**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q/A**


**Amendment
      No. 1**





|X|   QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


**For
      the quarterly period ended September 30, 2007**





OR





|  |   TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15 (d)


OF
      THE
      SECURITIES EXCHANGE ACT OF 1934


For
      the
      transition period from _____ to _____





Commission
      File Number:  0-21696





**ARIAD
      Pharmaceuticals, Inc.**


(Exact
      name of Registrant as specified in its charter)




**Delaware**
              **22-3106987**(State
                  or other jurisdiction of
              (I.R.S.
                  Employer Identification No.)incorporation
                  or organization)




**26
      Landsdowne Street, Cambridge, Massachusetts 02139**


(Address
      of principal executive offices) (Zip Code)





Registrant’s
      Telephone Number, Including Area Code:**(617)
      494-0400**





Former
      Name, Former Address and Former Fiscal Year,


If
      Changed
      Since Last Report:  Not Applicable





Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.




**Yes  |X|             No  |  |**





Indicate
      by check mark whether the Registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer.  See definition of
“large accelerated filer and accelerated filer” in Rule 12b-2 of the Exchange
      Act.


**Large
      accelerated filer |  |   Accelerated filer
      |X|     Non-accelerated filer
      |  |**





Indicate
      by check mark whether the Registrant is a shell company (as defined in Rule
      12b
      - 2 of the Exchange Act).


**Yes  |  |             No  |X|**




The
      number of shares of the Registrant’s
      common stock outstanding as of October 31, 2007 was
      69,238,890.


















**EXPLANATORY
      NOTE**





This
      Amendment No. 1 (the “Amended Filing”) to the Registrant’s Quarterly Report on
      Form 10-Q for the quarter ended September 30, 2007 originally filed on November
      9, 2007 (the “Original Filing”) is being filed solely to revise disclosure
      contained in Note 9 to the Registrant’s unaudited condensed consolidated
      financial statements contained in Part I, Item 1 of the Original Filing to:
      (i)
      correct a typographical error under the subheading “*The ‘374 and ‘090
      Patents*” relating to the scheduled commencement date of the trial and (ii)
      to revise disclosure under the subheading “*Reexamination Proceedings in
      PTO*” to reflect that some of the 94 claims cancelled by the Registrant were
      asserted in the Amgen litigation and to note that some of the 8 added claims,
      if
      issued, could be asserted against Lilly or Amgen.  Part II has also
      been amended to reflect the incorporation by reference in Part II, Item 1 of
      the
      revised disclosure in Note 9 and to reflect the required filing of new
      certifications of the principal executive officer and principal financial
      officer of the Registrant in accordance with Rule 12b-15 under the Securities
      Exchange Act of 1934, as amended.





Other
      than
      described above, no changes have been made to any other items in the Original
      Filing. This Amended Filing does not reflect events occurring after the date
      of
      the Original Filing or modify or update those disclosures affected by subsequent
      events.






2





**ARIAD
      PHARMACEUTICALS, INC.**





**TABLE
      OF CONTENTS**






**PART
                  I.**
              **FINANCIAL
                  INFORMATION**
              1**ITEM
                  1.**
              **UNAUDITED
                  FINANCIAL
                  STATEMENTS**
              1Condensed
                  Consolidated Balance Sheets – September
                  30, 2007 and December 31, 2006
              1Condensed
                  Consolidated Statements of Operations for the
                  Three Months and Nine Months Ended September 30, 2007 and
                  2006
              2Condensed
                  Consolidated Statements of Cash Flows for the
                  Nine Months Ended September 30, 2007 and 2006
              3Notes
                  to Unaudited Condensed Consolidated Financial
                  Statements
              4**PART
                  II.**
              **OTHER
                  INFORMATION**
              12**ITEM
                  1.**
              **LEGAL
                  PROCEEDINGS**
              12**ITEM
                  6.**
              **EXHIBITS**
              12**SIGNATURES**
              13**EXHIBIT
                  INDEX**
              14











**PART
      I.                      FINANCIAL INFORMATION**





**ITEM
      1.                      UNAUDITED FINANCIAL STATEMENTS**





**ARIAD
                PHARMACEUTICALS, INC. AND SUBSIDIARIES**
              **CONDENSED
                CONSOLIDATED BALANCE
                SHEETS*****In
                thousands, except share and per share data***
            
            **September
                30,**
              **2007**
            
            
            **December
                31,**
              **2006****(Unaudited)****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            68,875
            
            
            $
            31,728Marketable
                securities
            
            
            17,235
            
            
            
            8,076Amounts
                due under collaboration agreement
            
            
            3,421
            
            
            
            -Inventory
                and other current assets
            
            
            2,438
            
            
            
            1,839Total
                current assets
            
            
            91,969
            
            
            
            41,643Property
                and equipment:Leasehold
                improvements
            
            
            18,172
            
            
            
            18,126Equipment
                and furniture
            
            
            11,356
            
            
            
