Shares of Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) were down handily on Monday. The drop follows news that JPMorgan downgraded the stock to Underweight from Neutral. The firm also set a $7 price target.

What investors will care about here is that Ariad is not a typical downgrade stock. On top of that, Ariad just came under scrutiny for a drug price hike after Senator Sanders asked the company about the pricing of its blood cancer drug Iclusig.

What is so different here from other cases in which drug price hikes have come under scrutiny is that Ariad is not yet profitable. Its shares fell as much as 15% in the past week or so when the Sanders query was made and on word of repeated and staggering price hikes.

Reportedly, Ariad has raised its wholesale price of Iclusig as a therapy for a rare advanced form of leukemia four times over the course of a year. Bloomberg showed that its 30-day pack now costs over $16,000, for a cost of almost $200,000 per year. Iclusig sales almost doubled to $65 million in the second quarter of this year.

Another word of caution came from RBC Capital Markets, which noted that Ariad’s estimates may be 20% too high as a result of the congressional inquiry into Iclusig. The fear is that even if nothing comes out bad against the company, Ariad will still have to make some form of concession.

Even before the formal JPMorgan downgrade on Monday, the firm warned just last week that the pricing scrutiny made for a scenario in which the firm would not be surprised by some continued profit taking in the near term.

Again, what stands out here on Monday is that the drug price hikes are against a company that is not even profitable. As of the end of 2015, the company’s accumulated deficit for retained earnings was −$1.445 billion. That figure was down to −$1.389 billion by the end of June. Another issue worth noting is that for the past four years, again while the company has been losing money, research and development has been the single largest expense on average and is generally more than 50% of its expenses.

Ariad shares were trading at $13.07 on October 13, but they were down to $11.14 on October 14. Its stock has drifted lower almost every trading day since. After shares were down 3.7% to $10.38 on Friday, Monday’s initial trading was indicated down almost 4% at $9.97, but its shares were last seen down 7.5% at $9.60.

While this stock is down 30% or so in the past month, share are still up about 50% so far in 2016.

Ariad now has a consensus analyst price target of $13.33, according to Thomson Reuters. That is down from $10.43 just a month ago.

Stay tuned.

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