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Executives

Edward Fitzgerald – SVP, CFO and Treasurer

Harvey Berger – Chairman and CEO

Analysts

Terence Flynn – Lazard Capital

Mona Ashiya – JP Morgan

Howard Liang – Leerink Swann

Eun Yang – Jefferies

Phil Nadeau – Cowen

ARIAD Pharmaceuticals, Inc. (ARIA) Q2 2008 Earnings Call Transcript August 7, 2008 8:30 AM ET

Operator

Thank you for holding for ARIAD Pharmaceuticals' second quarter 2008 investor conference call. At this time, all participants are in listen-only mode. Following the formal report, ARIAD management will open the lines for a question-and-answer period. Please be advised that this call is being taped at the company's request and will be archived on the company's website for two weeks from today. At this time, I would like to introduce Mr. Edward Fitzgerald, ARIAD's Chief Financial Officer. Please go ahead.

Edward Fitzgerald

Good morning, and welcome to ARIAD's investor call to discuss our financial results in corporate development for our second quarter and six months year-to-date. Dr. Harvey Berger, our Chairman and Chief Executive Officer, is on the call with me. Today's agenda is as follows. First I will review our financial highlights for the second quarter and year-to-date, and then Harvey will report on our progress towards achievement of key corporate objectives for the year as well as comment on changes we announced earlier today in our management team. After the prepared remarks, we will open the call up to questions.

Before we get started, I would like to state that during this call we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to factors, risks and uncertainties such as those detailed in our Form 10-K for the year ended December 31, 2007 and other SEC filings that may cause actual results to differ materially from the results expressed or implied by such statements.

Now I would like to review our financial results as of June 30, 2008, details of which were provided in the press release that we issued earlier this morning. For the three-month period ended June 30, 2008, we reported a net loss of $17.3 million, or $0.25 per share, compared to a net loss of $17.0 million, or $0.25 per share, for the same period during 2007. For the six-month period ended June 30, 2008, we reported a net loss of $34.3 million, or $0.49 per share, compared to a net loss of $32.0 million, or $0.48 per share, for the same period in 2007.

These results continue to reflect the advancement of our development program and the positive impact of our collaboration with Merck & Co., Inc. on the development and commercialization activities for deforolimus. As expected, pursuant to our global development plan with Merck, we have expanded our development activities for deforolimus, resulting in an increase in development costs in the first six months of 2008 compared to the first six months of 2007, which preceded the Merck collaboration. However, due to the cost-sharing provisions of the collaboration, ARIAD's research and development expenses related to deforolimus have remained constant, increasing by less than $300,000 in the first six months of 2008 as compared to the first six months of 2007.

Other R&D expenses, encompassing the development of our second product candidate, our investigational multi-targeted kinase inhibitor AP24534, which is now enrolling patients in its first Phase 1 clinical trial, as well as discovery research, increased by $800,000 in the six-month period ended June 30, 2008 compared to the corresponding period in 2007. This reflects the net impact of the initiation of Phase 1 clinical development of AP24534 and additional discovery research activities, offset in part by the completion in 2007 of preclinical studies of AP24534.

Our general and administrative expenses increased by $3.9 million in the first six months of 2008 compared to the same period in 2007, due primarily to certain corporate and commercial development initiatives in support of our product development activities, as well as ongoing patent litigation. For the six-month period ended June 30, 2008, we reported cash used in operating activities of $31.7 million compared to cash used in operating activities of $26.4 million for the first half of 2007, the increase reflecting largely the increase in our net loss over the same period.

We ended the second quarter of 2008 with $60 million in cash, cash equivalents, and marketable securities on our balance sheet compared to $85.2 million at year-end 2007. It's important to note that our results of operations in cash flow for the first six months of 2008 are in line with our projections and are consistent with our financial guidance for the year. Based on our results through June 30, 2008, our financial guidance for 2008 remains unchanged.

We continue to project cash used in operations in the range of $41 million to $44 million for 2008 and a net loss of $81 million to $84 million for the year. Our cash used in operations for the first half of 2008, as I previously noted, was $31.7 million. We therefore estimate that our cash used in operations for the second half of 2008 will be in the range of $10 million to $12 million, which is net of expected milestone payments from Merck of $30 million. These expected milestone payments are related to the initiation of three Phase 2 clinical trials of deforolimus this year.

