
|
|
|
$
|
551
|
|
|
$
|
5,122
|
|
Provision
|
375
|
|
|
6,036
|
|
|
363
|
|
|
6,774
|
|
||||
Payments or credits
|
(331
|
)
|
|
(4,936
|
)
|
|
(250
|
)
|
|
(5,517
|
)
|
||||
Balance, March 31, 2016
|
155
|
|
|
5,560
|
|
|
664
|
|
|
6,379
|
|
||||
Provision
|
457
|
|
|
12,147
|
|
|
(270
|
)
|
|
12,334
|
|
||||
Payments or credits
|
(464
|
)
|
|
(6,071
|
)
|
|
(94
|
)
|
|
(6,629
|
)
|
||||
Adjustments
|
—
|
|
|
(4,684
|
)
|
|
(55
|
)
|
|
(4,739
|
)
|
||||
Balance, June 30, 2016
|
$
|
148
|
|
|
$
|
6,952
|
|
|
$
|
245
|
|
|
$
|
7,345
|
|
In thousands
|
2016
|
|
2015
|
||||
Raw materials
|
$
|
482
|
|
|
$
|
813
|
|
Work-in-process
|
1,289
|
|
|
89
|
|
||
Finished goods
|
814
|
|
|
1,007
|
|
||
Total
|
2,585
|
|
|
1,909
|
|
||
Current portion
|
(903
|
)
|
|
(1,096
|
)
|
||
Non-current portion included in intangible and other assets, net
|
$
|
1,682
|
|
|
$
|
813
|
|
In thousands
|
2016
|
|
2015
|
||||
Leasehold improvements
|
$
|
23,581
|
|
|
$
|
23,609
|
|
Construction in progress
|
292,683
|
|
|
246,669
|
|
||
Equipment and furniture
|
29,158
|
|
|
26,388
|
|
||
|
345,422
|
|
|
296,666
|
|
||
Less accumulated depreciation and amortization
|
(44,460
|
)
|
|
(42,584
|
)
|
||
Property and Equipment, Net
|
$
|
300,962
|
|
|
$
|
254,082
|
|
In thousands
|
2016
|
|
2015
|
||||
Capitalized patent and license costs
|
$
|
5,975
|
|
|
$
|
5,975
|
|
Less accumulated amortization
|
(5,117
|
)
|
|
(5,076
|
)
|
||
|
858
|
|
|
899
|
|
||
Inventory, non-current
|
1,682
|
|
|
813
|
|
||
Other assets
|
2,871
|
|
|
4,393
|
|
||
Intangible and Other Assets, Net
|
$
|
5,411
|
|
|
$
|
6,105
|
|
In thousands
|
2016
|
|
2015
|
||||
Amounts received in advance of revenue recognition
|
$
|
4,476
|
|
|
$
|
23,545
|
|
Other
|
821
|
|
|
779
|
|
||
Total
|
$
|
5,297
|
|
|
$
|
24,324
|
|
In thousands
|
2016
|
|
2015
|
||||
Convertible notes, net
|
$
|
168,884
|
|
|
$
|
164,438
|
|
Royalty financing, net
|
46,619
|
|
|
46,921
|
|
||
Facility lease obligation
|
275,776
|
|
|
231,733
|
|
||
|
491,279
|
|
|
443,092
|
|
||
Less current portion
|
(24,522
|
)
|
|
(13,872
|
)
|
||
Long term portion
|
$
|
466,757
|
|
|
$
|
429,220
|
|
•
|
during any calendar quarter commencing after the calendar quarter ending on December 31, 2014 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 percent of the conversion price, or approximately $12.00 per share, on each applicable trading day;
|
•
|
during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the convertible notes for each trading day of the measurement period was less than 98 percent of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
In thousands
|
2016
|
|
2015
|
||||
Liability component:
|
|
|
|
||||
Principal
|
$
|
200,000
|
|
|
$
|
200,000
|
|
Less: debt discount and unamortized debt issuance costs
|
(31,116
|
)
|
|
(35,562
|
)
|
||
Net carrying amount
|
$
|
168,884
|
|
|
$
|
164,438
|
|
Equity component
|
$
|
40,896
|
|
|
$
|
40,896
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
In thousands
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Contractual interest expense
|
$
|
1,813
|
|
|
$
|
1,813
|
|
|
$
