You may have a drug on the market, but you’re not out of the woods
So, Ariad Pharmaceuticals (NASDAQ:ARIA) is in a bit of a different place than the others on this list because it has brought its drug Iclusig to market, but that doesn’t mean that the drug has made an impact on the income statement yet. The drug’s release in January means that it still needs to keep an eye on its finances, especially considering the competitive market it is trying to capture. Iclusig is hoping to gain a foothold in the crowded chronic myeloid leukemia market — which already has Novartis AG (ADR) (NYSE:NVS)‘ Gleevec and Tasigna, Bristol Myers Squibb Co. (NYSE:BMY)‘s Sprycel, and also has newcomers Pfizer Inc. (NYSE:PFE)‘s Bosulif and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)‘s Synribo as well. Despite the FDA approval and the launch of the drug, Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is still in the process of another phase 3 clinical trial where it will compare the efficacy of Iclusig versus Gleevec. If the trial proves successful the company could move up the treatment pecking order. It also is still awaiting approval from the European regulatory commission, which they expect sometime later this year.
The company raised just over $300 million on a secondary share offering back in January. Added to its holdings at the end of the fiscal year, the company has about $475 million in cash and marketable securities. The company announced in its most recent 10-K that the combination of its newfound revenues from Iclusig and its cash on hand will be sufficient to keep the company going until the fourth quarter of 2014. Averaging this out, it would mean the company would spend about $60 million of its cash per quarter, which is a big jump from the $43 million it spent last quarter. This is somewhat understandable, though, considering the company will now need to account for sales and marketing expenses as well.
What a Fool believes
Don’t expect MannKind Corporation (NASDAQ:MNKD) or Dynavax Technologies Corporation (NASDAQ:DVAX) to bring their drugs to market without some sort of financial move. In the case of MannKind, that could be a partnership. For Dynavax, hopefully it will garner enough good publicity to see a spike in share price so it can replenish its cash pile. While it is important for these companies to keep their budgets in order, it is far more important that these drugs pass clinical trials. The success of these drugs is the only mechanism for the companies to start generating profits.
For Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), let’s hope for shareholders’ sake that this is the last equity issuance. The market it hopes to penetrate is pretty competitive, but there is a lot of money in the CML market. Last year, the three drugs on the market totaled about $4.75 billion in sales.
The article 3 Biotechs Still Burning Through Cash originally appeared on Fool.com and is written by Tyler Crowe.
Fool contributor Tyler Crowe has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