The first two of these trials, one in patients with metastatic breast cancer and the other in patients with advanced endometrial cancer, were initiated in July and August respectively. And the associated $17.5 million in milestone payments from Merck related to these trials will be reflected in our second half results. We expect to begin the third trial, a Phase 2 study in prostate cancer to be led by Merck later this year.

In summary, we are pleased to report that our results are on target for the year, and we remain committed to maintaining a strong financial position and the financial resources and flexibility necessary to support our corporate and development goals going forward. This concludes our financial report, and I will now turn the call over to Dr. Berger.

Harvey Berger

Thank you, Ed, and good morning. During the second quarter, we continued to focus our efforts and resources on the achievement of our key corporate objectives. And we demonstrated our commitment to the discovery, development, and commercialization of breakthrough medicines to improve the lives of patients with cancer.

As a reminder, we set four key objectives for 2008. First, to maximize the deforolimus opportunity in multiple potential clinical indications; second, to establish our oncology commercial infrastructure; third, to advance our pipeline of innovative oncology product candidates, including clinical development of AP24534, which I will refer to as 534; and lastly, to continue to maintain a strong financial position.

We have executed effectively on all four of these objectives during the second quarter and the first half of 2008. And I'm proud to review with you our recent progress with respect to achievements of these corporate goals. Let's start with deforolimus. Deforolimus development is marching steadily forward as part of our strong and collaborative partnership with Merck & Co. and our company's collaborative global development plan.

Enrollment in our Phase 3 SUCCEED trial, one of the largest trials ever conducted in patients with metastatic soft tissue and bone sarcomas, is proceeding on schedule, and new clinical trial sites around the world continue to enroll patients. We are devoting the necessary resources to ensure enrollment and completion of this trial as quickly as possible. And for the support of this effort, we went live during the quarter with the SUCCEED trial website that offers patients and clinicians a convenient resource to learn more about SUCCEED trial goals, logistics, participation, and eligibility.

We believe that oral deforolimus can change the treatment paradigm for sarcoma patients, for whom no treatment has been approved in the United States in more than 25 years. Prior to launching the SUCCEED trial, we made the important choice of the dose and dosing schedule to be used in the study. In making that decision, we drew on results of our Phase 1 dose-ranging study of oral deforolimus, in which seven different dosing regiments were evaluated in a large number of cancer patients.

The full results of the study were presented in May at the annual ASCO meeting. We highlighted the anti-tumor and safety profile of deforolimus at the chosen dosing schedule, consistent with results previously presented for the intravenous formulation of deforolimus in patients with sarcomas and other cancers.

I would like to shift our attention at this point from the SUCCEED trial in sarcomas to the other promising potential indications for deforolimus. In accordance with our joint global development plan with Merck, in July, we initiated a Phase 2 trial of oral deforolimus in combination with intravenous trastuzumab, or Herceptin, in patients with metastatic HER2-positive breast cancer who have developed resistance to trastuzumab therapy.

The primary endpoint of this study is clinical response to the clinical – excuse me, to the experimental combination therapy. A substantial unmet medical need exists in patients with metastatic breast cancer, creating a large commercial opportunity for novel targeted therapies such as deforolimus. Earlier this week, we also initiated another Phase 2 trial of oral deforolimus, in this case, in patients with advanced endometrial cancer. This randomized trial will compare single-agent deforolimus to progestin, the standard of care at this stage of the disease in patients with metastatic or recurrent endometrial cancer following first-line chemotherapy.

The primary endpoint for this study is progression-free survival, or PFS, with overall survival and response rate being evaluated at secondary endpoints. This trial draws on the highly encouraging data we have from a previous Phase 2 clinical trial of intravenous deforolimus in patients with endometrial cancer. Looking forward, and as Ed mentioned, we expect to launch one additional Phase 2 trial for deforolimus this year, a randomized study in patients with prostate cancer.

