Leerink Expects Ariad Pharmaceuticals To Outperform

Leerink’s Michael Schmidt noted that despite the recent outperformance, Ariad Pharmaceuticals, Inc. (NASDAQ: ARIA) shares were still trading at a discount to its commercial-stage oncology biotech peers, although the company’s top line was expected to grow at a 35 percent CAGR during 2016–2018, above that of its peers.

Schmidt initiated coverage of the company with an Outperform rating and a price target of $20.

Sales Growth

Following discussions with MEDACorp KOLs and analysis of the chronic myeloid leukemia (CML) market, the analyst expects Ariad Pharma’s Iclusig to deliver sales growth above the consensus expectations over the next three years.

In fact, the analyst pointed out that the Street expectations for the company’s pipeline products continue to be low.

Underappreciated Pipeline

“Driven by a best-in-class product profile, we believe brigatinib is well positioned to exceed commercial expectations in ALK + NSCLC, while AP32788, the company’s differentiated EGFR inhibitor, represents what we view as a free source of upside with Ph I data expected in mid-’17,” Schmidt mentioned.

Related Link: Why This Epidiolex Trial Was Different

Ariad Pharma’s new management team has structured a leaner and more focused company that could ensure commercial execution in the United States, while also sustaining future strategic flexibility.

“Positive results from ongoing OPTIC and OPTIC-2L trials in 2017 and 2018–20 could drive additional growth longer term. We forecast an 18 percent expected US Sales CAGR though 2020E in a base case scenario,” the analyst added.

Schmidt expects Iclusig to see peak sales of $670 million in the United States.

At time of writing, Ariad was up 1.82 percent at $13.77.

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