Ariad’s Iclusig Has A Strong Launch Trajectory After First Three Months

The biotech gave investors a surprise update about the status of its recently-launched leukemia drug after a sell-side analyst had investors questioning whether the drug was selling as expected.

After some bad press spooked Ariad Pharmaceuticals Inc.’s shareholders, the company’s management held an impromptu conference call on April 4 to refute claims that cardiovascular side effects have been plaguing the introduction of its leukemia treatment. The biotech also provided evidence that the drug’s launch has been going better than expected.

According to Ariad management, more than 325 patients are currently receiving Iclusig (ponatinib) as a treatment for either chronic myeloid leukemia (CML) or Philadelphia chromosome-positive acute lymphoblastic leukemia (ALL). Ariad launched the drug just 12 weeks ago after receiving approval from FDA Dec. 14, three months ahead of its priority review user fee date (Also see "Ariad’s Leukemia Drug Iclusig Sails Through FDA In Less Than 3 Months" - Pink Sheet, 14 Dec, 2012.). Ariad isn’t expected to release sales of the drug until May 7, but early indicators show that Iclusig revenues will likely exceed Wall Street’s consensus estimates of $4.5 million for the quarter.

Ariad Chairman and CEO Harvey Berger said during the April 4 call that about 2,500 patients, approximately 600 per quarter, are expected to switch from other tyrosine kinase inhibitors (TKIs) during 2013 as the patients fail to respond or develop a tolerance to the other medications. He implied that the company expects the number of patients for the quarter to be well above the current 325, and closer to 600. He also noted that one-third of patients currently taking Iclusig had only been on one prior TKI.

Approximately two-thirds of Iclusig prescribers are community-based physicians; the remaining third are academic physicians. The company cited that distribution as an indicator that Iclusig is being prescribed broadly by hematologists and oncologists in diverse clinical settings, not just the investigators who participated in the drug’s clinical trials.

“These data reaffirm that Iclusig is not being niched as a salvage therapy for patients with the T315I mutation or those who have failed three or more TKIs,” said Berger. “It is clear that Iclusig is being prescribed widely, consistent with its broad label, its robust efficacy and its excellent tolerability, and we expect this to increase further as the launch progresses.”

Berger stated during the Q&A portion of the call that the number of patients taking the drug has been increasing on a month-to-month basis since January. He was also quick to point out that there are still a number of patients on the company’s 30-day Quick Start program, which provides the drug to patients for free in a more timely fashion, but also keeps those patients from being counted in IMS Health and company revenue data for the drug.

FDA approved the drug with a wide label, making it a second-line therapy for CML patients who weren’t helped by any of the other TKIs, including dasatinib (Bristol-Myers Squibb Co.'s Sprycel) or nilotinib (Novartis AG's Tasigna). Initially, the drug was expected to be used largely in patients with the T315I mutation, but a companion diagnostic test was withdrawn from the regulatory process when it was determined that other patients without the mutation could benefit from the drug as well. Therefore, most patients are not even tested for the mutation.

The U.S. regulatory authority also gave the drug’s label a black box warning that noted a risk of arterial thrombosis that could lead to fatal stroke and heart attacks, as well as hepatotoxicity issues that could lead to liver failure or death.

Ariad Responds To Negative Sell-Side Report

An analyst report issued by Favus Institutional Research on April 3 left the company and its shareholders “distracted,” said Berger. The note implied that patients were experiencing a high number of severe adverse events, mostly among those with the T315I mutation. Ariad executives disputed the results, noting that the report surveyed just 13 oncologists who had used the drug in 77 patients and that most of the patients were being treated by one doctor.

Several news outlets and online blogs covered the report’s findings, causing some investor frenzy. Ariad stock fell 4.1% on April 3, the day the report was issued, to close at $16.76. It has since recovered slightly to close at $17.04 on April 4. Most analysts expect the company’s share price to be volatile until further proof of the drug’s success has been presented.

Ariad replied to the accusations from the report during the call by saying, “The survey is, at best, incomplete and is replete with misinformation, innuendo and false statements. His conclusions are unfounded and will be shown to be highly biased, as the commercial success of Iclusig becomes increasingly apparent and patients achieve sustained clinical benefit from Iclusig.”

Favus had a “sell” rating on the stock.

Berger added that doctors prescribing the drug haven’t reported new or unusual side effects to the company or FDA, and that the company’s observations of patient use have been largely positive.

BMO Capital Markets analyst Jim Birchenough countered the Favus report in an April 3 note suggesting that its survey focused disproportionately on gravely ill patients receiving Iclusig. “We strongly believe that any survey that includes >50% of patients from the expanded access program (EAP) will be skewed toward patients at the more terminal phase of disease and not representative of the labeled indication for earlier 2nd-line use,” Birchenough wrote. “We would remind investors that patients enrolled in the Iclusig EAP represent the sickest patient population, with a disproportionately high group of patients with blast phase or accelerated phase disease.”

Birchenough added that prescription data from IMS suggests that the Iclusig launch is going particularly well and is “well on its way to $1B+ in sales even as a 2nd-line+ option.”

The European Medicines Agency’s Committee for Human Medicinal Products (CHMP) gave the drug its stamp of approval in March, and Ariad expects that approval in Europe is imminent (Also see "Ariad’s Iclusig Cleared For European Approval By CHMP" - Pink Sheet, 22 Mar, 2013.). Iclusig’s European label criterion is expected to be similar to that of the U.S. label.

“Our internal market research, along with independent third-party research, shows that approximately 40% of chronic-phase patients and approximately 50% of advanced-phase patients in Europe with newly diagnosed CML are being treated at the onset by one of these two second-generation TKIs as their initial treatment,” said Berger during the call. “We expect these percentages to continue to increase similarly to the trend seen in the U.S. as greater adoption takes place. And this, in turn, will create a growing and broader opportunity for Iclusig and second-line patients in Europe.”