All three of these Phase 2 trials trigger milestone payments to ARIAD, totaling $30 million from Merck, the first $17.5 million of which relates to the launch of the breast and endometrial cancer trials. Three additional Phase 1 trials of deforolimus were initiated in the first half of this year. First, oral deforolimus in combination with Merck's IGF-1R inhibitor, a potential best-in-class combination for multiple solid tumors; second, oral deforolimus as a single agent in Japan, opening up opportunities for the Japanese marketplace; and, third, intravenous deforolimus as a single agent in patients with pediatric solid tumors sponsored by the Pediatric Cancer Foundation, a group known as the POETIC group.

Each of these trials represents a first time opportunity for deforolimus. While we continue to devote attention to the timely execution of our clinical trials for deforolimus, we are also ensuring that the base of scientific data supporting our deforolimus development plan continues to grow and broaden. Looking ahead to the EORTC-NCI-AACR or ENA meeting being held in October in Geneva, Switzerland, we plan to present new clinical and preclinical data on oral deforolimus.

Now let me turn to our 534 program. In May, we advanced our second oncology product candidate, 534, into the clinic. This investigational multi-targeted kinase inhibitor is now in a Phase 1 trial in patients with refractory hematological cancers. Patients with drug-resistant forms of chronic myeloid leukemia, CML, and acute myeloid leukemia, AML, among others, are being enrolled into this trial. This study is evaluating the safety and tolerability of 534 as well as its pharmacokinetics, the behavior of the drug in patients, and its pharmacodynamic, the effects of the drug in patient’s cell.

As all of the participants in this multi-center sequential dose escalation trial will have well-characterized hematologic malignancies, initial information describing the product candidates' antitumor activity will also be evaluated. Our plans for 534 also include solid tumor trials, and we are on track to initiate a Phase 1 study in solid tumors before year-end. Prior to this, at the October ENA meeting, we look forward to presenting for the first time preclinical data highlighting the potent anti-tumor activity from 534 in solid tumors. As a reminder, the likely mechanism for this anti-tumor activity is the potent antiangiogenic activity of 534 through multiple inhibitory mechanisms.

Finally, our discovery programs. Innovation from our drug discovery team remains core to ARIAD and the future growth we anticipate. By applying our pioneering lead identification and optimization techniques, ARIAD scientists are able to accelerate the process of creating novel small-molecule drug candidates like deforolimus and 534. We are confident in our goal of nominating our next oncology development candidate by year-end.

Let me turn now to the senior management changes we announced earlier this morning. Rich Pascoe, our Chief Operating Officer, has resigned to become the Chief Executive Officer of a specialty pharma company focused on psychiatric and neurological diseases. We wish him well in his new position.

We are very pleased to announce that Matt Ros, our Vice President, Oncology Marketing, will take on added responsibilities as Vice President, Commercial Operations, effective immediately. Matt will assume responsibility for our core commercial activities. He has an outstanding track record in the pharmaceutical industry, with nearly 20 years of experience in sales, marketing, and operations management, all for oncology products. Prior to joining ARIAD in 2007, Matt held a series of senior management positions at Bristol-Myers Squibb and played a key role in the launch and commercialization of several of BMS' most recent oncology products. I'm delighted to recognize Matt's proven leadership qualities and the results he has achieved to date.

Finally, Ms. Maria Cantor has joined the ARIAD team as Vice President, Corporate Communications and Investor Relations. Maria brings a great depth and breadth of experience to ARIAD, most recently as Senior Director of Corporate Communications at Genzyme Corporation. She is responsible for the design and implementation of all of our communications and investor relations strategies.

We continue to build our management team and add the key skills and expertise at all levels of the company to ensure that we execute on our key corporate goals. We are making solid progress in achieving these objectives. We are exactly where we expected to be at this point in the year. We are looking forward to a productive second half of the year and the continued execution of all of our programs and initiatives.

Thank you. This concludes our formal remarks, and I would like to open the call up to questions. Operator, please move forward with the Q&A session.

Question-and-Answer Session

Operator

(Operator instructions) And your first question comes from the line of Terence Flynn with Lazard Capital. Please proceed.

