Array BioPharma Inc. (ARRY)

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Array BioPharma Inc. (ARRY)

F1Q13 Earnings Call

October 30, 2012 9:00 a.m. ET


Tricia Haugeto - IR

Ron Squarer - CEO

Mike Carruthers - CFO

Kevin Koch - President and CSO

David Snitman - COO and VP, Business Development

Karsten Witt - VP, Clinical Sciences


Cory Kasimov - JP Morgan

Howard Liang - Leerink Swann & Company

Jim Birchenough - BMO Capital

Amol Pawar - Stifel Nicolaus

John Sonnier - William Blair & Company



Good day ladies and gentlemen and welcome to the financial results for Array BioPharma first quarter 2013 conference call. My name is Julian and I will be your operator for today. At this time all participants are in listen-only mode. (Operator Instructions)

I’d now like to turn the call over to Tricia Haugeto. Please proceed ma’am.

Tricia Haugeto

Thank you, Julian. Good morning and welcome once again to Array BioPharma’s conference call to discuss our financial results for the first quarter of fiscal 2013. You can listen to this conference call on Array’s website at Also we are using slides today to accompany our remarks. These slides can be downloaded on the Investor Relations home page of our website. In addition, a replay of the conference call will be available as a webcast from our website.

I’d like to introduce Array’s Chief Executive Officer, Ron Squarer; and our Chief Financial Officer, Mike Carruthers who will lead the call today. I’d also like to introduce Kevin Koch, our President and Chief Scientific Officer, David Snitman, our Chief Operating Officer and Vice President of Business Development; and Karsten Witt, our Vice President of Clinical Sciences who will be available to answer questions as needed.

But before I hand over the call to Ron, I’d like to read the following Safe Harbor statement. The matters we are discussing today include projections or other forward-looking statements about the future results, research and development goals of Array and its collaborators and future financial performance of Array. These statements are estimates based on management’s current expectations and involve risks and uncertainties that could cause them to differ materially from the actual results. We refer you to risk factors discussed in our filings with the SEC including our Annual Report filed on Form 10-K for the year ended June 30, 2011 and in other filings Array makes to the SEC. These filings identify important risk factors that could cause actual results to differ materially from those in our projections or forward-looking statements.

Now I’d like to turn it over to Array’s CEO, Ron Squarer.

Ron Squarer

Good morning everyone. First, I want to say that we've been following the massive storm in the eastern United States and our thoughts are with those across the region who are affected by this devastating event. We hope that you and your families continue to be safe and that the affected communities will recover quickly. We appreciate that some who may have wished to call in and participate this morning are unable to and maybe only have access to either the transcript or the webcast but we will be available here at Array for anyone who would like to contact us with specific questions.

I am turning now to slide three where we’re showing how Array is evolving into a late stage development company with full five programs having the potential for pivotal trial decisions by the end of calendar year 2013. These include two wholly-owned hemox programs ARRY-614 and ARRY-520 as well as three partnered programs selumetinib partnered with AstraZeneca, MEK 162 partnered with Novartis and danoprevir partnered with nterMune/Roche.

With our progress on 614 for myelodysplastic syndrome and 520 for multiple myeloma, we’ve established a clear internal focus here at Array on the hemox space. We believe that focusing our internal efforts on a single therapeutic area will in fact maximize our likelihood for success.

Looking back there were a couple of very remarkable things about Array. Now the first is how productive and sustainable our discovery engine has been. In our history, INDs have been filed on 18 molecules. 15 of them are still in human development and a full 10 of those are currently in phase 2 having stood the test of early development. The other remarkable thing about Array is our ability to partner with excellent economics and with some of the finest companies in the industry such as Novartis, AstraZeneca, Genentech, Roche, Amgen, Celgene and others. And we’re very excited about those partnerships and they're progressing well.

Through these partnerships, we've also been able to raise non-dilutive capital very effectively. In the past few years we’ve raised about $170 million from high-value licensing partnerships. As recently as August of last year, we announced a deal with Genentech on a preclinical ChK-1 program that included a nearly $30 million in upfront payments and nearly $700 million in potential milestone and the potential for double-digit royalties going forward. These types of terms have not been unusual for Array assets. In fact, if you add up all of the potential milestone related to our partnered portfolio it totals $3.4 billion, and this is before royalties kick in.

There are also additional assets that we'll be looking to partner between now and the end of 2013. Currently, we have about $70 million in cash as of the end of September and that should sustain us for a good period of time especially as we expect to do more partnering and collect milestone payments from existing partners.

The next 12 months are going to be very exciting and I will be reviewing some of the key catalysts and value drivers with you today. On slide four, we summarize our value drivers. The components of our value can be separated into three clear buckets. Now while these buckets are roughly similar in value on a risk-adjusted basis, we sense that many in the investment community value Array mostly on our MEK inhibitors alone. And that’s in the middle bucket on the slide which includes the MEK programs which have demonstrated already impressive multi-tumor activity. Selumetinib partnered with AstraZeneca and MEK 162 partnered with Novartis, and both of which we believe to be progressing towards a pivotal trial.

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