Battling Weak Stocks and Earnings Losses, Ariad Leases Almost Half of HQ to IBM
August 24, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Cambridge, Mass.-based Ariad Pharmaceuticals, Inc. announced today that it will be leasing almost half of its new headquarters on Binney Street to IBM Corporation . The sublease runs for 10 years starting in the third quarter of 2016. Ariad estimates it will receive about $115 million in that period.
The company recently announced its second quarter earnings, with a net loss of $63.2 million, compared to a net loss of $56.9 million in the same period in 2014. For the six-month period, the company reported a net loss of $115.8 million in 2015, compared to a net loss of $106.7 million in 2014.
The company, despite the overall losses, reported stronger sales of its drug Iclusig (ponatinib). “During the second quarter, the Company continued strong commercial execution of Iclusig with double-digit percentage, quarter-over-quarter growth in both the U.S. and European markets,” said Harvey Berger, chairman and chief executive officer of Ariad in a statement. “We expect additional commercial launches and positive pricing and reimbursement decisions in several European countries during the remainder of the year.”
Ariad originally had plans to use all of the headquarters space, but Iclusig’s sales projections were cut significantly in 2013, to about half of what was originally expected. That was in reaction to a U.S. Food and Drug Administration (FDA) warning about toxic side effects. Ariad then refiled for a narrower patient population. At that point, the company then laid off 160 employees, of about 450. At the end of 2014, Ariad had 370 employees worldwide, with 264 in the U.S.
In April, 2015, the company announced that Berger, who also founded the company, would retire at the end of this year or when a replacement was found, whichever came first.
The company has also been caught up in a proxy battle. On April 29, the company indicated it had settled its proxy context with Sarissa Capital Management. The search for Berger’s replacement is being headed by Alex Denner of Sarissa Capital. In addition, Ariad’s board appointed Anna Protopapas to fill a vacant seat on the Board. As part of the agreement, Sarissa withdrew its proposed list of director nominees, which included Protopapas, and agreed to vote all of its shares in favor of the Board’s nominees.
Sarissa is run by former Carl Icahn protégé Denner, and Richard Mulligan. Together they increased Sarissa’s stake in Ariad to 6.9 percent. Denner took a seat on Ariad’s board in February 2014. Denner demanded Berger step down after the stock’s initial slide, but he’s hung on so far.
There has been speculation that a number of different companies might acquire Ariad, including Roche , Celgene Corporation , Amgen , AbbVie , and Gilead Sciences, Inc. . So far, nobody’s biting.
has been volatile, and the current market drop hasn’t bypassed the company. Shares traded at a high of $9.71 on April 24, 2015 and have been on a slide downward ever since, trading for $7.56 on July 8 and currently trading for $6.51. Shares traded for $25.16 on Oct. 5, 2012, but dropped dramatically after the FDA’s bad news to $2.32 on Nov. 8, 2013.
Trade-Ideas LLC called Ariad a “dead cat bounce,” which is to say, down big yesterday but up big today. TheStreet Quant Ratings rated it as “Sell,” citing disappointing growth in net income and weak growth in earnings per share.