|
3,626
|
|
|
$
|
3,625
|
|
Amortization of debt discount
|
2,211
|
|
|
1,965
|
|
|
4,370
|
|
|
3,973
|
|
||||
Amortization of debt issuance cost
|
38
|
|
|
35
|
|
|
75
|
|
|
70
|
|
||||
Total interest expense
|
$
|
4,062
|
|
|
$
|
3,813
|
|
|
$
|
8,071
|
|
|
$
|
7,668
|
|
|
|
|
|
|
Additional
|
|
Accumulated
Other
|
|
|
|
|
|||||||||||
|
Common Stock
|
|
Paid-in
|
|
Comprehensive
|
|
Accumulated
|
|
Stockholders’
|
|||||||||||||
In thousands, except share data
|
Shares
|
|
Amount
|
|
Capital
|
|
Income (Loss)
|
|
Deficit
|
|
Equity
|
|||||||||||
Balance, January 1, 2016
|
189,662,148
|
|
|
$
|
190
|
|
|
$
|
1,338,585
|
|
|
$
|
3,835
|
|
|
$
|
(1,445,751
|
)
|
|
$
|
(103,141
|
)
|
Issuance of shares pursuant to ARIAD stock plans
|
2,459,257
|
|
|
2
|
|
|
4,072
|
|
|
—
|
|
|
—
|
|
|
4,074
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,377
|
|
|
—
|
|
|
—
|
|
|
9,377
|
|
|||||
Payments of tax withholding obligations related to stock compensation
|
—
|
|
|
—
|
|
|
(1,337
|
)
|
|
—
|
|
|
—
|
|
|
(1,337
|
)
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,862
|
)
|
|
—
|
|
|
(5,862
|
)
|
|||||
Reclassification into earnings upon sale of European operations
|
—
|
|
|
—
|
|
|
—
|
|
|
2,939
|
|
|
|
|
2,939
|
|
||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56,061
|
|
|
56,061
|
|
|||||
Balance, June 30, 2016
|
192,121,405
|
|
|
$
|
192
|
|
|
$
|
1,350,697
|
|
|
$
|
912
|
|
|
$
|
(1,389,690
|
)
|
|
$
|
(37,889
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Compensation cost from:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
$
|
2,072
|
|
|
$
|
4,129
|
|
|
$
|
5,354
|
|
|
$
|
8,371
|
|
Stock and stock units
|
487
|
|
|
6,395
|
|
|
3,758
|
|
|
10,461
|
|
||||
Purchases of common stock at a discount
|
99
|
|
|
120
|
|
|
265
|
|
|
246
|
|
||||
|
$
|
2,658
|
|
|
$
|
10,644
|
|
|
$
|
9,377
|
|
|
$
|
19,078
|
|
Compensation cost included in:
|
|
|
|
|
|
|
|
||||||||
Research and development expense
|
$
|
1,524
|
|
|
$
|
4,180
|
|
|
$
|
4,478
|
|
|
$
|
7,996
|
|
Selling, general and administrative expense
|
1,134
|
|
|
6,464
|
|
|
4,899
|
|
|
11,082
|
|
||||
|
$
|
2,658
|
|
|
$
|
10,644
|
|
|
$
|
9,377
|
|
|
$
|
19,078
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise Price
Per Share
|
|||
Options outstanding, January 1, 2016
|
10,232,969
|
|
|
$
|
10.00
|
|
Granted
|
4,490,700
|
|
|
$
|
6.30
|
|
Forfeited
|
(1,928,884
|
)
|
|
$
|
8.71
|
|
Exercised
|
(540,619
|
)
|
|
$
|
4.95
|
|
Options outstanding, June 30, 2016
|
12,254,166
|
|
|
$
|
9.07
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Outstanding, January 1, 2016
|
4,493,054
|
|
|
$
|
8.64
|
|
Granted / awarded
|
3,491,512
|
|
|
$
|
6.57
|
|
Forfeited
|
(2,513,304
|
)
|
|
$
|
7.64
|
|
Vested or restrictions lapsed
|
(1,855,022
|
)
|
|
$
|
8.48
|
|
Outstanding, June 30, 2016
|
3,616,240
|
|
|
$
|
7.42
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands, except per share amounts
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
109,848
|
|
|
$
|
(63,160
|
)
|
|
$
|
56,061
|
|
|
$
|
(115,835
|
)
|
|
|
|
|
|
|
|
|
||||||||
Shares used in basic computation
