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Investing as Shakespearean Tragedy: The Story of Ariad Pharmaceutical (ARIA)

By  +Follow November 12, 2013 8:57AM
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Shares in Ariad Pharmaceuticals (ARIA) were up 10.78 percent on Veterans Day. Even for a small-cap like Ariad, coming in at a valuation just under a half billion dollars, that’s normally what one would consider a pretty solid bounce. That’s a day that, for a lot of investors, would stand out. However, for the battered shareholders of Ariad, it probably doesn’t even register any more. Okay, that’s not true, double-digit jumps always register. But after the Odyssey Ariad’s been on for the last month, it’s not difficult to imagine that days like Monday just get lost in the shuffle.

It’s not often you see a company go on a ride like Ariad just has, plunging sharply, appearing to rally, rinse and repeat. And it’s a drama that’s swept a lot of people up. Over the last 3 months, Ariad’s moved an average of 11.14 million shares a day, good to make it the 75th most traded security over that period, one spot behind Elon Musk’s Tesla Motors (TSLA) , a battleground stock and the source of general market fascination. That’s a class that contains mostly mega-cap blue chips and high-profile ETFS, relatively few small-cap companies. And that’s not even the whole story. Ariad’s heavy volume is drawn mostly from the massive spike this last month. Over the last 30 days Aria has been moving an average of 20 million shares a day, meaning that more than 10 percent of outstanding shares are trading hands on an average day.

So what’s happening with this company? The story’s a simple one, but, for Ariad investors, it’s a tragic one.

Volatile Month

Lets start with the whole story: since the start of October, Ariad Pharmaceutical’s stock has lost over 85 percent of its value. No matter how specifically you pull things apart, that’s the simple fact one cannot avoid. Especially if you’ve owned Ariad for that whole stretch. But inside that one big sell-off is a series of daily price moves that could drive an investor insane. Here’s a timeline or the events that have brought Ariad so much grief:

October 8:

After market close, news gets out regarding the clinical trials for Ariad’s leukemia drug Iclusig and it’s bad. In fact, if you’re long Ariad, it’s positively awful. The drug showed blood clots developing in 11.8 percent of people treated with Iclusig after 24 months. This was a big jump from the 8 percent rate found after 11 months, and it prompts the FDA to block Ariad from enrolling any new patients to drug trials for Iclusig.

Like most small-cap pharma companies, Ariad’s future is tied mainly to just a couple of drugs, and the news that one of them might not be safe is pretty drastic. Especially when one considers that the nearly 800 percent gains from the start of 2010 to October 7 had a lot to do with the fact that Iclusig looked so promising, even getting accelerated approval based on its Phase 2 clinical data.

So it shouldn’t be surprising that the market’s reaction was swift and vengeful. As soon as investors got a crack at selling their position on October 9 shares plummeted over 65 percent.

October 10-18:

If the story ended there, it would be pretty much in line with a familiar narrative: small-cap pharma plummets on negative results of clinical trial. But, while nothing matched the degree of the move on the ninth, Ariad kept trading at heavy volumes and kept posting double-digit moves.

A series of analyst downgrades hit the company on October 10, with Barclays (BCS) downgrading the stock from overweight to underweight and cutting the price target from $25 a share to $4 (ouch). The stock kept falling, losing another 30 percent from October 10-16 but coasting into what appeared to be a bottom on October 16.

Then, on October 17, signs of life! Following comments from JP Morgan (JPM) analyst Cory Kasimov that physicians may not be all that concerned about the blood clots, the stock rebounded, posting a 10.78 percent gain and potentially giving hope to Ariad owners that the worst was behind them.

Except that it wasn’t. Not at all. October 18, word came out that Ariad and the FDA had agreed to halt testing of Iclusig entirely based on the rate of blood clotting incidences. The discontinuation of the late-stage trial dubbed Epic by Ariad caused shares to plunge more than 40 percent that day.

