Ariad Pharmaceuticals Inc (NASDAQ:ARIA)

CAPS Rating: 3 out of 5

The Company is engaged in the discovery and development of breakthrough medicines to treat cancers by regulating cell signaling with small molecules.

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Player Avatar zzlangerhans (99.77) Submitted: 12/2/2010 12:36:55 AM : Underperform Start Price: $4.08 ARIA Score: -350.27

Ariad's share price has bounced around a lot this year in advance of data from the phase III SUCCEED trial of ridaforolimus in metastatic sarcoma, and is now close to a three year high (and a six-year high in market cap). A 540M cap is simply too much given the questionable odds of success of ridaforolimus against a tough solid tumor like sarcoma, and a cash position of only 60M.

For those interested in put options, the ask on the May 4's is 1.10 today and I would expect a SUCCEED failure to send the share price below 1. That would represent a $190 profit per contract. The open interest on the May 2.50 puts is really high. I'll keep following the prices on these and consider a hit if the put prices continue to drop.

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