            10,677Total
            
            
            29,528
            
            
            
            28,803Less
                accumulated depreciation and amortization
            
            
            (24,837
            )
            
            
            (23,721
            )Property
                and equipment, net
            
            
            4,691
            
            
            
            5,082Intangible
                and other assets, net
            
            
            4,044
            
            
            
            4,318Total
                assets
            
            $
            100,704
            
            
            $
            51,043**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Current
                portion of long-term debt
            
            $
            4,295
            
            
            $
            1,920Accounts
                payable
            
            
            2,103
            
            
            
            4,003Accrued
                compensation and benefits
            
            
            772
            
            
            
            428Accrued
                product development expenses
            
            
            6,479
            
            
            
            6,612Other
                accrued expenses
            
            
            5,061
            
            
            
            1,841Current
                portion of deferred executive compensation
            
            
            456
            
            
            
            528Current
                portion of deferred revenue
            
            
            5,859
            
            
            
            452Total
                current liabilities
            
            
            25,025
            
            
            
            15,784Long-term
                debt
            
            
            
            
            
            
            3,815Deferred
                revenue
            
            
            67,939
            
            
            
            2Deferred
                executive compensation
            
            
            1,489
            
            
            
            1,180Stockholders’
                equity:Common
                stock, $.001 par value; authorized, 145,000,000 shares;
                issued
              and
                outstanding, 69,223,129
                shares in 2007 and 65,391,347 shares in 2006
            
            
            69
            
            
            
            65Additional
                paid-in capital
            
            
            358,000
            
            
            
            339,220Accumulated
                other comprehensive income
            
            
            14
            
            
            
            3Accumulated
                deficit
            
            
            (351,832
            )
            
            
            (309,026
            )Total
                stockholders’ equity
            
            
            6,251
            
            
            
            30,262Total
                liabilities and stockholders’ equity
            
            $
            100,704
            
            
            $
            51,043





See
      notes
      to unaudited condensed consolidated financial statements.






1





**ARIAD
                PHARMACEUTICALS, INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF
                OPERATIONS****(Unaudited)****Three
                Months Ended**
            
            
            **Nine
                Months Ended****September
                30,**
            
            
            **September
                30,*****In
                thousands, except share and per share data***
            
            **2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**License
                and collaboration revenue
            
            $
            1,602
            
            
            $
            229
            
            
            $
            1,981
            
            
            $
            688Operating
                expenses:Research
                and development
            
            
            8,242
            
            
            
            10,564
            
            
            
            29,805
            
            
            
            32,382General
                and administrative
            
            
            5,006
            
            
            
            5,244
            
            
            
            16,307
            
            
            
            17,231Total
                operating expenses
            
            
            13,248
            
            
            
            15,808
            
            
            
            46,112
            
            
            
            49,613Loss
                from operations
            
            
            (11,646
            )
            
            
            (15,579
            )
            
            
            (44,131
            )
            
            
            (48,925
            )Other
                income (expense):Interest
                income
            
            
            878
            
            
            
            482
            
            
            
            1,609
            
            
            
            1,720Interest
                expense
            
            
            (82
            )
            
            
            (123
            )
            
            
            (284
            )
            
            
            (369
            )Other
                income, net
            
            
            796
            
            
            
            359
            
            
            
            1,325
            
            
            
            1,351Net
                loss
            
            $
            (10,850
            )
            
            $
            (15,220
            )
            
            $
            (42,806
            )
            
            $
            (47,574
            )Net
                loss per share
            
            $
            (.16
            )
            
            $
            (.25
            )
            
            $
            (.63
            )
            
            $
            (.77
            )Weighted-average
                number of shares ofcommon stock outstanding
            
            
            69,160,289
            
            
            
            62,120,381
            
            
            
            67,870,622
            
            
            
            62,013,462





See
      notes
      to unaudited condensed consolidated financial statements.






2





**ARIAD
                PHARMACEUTICALS, INC. AND SUBSIDIARIES**
              **CONDENSED
                CONSOLIDATED STATEMENTS OF CASH
                FLOWS**
              **(Unaudited)**


**Nine
                Months Ended**
              **September
                30,*****In
                thousands***
            
            **2007**
            
            
            **2006**Cash
                flows from operating activities:Net
                loss
            
            $
            (42,806
            )
            
            $
            (47,574
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            1,765
            
            
            
            3,476Accretion
                of discount on marketable securities
            
            
            (609
            )
            
            
            (1,313
            )Deferred
                executive compensation expense
            
            
            745
            
            
            
            669Stock-based
                compensation
            
            
            4,487
            
            
            
            3,388Increase
                (decrease) from:Inventory
                and other current assets
            
            
            (599
            )
            
            
            (93
            )Amounts
                due under collaboration agreement
            
            
            (3,421
            )Other
                assets
            
            
            (4
            )
            
            
            35Accounts
                payable
            
            
            (1,900
            )
            