|
191,485
|
|
|
188,598
|
|
|
190,894
|
|
|
188,220
|
|
||||
Dilutive impact of employee equity award plans
|
3,084
|
|
|
—
|
|
|
2,610
|
|
|
—
|
|
||||
Shares used in diluted computation
|
194,569
|
|
|
188,598
|
|
|
193,504
|
|
|
188,220
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per Share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.57
|
|
|
$
|
(0.33
|
)
|
|
$
|
0.29
|
|
|
$
|
(0.62
|
)
|
Diluted
|
$
|
0.56
|
|
|
$
|
(0.33
|
)
|
|
$
|
0.29
|
|
|
$
|
(0.62
|
)
|
In thousands
|
Unrealized
Gains
on
Marketable
Securities, net of tax
|
|
Cumulative
Translation
Adjustment
|
|
Defined
Benefit
Pension
Obligation
|
|
Total
|
||||||||
Balance, April 1, 2016
|
2,835
|
|
|
535
|
|
|
(3,498
|
)
|
|
(128
|
)
|
||||
Other comprehensive (loss) income
|
(1,923
|
)
|
|
(12
|
)
|
|
36
|
|
|
(1,899
|
)
|
||||
Reclassification into earnings upon sale of European operations
|
—
|
|
|
(523
|
)
|
|
3,462
|
|
|
2,939
|
|
||||
Balance, June 30, 2016
|
$
|
912
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
912
|
|
|
|
|
|
|
|
|
|
||||||||
In thousands
|
Unrealized
Gains
on
Marketable
Securities, net of tax
|
|
Cumulative
Translation
Adjustment
|
|
Defined
Benefit
Pension
Obligation
|
|
Total
|
||||||||
Balance, January 1, 2016
|
6,821
|
|
|
567
|
|
|
(3,553
|
)
|
|
3,835
|
|
||||
Other comprehensive (loss) income
|
(5,909
|
)
|
|
(44
|
)
|
|
91
|
|
|
(5,862
|
)
|
||||
Reclassification into earnings upon sale of European operations
|
—
|
|
|
(523
|
)
|
|
3,462
|
|
|
2,939
|
|
||||
Balance, June 30, 2016
|
$
|
912
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
912
|
|
In thousands
|
June 30, 2016
|
||
Balance, January 1, 2016
|
$
|
—
|
|
Charges
|
3,010
|
|
|
Amounts paid
|
(1,837
|
)
|
|
Adjustments, net
|
(827
|
)
|
|
Balance, June 30, 2016
|
$
|
346
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Iclusig
®
(ponatinib)
is our first approved cancer medicine, which we are commercializing in the United States, Europe and other territories for the treatment of certain patients with rare forms of leukemia. We are also continuing to develop ponatinib, including in our ongoing OPTIC dose-ranging trial and our OPTIC-2L trial in second-line patients with chronic phase chronic myeloid leukemia, or CML.
|
•
|
Brigatinib (previously known as AP26113)
is our next most advanced drug candidate, which we are developing for the treatment of certain patients with a form of non-small cell lung cancer, or NSCLC. We have completed enrollment in our ALTA Phase 2 pivotal clinical trial of patients with ALK+ NSCLC who are resistant to crizotinib, and have initiated a rolling submission for regulatory approval in the United States that we expect to complete in the third quarter of 2016, which could lead to potential approval and launch in early 2017. We have also commenced a global Phase 3 clinical trial of brigatinib, called the ALTA-1L trial, designed to evaluate brigatinib as a potential front-line therapy in ALK+ NSCLC patients. Subject to the timing of enrollment, we currently anticipate to complete enrollment in this trial in 2018.
