8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 11, 2007

ARIAD Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-21696	22-3106987
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

26 Landsdowne Street, Cambridge, Massachusetts
(Address of principal executive offices) 02139
(Zip Code)

Registrant’s telephone number, including area code: (617) 494-0400

Not Applicable
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

     On July 11, 2007, ARIAD Pharmaceuticals, Inc. and ARIAD Gene Therapeutics, Inc. (collectively, “ARIAD”), entered into a Collaboration Agreement with Merck & Co., Inc. (“Merck”) for the joint global development and commercialization of AP23573, ARIAD’s novel mTOR inhibitor (the “Product”), for use in cancer (the “Collaboration Agreement”).

     Under the terms of the Collaboration Agreement, Merck and ARIAD anticipate conducting a broad-based development program in which clinical trials and biomarker studies will be conducted concurrently in multiple cancer indications, pursuant to a global development plan to be agreed upon by ARIAD and Merck. Each party will fund fifty percent (50%) of the global development costs, except that Merck will fund one-hundred percent (100%) of any cost of development that is specific to development or commercialization of the Product outside the United States. The Collaboration Agreement provides that, in certain circumstances, either party may opt out of conducting and funding certain late-stage clinical trials, which would result in changes in development and commercialization responsibilities and compensation arrangements. ARIAD will be responsible for supplying the active pharmaceutical ingredient used in the Product and Merck will be responsible for the formulation of the finished Product, under a Supply Agreement covering both aspects of supply to be negotiated by the parties.

     The Collaboration Agreement provides that, in the United States, ARIAD and Merck will co-promote the Product, ARIAD will distribute and sell the Product for all cancer indications and book all sales, and each will receive fifty percent (50%) of the profit from such sales. Outside the United States, Merck will distribute, sell and promote the Product and book all sales, and Merck will pay ARIAD tiered double-digit royalties on sales outside the United States. Royalties are payable by Merck, on a country by country basis, until the later of (i) the expiration of the last valid claim of any patent rights owned by either ARIAD or Merck that cover the Product, (ii) a specified number of years from first commercial sale, or (iii) the last date upon which ARIAD supplies active pharmaceutical ingredient to Merck under the Supply Agreement, subject to partial reduction in certain circumstances.

     ARIAD and Merck have each agreed in the Collaboration Agreement that, on a country-by-country basis, until the later to occur of the expiration of the last valid claim of any patent rights owned by either of them that cover the Product, or twelve (12) years from first commercial sale of the Product, it will not research, develop or commercialize Rapamycin or any mTOR inhibitor derived from Rapamycin, except that ARIAD may develop or commercialize through licensees AP23573 or other mTOR inhibitors derived from Rapamycin for use in stents or other medical devices.

     Under the terms of the Collaboration Agreement, Merck has agreed to pay ARIAD an initial payment of Seventy-Five Million dollars ($75,000,000), up to Four Hundred Fifty-Two Million dollars ($452,000,000) in milestone payments based on the successful development of the Product in multiple cancer indications, and up to Two Hundred Million dollars ($200,000,000) based on achievement of specified Product sales thresholds. Merck has also agreed to provide ARIAD with up to Two Hundred Million dollars ($200,000,000) in interest-bearing, repayable, development cost advances to cover a portion of ARIAD’s share of global

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development costs, after ARIAD has paid One Hundred and Fifty Million dollars ($150,000,000) in global development costs.

     The Collaboration Agreement may be terminated (i) by either Party based on insolvency or uncured breach by the other Party, (ii) by Merck on or after the third anniversary of the effective date by providing at least twelve (12) months prior written notice, or (iii) by Merck upon the failure of the Product to meet certain developmental and safety requirements. Upon termination of the Collaboration Agreement, depending upon the circumstances, the parties have varying rights and obligations with respect to the continued development and commercialization of the Product and continuing royalty obligations.

     ARIAD and Merck will establish a series of joint committees which will be responsible for the development and commercialization of the Product. Under the committee structure, if the committees are unable to reach a decision, the matter is referred to senior executives of the parties. Each party has ultimate decision making authority with respect to a specified limited set of issues, and for all other issues, the matter must be resolved by consensus.

