ARIA is not worth $7.8 billion
The company has:
1. Intellectual Property (which the patent was essentially invalidated and I am not sure it's worth much anymore - like most patents that came out of the Genomics Project)
2. Ridaforolimus (an mTOR which likely isn't going to earn much of a revenue stream in sarcoma due to several other compounds in the clinic which are for the sarcoma indication - one being ZIOP's compound. Other GIST compounds are showing great promise). I am not sure how much money Rida will bring in with combination - either way, those are likely 2-3 years away before any final approval (combo studies). The SUCCEED trial isn't a sure thing, either. The only value in Rida is it VALIDATES a compound Ariad has made in its own clinic.
3. '534. That's the big winner here.
4. '113. Likely won't see any revenues from dosing patients (assuming it's even approved, for at least 3-5 years - earliest).
How some people come up with all these being worth $7.8 billion (when Dendreon and Human Genome Sciences aren't even remotely worth that much) is beyond me.
IMO, this company is a buyout in the range of $1.5 billion-$2 billion assuming everything goes right. That would make it $15-20 fully diluted. More dilutions, less price. It's simple math.
DISCLOSURE: I am long. Reasons: 50/50 gamble SUCCEED trial succeeds. '534 partnership and I see the real value with what they are going to do with '534. '113 is still vapor, although, a valid target. All three of the above are reasons why a successful pharma would want Ariad - but no Board is going to approve a $7 billion buyout of the company, considering it's value today is roughly $400 million.