            
            97Accrued
                compensation and benefits
            
            
            344
            
            
            
            407Accrued
                product development expenses
            
            
            (133
            )
            
            
            (1,440
            )Other
                accrued expenses
            
            
            3,220
            
            
            
            901Deferred
                revenue
            
            
            73,344
            
            
            
            (363
            )Deferred
                executive compensation paid
            
            
            (508
            )
            
            
            (423
            )Net
                cash provided by (used in) operating activities
            
            
            33,925
            
            
            
            (42,233
            )Cash
                flows from investing activities:Proceeds
                from maturities of marketable securities
            
            
            43,377
            
            
            
            70,766Purchases
                of marketable securities
            
            
            (51,916
            )
            
            
            (37,761
            )Investment
                in property and equipment
            
            
            (725
            )
            
            
            (1,018
            )Investment
                in intangible assets
            
            
            (371
            )
            
            
            (434
            )Net
                cash (used in) provided by investing activities
            
            
            (9,635
            )
            
            
            31,553Cash
                flows from financing activities:Repayment
                of borrowings
            
            
            (1,440
            )
            
            
            (1,440
            )Proceeds
                from the issuance of stock , net of issuance costs
            
            
            12,300Proceeds
                from issuance of stock pursuant to stock option and purchase
                plans
            
            
            1,997
            
            
            
            1,488Net
                cash provided by financing activities
            
            
            12,857
            
            
            
            48Net
                increase (decrease) in cash and cash equivalents
            
            
            37,147
            
            
            
            (10,632
            )Cash
                and cash equivalents, beginning of period
            
            
            31,728
            
            
            
            25,453Cash
                and cash equivalents, end of period
            
            $
            68,875
            
            
            $
            14,821





See
      notes
      to unaudited condensed consolidated financial statements.






3




**ARIAD
      PHARMACEUTICALS, INC. AND SUBSIDIARIES**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED**


**FINANCIAL
      STATEMENTS**





**1.      Management
      Statement**





In
      the
      opinion of the Company’s management, the accompanying unaudited condensed
      consolidated financial statements contain all adjustments (consisting of items
      of a normal and recurring nature) necessary to present fairly the financial
      position as of September 30, 2007, the results of operations for the three-month
      and nine-month periods ended September 30, 2007 and 2006 and cash flows for
      the
      nine-month periods ended September 30, 2007 and 2006.  The results of
      operations for the three-month and nine-month periods ended September 30, 2007
      are not necessarily indicative of the results to be expected for the full
      year.  These financial statements should be read in conjunction with
      the Company’s Annual Report on Form 10-K for the year ended December 31, 2006,
      which includes consolidated financial statements and notes thereto for the
      years
      ended December 31, 2006, 2005 and 2004.





At
      September 30, 2007, the Company has cash, cash equivalents and marketable
      securities totaling $86.1 million.  The Company believes that the
      combination of its cash, cash equivalents and marketable securities, together
      with funding pursuant to its collaboration with Merck & Co., Inc. (Note 3)
      and the availability of $37.5 million under its equity financing facility with
      Azimuth Opportunity Ltd. (Note 5), provide sufficient resources for the Company
      to satisfy its operating and capital requirements for more than twelve
      months.





**2.**
            **Revenue
                Recognition Policy**





The
      Company generates revenue from license and collaboration agreements with third
      parties related to use of the Company’s technology and/or development and
      commercialization of product candidates.  Such agreements may provide
      for payment to the Company of up front payments, periodic license payments,
      milestone payments and royalties.





The
      Company recognizes revenue in accordance with the Securities and Exchange
      Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 101,***Revenue
      Recognition in Financial Statements*, SAB No. 104, *Revenue
      Recognition*, and Emerging Issues Task Force (“EITF”) No. 00-21,
*Accounting for Revenue Arrangements with Multiple
      Deliverables*.  Revenue is recognized when there is persuasive
      evidence that an arrangement exists, delivery has occurred, the price is fixed
      and determinable and collection is reasonably assured.  Revenue
      arrangements with multiple elements are divided into separate units of
      accounting if certain criteria are met, including whether the delivered element
      has stand-alone value to the customer and whether there is objective and
      reliable evidence of the fair value of the undelivered
      items.  Consideration received is allocated to the separate units of
      accounting based on the fair value of each unit and the appropriate revenue
      recognition principles are applied to each unit.





Up-front
      and annual license fees associated with collaboration and license agreements
      are
      recorded as deferred revenue upon receipt and recognized as revenue on a
      systematic basis over the period of time they are earned in accordance with
      the
      terms of the agreements.  Milestone payments are also recognized as
      revenue on a systematic basis over the remaining performance period of the
      agreements, commencing when the milestone has been achieved or is probable
      of
      achievement.  Royalty payments are recognized as revenue based on
      contract terms and reported sales of licensed products, when reported sales
      are
      reliably measurable and collectibility is reasonably assured.





