Ariad Pharmaceuticals Inc fka ARIA

[trading_cyclist]

Economic Value FDA"breakthrough Status." I suspct it will take some time for the market, and all of us, to absorb the true economic value of the "Breakthrough Status" designation for AP26113. That said, consider this.

First, breakthrough status can result in a drug candidate jumping from phase 1 or phase 2 to FDA approval. That can add three years (or more) to the economic life of a drug - before the patent runds out, or other competitors catch up (or both). So, if the the current market value of crizotinib is $350m per year, and IF AP26113 were to replace it, you would be looking at an increase of up to $1.0b over the life of the drug.

Second, there is the benefit of skipping a costly phase III trial. The only academic reference I can find on short order for the cost of phase III trials is old, but comes in at $86m. The link is included below. I found another (non academic) link for the cost of phase III that was more recent, and put this at $125m. Either way, it is a large number.

http://moglen.law.columbia.edu/twiki/pub/LawNetSoc/BahradSokhansanjFirstPaper/22JHealthEcon151_drug_development_costs_2003.pdf

The punch line for me here is that, management issues not withstanding, the potential economic value of the breakthrough status is significant; I assume the market will eventually appreciate that, whateverultimately happens with AP26113.

Kind regards to all,

TC