May 14, 2010
To Our Shareholders:
This letter to you could not come at a better time. ARIAD just completed a revised agreement with Merck for the development, manufacture and commercialization of ridaforolimus – ARIAD’s investigational mTOR inhibitor. This agreement has been a goal of ours for over a year, and we are extremely pleased with its highly favorable financial and business terms. We also are making substantial progress in advancing all three of our internally discovered drug candidates. This year should be one of great promise and opportunity for ARIAD as we expect several additional catalysts during the year, each one with the potential to create significant value for our shareholders.
A Continuing Commitment to Ridaforolimus
The revised collaboration with Merck ensures continued broad development of ridaforolimus in patients with cancer and reflects the ongoing commitment of both companies to ridaforolimus as a new therapeutic option. We believe that the amended agreement will maximize the potential of ridaforolimus, both alone and in combination with other agents, and should provide significant financial return to ARIAD for its discovery of ridaforolimus and for leading the clinical development of ridaforolimus through its initial Phase 3 trial in sarcomas – the SUCCEED trial. With the excellent nearterm and long-term financial terms of the revised agreement, we have markedly improved ARIAD’s financial position and strengthened our balance sheet.
The current agreement provides ARIAD with $69 million this quarter. In addition, going forward, instead of ARIAD and Merck sharing the ridaforolimus costs 50/50, Merck will fund 100 percent of these costs. This agreement also provides up to $514 million in potential regulatory and sales milestones for the successful development and commercialization of ridaforolimus in multiple indications and tiered, double-digit royalties on global net sales. These royalties are approximately one-third greater than those that ARIAD would have received just for ex-U.S. sales at each of the sales tiers in the original agreement. We have been able to retain essentially the same potential commercial return, while not needing to invest any further in the development and commercialization of ridaforolimus.
Moving AP24534 into Late-Stage Development
Momentum is building this year for another key value driver for ARIAD – the expected start of a pivotal clinical trial of our second internally developed product candidate, AP24534. We are actively engaged in discussions with regulatory authorities to initiate this pivotal trial of AP24534, our investigational pan- BCR-ABL inhibitor, in patients with treatment-resistant chronic myeloid leukemia (CML), in the second half of 2010.
Data presented at last year’s Annual Meeting of the American Society of Hematology provided strong clinical evidence of hematologic, cytogenetic and molecular anti-cancer activity of AP24534 in heavily pretreated patients with resistant or refractory CML, including the T315I mutation of the target protein. These patients have very few, if any, viable treatment options available to them. Initial findings from this Phase 1 study showed AP24534 to be well-tolerated and to produce beneficial anti-leukemia activity in patients who have failed prior tyrosine kinase inhibitor therapy for CML. Additional data from this Phase 1 clinical trial of AP24534 will be presented at the upcoming Annual Meeting of the American Society of Clinical Oncology next month and should provide the medical community with reason for continued excitement about the potential of this drug candidate.
Phase 3 Sarcoma Data Expected in 2010
With the full accrual of patient enrollment in the Phase 3 SUCCEED trial late last year, ARIAD has led the development of this global clinical trial of oral ridaforolimus in patients with metastatic soft-tissue and bone sarcomas and completed it on schedule. We expect that data from the trial will be announced later this year and could lead to a filing for regulatory approval of ridaforolimus in a patient population that has had no new drug approved in the U.S. in more than twenty years. The SUCCEED trial is believed to be the largest trial of its kind in patients with sarcomas, and its results will be important to oncologists around the world. Our work represents a significant accomplishment on the part of many ARIAD employees and outside collaborators, and we thank them for their ongoing commitment to reaching this goal.
Advancing the Pipeline
ARIAD has exceptional scientists and is known for our productive drug-discovery and translationalscience capabilities. We are now advancing the development of our earliest stage product candidate, AP26113, a highly promising anaplastic lymphoma kinase (ALK) inhibitor, that has potential for use in patients with lymphomas, neuroblastomas and non-small cell lung cancer. Preclinical data show AP26113 to potently inhibit the target protein and mutant forms that are resistant to a first-generation ALK inhibitor, which currently is in clinical trials in patients with cancer. ARIAD specifically designed AP26113 as a highly potent and selective inhibitor of ALK with superior drug-like properties and best-inclass potential. We will advance its development this year and look forward to filing an investigational new drug application as soon as possible.
Our Vision Continues
ARIAD’s vision is to transform the lives of cancer patients with breakthrough medicines. This has been our focus for many years, and it is what drives every member of the ARIAD management team, each one of our employees and everyone we work with, from outside investigators and scientists to patients and advocacy groups. We all are working toward the common goal of making the lives of cancer patients better.
Our accomplishments are the result of the dedication and commitment of our employees who have driven the discovery and development of our growing product portfolio. We have built a fundamentally strong, broad-based oncology company with three targeted cancer therapies in development. We will continue to be innovative and to put our critical resources to their best use in advancing our pipeline, bringing important new therapies to cancer patients, and importantly delivering long-term value to our shareholders. Thank you for your continued support of ARIAD and our vision.
Sincerely yours,
Harvey J. Berger, M.D.
Some of the statements in this letter constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements relating to our plans and expectations regarding: the financial impact of our revised collaboration with Merck, the availability of data from the Phase 3 SUCCEED clinical trial and the potential for a filing for regulatory approval for ridaforolimus, the expected initiation of a pivotal clinical trial for AP24534 and the advancement of AP26113 in pre-clinical development. Such statements are subject to factors, risks and uncertainties (such as those detailed in the Company’s Form 10-K for the year ended December 31, 2009 and other SEC filings) that may cause actual results to differ materially from those expressed or implied by such forward-looking statements.