Friday, March 14, 2008 3:32:24 AM
ARRY: Quick primer. IMO, the shares are extremely undervalued at close to a 52-week low. Yes, I have built a substantial position...
Market cap: $283M EV: $156M Cash: $142M
The company's stated goal is to advance an additional 1-3 compounds into the clinic per year, generate value-creating PII data, and then partner each. Think of ARRY as a reasonably-valued version of EXEL.
Corporate fact sheet:
http://media.corporate-ir.net/media_files/irol/12/123810/Factsheet/Array_BioPharma_Fact_Sheet_030708.pdf
Q2 2008 Earnings CC transcript (from Seeking Alpha; numerous typos):
http://seekingalpha.com/article/63205-array-biopharma-inc-q2-2008-earnings-call-transcript?source=yahoo
THE CASE FOR ARRAY
1. Dec 19, 2007: This news item decimated ARRY's stock, which had traded @$12 prior to:
http://biz.yahoo.com/bw/071219/20071219006112.html?.v=1
BOULDER, Colo.--(BUSINESS WIRE)--Array BioPharma Inc. (NASDAQ: ARRY - News) today announced initial results from a randomized Phase 2 study comparing AZD6244 (ARRY-886) monotherapy with temozolomide (Temodar®, an alkylating agent) in the first-line treatment of advanced melanoma. There was no apparent difference in efficacy between AZD6244 and temozolomide for the primary endpoint (Progression Free Survival). AstraZeneca, which licensed AZD6244 from Array in 2003, was responsible for running the Phase 2 trial.
Based on the results of this study, AstraZeneca does not plan to progress AZD6244 as a monotherapy into a Phase 3 trial in patients with advanced melanoma at this time, although anti-tumor activity was detected. AstraZeneca is exploring other options to further develop this compound.
In addition, AstraZeneca recently completed analysis on two smaller monotherapy signal searching studies in 3rd line advanced colorectal cancer (CRC) and 2nd line advanced non-small cell lung cancer (NSCLC). Neither of these studies reached their primary endpoint of delaying disease progression versus the randomized comparators in the overall population; however, there was evidence of anti-tumor activity in the NSCLC study.
2. Dec 20, 2007: After listening to the event CC, I concluded that the drug did not fail; rather, AZN's trials were designed for failure. ARRY believes the drug is as efficacious as both ALIMTA and TEMODAR. AZN/NCI are running additional trials; AZN will announce their further plans for the drug mid-2008 @ASCO. A MUST-LISTEN CC, some great analyst's questions/answers (45 minutes):
http://biz.yahoo.com/cc/4/88094.html
3. March 3, 2008: ARRY 797 succeeds: http://biz.yahoo.com/bw/080303/20080303005265.html?.v=1
Array BioPharma Inc. (NASDAQ: ARRY - News) today announced positive top-line results from a Phase 2 clinical trial evaluating the efficacy of ARRY-797, a novel, orally administered, small molecule pan-cytokine inhibitor, in patients with post-surgical dental pain. ARRY-797 achieved its primary and secondary endpoints for analgesic efficacy and was well tolerated. Based on these results, Array is moving forward with a second Phase 2 acute inflammatory pain trial comparing various doses of ARRY-797 to placebo and to celecoxib. Array also plans to initiate a Phase 2 study of ARRY-797 in ankylosing spondylitis, a chronic, painful, inflammatory disorder known to respond to biologic TNF inhibitors.
The analgesic effect of 400 mg of ARRY-797, compared to placebo, was statistically significant based upon the primary endpoint of total pain relief over six hours post dose (p<0.0001). The analgesic effect was also statistically significant for total pain relief over three, eight, twelve and 24 hours post dose. Other analgesic endpoints, including total pain intensity, time to meaningful pain relief and time to analgesia were also significantly improved versus placebo. Peri-operative dosing with 200 mg before and 200 mg after surgery also resulted in a substantial reduction in total pain intensity. Array believes the efficacy observed in this study is due to the simultaneous inhibition of the pain mediator PGE2 and the inflammatory mediators TNF, IL-1 and IL-6. No serious adverse events were reported and non-serious adverse events were evenly balanced across the three groups. Complete trial results will be presented at an appropriate scientific conference later this year.