October 21-October 30:

After any stock gets hammered that hard in that short a period, one might expect it to bounce back. At least a little. Considering how steep the discount it’s trading at as compared to a mere two weeks ago, it has to garner at least a little interest, right?

And it did. The company staged a pretty substantial rally, gaining almost 50 percent in just nine days. It’s not much when one considers just how fall the stock fell prior to the rally, but at least the battered shareholders got a respite in the end, right?

October 31:

Only it wasn’t the end. Halloween was extra spooky if you had decided to wait out Ariad’s steep decline. Ariad announced that it would suspend marketing and distribution of Iclusig while it "continues to negotiate updates to the U.S. prescribing information." In retrospect, it certainly seems as though this shouldn’t have been all that surprised, but it clearly surprised at least some people as the company’s stock plunged nearly 45 percent.

And Beyond…?

Where Ariad’s going from here is unclear. Since the start of November, the stock’s up over 15 percent, including a 17.27 percent leap the day after Halloween and Monday’s double-digit gain. However, precisely what to expect moving forward is unclear. In the event that Ariad can return Iclusig to the market and ensure that it’s safe, there’s a pretty good chance the stock takes off. That said, there’s no real way to know whether or not that’s possible. In the meantime, the company announced that it was shedding 40 percent of its American-based workforce on November 7.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for ARIA
danrocks
22 Aug 14 06:41:07
$INTC alot of talk going around about this one $FB $TC $ABX $ARIA $HYG http://t.co/QBMjEqa9Fm
Market News Desk
22 Aug 14 06:04:35
$ARIA: ARIAD to Webcast Conference Call on Second Quarter 2014 Financial Results http://t.co/oK9HM9EQ2K http://t.co/ywlYYagL3V
iHangout
22 Aug 14 02:40:52
http://t.co/l4qmOlz0qf Stock_Tracker: Stock DD Board: Ariad Pharmaceuticals (ARIA) 5.90 $ARIA 5 Stocks http://t.co/F99S1qjefW
Business Headlines
21 Aug 14 21:04:28
$ARIA: Why Ariad Pharmaceuticals (ARIA) Stock Is Down Today http://t.co/OOMnbCbV6j http://t.co/fOZhTWxzE5
Colin Macleod
21 Aug 14 20:16:03
August 21 2014 Chart Patterns: Channel Down http://t.co/9d3wcxJQ28 $ARIA $JNPR $GNC $LPX $EDU $TIBX $CGA $AEGR
Colin Macleod
21 Aug 14 18:56:57
August 21 2014 Recent Insider Buying http://t.co/fnZyvSZaOl $CLF $FOLD $ARIA $MHR $GNC $OPK $PM $AEGR $ARCC $REXX
Gotham City Capital
21 Aug 14 18:50:47
RT @SolarMelt: $ARIA has a beautiful double bottom, but she's going back down. Overbought, Money Flow Negative, Distribution ...
Solar Melt
21 Aug 14 18:44:24
$ARIA has a beautiful double bottom, but she's going back down. Overbought, Money Flow Negative, Distribution ...
OTPicks.com
21 Aug 14 13:35:09