Terence Flynn – Lazard Capital

Hi. Good morning, Harvey and Ed. Thanks for taking the questions, and congratulations on all the recent progress. First, I was just wondering if the dose and schedule that you guys are using in the Phase 2 breast and endometrial trials is going to be identical to the Phase 3 SUCCEED schedule. And then the second question, just wondering if you can give us a little insight into what you'd expect for progression-free survival and overall survival for progestin in the endometrial trial. Thanks a lot.

Harvey Berger

Sure. Terry, thanks very much for the questions. The answer to your first question, straightforward, yes. The dose and schedule are identical for oral deforolimus in all of these trials. Certainly, all three of the Phase 2 trials, the two that have started and the one that's going to start later this year, we anticipate using the exact same dose as well as dosing schedule. So that's 40 milligrams orally per day, five out of seven days each week. And other than the pediatric trial, which is purposefully done with the IV dose formulation, all of the other trials, including the Phase 1 trial, have the standard oral dose. Regarding the anticipated PFS for progestin – for the progestin arm, I must confess I don't have that number at my fingertips, and I certainly can try to track that down. But I don't want to just throw out a number without knowing for sure. But I'd be glad to follow up with you.

Terence Flynn – Lazard Capital

Great. Thanks a lot.

Operator

Your next question comes from the line of Cory Kasimov with JPMorgan. Please proceed.

Mona Ashiya – JP Morgan

Hi, good morning. This is Mona Ashiya actually for Cory Kasimov. A couple of questions. One, Harvey, I wonder if you could comment on your expectations for the two interim analyses in SUCCEED, both later this year and then particularly the one next year, given deforolimus' activity in this setting.

Harvey Berger

Well, I think you've highlighted most of what we've said about the interim analyses. We expect two interim analyses, as we've said before, one at approximately a third of the events in the trial, one at approximately two-thirds of the projected events in the trial. We expect the two-third events or second interim analysis to coincide with full patient enrollment. We expect the first interim analysis to be roughly the end of this year. We can't say exactly the timing of it, but roughly then. And the second interim analysis some time in the first half of next year. Again, we'll be more specific and know more as we move into next year. But we're right on track for enrollment, for sites, for initiations around the world, and are getting excellent – really excellent interest and responsiveness from the investigators. So the trial is designed in such a way that with very robust activity we should – there's a good chance we'll see a significant effect at the time of the second interim analysis. Could it happen at the first? Yes, but that's never been our – the likely outcome or consistent with the most likely parameters or the design of the trial. But our expectation is that we should have a great deal of clarity on the trial next year at the time of the second interim analysis.

Mona Ashiya – JP Morgan

Great. That's helpful.

Harvey Berger

Is that – did I answer your question?

Mona Ashiya – JP Morgan

Yes. Actually, I was looking exactly for your expectation for success on the second. And then the second question I have actually relates to the clinical development thoughts in endometrial and particularly in breast cancer. In endometrial, you along with Merck are going into a randomized Phase 2, whereas in breast it's a single-arm trial. And I was just wondering if you can just remind us what the data has – if there has been any data in breast so far and what your thoughts are for trials after this initial smaller Phase 2 in breast.

Harvey Berger

Well, a lot of thought with key opinion leaders around the world went into the design of each of these trials. And with our colleagues at Merck, we have thought through the various steps on how to develop or what the options are for optimally developing deforolimus alone or in combination in each of these indications. And so, our choices of the designs that we've recently announced are driven in part by what the competitive situation is, the natural history of the diseases, the available therapeutic options, and what are the standards that we need to hit in order to justify the investment and the timing of a Phase 3 trial. So there are different questions in endometrial cancer, breast cancer, and prostate cancer, although the thinking that went into each of them and as well into non-small cell lung and colon and other areas that we've contemplated in our planning, the thinking is similar. The actual background options, natural history is very different in each of these diseases. So, as you know, in endometrial cancer we already have a positive Phase 2 trial. It's with the IV form of deforolimus. So the goal of this trial is, one, to extend our knowledge of IV to oral, because we have relatively limited experience of oral deforolimus in endometrial cancer, although I think that's the easiest hurdle to meet, given how much experience we have with oral deforolimus in general, but also to gain a real understanding of the event rate you would expect in the control arm in this patient setting. What should we exactly expect in the progestin arm? We will learn more about that by running this trial. So I think a small, relatively easy to enroll randomized trial in endometrial cancer we felt was the right decision. There's relatively little competition for patients in endometrial cancer because very few drugs have shown any activity in endometrial cancer. And most of the experts in endometrial cancer looked at our Phase 2 IV results and were blown away with how positive those results were. Obviously, as you know, in breast cancer, there are lots of drugs being developed, and we needed to set a clear and well-defined reasonably high hurdle that can be achieved we think quite effectively in a modest number of patients to show a response rate. And if you look at the results on lapatinib and other drugs that have been approved in breast cancer, objective response rate, even a relatively low objective response rate, but seeing objective responses is very predictive of clinical efficacy and outcome in the broader population. So both of these trials – a lot of thought went into the design, the choice of randomized versus non-randomized, the sample size, the outcomes analysis, both of which lead to registration paths that hopefully can be executed effectively and with the unified strong support of the clinical community, who in the end have got to be excited about the Phase 2 data so that they prioritize deforolimus into the available patient population, which is, we think, critically important to doing this well and efficiently.