**3.      Collaboration
      Agreement with Merck & Co., Inc.**





On
      July
      11, 2007, the Company entered into a collaboration agreement with Merck &
Co., Inc. (“Merck”) for the joint global development and commercialization of
      deforolimus, previously known as AP23573, the Company’s lead product candidate
      (the “Product”), for use in cancer (the “Collaboration Agreement”).






4




Under
      the
      terms of the Collaboration Agreement, Merck and the Company will conduct 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 the Company 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.  The Company 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, all under a separate
      supply agreement to be negotiated by the parties.





The
      Collaboration Agreement provides that, in the United States, the Company and
      Merck will co-promote the Product, the Company will distribute and sell the
      Product for all cancer indications and record all sales, and each party 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 the Company tiered double-digit royalties on
      such
      sales.  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 the Company or Merck that cover the Product, (ii) a
      specified number of years from first commercial sale, or (iii) the last date
      upon which the Company supplies active pharmaceutical ingredient to Merck under
      the Supply Agreement, subject to partial reduction in certain
      circumstances.





Under
      the
      terms of the Collaboration Agreement, Merck paid the Company an initial up-front
      payment of $75 million in July 2007, and has agreed to pay up to $452 million
      in
      milestone payments based on the successful development of the Product in
      multiple cancer indications, and up to $200 million based on achievement of
      specified Product sales thresholds.  Merck has also agreed to provide
      the Company with up to $200 million in interest-bearing, repayable, development
      cost advances to cover a portion of the Company’s share of global development
      costs, after the Company has paid $150 million in global development
      costs.  All amounts to be paid to the Company by Merck, with the
      exception of any development cost advances, are non-refundable.





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, (iii) by Merck upon the failure of the Product to meet
      certain developmental and safety requirements, or (iv) after discussions between
      the parties, in the event Merck concludes it is not advisable to continue the
      development of deforolimus for use in a cancer indication.  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.





Under
      the
      terms of the Collaboration Agreement, the Company and Merck have established
      a
      series of joint committees which are 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 of the
      parties.  Either party may choose not to appoint members to any of the
      joint committees and such a determination by either party has no impact on
      the
      financial or other terms of the collaboration.





The
      up-front payment of $75 million received by the Company has been deferred and
      is
      being recognized as revenue on a straight-line basis through 2023, the estimated
      expiration of the patents related to the underlying technology.  The
      Company has also deemed as probable the expected receipt of the first milestone
      payment of $13.5 million, related to the start of the Phase 3 clinical trial
      of
      deforolimus in patients with metastatic sarcomas, and therefore began
      recognizing revenue related to such milestone in the third quarter of 2007
      on
      the same basis as the up-front payment.






5




Development
      costs under the Collaboration Agreement are aggregated and split between the
      Company and Merck in accordance with the terms of the agreement.  The
      Company’s share of such development costs are reflected in operating expenses in
      the Company’s statement of operations.  Any amounts due to or from
      Merck in respect of such development costs are recorded as such on the Company’s
      balance sheet.  At September 30, 2007, the Company has recorded an
      amount due from Merck under the collaboration agreement of $3.4
      million.





**4.      Marketable
      Securities**





The
      Company has classified its marketable securities as available-for-sale and,
      accordingly, carries such securities at aggregate fair value.  At
      September 30, 2007, all of the Company’s marketable securities consisted of
      United States government or agency securities.





At
      September 30, 2007, the aggregate fair value and amortized cost of the Company’s
      marketable securities were $17,235,000 and 17,221,000,
      respectively.  Gross unrealized gains and losses were $15,000 and
      $1,000, respectively, at September 30, 2007.  The gross unrealized
      losses of $1,000 pertain to one marketable security with an aggregate fair
      value
      of $1,499,000, which has been in a continuous loss position for less than twelve
      months.





At
      December 31, 2006, the aggregate fair value and amortized cost of the Company’s
      marketable securities were $8,076,000 and $8,073,000,
      respectively.  Gross unrealized gains and losses were $3,000 and $0
      respectively, at December 31, 2006.





The
      Company’s marketable securities with unrealized losses have remaining maturities
      of less than 90 days and are guaranteed by the U.S. government or an agency
      thereof.  Therefore,  the Company does not consider the
      investments to be other-than-temporarily impaired.





Realized
      gains and losses on investment security transactions are reported on the
      specific-identification method.  There were no realized gains or
      losses on sales of marketable securities during the nine months ended September
      30, 2007.  Changes in market values resulted in a decrease in net
      unrealized gains of $11,000 for the nine-month period ended September 30,
      2007.