     A copy of the press release announcing the Collaboration Agreement is attached to this Current Report on Form 8-K as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Press Release dated July 12, 2007

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ARIAD Pharmaceuticals, Inc.
Date: July 17, 2007	By:	/s/ Edward M. Fitzgerald
	Name:	Edward M. Fitzgerald
	Title:	Senior Vice President, Finance and Corporate Operations, Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated July 12, 2007

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EX-99.1

Exhibit 99.1

ARIAD and Merck & Co., Inc. Announce Global Collaboration to Jointly Develop and
Commercialize AP23573 — ARIAD’s Novel mTOR Inhibitor — for Cancer

ARIAD to Host Investor Call Today at 9:00 a.m. (EST)

CAMBRIDGE, Mass. & WHITEHOUSE STATION, N.J.—(BUSINESS WIRE)—July 12, 2007—ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) and Merck & Co., Inc. (NYSE: MRK) today announced that they have entered into a global collaboration to jointly develop and commercialize AP23573, ARIAD’s novel mTOR inhibitor, for use in cancer. It is expected that AP23573 will enter into Phase III clinical development for the treatment of metastatic sarcomas beginning this quarter.

The agreement provides for an initial payment of $75 million to ARIAD, up to $452 million more in milestone payments to ARIAD based on the successful development of AP23573 in multiple cancer indications (including $13.5 million for the initiation of the Phase III clinical trial in metastatic sarcomas and $114.5 million for the initiation of other Phase II and Phase III clinical trials), up to $200 million more based on achievement of significant sales thresholds, at least $200 million in estimated contributions by Merck to global development, up to $200 million in interest-bearing repayable development-cost advances from Merck to cover a portion of ARIAD’s share of global-development costs (after ARIAD has paid $150 million in global development costs), and potential commercial returns from profit sharing in the U.S. or royalties paid by Merck outside the U.S.

“We are very excited to be entering into this partnership with ARIAD for the development and potential commercialization of AP23573, as it has the promise to allow us to bring an important new medicine to cancer patients globally. Merck is fully committed to the field of oncology, and this partnership further demonstrates that commitment as we strive to meet unmet medical needs in cancer,” said Vlad Hogenhuis, M.D., general manager, oncology, specialty and neuroscience franchise of Merck.

The companies anticipate conducting a broad-based global development program in which clinical trials and biomarker studies will be conducted concurrently in multiple cancer indications. Each party will fund 50 percent of the cost of global development of AP23573, except that Merck will fund 100 percent of the cost of ex-U.S. development that is specific to the development or commercialization of AP23573 outside the U.S. In certain circumstances, either party may opt-out of conducting and funding certain late-stage clinical development of AP23573, which would result in changes in development and commercialization responsibilities and compensation arrangements.

Both companies will share overall responsibility for global commercialization and development of AP23573. In the U.S., ARIAD will distribute and sell AP23573 for all cancer indications and book all sales, and ARIAD and Merck will co-promote and will each receive 50 percent of the income from such sales. Outside the U.S., Merck will distribute, sell and promote AP23573 and

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book all sales; Merck will pay ARIAD tiered double-digit royalties on such end-market sales of AP23573. On a global basis, ARIAD will be responsible for manufacturing the active pharmaceutical ingredient used in the product, and Merck will be responsible for the formulation of the finished product (tablets).

In the U.S., ARIAD will have primary responsibility for development of AP23573 in the metastatic sarcoma indication. Merck and ARIAD will have joint responsibility in the U.S. for development of all other cancer indications being pursued. Outside the U.S., Merck will have primary responsibility for development in all cancer indications being pursued.

Stephen Friend, M.D., Ph.D., executive vice president and oncology franchise head of Merck said, “mTOR is a validated target for therapeutic intervention in human cancer and resides at a crucial intersection point controlling cell growth and survival of many tumor types. We are delighted to partner with ARIAD to develop and commercialize AP23573 for major unmet medical needs in oncology.”

“This partnership aligns our interests directly with those of Merck — one of the leading global pharmaceutical companies dedicated to developing and commercializing new oncology drugs and with a demonstrated expertise in biomarker development,” said Harvey J. Berger, M.D., chairman and chief executive officer of ARIAD. “From the beginning, our top corporate priority has been to establish a partnership that will maximize the commercial and clinical potential of our lead oncology product and allow us to realize our vision of becoming a fully integrated oncology company. We implemented a rigorous partnering process that generated substantial interest from multiple companies and ultimately enabled us to select Merck as our partner of choice.”

Richard W. Pascoe, chief commercial officer of ARIAD, added, “We look forward to working closely with our clinical, manufacturing, marketing and sales colleagues from Merck to bring AP23573 to cancer patients as quickly as possible. The structure of this partnership allows the partners to pursue the clinical development of AP23573 in multiple indications concurrently throughout the world.”