|
•
|
AP32788
is our most recent, internally discovered drug candidate, which we are developing for the treatment of patients with NSCLC with specific mutations in the EGFR or HER2 kinases. We commenced a Phase 1/2 clinical trial of AP32788 in the second quarter of 2016.
|
•
|
a commitment to commercializing brigatinib in the U.S., subject to approval by the U.S. Food and Drug Administration, or FDA;
|
•
|
a focus on the valuable U.S. market, with the divestiture of our European operations and out-license of Iclusig rights in Europe and other selected countries to Incyte, while also maintaining future strategic flexibility through a buy-back provision for the licensed Iclusig rights following a change of control of ARIAD;
|
•
|
a significant reduction in our expense base, together with more rigorous cost controls, while also planning to commit resources to expand our product pipeline and conducting clinical trials to expand potential market opportunities;
|
•
|
changes to our executive leadership team and board of directors; and
|
•
|
a decision to build upon our core strengths in precision small molecule therapies and rare cancers, including investing in potential new opportunities in immuno-oncology, with pharmacologic proof-of-concept achieved against a validated lead target.
|
|
Three Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Product revenue, net
|
$
|
65,326
|
|
|
$
|
27,818
|
|
|
$
|
37,508
|
|
License, collaboration and other revenue
|
2,799
|
|
|
1,420
|
|
|
1,379
|
|
|||
|
$
|
68,125
|
|
|
$
|
29,238
|
|
|
$
|
38,887
|
|
|
Three Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Trade allowances
|
$
|
457
|
|
|
$
|
304
|
|
|
$
|
153
|
|
Rebates, chargebacks and discounts
|
12,147
|
|
|
3,262
|
|
|
8,885
|
|
|||
Other incentives
|
(270
|
)
|
|
228
|
|
|
(498
|
)
|
|||
Total adjustments
|
$
|
12,334
|
|
|
$
|
3,794
|
|
|
$
|
8,540
|
|
Gross product revenue
|
$
|
77,660
|
|
|
$
|
31,612
|
|
|
$
|
46,048
|
|
Percentage of gross product revenue
|
15.9
|
%
|
|
12.0
|
%
|
|
|
|
Three Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Inventory cost of Iclusig sold
|
$
|
689
|
|
|
$
|
276
|
|
|
$
|
413
|
|
Shipping and handling costs
|
184
|
|
|
184
|
|
|
—
|
|
|||
Inventory reserves/write-downs
|
235
|
|
|
28
|
|
|
207
|
|
|||
|
$
|
1,108
|
|
|
$
|
488
|
|
|
$
|
620
|
|
|
Three Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Direct external expenses:
|
|
|
|
|
|
||||||
Iclusig
|
$
|
7,612
|
|
|
$
|
5,629
|
|
|
$
|
1,983
|
|
Brigatinib
|
13,489
|
|
|
8,041
|
|
|
5,448
|
|
|||
All other R&D expenses
|
21,763
|
|
|
25,069
|
|
|
(3,306
|
)
|
|||
|
$
|
42,864
|
|
|
$
|
38,739
|
|
|
$
|
4,125
|
|
|
Six Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Product revenue, net
|
$
|
98,960
|
|
|
$
|
51,719
|
|
|
$
|
47,241
|
|
License, collaboration and other revenue
|
4,763
|
|
|
1,510
|
|
|
3,253
|
|
|||
|
$
|
103,723
|
|
|
$
|
53,229
|
|
|
$
|
50,494
|
|
|
Six Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Trade allowances
|
$
|
832
|
|
|
$
|
559
|
|
|
$
|
273
|
|
Rebates, chargebacks and discounts
|
18,184
|
|
|
5,359
|
|
|
12,825
|
|
|||
Other incentives
|
93
|
|
|
446
|
|
|
(353
|
)
|
|||
Total adjustments
|
$
|
19,109
|
|
|
$
|
6,364
|
|
|
$
|
12,745
|
|
Gross product revenue
|
$
|
118,069
|
|
|
$
|
58,083
|
|
|
$
|
59,986
|
|
Percentage of gross product revenue
|
16.2
|
%
|
|
11.0
|
%
|
|
|
|
Six Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Inventory cost of Iclusig sold