**5.      Equity
      Financing Facility**





On
      February 14, 2007, the Company entered into an agreement with Azimuth
      Opportunity Ltd. (“Azimuth”) under which the Company may offer and sell, at the
      Company’s sole discretion, and Azimuth is committed to purchase, subject to the
      terms and conditions set forth in the agreement, up to $50 million of the
      Company’s common stock, or the number of shares which is one less than twenty
      percent of the issued and outstanding shares of the Company’s common stock as of
      the date of the agreement, whichever is fewer.  The per share purchase
      price for these shares will equal the daily volume weighted average price of
      the
      Company’s common stock on such date, less a discount ranging from
      3.5%  to 5.5%.  The agreement expires in August
      2008.  Upon each sale of common stock to Azimuth, the Company will pay
      to Reedland Capital Partners a placement fee equal to 1.0% of the aggregate
      dollar amount received by the Company from such sale.





Pursuant
      to the terms of this agreement, on March 26, 2007, the Company sold to Azimuth
      3,072,393 shares of its common stock at an aggregate purchase price of $12.5
      million.  The net proceeds from this transaction, after deducting
      issuance expenses, were approximately $12.3 million.  Following this
      transaction, $37.5 million remains available to the Company under this equity
      financing facility.






6




The
      shares
      of common stock sold to Azimuth were registered under a shelf registration
      statement filed by the Company with the U.S. Securities and Exchange Commission
      (“SEC”) on January 30, 2007 and declared effective by the SEC on February 6,
      2007 which registered for issuance a total of $100 million of
      securities.  Following the sale of common stock to Azimuth, $87.5
      million of securities remain available for issuance under this shelf
      registration statement.





**6.      Stock-Based
      Compensation**





The
      Company awards stock options and other equity-based instruments to its
      employees, directors and consultants and provides employees the right to
      purchase common stock (collectively “share-based payments”) pursuant to
      stockholder approved plans.  The Company’s statement of operations
      included total compensation cost from share-based payments for the three-month
      and nine-month periods ended September 30, 2007 and 2006 as
      follows:





**Three
                Months Ended**
              **September
                30,**
            
            
            **Nine
                Months Ended**
              **September
                30,*****In
                thousands***
            
            **2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Compensation
                cost from:Stock
                options
            
            $
            1,170
            
            
            $
            920
            
            
            $
            3,862
            
            
            $
            2,801Stock
                and stock
                units
            
            
            91
            
            
            
            184
            
            
            
            571
            
            
            
            553Purchases
                of common stock at a
                discount
            
            
            18
            
            
            
            12
            
            
            
            54
            
            
            
            34$
            1,279
            
            
            $
            1,116
            
            
            $
            4,487
            
            
            $
            3,388





During
      the
      nine-month periods ended September 30, 2007 and 2006, the Company made awards
      of
      stock options, common stock and stock units to employees and directors, and
      sold
      common stock to employees at a discount pursuant to the Company’s employee stock
      purchase plan, as follows:




**Nine
                Months Ended September 30,****2007**
            
            
            **2006****Shares**
            
            
            **Weighted-Average**
              **Grant-Date**
              **Fair
                Value**
            
            
            **Total**
              **Fair
                Value**
            
            
            **Shares**
            
            
            **Weighted-Average**
              **Grant-Date**
              **Fair
                Value**
            
            
            **Total**
              **Fair
                Value*****(Per
                Share)***
            
            
            ***(in
                000’s)***
            
            
            
            
            
            ***(Per
                Share)***
            
            
            ***(in
                000’s)***Stock
                options
            
            
            2,092,220
            
            
            $
            3.28
            
            
            $
            6,862
            
            
            
            563,895
            
            
            $
            4.37
            
            
            $
            2,464Stock
                and stock units
            
            
            134,000
            
            
            
            4.94
            
            
            
            662
            
            
            
            80,000
            
            
            
            6.43
            
            
            
            514Purchases
                of commonstock at a discount
            
            
            39,041
            
            
            
            1.41
            
            
            
            55
            
            
            
            27,896
            
            
            
            1.25
            
            
            
            342,265,261
            
            
            
            
            
            
            
            
            
            
            
            671,791




Stock
      options are granted with an exercise price equal to the closing price of the
      Company’s common stock on the date of grant and have a term of ten
      years.  Stock options generally vest 25% per year over four
      years.  Stock options are valued using the Black-Scholes option
      valuation model and compensation expense is recognized based on such fair value,
      net of the impact of forfeitures, over the vesting period on a straight-line
      basis.  The weighted average assumptions used in the Black-Scholes
      model to value stock options granted during the nine-month periods ended
      September 30, 2007 and 2006 were as follows:







7




**Nine
                Months Ended**
              **September
                30,****2007**
            
            **2006**Expected
                life of options granted (in years)
            
            7.60
            
            7.07Expected
                volatility
            
            68.02%
            
            70.59%Risk
                free interest rate
            
            4.47%
            
            4.68%Expected
                annual dividends
            
            0%
            
            0%




Stock
      and
      stock unit grants are valued based on the closing price of the Company’s common
      stock on the date of grant and compensation expense is recognized over the
      requisite service period or period during which restrictions remain on the
      common stock or stock units granted.  Compensation expense related to
      purchases of common stock by employees under the Company’s employee stock
      purchase plan is recognized in the period of grant.





