Can Array BioPharma Attract Yet Another Partner?

By Patrick Crutcher

Tuesday, 05 October 2010 08:36

Shares of Array BioPharma Inc.(NASDAQ:ARRY) traded up after announcing positive interim results of its novel, oral HER2 (ErbB2) inhibitor, ARRY-380, in a Phase 1 trial in patients with advanced cancer. As our premium subscribers were told yesterday, the results which presented at the 2010 ASCO Breast Cancer Symposium in National Harbor, Maryland may attract some attention to the company going forward. ARRY-380 is a potent, orally active small molecule drug that has been well-tolerated to date and selectively inhibits tumor growth in preclinical models of HER2-dependent tumors. HER2, also known as ErbB2, is a receptor tyrosine kinase that has been found to be over-expressed in breast cancer and other cancers such as gastric and ovarian. ARRY-380 has demonstrated significant dose-related tumor growth inhibition in preclinical models that was superior to Herceptin and Tykerb(lapatinib) and was additive for tumor growth inhibition in preclinical models when dosed in combination with the standard of care therapeutics such as Herceptin(trastuzumab) or Taxotere(docetaxel). Ideally, ARRY-380 would be competing with Herceptin, which is a blockbuster drug for Genentech.

The interim results concerned 17 HER2 positive metastatic breast cancer patients treated with ARRY-380 at doses greater than or equal to 200 mg BID. 29% of these patients had a partial response or stable disease for 6 months or longer. 13/17(76%) of patients had measurable disease as defined by the RECIST scale for tumors; of these patients, 7/17(54%) had regressions in target lesions. ARRY-380 has been well-tolerated; the predominant treatment-related adverse events have been Grade 1. Because ARRY-380 is selective for HER2 and does not inhibit EGFR, there was, as expected, a low incidence and severity of diarrhea, rash and fatigue. An expansion cohort in patients with HER2 positive metastatic breast cancer is ongoing to confirm safety and explore efficacy and pharmacodynamic markers.

What’s also important about these results? One could guess that a large pharma might be on prowl for this unpartnered program. At this point, ARRY’s pipeline is a bit young for most buyers to consider acquiring them. Once their pipeline has matured and it’s technology proven by clinical results, then there might be a possibility of being acquired.

ARRY has an impressive track record of landing partnerships with their pipeline candidates. Their largest collaborations include agreements with Novartis(NVS), Amgen(AMGN), AstraZeneca(AZN), Celgene(CELG), Eli Lilly(LLY), Genentech(via Roche-RHHBY), InterMune(ITMN) and VentiRx(Private). The deals with Amgen and Novartis totalling $145M in upfront payments, high royalties on sales of approved drugs, and an additional $422M/$666M if certain milestones are achieved.

They also have a potentially lucrative deal with Celgene for a discovery collaboration in cancer and inflammation. ARRY was paid $40M upfront to discover, develop, and commercialize therapeutics for those areas. For each drug that Celgene exercises their option for under this agreement, ARRY is entitled to receive potential milestones reaching $200M for clinical/regulatory milestones and and an additional $300M for certain commercial milestones, as well as royalties on net sales. ARRY will retain all rights to the other programs.

Also investors shouldn’t forget that back in June, ARRY announced they were in partnering discussions for ARRY-543 (HER2/EGFR for solid tumors). This could be yet another very lucrative partnering deal, given the market size for indication. During 2010, they plan to complete and report results from the 3 Phase 1b combination studies of ARRY-543 and to initiate a Phase 2 trial in combination with another anti-cancer drug in patients with certain gastrointestinal cancers that have dual-expressing tumors.

Additionally, we’ll be looking forward to the American Society of Hematology (ASH) meeting in December. ARRY hopes to present additional data on their multiple myeloma drug candidate, ARRY-520, an inhibitor of kinesin spindle protein(KSP). Essentially, inhibition of KSP function leads to cell cycle arrest at mitosis and ultimately, to cell death. ARRY-520 is unpartnered and significant clinical data could easily change that status. Much depends on the response rate and safety data, since KSP inhibitors have shown fewer side effects than taxanes or vinca alkaloids. They also have an agreement with Signal Genetics to help develop biomarkers to predict response for patients with multiple myeloma. Early results were presented at ASCO 2010, showing it’s safety and potential efficacy signal.
ARRY might be one of the most undervalued small-cap biotechs out there, given their management and prospects. Try comparing it to other biotechs with similar platforms and you’ll see the price disparity. ARRY reminds me of Exelis Inc(EXEL), but without the debt. Considering 13 drug candidates in clinical testing, it’s vital for ARRY to adequately control costs and maintain efficiency. We look forward to tracking their progression and keeping you updated on future catalysts.

ARRY press release: http://bit.ly/d9eipk

Disclosure: No positions

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