Mona Ashiya – JP Morgan

Thanks very much.

Harvey Berger

Thanks, Mona.

Operator

Your next question comes from the line of Howard Liang with Leerink Swann. Please proceed.

Howard Liang – Leerink Swann

Thanks very much for taking the question. Harvey, if I could ask first about the design of the breast cancer trial, and maybe if you could review for us the current data of Herceptin and mTOR inhibitor combination in patients who have Herceptin resistance. I guess I've seen the RAD001 data. That does look good, both in combination with Herceptin alone as well as in combination with Herceptin and paclitaxel. One specific question I had was, why in your trial you did not include paclitaxel? I guess why not? Or is that the next step? And whether you have combination data with paclitaxel with deforolimus already?

Harvey Berger

Well, to answer your second question first, we've already presented data on taxanes and deforolimus. And clearly we can give that combination. Without going into the details of our thinking on this specific approach, we gave a lot of thought to which patient population, which combination, and we felt that the best clinical opportunity was to combine deforolimus with Herceptin, or trastuzumab, and not complicated by inclusion as well of paclitaxel. So, that was clearly a discussion that was had and an analysis that was done, and we think this is the right way to evaluate the drug most efficiently. It's not based on a concern of whether deforolimus can be given with paclitaxel because we've already shown that it can be. So we think that the scientific or genetic rationale for looking at trastuzumab resistance is an excellent one, because there is clearly a very well documented role for activation of the mTOR pathway in this resistance setting, including p10 mutations. That theory, which has now been borne out by a lot of data, has been put forward for a number of years. In fact, there was an editorial in The New England Journal probably three or four years ago saying, "Gee, that's an interesting strategy to consider as trastuzumab resistance becomes increasingly a concern." So we think the data in this area is very encouraging. We think there's an excellent scientific rationale for this combination. We think you don't need paclitaxel to have the impact that we're looking for. And this design obviously, if successful in the trial, gets us an answer quickly and moves us to a definitive registration strategy quickly and efficiently.

Howard Liang – Leerink Swann

Okay, great. And for the endometrial cancer trial in the second-line setting, what is the requirement for the first-line treatment for the patients enrolling in that study?

Harvey Berger

It's open to – as far as I recall, it's open to whatever appropriate first-line chemotherapy is in endometrial cancer. I must confess I don't recall which of the chemotherapies are the standard of care today, but certainly the design of the trial is such that we would enroll patients who have recurrent or metastatic endometrial cancer following whatever the appropriate first-line chemotherapy would be. And so this is really, in a way, a classic second-line approach. What's interesting is, contrast this to sarcomas. In sarcomas, patients go through first line, aggressive second line, more aggressive third line, if they are – especially in the US. In Europe, they would probably stop after second line. In endometrial cancer, the standard of care here is progestin – hardly classic second-line chemotherapy. So you have a very different disease natural history following first-line chemotherapy in endometrial cancer versus sarcoma. It's not to say that some patients with advanced endometrial don't get lots of lines of aggressive chemotherapy, but it's the standard of care here to be able to use progestin and not go directly to high-powered second or third-line toxic chemotherapies because they don't have very much benefit. So what is becoming increasingly clear is, as you know, is the standard of care and the available options are widely different, as you go from these hormone-dependent cancers to these highly aggressive, proliferative cancers to the very hard-to-treat cancers. And so it's an interesting mix. And the strategy you need to use in each one of these is in fact quite different. And what we've tried to do is build on the uniqueness of each of the diseases.