**7.      Executive
      Compensation Plans**





Under
      the
      Company’s deferred executive compensation plan established in 1997, participants
      were granted options to purchase shares of certain designated mutual funds
      at a
      discount equal to the amount of the award.  The options vested equally
      over four years.  The fair value of the awards was recognized as
      expense over the vesting period.





Effective
      in October 2005, the Company adopted a new deferred executive compensation
      plan
      that defers the payment of annual bonus awards to future periods as specified
      in
      each award.  The Company accrues a liability based on the fair value
      of the awards ratably over the vesting period.  The recorded balances
      of such awards are increased or decreased based on the actual total return
      and
      quoted market prices of specified mutual funds.  In April 2007, the
      Company made awards in the aggregate amount of $1,403,000 to eleven officers;
      there were no awards made in 2006.  Total expense related to these
      plans amounted to $745,000 and $669,000 for the nine-month periods ended
      September 30, 2007 and 2006, respectively.





**8.      Net
      Loss Per Share**





Net
      loss
      per share amounts have been computed based on the weighted-average number of
      common shares outstanding during each period.  Because of the net loss
      reported in each period, diluted and basic net loss per share amounts are the
      same.  For the nine months ended September 30, 2007 and 2006, options
      to purchase 7,416,794 and 6,836,781 shares of common stock, respectively, were
      not included in the computation of net loss per share, because the effect would
      be anti-dilutive.





**9.      Litigation**





**NF-κB
      Patent Infringement Litigation and Reexamination**





*Lilly
      Litigation*





In
      2002, the Company,
      together with Massachusetts Institute of Technology, The Whitehead Institute
      for
      Biomedical Research and Harvard University (collectively, the Plaintiffs)
      filed a lawsuit in the United States District Court for the District of
      Massachusetts (the “U.S. District Court“) against Eli Lilly and Company
      (“Lilly”) alleging infringement of certain claims (the “NF-κB ‘516 Claims”) of
      the Plaintiffs’ U.S. Patent No. 6,410,516 (the “‘516 Patent”), covering methods
      of treating human disease by regulating NF-κB cell-signaling activity through
      sales of Lilly’s osteoporosis drug, Evista®,
      and Lilly’s septic
      shock drug, Xigris®,
      and seeking monetary
      damages from Lilly.






8




Both
      a jury
      trial and a bench trial were held in this case.  On May 4, 2007,
      following a trial, a jury rendered a verdict in favor of the
      Plaintiffs.  The jury found that the NF-κB ‘516 Claims asserted in the
      lawsuit are valid and infringed by Lilly through sales of Evista and
      Xigris in the United States.  The jury awarded damages of $65.2
      million to the Plaintiffs, plus further damages equal to 2.3% of U.S. sales
      of
      Evista and Xigris from February 28, 2006 through the year 2019, when the patent
      expires.  Final Judgment was entered on September 10, 2007, following
      a bench trial after which the U.S. District Court held that the four claims
      of
      the ‘516 Patent found infringed by the jury do not encompass unpatentable
      subject matter and the ‘516 Patent is not invalid due to inequitable conduct or
      prosecution laches.





On
      September 20, 2007, Lilly filed a renewed motion for judgment as a matter of
      law, or, in the alternative, for a new trial.  Following a ruling by
      the U.S. District Court on this motion, Lilly also has the right to file an
      appeal of the jury’s verdict and other rulings by the U.S. District Court with
      the Court of Appeals for the Federal Circuit.  If the Final Judgment
      is upheld, damages paid by Lilly will be applied first to reimburse the Company
      for any unreimbursed legal fees and expenses relating to the
      litigation.  The Company will receive 91% of the remainder, and the
      co-plaintiffs will receive 9%.





*Amgen
      Litigation*





*The
      ‘516 Patent*





On
      April
      20, 2006, Amgen Inc. and certain affiliated entities (“Amgen“) filed a lawsuit
      against the Company in the U.S. District Court for the District of Delaware
      (the
“Delaware Court“) seeking a declaratory judgment that each of the claims
      contained in the ‘516 Patent are invalid and that Amgen has not infringed any of
      the claims of the ‘516 Patent based on activities related to Amgen’s products,
      Enbrel® and
      Kineret®.  On April
      13, 2007, the Company, together with the institutional patentees, filed a
      counterclaim against Amgen, and joining Wyeth in the action.  The
      counterclaim against Amgen and Wyeth alleges infringement of the ‘516 Patent
      based on activities related to Enbrel and Kineret, as well as the Company’s
      answer to Amgen’s complaint, counter-claim and demand for jury
      trial.





On
      June 4, 2007, Wyeth filed a motion seeking to sever it from the proceedings
      in
      the Delaware Court relating to Amgen and to stay such proceedings against
      Wyeth.  A ruling on this motion is pending.





An
      amended
      scheduling order for this action has been issued by the Delaware
      Court.  The technology tutorial was held before the Delaware Court on
      May 1, 2007.  The claim construction hearing in this case is scheduled
      to be heard on or around June 24, 2008, with trial scheduled to commence on
      November 3, 2008.





