>Aria as a short
Well you and I would be on the opposite sides of this trade, as ARIA is by far my biggest position (as it was when it was below $2).
I agree Ponatinib approval is baked in now - that is primarily what has taken the stock from low single digits to where it is now.
Ponatinib looks to be best in class - not only most potent, but also potentially having a very good side effect profile. Note that in 1st line therapy they will likely be able to use a lower dose than they are now. So sales of $500m in a few years are essentially a lock (assuming generic Gleevec), and the likelihood is that sales in excess of $1b are achievable. Cancer treatment is not like high cholesterol - managed care can encourage the use of Gleevec, but they can't require it. The generic filing on Sprycel I view as noise.
Ariad wholly owns ponatinib - look at the revenue multiple CELG currently gets on its wholly-owned drugs (EV is currently 5.6X revenues), 15X for ALXN.
Rida is worth a couple of bucks a share - I expect approval and there is some potential upside from the multiple combination trials Merck is running.
Finally you ignore '113 - potentially the most valuable asset ARIA has. If its preclinical promise gets fulfilled (something we will almost certainly know one way or another within a year), then ARIA will climb dramatically from here. In the ALK space (like CML) the preclinical results should prove highly predictive of efficacy, so in my view this happens to be one of the exceedingly rare cases in biotech where preclinical results have a substantial impact on valuation. This drug has the potential to be a multi-billion dollar drug within a few years - I'll leave as an exercise for the reader what ARIA's stock price would be if it had a wholly-owned drug that sold $2 bilion a year.
So I'd say this would be an exceedingly risky short.
Peter