|
$
|
947
|
|
|
$
|
539
|
|
|
$
|
408
|
|
Shipping and handling costs
|
365
|
|
|
399
|
|
|
(34
|
)
|
|||
Inventory reserves/write-downs
|
282
|
|
|
245
|
|
|
37
|
|
|||
|
$
|
1,594
|
|
|
$
|
1,183
|
|
|
$
|
411
|
|
|
Six Months Ended June 30,
|
|
Increase/
|
||||||||
In thousands
|
2016
|
|
2015
|
|
(decrease)
|
||||||
Direct external expenses:
|
|
|
|
|
|
||||||
Iclusig
|
$
|
14,608
|
|
|
$
|
11,858
|
|
|
$
|
2,750
|
|
Brigatinib
|
23,892
|
|
|
16,802
|
|
|
7,090
|
|
|||
All other R&D expenses
|
48,457
|
|
|
49,523
|
|
|
(1,066
|
)
|
|||
|
$
|
86,957
|
|
|
$
|
78,183
|
|
|
$
|
8,774
|
|
|
Six Months Ended June 30,
|
||||||
In thousands
|
2016
|
|
2015
|
||||
Proceeds from the Incyte transaction, net of cash transferred
|
$
|
144,847
|
|
|
$
|
—
|
|
Option and stock purchase plans
|
4,074
|
|
|
$
|
2,620
|
|
|
Reimbursement of amounts related to facility lease obligation
|
26,759
|
|
|
15
|
|
||
|
$
|
175,680
|
|
|
$
|
2,635
|
|
•
|
our existing cash, cash equivalents, and marketable securities, together with
$50 million
provided by PDL in July 2016 under our royalty financing agreement;
|
•
|
cash flows from sales of Iclusig, including from royalties on sales outside the United States from our collaborators and distributors;
|
•
|
payments under our license agreement with Incyte, including up to
$14 million
in cost-sharing for our OPTIC and OPTIC-2L trials, and up to
$135 million
in potential milestone payments;
|
•
|
future milestone payments under our existing collaboration and distribution agreements; and
|
•
|
funding from potential new collaborative agreements, licenses or strategic alliances.
|
|
Six Months Ended June 30,
|
||||||
In thousands
|
2016
|
|
2015
|
||||
Net cash used in operating activities
|
$
|
97,747
|
|
|
$
|
78,617
|
|
Repayment of long-term borrowings and capital leases
|
2,889
|
|
|
—
|
|
||
Investment in property and equipment
|
31,504
|
|
|
2,700
|
|
||
Payment of tax withholding obligations related to stock compensation
|
1,337
|
|
|
174
|
|
||
|
$
|
133,477
|
|
|
$
|
81,491
|
|
|
|
|
Payments Due By Period
|
||||||||||||||||
In thousands
|
Total
|
|
In
2016 |
|
2017
through 2019 |
|
2020
through 2021 |
|
After
2021 |
||||||||||
Long-term debt
|
$
|
200,000
|
|
|
$
|
—
|
|
|
$
|
200,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Royalty financing
|
46,129
|
|
|
—
|
|
|
—
|
|
|
46,129
|
|
|
—
|
|
|||||
Lease agreements
|
468,809
|
|
|
7,701
|
|
|
103,736
|
|
|
64,756
|
|
|
292,616
|
|
|||||
Other long-term obligations
|
5,958
|
|
|
2,383
|
|
|
3,425
|
|
|
100
|
|
|
50
|
|
|||||
Total fixed contractual obligations
|
$
|
720,896
|
|
|
$
|
10,084
|
|
|
$
|
307,161
|
|
|
$
|
110,985
|
|
|
$
|
292,666
|
|
•
|
inability to maintain the relationship with the single specialty pharmacy with whom we have contracted for distribution of Iclusig in the United States and our other distributors, suppliers and manufacturers;
|
•
|
inability of sales personnel to obtain access to or convince adequate numbers of physicians to prescribe our products;
|
•
|
inability to recruit, retain and effectively manage adequate numbers of effective sales and marketing personnel;
|
•
|
lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies that have more extensive product lines; and
|
•
|
unforeseen delays, costs and expenses associated with maintaining an effective sales and marketing organization, supply chain and pricing and reimbursement capabilities.
