Ariad Pharmaceuticals Inc. has watched its stock quietly gain 100 percent in just over three weeks, especially buoyed by a ruling in its patent case against Eli Lilly and Co. but also helped by clinical news and research activities that include its Argent technology
The Cambridge, Mass.-based company Friday said scientists at the Albert Einstein College of Medicine in New York used an Argent congestive heart failure animal model to demonstrate the cause of that disease. The Argent technology can be used to make transgenic animals.
Ariad's stock (NASDAQ:ARIA) rose 26 cents Friday, or about 9 percent, to close at $3.16.
But the most recent, biggest lift was given by the court ruling Wednesday that brushed aside Indianapolis-based Lilly's requests for dismissal and summary judgment in the patent infringement suit encompassing Lilly's marketed products Evista and Xigris. Although that leaves the trial itself to contend with, the news pushed Ariad's stock up 84 cents Wednesday, or more than 40 percent. (See BioWorld Today, May 15, 2003.)
"The litigation with Lilly started last June 25," said Harvey Berger, CEO and chairman of Cambridge, Mass.-based Ariad. "We filed a lawsuit with respect to Evista and Xigris based on the issuance of the patent, what we call our treatment method patent for NF-(kappa)B cell signaling."
NF-(kappa)B cell signaling technology is the basis for both Evista, approved for osteoporosis, and Xigris, approved for septic shock, Berger told BioWorld Today. And while there are three other patents - two in the U.S. and one in Europe - that cover screening uses, the patent at the center of the Lilly suit is the only one that covers "methods for treating disease," and it covers it through 2019.
"Roughly a year from now," the two companies should meet in the courtroom, he said.
"We want to proceed expeditiously to trial," Berger said. "We believe we have a strong case. We're very positive about moving forward to trial."
At the trial, Ariad will press for royalty payments dating back to the date of patent issuance: June 25, 2002. Considering that in 2003's first quarter Evista brought Lilly $214 million in worldwide sales and Xigris generated $35.9 million, which works out to be about $250 million a quarter and $1 billion over the course of 12 months, any royalty payments could rise to significant levels.
NF-(kappa)B is a transcription factor that might be activated by any one of several different signals originating outside the cell, including various inflammatory cytokines, bacterial and viral infections, and cancer-causing proteins. It usually resides in the cell bound to its inhibitor, which prevents NF-(kappa)B from entering the nucleus. When cells are activated, the company said, the inhibitor protein usually is broken down by proteasomes, which frees NF-(kappa)B to move into the nucleus where it regulates the expression of genes involved in immune and inflammatory responses, as well as cellular growth, control and death.
David Baltimore, Phillip Sharp and Thomas Maniatis led the team that invented the technology. Baltimore is a founding member of Ariad's board of scientific and medical advisers.
But there are other reasons beyond the lawsuit for Ariad's stock climb. The company has three areas of focus: oncology, its Argent technology and the NF-(kappa)B cell platform.
Its oncology focus is highlighted by AP23573, which earlier in May became the subject of two Phase I trials. It is designed to inhibit the protein mTOR and shrink tumors by the inhibition of nutrient uptake to tumor cells and inhibition of growth factor stimulation.
Ariad licenses its Argent technology free of charge to academic investigators, such as those at Albert Einstein College of Medicine, and it is being used in about 600 labs, Berger said. Since Ariad owns the rights, once an accomplishment is made - the congestive heart failure model being one - Ariad has the option of licensing it to commercial organizations.
Ariad ended the first quarter with $21.5 million in cash and equivalents. It posted a net loss for the quarter of $5.3 million, but it has decreased its burn rate and anticipates burning through $18 million in 2003, including funding the AP23573 trials.
"We have over a year of cash and we are, I think, in good shape," Berger said. He attributed Ariad's increasing share price to the company's tri-focus.
"You look at the news over the past two weeks, and you'll see we show substantial progress in each of these three areas," he said. "That's what I think has driven the increase.
"There has been a lot of news in oncology," he continued. "You've got the approval of Iressa [AstraZeneca plc] and the approval of Velcade [Millennium Pharmaceuticals Inc.]. Both are oncology products. The core driver is that the regulatory hurdles appear to be quite manageable for oncology products and we are a company with a strong oncology portfolio."