“These results demonstrate efficacy of ARRY-797 in the management of inflammatory pain,” said John Yates, MD, Chief Medical Officer, Array BioPharma. “Together with our multiple-dose, 14-day trial in healthy volunteers, these data confirm the good safety and tolerability profile of ARRY-797. In particular, we have observed no evidence of any gastrointestinal, hepatic or skin toxicity due to ARRY-797. Therefore, we remain very excited about the potential of ARRY-797 to provide clinical benefit in a variety of inflammatory pain conditions.”
Ok, what if we totally discount ARRY 886 (AZD 6244). What about the rest of the pipeline and the collaborations? Selected excerpts from the above references:
"Today, Array has six 100% owned Array drug in our proprietary clinical pipeline. We believe this is one of the deepest and most valuable pipelines in the biotech industry. Each of these programs has aimed at an important therapeutic target with a large market opportunity. They are highly selective drugs, the drugs are either first in class aimed at a novel mechanism, where second generation drugs that we believe have a competitive advantage over marketed therapies or drugs in clinical development. We continually look to take the advantage of the opportunity to replace protein therapeutics with our small molecules.
So far each of the drugs has been well tolerated, achieved appropriate human exposure, and inhibited their intended molecular target as indicated by a biomarker. We believe when any of these drugs demonstrate positive proof-of -concept data, which should see a significant increase in value for Array. We plan to start delivering proof-of- concept data in mid 2008 on our first drug Array-797 and they have data on all six drugs by the end of 2009.
{Positive 797 results reported already, 03 Mar 2008}
Our commercial strategy for our drug pipeline is to retain as much US rights as possible and partner rest of world rights to help pay for development and provide worldwide distribution capabilities. We believe Array continues to have one of the most productive drug discovery platforms in the drug industry. Over the past five years, we put 10 Array invented drugs into clinical development between our partnered and proprietary research. The quality of our discovery platform and the clinical assets it’s created has lead the partnerships with great companies like Celgene, Genentech, Liley, AstraZeneca and others. {Intermune} To date, we received $270 million in funded research from our partners.
If we total all the partnerships together, we have the potential for $1.3 billion in milestones and royalties from 3% to 13% on the programs.
{He is only speaking to the partnered drugs; not the other 100% wholly-owned ones.}
Our discovery platform will continue to feed our proprietary clinical pipeline adding one to three additional drugs each year.
...ITMN-191 advanced in a Phase 1 multiple-ascending-dose clinical trial evaluating ITMN-191 as monotherapy in patients with chronic hepatitis C. ITMN-191 is an HCV protease inhibitor invented at Array and in development by InterMune and its partner, Roche.
{Intermune will report results @ April at EASL?}
We initiated research on Celgene program on four drug discovery programs as part of our collaboration with them. The targets were mutually chosen by the two companies and have not been disclosed but they are either in cancer or inflammatory disease.
Financially, we had a solid quarter with both revenues and loss per share on forecast and ended the quarter with a $142 million in cash or equivalents."
William Ho (Analyst):
"Right, one another question on 6244. When we looked at it that really look so bad and I think it probably surprised many of us as to the endpoints that AstraZeneca picked. Can you by any chance say anything at all as to why AstraZeneca set such a high hurdle to demonstrate superiority over standard of care as in monotherapy, and do you believe there is still potential for the drug to one day to be marketed successfully?"
Robert Conway
"Oh! Yes, we are very, very bullish on the mechanism. I think there is continue to be significant interest throughout the industry in the mechanism, there is several combination studies that have been shown in the literature and at presentations and meetings where combinations with MEK have either added a vertiginous effect with standard of care. And then, I think regarding the endpoints, realistically, developing a monotherapy is the fastest, easiest, highest market value way of developing a compound. If you are successful, it is a home run, in our case, we were only as good as $2 billion drugs. So I think we are relatively happy with that result, although, I think the market has reacted rather fiercely to the data, but I think, I am very bullish on it and we believe at this moment that AstraZeneca will continue to move these compounds rapidly in clinical development and demonstrate its value."