|
•
|
product formulation;
|
•
|
dose and dosage regimen;
|
•
|
the ability to obtain timely and sufficient patient enrollment in clinical trials;
|
•
|
the risk of occurrence of adverse events and other side effects in patients participating in clinical trials and any early access programs;
|
•
|
the attainment of clinical data that is sufficient to support regulatory approval;
|
•
|
the ability to manufacture sufficient quantities of product candidates at commercially reasonable costs;
|
•
|
the ability to fund commercial development and to build or access a sales force in the marketplace for that product candidate;
|
•
|
the ability to obtain and maintain reimbursed named patient and early access programs on adequate terms;
|
•
|
the ability to successfully differentiate product candidates from competitive products;
|
•
|
the ability to develop and obtain clearance or approval of companion diagnostic tests, if required, on a timely basis;
|
•
|
the ability to educate physicians and build awareness about our product candidates; and
|
•
|
the ability to sell, market and distribute such product candidates.
|
•
|
cautionary prescribing behavior, confusion or other concerns regarding the safety and risk-benefit of Iclusig;
|
•
|
decisions that may be made by physicians regarding dosing of patients with Iclusig in response to safety concerns or adverse events;
|
•
|
difficulty in identifying appropriate patients for treatment with Iclusig;
|
•
|
the cost and availability of reimbursement for the product;
|
•
|
treatment guidelines issued by government and non-government agencies;
|
•
|
types of cancer for which the product is approved;
|
•
|
timing of market entry relative to competitive products;
|
•
|
availability of alternative therapies;
|
•
|
price of our product relative to alternative therapies, including generic versions of our product, or generic versions of innovative products that compete with our product;
|
•
|
patients’ reliance on patient assistance programs, under which we provide free drug;
|
•
|
rates of returns and rebates;
|
•
|
uncertainty of launch trajectory;
|
•
|
the ability of our third-party manufacturers to manufacture and deliver Iclusig in commercially sufficient quantities;
|
•
|
the ability of our single specialty pharmacy distributor in the United States and our collaborators and distributors in other markets to process orders in a timely manner and satisfy their other obligations to us;
|
•
|
the extent of marketing efforts by us and our collaborators and distributions and any third-party agents retained on our and their behalf; and
|
•
|
side effects or unfavorable publicity concerning our products or similar products.
|
•
|
the failure to obtain anticipated royalties, milestones, cost savings or other benefits of the transaction;
|
•
|
difficulties in the separation of operations, responsibilities and personnel;
|
•
|
the diversion of management’s attention from other business concerns;
|
•
|
disruptions in the development and commercialization of our products and product candidates due to the loss of key personnel that had supported these efforts or difficulties in coordinating any joint responsibilities with Incyte under the license agreement; and
|
•
|
the potential loss of key employees.
|
•
|
differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries;
|
•
|
changes in tariffs, trade barriers and regulatory requirements;
|
•
|
economic weakness, including inflation, or political instability in particular foreign economies and markets;
|
•
|
compliance with country-specific regulations limiting the use of individuals’ personal information and restricting the transfer of this information to the United States;
|
•
|
foreign currency fluctuations, which could result in increased operating expenses or reduced revenues, and other obligations incident to doing business or operating in another country;
|
•
|
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
|
•
|
business interruptions resulting from geo-political actions, including war and terrorism.