http://t.co/stbZjDRYAm Jake13: $ARIA Barchart Opinion Click here to find out if: Jake13 http://t.co/fehffFA4oV http://t.co/stbZjDRYAm
Biz Headlines
21 Aug 14 13:04:18
$ARIA: ARIAD PHARMACEUTICALS INC Financials http://t.co/TljHm13Tis http://t.co/srIuHtpY66
Kenneth Meyerson
21 Aug 14 12:47:18
On the minute chart, right before the spike in price, you actually see (as a visual cue) the spike in the money flow. #cool $ARIA
Kenneth Meyerson
21 Aug 14 12:32:46
RT @TheSkeptic21: @PortableRockArt Likely accumulation ahead of PRAC/CHMP positive outcome. $ARIA
Stockaholics
21 Aug 14 12:19:32
LGBS up 42.86%! News update & New Pick Coming: http://t.co/LfDGSIfVSV $FASC $ARIA $TUCN
The Skeptic
21 Aug 14 11:38:01
@PortableRockArt Likely accumulation ahead of PRAC/CHMP positive outcome. $ARIA
Kenneth Meyerson
21 Aug 14 11:31:32
RT @afmarko99: $ARIA Failed $6.20 breakout. Retesting support.
Kenneth Meyerson
21 Aug 14 11:24:32
A positive money-flow in the context of lower prices....accumulation before the next breakout? $ARIA
WallStreet
21 Aug 14 11:14:58
$ARIA - Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) Director Alexander Denner Acquires Shares Indirectly - http://t.co/y9SMdLnEEY
Stock News Headlines
21 Aug 14 11:04:24
$ARIA: ARIAD Pharmaceuticals Inc Earnings Call scheduled for 8:30 am ET today http://t.co/25b32yXJMX http://t.co/x5Z1NDvhjj
Veniamin Kofman
21 Aug 14 10:53:17
$ARIA This is officially the worst investment I made last year. Bought october last year and it is pretty much flat.
Investors Hangout
21 Aug 14 10:51:13
DennyT: FOLD Insider Roster $FOLD $ARIA $FEYE $UTRM $DAL http://t.co/QWk6drsFbC
Investors Hangout
21 Aug 14 10:51:11
DennyT: FOLD Insider Roster $FOLD $ARIA $FEYE $UTRM $DAL http://t.co/6LD5QUcKp2
Investors Hangout
21 Aug 14 10:18:27
DennyT: FFFC Industry $FFFC $ARIA $QTMM $CSIQ $XLK http://t.co/y8hhFm0E7G
Investors Hangout
21 Aug 14 10:18:14
DennyT: FFFC Industry $FFFC $ARIA $QTMM $CSIQ $XLK http://t.co/K9ToSjquKK
Jake13
21 Aug 14 10:09:32
$ARIA Barchart Opinion Click here to find out if $ARIA is a buy hold or sell. Watching these stocks. $SDS $TMF http://t.co/lntqL39di1
Companies in News
21 Aug 14 10:04:31
$ARIA: Will GW Pharmaceuticals (GWPH) Miss this Earnings Season? http://t.co/CAHC1b8pcb http://t.co/mlFLw8PJM9
lookn4wins
21 Aug 14 09:37:50
$CVX Candlesticks $CVX Most recent stock chart and technical analysis. $ECAU $AMZN $EFA $FBCD $ARIA $FCEL http http://t.co/5zIa4I0EMe
lookn4wins
21 Aug 14 09:15:47
$NKY Current Price $NKY Most recent stock chart and technical analysis. $FFFC $CSCO $IWM $AEM $ARIA $UNG http: http://t.co/HVb92CnmRB
Mark Romero
21 Aug 14 09:15:32
$ARIA Failed $6.20 breakout. Retesting support.
Business Headlines
21 Aug 14 08:04:29
$ARIA: Stock Highlights: Praxair Inc. (NYSE:PX), Ariad Pharmaceuticals Inc. (NASDAQ ... http://t.co/mFutJqVXXv http://t.co/7YsgVsDSIl
Jeffrey Blake
21 Aug 14 07:31:07