Market cap: $283M EV: $156M Cash: $142M
The company's stated goal is to advance an additional 1-3 compounds into the clinic per year, generate value-creating PII data, and then partner each. Think of ARRY as a reasonably-valued version of EXEL.
Corporate fact sheet:
http://media.corporate-ir.net/media_files/irol/12/123810/Factsheet/Array_BioPharma_Fact_Sheet_030708.pdf
Q2 2008 Earnings CC transcript (from Seeking Alpha; numerous typos):
http://seekingalpha.com/article/63205-array-biopharma-inc-q2-2008-earnings-call-transcript?source=yahoo
THE CASE FOR ARRAY
1. Dec 19, 2007: This news item decimated ARRY's stock, which had traded @$12 prior to:
http://biz.yahoo.com/bw/071219/20071219006112.html?.v=1
BOULDER, Colo.--(BUSINESS WIRE)--Array BioPharma Inc. (NASDAQ: ARRY - News) today announced initial results from a randomized Phase 2 study comparing AZD6244 (ARRY-886) monotherapy with temozolomide (Temodar®, an alkylating agent) in the first-line treatment of advanced melanoma. There was no apparent difference in efficacy between AZD6244 and temozolomide for the primary endpoint (Progression Free Survival). AstraZeneca, which licensed AZD6244 from Array in 2003, was responsible for running the Phase 2 trial.
Based on the results of this study, AstraZeneca does not plan to progress AZD6244 as a monotherapy into a Phase 3 trial in patients with advanced melanoma at this time, although anti-tumor activity was detected. AstraZeneca is exploring other options to further develop this compound.
In addition, AstraZeneca recently completed analysis on two smaller monotherapy signal searching studies in 3rd line advanced colorectal cancer (CRC) and 2nd line advanced non-small cell lung cancer (NSCLC). Neither of these studies reached their primary endpoint of delaying disease progression versus the randomized comparators in the overall population; however, there was evidence of anti-tumor activity in the NSCLC study.
2. Dec 20, 2007: After listening to the event CC, I concluded that the drug did not fail; rather, AZN's trials were designed for failure. ARRY believes the drug is as efficacious as both ALIMTA and TEMODAR. AZN/NCI are running additional trials; AZN will announce their further plans for the drug mid-2008 @ASCO. A MUST-LISTEN CC, some great analyst's questions/answers (45 minutes):
http://biz.yahoo.com/cc/4/88094.html
3. March 3, 2008: ARRY 797 succeeds: http://biz.yahoo.com/bw/080303/20080303005265.html?.v=1
Array BioPharma Inc. (NASDAQ: ARRY - News) today announced positive top-line results from a Phase 2 clinical trial evaluating the efficacy of ARRY-797, a novel, orally administered, small molecule pan-cytokine inhibitor, in patients with post-surgical dental pain. ARRY-797 achieved its primary and secondary endpoints for analgesic efficacy and was well tolerated. Based on these results, Array is moving forward with a second Phase 2 acute inflammatory pain trial comparing various doses of ARRY-797 to placebo and to celecoxib. Array also plans to initiate a Phase 2 study of ARRY-797 in ankylosing spondylitis, a chronic, painful, inflammatory disorder known to respond to biologic TNF inhibitors.
The analgesic effect of 400 mg of ARRY-797, compared to placebo, was statistically significant based upon the primary endpoint of total pain relief over six hours post dose (p<0.0001). The analgesic effect was also statistically significant for total pain relief over three, eight, twelve and 24 hours post dose. Other analgesic endpoints, including total pain intensity, time to meaningful pain relief and time to analgesia were also significantly improved versus placebo. Peri-operative dosing with 200 mg before and 200 mg after surgery also resulted in a substantial reduction in total pain intensity. Array believes the efficacy observed in this study is due to the simultaneous inhibition of the pain mediator PGE2 and the inflammatory mediators TNF, IL-1 and IL-6. No serious adverse events were reported and non-serious adverse events were evenly balanced across the three groups. Complete trial results will be presented at an appropriate scientific conference later this year.