|
•
|
the authorized number of directors may be changed only by resolution of the board of directors;
|
•
|
any vacancies on the board of directors may only be filled by a majority of the directors then serving, although not a quorum, and not by the stockholders;
|
•
|
the ability of the board of directors to issue preferred stock that could dilute the stock ownership of a potential unsolicited acquirer and so possibly hinder an acquisition of control of us that is not approved by our board of directors, including through the use of preferred stock in connection with a shareholder rights plan which we could adopt by action of the board of directors;
|
•
|
record date-setting provisions for annual and special meetings of stockholders and actions by written consent, provisions regulating the conduct of meetings of stockholders and action by written consent, and “advance notice” timing and informational requirements for stockholder nominations to our board of directors at stockholder meetings or for stockholder proposals that can be acted on at stockholder meetings or by written consent; and
|
•
|
the inability of our stockholders to call a special meeting of stockholders, the limitation of matters to be acted upon at an annual meeting of stockholders to those matters proposed by us or properly brought before the meeting and the limitation of matters to be acted upon at a special meeting of stockholders to matters which we place on the agenda for the meeting.
|
ARIAD PHARMACEUTICALS, INC.
|
||
|
|
|
By:
|
|
/s/ Paris Panayiotopoulos
|
|
|
Paris Panayiotopoulos
|
|
|
President and Chief Executive Officer
|
|
|
(Principal executive officer)
|
|
|
|
By:
|
|
/s/ Manmeet S. Soni
|
|
|
Manmeet S. Soni
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
|
(Principal financial officer and principal accounting officer)
|
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
with
this
Report
|
|
Incorporated by
Reference
herein from
Form or
Schedule
|
|
Filing
Date
|
|
SEC File/
Reg.
Number
|
|||
10.1
|
|
|
|
|
Amended and Restated Buy-In License Agreement, dated June 1, 2016, among ARIAD Pharmaceuticals, Inc., ARIAD Pharmaceuticals (Europe) S
à
rl and Incyte Corporation (as guarantor)*
|
|
X
|
|
|
|
|
|
|
10.2
|
|
|
|
|
Share Purchase Agreement, dated May 9, 2016, among Incyte Europe S.
à.
r.l., ARIAD Pharmaceuticals (Cayman) L.P., ARIAD Pharmaceuticals, Inc. (as guarantor) and Incyte Corporation (as guarantor)*
|
|
X
|
|
|
|
|
|
|
10.3
|
|
|
|
|
Amendment No. 1 to RIAA, dated May 9, 2016, between ARIAD Pharmaceuticals, Inc. and PDL BioPharma, Inc.*
|
|
X
|
|
|
|
|
|
|
10.4
|
|
|
|
|
Partial Release of Security Interest, dated May 9, 2016, between ARIAD Pharmaceuticals, Inc. and PDL BioPharma, Inc.*
|
|
X
|
|
|
|
|
|
|
10.5
|
|
|
|
|
Executive Employment Agreement, dated May 23, 2016, between ARIAD Pharmaceuticals, Inc. and Jennifer L. Herron+
|
|
X
|
|
|
|
|
|
|
10.6
|
|
|
|
|
Executive Employment Agreement, dated June 1, 2016, between ARIAD Pharmaceuticals, Inc. and Jayne M. Gansler+
|
|
X
|
|
|
|
|
|
|
10.7
|
|
|
|
|
Form of Option Agreement under the ARIAD Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, effective May 16, 2016+
|
|
X
|
|
|
|
|
|
|
10.8
|
|
|
|
|
Form of Restricted Stock Unit Agreement under the ARIAD Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, effective May 16, 2016+
|
|
X
|
|
|
|
|
|
|
10.9
|
|
|
|
|
Form of Performance Share Agreement under the ARIAD Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, effective April 29, 2016+
|
|
X
|
|
|
|
|
|
|
31.1
|
|
|
|
|
Certification of the Chief Executive Officer
|
|
X
|
|
|
|
|
|
|
31.2
|
|
|
|
|
Certification of the Chief Financial Officer
|
|
X
|
|
|
|
|
|
|
32.1
|
|
|
|
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
with
this
Report
|
|
Incorporated by
Reference
herein from
Form or
Schedule
|
|
Filing
Date
|
|
SEC File/
Reg.
Number
|
|||
101
|
|
|
|
|
The following materials from ARIAD Pharmaceutical, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Loss, (iv) Unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
|
|
X
|
|
|
|
|
|
|
(+)
|
Management contract or compensatory plan or arrangement.
|
(*)
|
Confidential treatment has been requested from the Securities and Exchange Commission as to certain portions.
|
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