Today’s Conference Call

ARIAD will hold a live webcast and conference call today at 9:00 a.m. (EST) to discuss the partnering agreement with Merck. The live webcast can be accessed by visiting the investor relations section of the Company’s Web site at http://www.ariad.com/investor. The call can be accessed by dialing 1-866-770-7146 (domestic) or 617-213-8068 (international) five minutes prior to the start time and providing the passcode 17678277. A replay of the call will be available on the ARIAD Web site approximately two hours after completion of the call and will be archived for two weeks.

About AP23573

ARIAD’s lead product candidate, AP23573, is a novel small-molecule inhibitor of the protein mTOR, a “master switch” in cancer cells. Blocking mTOR creates a starvation-like effect in cancer cells by interfering with cell growth, division, metabolism, and angiogenesis. AP23573 is currently in Phase I and II clinical trials in patients with solid tumors and hematologic cancers. AP23573 has been designated both as a fast-track product and an orphan drug by the U.S. Food

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and Drug Administration and as an orphan drug by the European Medicines Agency for the treatment of soft-tissue and bone sarcomas. ARIAD is collaborating with Merck to develop and commercialize AP23573 in oncology and with Medinol Ltd. to develop stents and other medical devices that deliver AP23573 to prevent reblockage at sites of vascular injury following stent-assisted angioplasty.

About ARIAD

ARIAD is engaged in the discovery and development of breakthrough medicines to treat cancer by regulating cell signaling with small molecules. ARIAD is developing a comprehensive approach to patients with cancer that addresses the greatest medical need — aggressive and advanced-stage cancers for which current treatments are inadequate. ARIAD has a global partnership with Merck to develop and commercialize AP23573, ARIAD’s lead cancer product candidate. Medinol Ltd. also is developing stents and other medical devices that deliver AP23573 to prevent reblockage at sites of vascular injury following stent-assisted angioplasty. ARIAD has an exclusive license to pioneering technology and patents related to certain NF-(kappa)B treatment methods, and the discovery and development of drugs to regulate NF-(kappa)B cell-signaling activity, which may be useful in treating certain diseases. Additional information about ARIAD can be found on the Web at http://www.ariad.com.

About Merck

Merck & Co., Inc. is a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck currently discovers, develops, manufactures and markets vaccines and medicine to address unmet medical needs. The company devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them. Merck also publishes unbiased health information as a not-for-profit service. For more information, visit http://www.merck.com.

ARIAD Forward-looking Statement

This press release contains “forward-looking statements,” including statements related to the potential value of payments, which may be received pursuant to our collaboration with Merck & Co., Inc., the anticipated development of AP23573 pursuant to the collaboration in several cancers, and the future responsibilities of the parties under the collaboration agreements. Forward-looking statements are based on management’s expectations and are subject to certain factors, risks and uncertainties that may cause actual results, outcome of events, timing and performance to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to, the costs associated with our research, development, manufacturing and other activities, the conduct and results of pre-clinical and clinical studies of our product candidates, difficulties or delays in obtaining regulatory approvals to market products resulting from our development efforts, our reliance on partners, including Medinol and Merck, and other key parties for the successful development, manufacturing and commercialization of products, the adequacy of our capital resources and the availability of additional funding, patent protection and third-party intellectual property claims relating to our and any partner’s product candidates, the timing, scope, cost and outcome of legal and patent office proceedings concerning our NF-(kappa)B patent portfolio, the potential acquisition of or

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other strategic transaction regarding the minority stockholders’ interests in our 80 percent-owned subsidiary, ARIAD Gene Therapeutics, Inc., future capital needs, key employees, markets, economic conditions, prices, reimbursement rates, competition and other factors detailed in the Company’s public filings with the U.S. Securities and Exchange Commission. The information contained in this document is believed to be current as of the date of original issue. The Company does not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results or to changes in the Company’s expectations, except as required by law.

Merck Forward-looking Statement

This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding product development, product potential or financial performance. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this press release should be evaluated together with the many uncertainties that affect Merck’s business, particularly those mentioned in the risk factors and cautionary statements in Item 1A of Merck’s Form 10-K for the year ended December 31, 2006, and in its periodic reports on Form 10-Q and Form 8-K, which the Company incorporates by reference.

CONTACT: Merck & Co., Inc.
Media:
Amy Rose, 908-423-6537
Investors:
Graeme Bell, 908-423-5185
Or
ARIAD
Media:
Andrea Johnston, 910-616-5858
Investors:
Edward Fitzgerald, 617-621-2345

SOURCE: Merck & Co., Inc. & ARIAD Pharmaceuticals, Inc.

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