Ariad plans 6 million share follow-on; posts wider second-quarter net loss

By Ronda Fears

Nashville, Aug. 1 - Ariad Pharmaceuticals Inc. filed plans for a secondary offering of 6 million shares on Monday with estimated proceeds of $48.1 million, including the greenshoe and assuming an offering price of $7.48 per share.

Lehman Brothers is sole bookrunner of the offering, which is slated to price after the market close Thursday. Co-managers are Lazard Capital Markets and SG Cowen & Co.

Proceeds will be used for operations - research and development, clinical trials, product manufacturing, intellectual property protection and enforcement - working capital and general corporate purposes such as repayment or refinancing of debt, capital expenditures and possible acquisitions.

On Monday, Ariad also reported a second-quarter net loss of $14.1 million, or $0.27 per share, as compared to $9.2 million, or $0.18 per share, in second-quarter 2004. Total license revenue rose to $350,000 from $188,000.

"Based on our progress during the second quarter of 2005, we are now well positioned to pursue our next set of critical objectives: a partnership to commercialize AP23573 outside the U.S., readiness to launch AP23573 in the U.S. ourselves, and execution of the initial AP23573 registration trial in patients with soft-tissue and bone sarcomas," said Harvey J. Berger, M.D., chairman and chief executive officer of Ariad.

"If all goes well, we could have our first cancer product approval and product revenues in 2007."

AP23573, or Ariad 573, reached key clinical data points for the treatment of endometrial and prostate cancer during the first half of 2005, some earlier than expected. Cambridge, Mass.-based Ariad is testing Ariad 573 on other cancers and also has two other cancer drugs in development and other products.

While the company is looking for a partner to commercialize Ariad 573, Berger said on the earnings conference call that a partner is not necessary while in late-stage trials. He acknowledged, though, that it would be desirable to have an agreement in place with a global partner at the time of launching a commercial product.

"We're going forward with a plan, with dispatch," Berger said. "We don't need to have a partner in place to launch that trial."

At June 30, the company recorded $50.2 million in cash and equivalents, compared with $75.5 million at the end of 2004.

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