$ARIA Insider Buying: Ariad Pharmaceuticals Director Alexander J. Denner Buys ... http://t.co/JwopSt9Xtq
Investors Hangout
21 Aug 14 07:08:03
Jake13: $ARIA Barchart Opinion Click here to find out if http://t.co/5AY3wdFnTx
Investors Hangout
21 Aug 14 07:08:03
Jake13: $ARIA Barchart Opinion Click here to find out if http://t.co/argPU4BX6a
Market Headlines
21 Aug 14 07:04:35
$ARIA: Stock Highlights: Praxair Inc. (NYSE:PX), Ariad Pharmaceuticals Inc. (NASDAQ ... http://t.co/n0Y96rdHso http://t.co/ARaavSGQb1
Eric Stein
21 Aug 14 07:02:49
Fairly large insider buy at $ARIA, first in very long time #bottom
OTPicks.com
21 Aug 14 06:54:48
http://t.co/ioejVXw2Lr ClayTrader: * * $ARIA Video Chart 8-20-14 * *: ClayTrader http://t.co/cp84D3ymrQ http://t.co/ioejVXw2Lr
OTPicks.com
21 Aug 14 06:54:48
http://t.co/ioejVXw2Lr ClayTrader: * * $ARIA Video Chart 8-20-14 * *: ClayTrader http://t.co/d2iBGL3Aus http://t.co/UUQeeS6eNk
Jake13
21 Aug 14 06:44:47
$ARIA Barchart Opinion Click here to find out if $ARIA is a buy hold or sell. Watching these stocks. $XLP $AMG http://t.co/2Wmk5rA7R6
Eleazar J. Lua
21 Aug 14 06:41:57
$ARIA closes gap and back at it again. Adding here at 6.
Peter Bardens
21 Aug 14 06:00:54
$ARIA Commit To Purchase ARIAD Pharmaceuticals At $3.50, Earn 21.4% Using Options http://t.co/K3uqB0IFHq
Eleazar J. Lua
21 Aug 14 05:47:47
$ARIA
FonsieTrader
21 Aug 14 05:12:22
Parabolic Sar Buy Signals 1/2 $AA $ANN $ARIA $ASNA $ATML $CACB $CERN $CIEN $EMN $EXPR $FAST http://t.co/aE8URGZ4qg
Stock News Guru
21 Aug 14 05:04:28
$ARIA: Will GW Pharmaceuticals (GWPH) Miss this Earnings Season? http://t.co/3VkW2fDMpd http://t.co/uV7Wtj1SLo
US Banking News
21 Aug 14 04:58:46
Insider Buying: Alexander J. Denner Acquires 850,000 Shares of Ariad Pharmaceuticals Stock $ARIA http://t.co/2YElskMZM6
Ticker Report
21 Aug 14 04:44:39
Insider Buying: Alexander J. Denner Acquires 850,000 Shares of Ariad Pharmaceuticals Stock $ARIA http://t.co/lLKRaI8h8I
johanna ihli
20 Aug 14 22:09:42
RT @ClayTrader25: $ARIA Stock Chart Analysis_ 8-20-14 - watch here: http://t.co/9yr1rL9NNr @jimcramer @cnbc @thestreet @SquawkStreet
Stocks in News
20 Aug 14 21:04:27
$ARIA: ARIAD Pharmaceuticals Inc Earnings Call scheduled for 8:30 am ET today http://t.co/YQlAswYsbZ http://t.co/4Ti8nkuejt
OTPicks.com
20 Aug 14 20:52:48
http://t.co/ioejVXw2Lr ClayTrader: * * $ARIA Video Chart 8-20-14 * *: ClayTrader http://t.co/vuSfXlOH5j http://t.co/ioejVXw2Lr
OTPicks.com
20 Aug 14 20:52:48
http://t.co/ioejVXw2Lr ClayTrader: * * $ARIA Video Chart 8-20-14 * *: ClayTrader http://t.co/4KxyJMWRiy http://t.co/ioejVXw2Lr
Stockaholics
20 Aug 14 20:35:02
$GLBH closed up 150% today! Major Update: http://t.co/WFeoEydWra $FASC $ARIA $TUCN
Market Headlines
20 Aug 14 20:04:30
$ARIA: Storm The Castle: ARIAD Pharmaceuticals (ARIA) http://t.co/nn5JfLlSGJ http://t.co/1u7Yt87yvk
				
				
By  +Follow November 12, 2013 8:57AM
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