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Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA)

UBS Global Healthcare Conference Call

May 20, 2014 4:00 PM ET

Executives

Harvey J. Berger, M.D. – Chairman and Chief Executive Officer

Analysts

Andrew Peters – UBS Securities LLC

Andrew Peters – UBS Securities LLC

Good afternoon. Welcome everyone to the 2014 UBS Global Healthcare Conference. My name is Andrew Peters, and I’m the small mid-cap biotech analyst here at UBS. It’s my great pleasure today to introduce Ariad Pharmaceuticals. Speaking on behalf of the company is Dr. Harvey Berger, the CEO.

Harvey J. Berger

Thanks very much. It’s a real pleasure to be here this afternoon and have an opportunity to share with you our progress over the past several months and our plans for the coming year. This is especially important time as we head into ASCO, American Society of Clinical Oncology Meeting, which would be up and coming in a couple of weeks.

Let me start by just mentioning that we will be making forward-looking statements and refer all of you to our filed SEC documents and to mention that actual results may differ materially from those expressed or implied by forward-looking statements.

Our focus first and foremost is creating shareholder value. We believe that can be achieved best by rebuilding confidence in Iclusig and by rebuilding the value of Ariad. In terms of Iclusig, our focus starts with resistant or intolerant Philadelphia-positive leukemia patients. This is really the heart of the clinical development and the utilization of Iclusig.

We’ve begun the relaunch of Iclusig in the U.S., this started in January after coming back to market in late December after a short period of the market of about six weeks. As we look at this year pricing and reimbursement approvals and the ongoing country by country launch in Europe will drive value and revenues for us based upon the European commercialization of Iclusig.

We’re working hard as well on the completion of the clinical trial, necessary for registration in Japan, as well as additional clinical trials to support registration on a global basis. We have largely succeeded at lifting the clinical hold on most of the clinical trials involving Iclusig in the U.S., and we expect those trials to virtually all be off clinical hold very shortly.

Our longer-term aspiration and goal and an important driver of the overall value of Iclusig is moving Iclusig to earlier lines of CML treatment. We believe this is achievable as we learn more about the safety and efficacy of lower doses of Iclusig below the approved standard dose of 45 milligrams per day.

Iclusig as well will grow by virtue of its potential applications and new indications. These new indications are driven by understanding of the profile of Iclusig and its inhibitory activity against specific well-defined tyrosine kinases, and I’ll talk a bit more about that this afternoon.

Rebuilding value in Ariad will start with Iclusig and improving the benefit risk as we just discussed, demonstrating the competitive advantages of our next cancer medicine AP26113, our new tyrosine kinase inhibitor for patients with refractory, non-small cell lung cancer, and moving forward with our new first-in-class tyrosine kinase inhibitor, which we expect to provide additional information on later this year.

So, let’s start by talking about Iclusig. The U.S. commercial opportunity is built around an eligible population of about 1,300 new patients annually. We have a focused streamline distribution system compared to last year. We have a modest price premium relative to the second generation medicines in this class, namely dasatinib Sprycel annual therapy for Iclusig, it’s about $125,000 per year in the U.S. We as well have a comprehensive patient assistance program or PAS program as well as $10 copay. What this means is that Iclusig should be available to any patient who needs this new medicine.

Early progress has been strong in the U.S. with over 400 commercial U.S. patients through April. Bear in mind that last October just before the temporary suspension of marketing of Iclusig, we had about 650 U.S. patients. So we’ve recovered about two-thirds of those patients in the first 10 weeks of commercialization in the U.S. We’ve moved effectively from the single patient IND, which was the approach that was used by the FDA and us to make Iclusig available while the drug was temporarily off the market in the U.S.

About a third of the patients are now who are receiving Iclusig are doing so in the third line, a little over half of the patients in the fourth line, and the remaining patients about 15 or so percent in the second line. About 60% of patients who receive Iclusig are patients in the most important and biggest category that is chronic-phase CML patients, and only about a quarter of the overall patients are those with T315I Mutation the patient group in which there is no doubt that Iclusig is the only medicine that can be used.

We see the prescriber base continuing to grow with over 300 unique prescribers through April. So we are getting back to where we were prior to the temporary suspension of commercialization. We are effectively commercializing and interacting with a broad spectrum of physicians and about 60% of the prescribers for Iclusig are community-based physicians. That’s an important part of building the long-term market for Iclusig.

We’re moving forward in Europe as well. We currently are selling Iclusig in several of the large markets in Europe such as Germany, UK, France, and others. We expect that this will grow as pricing and reimbursement approvals are obtained in the remainder of this year, predominantly in the next couple of quarters. We have a very focused, modest commercial operation throughout Europe and one that is specifically customized to the local market dynamics. The markets in each country and the number of people that we have in place in those countries are aligned directly with the type of resources that are needed for that specific country.