*The
      ‘374 and ‘090 Patents*





On
      May 30,
      2007, the Company and the institutional patentees filed a motion seeking to
      amend their counterclaims to assert claims against Amgen for infringement of
      U.S. Patent Nos. 5,804,374 (the “’374 Patent”) and 6,150,090 (the “’090
      Patent”).  On September 13, 2007, the Delaware Court issued an order
      granting the Company’s motion to amend its counterclaims asserted against Amgen
      to include infringement of the ‘374 Patent and the ‘090 Patent. The trial with
      respect to these counterclaims is scheduled to commence on March 23,
      2008.





*Reexamination
      Proceedings in PTO*





On
      April
      4, 2005, Lilly filed a request in the United States Patent and Trademark Office
      (“PTO“) to reexamine the patentability of certain claims of the ‘516
      Patent.  An unrelated third party filed a similar request in the PTO
      on December 2, 2005 to reexamine the patentability of certain claims of the
‘516
      Patent.  These two requests have been granted and were merged by the
      PTO into a single reexamination proceeding.






9




The
      PTO
      issued its first office action on August 2, 2006.  In this first
      office action, 160 of the 203 claims of the ‘516 Patent were rejected by the
      PTO, including the claims asserted by the Company in the Lilly litigation and
      claims which are or may be asserted by the Company in the Amgen
      litigation.  The Company cancelled 8 of the 160 claims in its response
      to the first office action filed on November 9, 2006.  On July 6,
      2007, the PTO issued a final office action, rejecting 141 claims of the ‘516
      Patent, including the claims asserted by the Company in the Lilly and Amgen
      litigations.  The Company cancelled 94 of the 141 claims (none of
      which were asserted in the Lilly litigation and some of which were asserted
      in
      the Amgen litigation), and added 8 new claims (some of which, if issued, could
      be asserted against Lilly or Amgen), in its response to the final office action
      filed on October 22, 2007.  The Company also filed both a petition to
      withdraw the finality of July 6 office action on July 25, 2007 and a request
      for
      continued reexamination on October 22, 2007.





The
      PTO
      granted the Company’s petition for continued reexamination on October 26, 2007,
      which has the effect of withdrawing the finality of the July 6 office
      action.  Consequently, the PTO may issue another office action or a
      final office action in response to the Company’s response to the July 6 office
      action.





*Timing
      and Outcome of Litigation and Reexamination Proceedings*





The
      timing
      and ultimate outcome of the Lilly and Amgen litigations and the reexamination
      proceedings in the PTO cannot be determined at this
      time.  Consequently, the Company cannot predict which of these
      proceedings will lead to a first appeal to the Court of Appeals for the Federal
      Circuit and no determination can be made with respect to allowance of the claims
      of the ‘516 Patent, nor can any final determination be made with respect to the
      validity or infringement of the claims asserted in the Lilly and the Amgen
      litigations, nor can the Company predict whether the damages awarded by the
      jury
      in the U.S. District Court in the Lilly litigation will be upheld, eliminated
      or
      limited.  Although the Company has prevailed in both the jury and
      bench trials in the Lilly litigation, the damages the Company was awarded by
      the
      jury may be eliminated or limited by an adverse finding on post-trial motions,
      upon appeal, or in the event that the claims of the ‘516 Patent are invalidated
      by the PTO.





**10.           Recently
      Adopted or Issued Accounting Pronouncements**





The
      Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No.
      48 (“FIN 48”), *Accounting for Uncertainties in Income Taxes*, on January
      1, 2007.  FIN 48 defines the threshold for recognizing the benefits of
      tax-return positions in the financial statements as “more-likely-than-not” to be
      sustained by the taxing authorities.  FIN 48 also requires explicit
      disclosure about a company’s uncertainties related to their income tax position,
      including a detailed roll-forward of tax benefits taken that do not qualify
      for
      financial statement recognition.  The adoption of FIN 48 did not have
      a material impact on the Company’s financial position or results of operations
      as of and for the period ended September 30, 2007.





In
      September 2006, FASB issued Statement of Financial Accounting Standards (“SFAS”)
      No. 157, *Fair Value Measurements*.  SFAS No. 157 defines fair
      value, establishes a framework for measuring fair value, and expands disclosures
      related to fair value measurements.  SFAS No. 157 is effective for the
      fiscal year that begins subsequent to November 15, 2007 and shall be applied
      prospectively as of the beginning of the fiscal year in which it is
      adopted.  The Company has not yet determined the impact of adoption of
      SFAS No. 157 on its consolidated financial statements.