“These results demonstrate efficacy of ARRY-797 in the management of inflammatory pain,” said John Yates, MD, Chief Medical Officer, Array BioPharma. “Together with our multiple-dose, 14-day trial in healthy volunteers, these data confirm the good safety and tolerability profile of ARRY-797. In particular, we have observed no evidence of any gastrointestinal, hepatic or skin toxicity due to ARRY-797. Therefore, we remain very excited about the potential of ARRY-797 to provide clinical benefit in a variety of inflammatory pain conditions.”
Ok, what if we totally discount ARRY 886 (AZD 6244). What about the rest of the pipeline and the collaborations? Selected excerpts from the above references:
"Today, Array has six 100% owned Array drug in our proprietary clinical pipeline. We believe this is one of the deepest and most valuable pipelines in the biotech industry. Each of these programs has aimed at an important therapeutic target with a large market opportunity. They are highly selective drugs, the drugs are either first in class aimed at a novel mechanism, where second generation drugs that we believe have a competitive advantage over marketed therapies or drugs in clinical development. We continually look to take the advantage of the opportunity to replace protein therapeutics with our small molecules.
So far each of the drugs has been well tolerated, achieved appropriate human exposure, and inhibited their intended molecular target as indicated by a biomarker. We believe when any of these drugs demonstrate positive proof-of -concept data, which should see a significant increase in value for Array. We plan to start delivering proof-of- concept data in mid 2008 on our first drug Array-797 and they have data on all six drugs by the end of 2009.
{Positive 797 results reported already, 03 Mar 2008}
Our commercial strategy for our drug pipeline is to retain as much US rights as possible and partner rest of world rights to help pay for development and provide worldwide distribution capabilities. We believe Array continues to have one of the most productive drug discovery platforms in the drug industry. Over the past five years, we put 10 Array invented drugs into clinical development between our partnered and proprietary research. The quality of our discovery platform and the clinical assets it’s created has lead the partnerships with great companies like Celgene, Genentech, Liley, AstraZeneca and others. {Intermune} To date, we received $270 million in funded research from our partners.
If we total all the partnerships together, we have the potential for $1.3 billion in milestones and royalties from 3% to 13% on the programs.
{He is only speaking to the partnered drugs; not the other 100% wholly-owned ones.}
Our discovery platform will continue to feed our proprietary clinical pipeline adding one to three additional drugs each year.
...ITMN-191 advanced in a Phase 1 multiple-ascending-dose clinical trial evaluating ITMN-191 as monotherapy in patients with chronic hepatitis C. ITMN-191 is an HCV protease inhibitor invented at Array and in development by InterMune and its partner, Roche.
{Intermune will report results @ April at EASL?}
We initiated research on Celgene program on four drug discovery programs as part of our collaboration with them. The targets were mutually chosen by the two companies and have not been disclosed but they are either in cancer or inflammatory disease.
Financially, we had a solid quarter with both revenues and loss per share on forecast and ended the quarter with a $142 million in cash or equivalents."
William Ho (Analyst):
"Right, one another question on 6244. When we looked at it that really look so bad and I think it probably surprised many of us as to the endpoints that AstraZeneca picked. Can you by any chance say anything at all as to why AstraZeneca set such a high hurdle to demonstrate superiority over standard of care as in monotherapy, and do you believe there is still potential for the drug to one day to be marketed successfully?"
Robert Conway
"Oh! Yes, we are very, very bullish on the mechanism. I think there is continue to be significant interest throughout the industry in the mechanism, there is several combination studies that have been shown in the literature and at presentations and meetings where combinations with MEK have either added a vertiginous effect with standard of care. And then, I think regarding the endpoints, realistically, developing a monotherapy is the fastest, easiest, highest market value way of developing a compound. If you are successful, it is a home run, in our case, we were only as good as $2 billion drugs. So I think we are relatively happy with that result, although, I think the market has reacted rather fiercely to the data, but I think, I am very bullish on it and we believe at this moment that AstraZeneca will continue to move these compounds rapidly in clinical development and demonstrate its value."
"Illegitimacy is something we should talk about in terms of not having it."
- Dan Quayle
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