So we work very hard to align the expenditures with the market opportunity and the types of requirements that exist in each of the key European countries. We expect to be commercializing in 15 key countries in Europe with an eligible patient population of about 2,500 patients per year. We expect pricing and reimbursement negotiations to continue to evolve throughout the year. Germany, France and Ireland, we expect to come to provision sometime between now and midyear and the remainder in the second half of this year. So it’s a dynamic process that is specific to the issues in each individual country, where the actual processes vary as one moves country by country.

So Iclusig is really at the heart of where we’re investing for clinical development. Most of what we’re doing within Ariad from a clinical point of view is Iclusig first, and then secondly as well, 113, our lung cancer medicine. Essential to rebuilding confidence in Iclusig will be improving the benefit risk of Iclusig. A better understanding of the vaso-occlusive events both at the molecular and biologic level, as well as at the clinical level.

As well secondly, thinking about interventions that can help in the improvement of the benefit risk. What’s the role of anticoagulants or antiplatelet medicine in improving the benefit risk of Iclusig. How can we mitigate cardiovascular risks through effective use of other medicines or by better selection of patients. And lastly, we expected the benefit risk of Iclusig will be increasingly favorable as we move to lower doses of Iclusig. We know that lower doses, doses below 45 milligrams that is 30 milligrams or 15 milligrams per day are effective doses in patients and that we can achieve a high response rate perhaps the same as or close to the response rate that we see at 45 milligrams.

So an important part of improving the overall benefit risk of Iclusig will be studying, evaluating lower doses of Iclusig, and that’s part of our plans for a randomized trial that we anticipate initiating in the second half of this year.

So beyond the Philadelphia-Positive Leukemias, there are other opportunities for Iclusig and GIST gastrointestinal stromal tumors is one example of a clinical indication that’s well suited for Iclusig. We know that GIST results from activation of an oncogene called KIT, and that Iclusig has extremely high potency against KIT in its natural form, as well as the many resistance mutants that now have been very well identified and characterized by physicians.

So we have a Phase 2 trial ongoing of Iclusig and patients with refractory GIST the data from that trial will be presented at ASCO in the coming few weeks. But in this slide I’m able to present the single case of patients who is not in the trial, but a patient with highly refractory GIST of patients who has failed four prior lines of therapy, so this is a fifth line patient having failed the three approved drugs of imatinib, sunitinib, and regorafenib, and as well failed crizotinib as well, so a fifth line application of Iclusig.

Let me highlight and point out the three panels. On the left is our base line. This is after a patient, this is September 2013 a patient on crizotinib 800 milligrams a day in the center panel in November 2013 crizotinib was stopped and the patients then began on ponatinib 30 milligrams a day, so below the approved dose of 45 milligrams.

Note that in comparing the center panel with the left panel, there is very evident tumor progression. And then on the right, a month after starting ponatinib, so December of last year, you can see the response and comparing especially in this lower panel. And the response is documented by shrinkage of many of these very important and very difficult to treat tumors, but as well and the explantation for this darkening of the lesions on the skin massive cystic necrosis. In other words, the lesion the mass itself dissolves and the tumor itself coalesces on itself. And that’s the sort of response you sometime see in response to front line GIST therapy very, very rare to see that sort of dramatic response in a patient with late-stage highly refractory GIST.

So this is really the first example that we had that we had talked about demonstrating at least in the first Phase activity of Iclusig in patients with GIST. The trial that is ongoing and that will be reported ARIAD at ASCO will provide us with far greater insight into the activity of Iclusig in patients with GIST.

We have many investigator sponsored trials running throughout the world, these are relatively inexpensive trials. The trials that are highly informative, these are trials that are proposed and run by investigators throughout the world. These are usually done by leading key opinion leaders in different regions that have particular research interest that can be pursued with a drug like Iclusig and while I won’t go down the long list. It shows trials in Philadelphia-Positive Leukemias patients with various solid tumors and FGFR amplification or RET translocation, GIST is some of the examples.

On the next slide you can see many different combinations in the treatment of acute myeloid leukemia. This is patients who are at high risk due to refractory FLT3 positive form of acute myeloid leukemia, as well as other related indications.

So, it’s very clear that Iclusig can be used not only in the Philadelphia-Positive Leukemias like CML and Philadelphia positive ALL, but their important opportunities include to its utilization more broadly such as in patients with GIST and AML and to various solid tumors. And one of our real priorities is to probe and understand how broadly we can use Iclusig and how it can be utilized in indications above and beyond the CML indication.

