Biotech investors have to make some tough choices when it comes to oncology drug companies. On one side of the ledger are small, cheap-looking stocks that could triple if their pivotal trials beat the odds and succeed. On the other side are the companies which much more certain prospects, but considerably higher valuations. With Ariad Pharmaceuticals' (ARIA) stock already incorporating some pretty big things, investors have to ask how much more than can expect to reap from it.
Shrugging Off A Minor Setback
News from Ariad hasn't been all that positive of late. The FDA's advisory committee roundly punted the application made by Ariad's partner Merck (MRK) to market ridaforolimus for sarcoma. While modest improvements in progression-free survival had kept expectations low, bad news is still bad news. Although the loss to Ariad's implied valuation was minimal (perhaps $2 to $3 per share based on about $175 million to $200 million in potential revenue and milestones/royalties), the co-promotion angle could have been of more long-term use to Ariad.
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Investors Already Expect A Lot From Ariad Pharmaceuticals
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