Howard Liang – Leerink Swann

Okay, great. Then I have a question on the rationale of the milestone, the size of the milestone payments. It looks like for breast cancer you got $15 million for starting a 33-patient trial. For the endometrial cancer, you got only $2.5 million for doing a 150-patient trial. Is there a correlate to the size of the tumor – the market opportunity of the tumor type?

Harvey Berger

It's much more complicated than that. I mean, it's obvious it has nothing to do with the size of the trial. It has something indirectly to do with the size of the potential market, but not in anything close to a linear fashion. It was a heavily negotiated structure that ensured that we got the money we needed to fund our 50% of the development costs. And quite honestly, we don't – we look at it, we got $15 million in one and $2.5 million in the other, and we're going to get another $12.5 million for prostate. We're getting $30 million in a mix of times this year. It's completely fungible. It doesn't matter at all which one drives it. We use the cash to fund the program. Ed?

Edward Fitzgerald

And Howard, just to add to that, these milestones were all previously determined and negotiated as part of the collaboration agreement and are not then subsequently dependent on what the nature or size of a given trial might be.

Howard Liang – Leerink Swann

Okay. And then just a quick follow-up on the prostate cancer milestone for modeling purposes, would that more likely to be in the third quarter or fourth quarter?

Edward Fitzgerald

All we've indicated at this point in time, Howard, is second half of the year. We haven't indicated more specifically than that.

Howard Liang – Leerink Swann

Okay, great. Thanks very much.

Operator

Your next question comes from the line of Eun Yang with Jefferies. Please proceed.

Eun Yang – Jefferies

Thank you very much. On deforolimus for sarcoma, looking at the clinicaltrials.gov, the completion date and final data collection date is March 2011. Is that in line with your projection, assuming the patient enrollment to be completed in third quarter '09 as previously anticipated?

Harvey Berger

Yes, the guidance that we've given in the past, which was that it would take less than two years to fully enroll the trial, is unchanged. We are right on track to achieve that. The March 2011 I assume – although I didn't put that number in, but I assume what that number reflects is full follow-up in 100% of the patients of the trial. That's the last patient followed up to death.

Eun Yang – Jefferies

Okay, thanks.

Harvey Berger

So I'm sure that that's what's driving the timing on clinicaltrials.gov. But in terms of what's relevant to the registration and relevant to our planning, full enrollment and second interim analysis within two years of the first patient, which would put it into third quarter of next year, we're on track to achieve that. We're hoping to do better than that in terms of patient enrollment. And I'm quite confident that we're on track to achieve our goals.

Eun Yang – Jefferies

Okay. And the last question is on Bcr-Abl tyrosine kinase. SGX has a similar one, and also they have shown that their inhibitor has activity against T315I mutation. Can you actually comment on how your product is differentiated versus SGX, or is it just too early to comment?

Harvey Berger

Well, I mean, a real detailed comparison is difficult to make because there's virtually no preclinical data out there at scientific meetings on the SGX compound. However, based on what has been said, to the best of my knowledge, the SGX compound has activity against T315I, that mutation, but does not have comparable activity against other forms, other mutant forms of Bcr-Abl or the wild-type form of the enzyme. And I believe, although they would know better than we do, I believe that contributed to Novartis' decision not to further develop that compound, and thus it went back to SGX. What distinguishes 534 is that it is equally potent against T315I, T315A, all of the other common clinical mutants and the wild-type are naturally occurring form of the Bcr-Abl enzyme. So it is potentially a pan Bcr-Abl inhibitor, comparably inhibiting all the known forms, mutant and otherwise, of Bcr-Abl. And I think that distinguishes it in terms of justifying the commitment and investment in the drug.

Eun Yang – Jefferies

Okay. Thanks very much.

