Ariad puts hold on Kendall Sq. move
But city officials sure space will be filled
Ariad Pharmaceuticals Inc., suffering a sharp drop in its market value over the past two weeks amid safety questions about its leukemia drug, has put a hold on plans to move into a new headquarters and laboratory complex under construction in Cambridge’s Kendall Square.
“We are pausing our internal work on the building,” Ariad spokesman Jeffrey Krasner said Monday. “It doesn’t look like we’ll be moving in [as scheduled] in early 2015.”
Krasner did not say whether Ariad might ultimately seek to back out of a 15-year lease it signed earlier this year with Pasadena, Calif., developer Alexandria Real Estate Equities Inc. Such an action could cost the Cambridge biotechnology company a hefty cancellation fee.
Despite the sudden uncertainty for the two-building project at 75 and 125 Binney St. that was to kickstart a larger life sciences project called Alexandria Center at Kendall Square, Cambridge officials said they were confident the developer could find new tenants for the 386,000-square-foot space if necessary.
“This is a situation that’s developing in real time,” said Brian Murphy,
assistant city manager for community development. “I would expect that Ariad and Alexandria will work this out in a way that makes sense for all parties involved. We’re very fortunate in Cambridge to have a diverse and robust life sciences community. So when a building is built, tenants jump in.”
Cambridge City Councilor Leland Cheung said he, too, believed the Alexandria project in Kendall Square would go forward — with or without Ariad as the anchor tenant.
“The biotechnology industry in Cambridge remains strong,” Cheung said. “The vacancy rate for lab space is very low. Obviously, I have concerns for the company and for people who may have benefited from its products. But there’s a lot of demand to get into space in Kendall Square.”
Thomas J. Andrews, executive vice president and regional market director for Alexandria, did not return phone calls to his Cambridge office Monday.
Ariad executives in January signed a 15-year lease to occupy about 60 percent of the two buildings on Binney Street. While the parties did not disclose financial terms, Ariad raised $310 million in a January stock offering. Last month, the company said i t had amended its lease agreement with Alexandria to take the remainder of the buildings’ office and lab space that was to have been used by other tenants.
But its fortunes changed dramatically recently. Company shares have lost more than 80 percent of their value since Oct. 9 when the Food and Drug Administration placed a “partial clinical hold” on all studies of Ariad’s drug Iclusig as a treatment for leukemia and other cancers, forcing the company to stop enrolling new patients in trials. The move came after data showed an increased number of patients suffered blood clots and heart problems after taking the drug in an earlier study.
On Friday, Ariad said it had terminated a pivotal clinical trial aimed at turning Iclusig — which now treats patients whose leukemia resists other medicines — into a so-called first-line treatment for newly diagnosed patients. That would have expanded its potential market.
Ariad’s share price rebounded modestly Monday, climbing 27 cents to $2.94, a gain of 10.1 percent on the Nasdaq exchange. But it remains far below the closing price of $17.14 on Oct. 8. Some stock analysts released reports suggesting that, while first-line designation was now out of reach, Ariad can still be expected to build a business on the strength of a smaller “refractory” market of patients who had failed other leukemia treatments.
The company had another setback Monday when a California firm, the Shareholders Foundation Inc. of San Diego, said it had filed a lawsuit on behalf of Ariad investors accusing the Cambridge biotech of misleading investors about the safety and effectiveness of Iclusig. Other attempts to round up Ariad stockowners for lawsuits are also reportedly in the works.
Krasner, the Ariad spokesman, declined to discuss legal actions against the company.
Commercial real estate executives, speaking on the condition of anonymity because they were not involved in the Alexandria development, said Ariad might have to pay a cancellation fee totaling tens of millions of dollars i f the company walked away from its lease and Alexandria faced a delay in renting the Binney Street complex to other life sciences companies.