In
      February 2007, FASB issued SFAS No. 159, *The Fair Value Option for Financial
      Assets and Financial Liabilities—Including an amendment of FASB Statement No.
      115*.  SFAS No. 159 allows companies to choose to measure many
      financial instruments and certain other items at fair value that are currently
      not required to be measured at fair value.  The fair value option is
      applied instrument by instrument, is irrevocable and is applied only to an
      entire instrument.  SFAS No. 159 is effective for the fiscal year that
      begins subsequent to November 15, 2007 and should not be applied retrospectively
      to fiscal years beginning prior to the effective date.  The Company
      has not yet determined the impact of adoption of SFAS No. 159 on its
      consolidated financial statements.






10




In
      June
      2007, the Emerging Issues Task Force (“EITF”) issued EITF No. 07-3,
*Accounting for Nonrefundable Advance Payments for Goods or Services Received
      for Use in Future Research and Development Activities*.  EITF No.
      07-3 states that nonrefundable advance payments for goods or services that
      will
      be used for future research and development activities should be deferred and
      capitalized and that such amounts should be recognized as an expense as the
      goods are delivered or the services are performed.  EITF No. 07-3 is
      effective for the fiscal year that begins subsequent to December 15,
      2007.  The Company expects that the adoption of this EITF will not
      have a material impact on the Company’s consolidated financial
      statements.





**11.           Subsequent
      Event**





On
      October
      9, 2007, the Company entered into a non-exclusive license agreement with ICON
      Medical Corp. (“ICON”), a cardiovascular medical device company, to develop and
      commercialize drug-eluting stents that deliver the Company’s mTOR inhibitor,
      deforolimus, to prevent restenosis of injured vessels following interventions
      in
      which stents are used in conjunction with balloon angioplasty (the “Stent
      Products”).





Under
      the
      license agreement, the Company granted to ICON a non-exclusive, world-wide,
      royalty-bearing license, under its patents and technology, to develop,
      manufacture and sell the Stent Products.  The term of the license
      agreement extends to the later to occur of the expiration of the Company’s
      patents relating to the rights granted to ICON under the license agreement
      or
      fifteen years after the first commercial sale of a Stent
      Product.  ICON is required under the license agreement to use
      commercially reasonable efforts to develop the Stent Products.  The
      license agreement provides that the Company will receive an equity stake in
      ICON
      pursuant to a stock purchase agreement, up to $27 million in payments based
      on
      achievement of certain clinical, regulatory and commercial milestones for two
      Stent Products and royalties based on worldwide sales of the Stent
      Products.  The Company is required to use commercially reasonable
      efforts to supply deforolimus to ICON for use in the development, manufacture
      and sale of the Stent Products.  The license may be terminated by
      either party for breach after a cure period of up to 90 days, by either party
      in
      the case of bankruptcy, by ICON upon 30 days prior written notice if it
      determines, in its reasonable business judgment, that it is not in its business
      interest to continue the development of any Stent Product, or by the Company
      upon 30 days prior written notice if it determines that it is not in its
      business interest to continue development and regulatory approval efforts with
      respect to deforolimus.






11




**PART
      II.                 
  OTHER INFORMATION**





**ITEM
      1.                     LEGAL PROCEEDINGS**





The
      information contained in Note 9 to the Notes to our Unaudited Condensed
      Consolidated Financial Statements found elsewhere in this Amendment No. 1 to
      the
      Quarterly Report on Form 10-Q is incorporated herein by reference.





**ITEM
      6.                      EXHIBITS**





10.1
            Collaboration
                Agreement dated July 11, 2007 among ARIAD Pharmaceuticals, Inc.,
                ARIAD
                Gene Therapeutics, Inc. and Merck & Co., Inc. (Filed as Exhibit 10.1
                to the Original Filing (File No. 0-21696) and incorporated herein
                by
                reference) *





31.1
            Certification
                of the Chief Executive Officer.





31.2
            Certification
                of the Chief Financial Officer.





32.1
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.


_________


*
      Confidential treatment has been requested for portions of this
      exhibit.








ARIAD
      and
      the ARIAD logo are our registered trademarks and ARGENT is our
      trademark.  The domain name and website address www.ariad.com, and all
      rights thereto, are registered in the name of, and owned by,
      ARIAD.  The information in our website is not intended to be part of
      this Quarterly Report on Form 10-Q.  We include our website address
      herein only as an inactive textual reference and do not intend it to be an
      active link to our website.






12




**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, thereunto
      duly authorized.






ARIAD
                Pharmaceuticals, Inc.By:
            /s/
                Harvey J. Berger, M.D.Harvey
                J. Berger, M.D.Chairman
                and Chief Executive Officer


By:
            /s/
                Edward M. FitzgeraldEdward
                M. FitzgeraldSenior
                Vice President,Finance
              and Corporate Operations, and Chief
              Financial OfficerDate:  December
              12, 2007
            
            (Principal
              financial officer and
              chief accounting officer)







13




**EXHIBIT
      INDEX**







**Exhibit                                                                   Title**


**No.**





31.1
            Certification
                of the Chief Executive Officer.





31.2
            Certification
                of the Chief Financial Officer.





32.1
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.








**** 14