Harvey Berger

Thank you.

Operator

Your next question comes from the line of Phil Nadeau with Cowen. Please proceed.

Phil Nadeau – Cowen

Good morning. Thanks for taking my questions. I guess my first question is just on the Lilly and Amgen litigation. Is there any update on the timelines there?

Harvey Berger

I'll summarize where we are in both of them. The Lilly case is on appeal. Appeals briefs have been filed by Lilly to the Federal Circuit. I believe our response briefs are due soon. I don't recall the exact date. And that would mean that after the case is fully briefed, the Federal Circuit would hear the case and probably reach a decision next year. So the Lilly case, I believe, is getting to its final resolution, which should be in 2009. Obviously I can't speak to the possibility of additional appeals such as to the Supreme Court, but at least with respect to the Federal Circuit, which is the appeals court that hears all of the patent cases in this country, we should have resolution next year. The Amgen case goes to trial in Wilmington, Delaware in early November of this year. And we're confident and looking forward to the trial, which is about two weeks, the period before Thanksgiving. There has been a Markman hearing in which claim construction has been discussed. Markman briefs are in. And we're now getting to the pre-trial stage, and the trial is not far off. And we expect to go to trial in November.

Phil Nadeau – Cowen

And how long after the bench phase of the trial completes do you get a ruling, typically?

Harvey Berger

Well, the trial in Wilmington is a jury trial. So the core issues are going to be decided by a jury. There are aspects of the dispute that would be resolved by the judge as a simultaneous or concurrent bench trial, which I believe is the way this is going to be handled, as opposed to the way it was handled in Massachusetts, where it was done with a separate, delayed bench trial. How quickly the judge responds to the issues is entirely, as far as I know, in the hands of the judge. But the jury will provide its verdict on infringement and validity before they go home at the end of the trial, before Thanksgiving.

Phil Nadeau – Cowen

Okay, great. That's very helpful. Thank you.

Harvey Berger

Sure.

Operator

(Operator instructions) And now you have a follow-up from the line of Terence Flynn with Lazard Capital. Please proceed.

Terence Flynn – Lazard Capital

Hi, thanks for taking the follow-up. Just wondering what the definition of Herceptin resistance is that's being employed in the Phase 2 trial. Thanks.

Harvey Berger

I'm not sure I can give you the formal definition, but patients clearly fail to continue to maintain benefit on trastuzumab. I don't recall, having not seen the protocol recently, the exact definition of resistance. Again, certainly something that we can follow up with you, and I'd rather get you the exact description, because it's in the protocol, than give you an estimate.

Terence Flynn – Lazard Capital

Okay. Thank you very much.

Operator

You have a follow-up question from the line of Howard Liang. Please proceed.

Howard Liang – Leerink Swann

Thanks very much. Can you talk about the nature of your clinical presentation on deforolimus at the EORTC or ENC meeting?

Harvey Berger

We haven't provided, Howard, any additional guidance on that. As we get closer to the meeting, we will. But what I think we can say is that it relates to trials that have been completed. It's additional detailed information that relates some of the clinical findings to the preclinical and scientific rationale for use of deforolimus, consistent with sort of the main focus of the ENA meeting, which is translational and crossroads between preclinical and clinical science.

Howard Liang – Leerink Swann

Great. Thanks very much.

Harvey Berger

Thanks, Howard.

Operator

At this time, we do not have any more questions in queue, and I would like to turn the presentation back to Dr. Berger for closing remarks.

Harvey Berger

Thanks very much. I'd like to start by thanking the folks with – participants with questions, for a really excellent set of questions this morning. I appreciate your time and the insight you've provided. We look forward to hearing from you more. We will follow up with answers to some of the open detailed questions about trials and look forward as well to continuing to report on our progress. It should be a very busy, very exciting second half of the year. And as we look to 2009 with these data starting to be presented at important oncology and other medical meetings, the whole deforolimus and 534 story will really become front and center and much clearer going forward. So we're excited about where we are, and we appreciate your interest and look forward to our next meetings with you. Thank you.

Operator

Thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Good day.

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Source: ARIAD Pharmaceuticals, Inc. Q2 2008 Earnings Call Transcript
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