So now let’s shift attention to 113. This is our inhibitor of anaplastic lymphoma kinase or ALK inhibitor as important indications we believe in non-small cell lung cancer. We’ve demonstrated that 113 has robust anti-tumor activity in non-small cell lung cancer, post-crizotinib being the first major application that is patient who have failed the approved therapy of crizotinib or XALKORI.

We’ve also studied patients and have important results in patients who are TKI-naïve meaning have – these are patients who have not received other tyrosine kinase inhibitors and are presenting with lung cancer for the first time. We’ve demonstrated in both of these groups durable responses beginning at 90 milligrams a day, so at dose level that’s readily achievable, well tolerated, and one of the doses that’s part of our dosing regimen for our pivotal trial.

An important differentiator of 113 is this medicine’s activity in patients whose tumor have spread to the brain. Brain metastases are very common in lung cancer particularly in patients who have failed drug such as crizotinib and part of the key to effective treatment and the differentiation especially in contrast to other medicines in this class is to have this very important differentiated activity, high degree of activity against brain metastases. And given that over 50% of patients who failed crizotinib have brain metastases. This represents one of the most important areas for Iclusig especially for 113 and for its differentiation.

We’ve demonstrated that 113 is well tolerated. We’ve been able to choose a dose actually two different doses that appear to be very well tolerated, one, 90 milligrams going up to 180 milligrams, and another just continuing at 90 milligrams throughout. Both appear to be highly active. We think for example, this is the benefit of going to a 180 milligrams may well be in patients with brain metastases to have a higher dose that we can use in the more refractory, more difficult to treat patients.

We have started a pivotal trial of 113 in patients without positive non-small cell lung cancer. This is a trial with 220 patients, randomized equally between 90 milligrams going to 180 milligrams after a week versus 90 milligrams straight through the way the trial is designed. All patients start on 90 milligrams at the end of a week, the decision is made or the randomization drives this decision to either stay at 90 milligrams or in half of the patients to go up to 180 milligrams.

And as I pointed out earlier, this will allow us to compare in a randomized trial design two very important dosing options and allow us to study a high dose and a low dose both of which we believe are very active and well tolerated, but give us the ability kind of ultimately have both doses in the – hopefully in the approved label for 113, thus giving physicians a choice on how to optimize the dose for given patients. The primary endpoint of this trial is objective response rate. It is a non-comparative trial, although it’s a randomized trial.

The goal was not to demonstrate relative improvement of one dose versus the other, but rather to obtain data for both doses, but in a randomized form. Our next program which is part of our continued discovery effort is the development of a highly differentiated tyrosine kinase inhibitor another cancer medicine. This is an extension of the programs that we’ve had in place for a number of years. We believe that this program will result in a best-in-class small-molecule TKI with a – what is thought to be an extremely challenging target, but the medical importance of that target is very well defined.

We believe this will address a critical unmet medical need that currently cannot be treated with available therapies. And this really represents a further extension of our computational chemistry expertise of our platform for drug discovery. We expect to nominate a clinical candidate in this program in the second half of this year.

Our internal drug discovery efforts have really been at the heart of the company’s success for many years. We brought five novel molecules from discovery into the clinic. Thinking first of our first generation products Ridaforolimus and 1903, Ridaforolimus is being developed by one of our partners for use in drug-eluting stents, this is in the mTOR inhibitor class, where mTOR inhibitors have been demonstrated to have the high degree of activity in drug-eluting stents that are used in patients with coronary disease, and we have linked up with MedNova one of the leading medical device in drug-eluting stent companies in the world to develop a Ridaforolimus-Eluting Stent, they are also our important cancer indication for Ridaforolimus and I anticipate that we will pursue some of those as well.

1903 is one of our, what I would describe as our legacy molecule, one of our first compounds we discovered many years ago has been partnered with a company that’s expert in cell therapy. This is a company called Bellicum, and cell therapy went through very tough times and very difficult regulatory challenges for many years. But the excitements around Immuno-Oncology has evolved, and we now have some important applications for cell therapy, particularly CAR T Cells and other oncology applications. And Bellicum is using 1903 and our cell signaling regulation technology to pursue several products built around our and their technologies together.

Our current generation products ponatinib or Iclusig and 113 and our next-generation next compound will be the new small molecule TKI that I described a few moments ago. So it – what we have is a successful drug discovery platform that has brought us five novel molecules.

So as I wrap up, I come back to our original statement and our original goal for this year in moving forward, building shareholder value, discovering new cancer medicines, developing them effectively and smartly in a global basis, and delivering them to cancer patients, to patients that are in need of the advantages of these important life saving new cancer medicines that we’ve developed. Thank you very much. I think there is a breakout session across the hallway. Thank you.

Question-and-Answer Session

[No Q&A session for this event]

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