We are reiterating our Outperform rating on shares of ARRY and
increasing our price target to $28 following review of BEACON data
in mCRC for encorafenib + binimetinib. Results are better than
expected, should support a new standard of care for BRAF colorectal
cancer and should conservatively support peak sales of $2.2B, not
reflected in current valuation.
? The Wells Fargo Securities biotechnology team attended an investor
event hosted by Array BioPharma (ARRY) at the European Society
for Medical Oncology (ESMO) over the weekend in Madrid, Spain.
Focus of the meeting was on a 30 patient lead-in phase of the
BEACON phase 3 study of ERBITUX + encorafenib +/- binimetinib
(EEB) in 29 patients with V600E BRAF+ melanoma and expert
feedback on the results.
? Results were better than expected with 41% overall response rate
(ORR), 52% stable disease rate, and 93% disease control rate
(DCR) , and 100% disease control rate (DCR) in 27 evaluable
patients with 2nd-line+ treatment. For 2nd line patients results were
particularly strong with 57% ORR. Progression free survival (PFS)
data was not yet mature, but 12 of 29 patients had disease control
duration beyond 6 months, and expert feedback suggested that it
would be statistically improbable for PFS to be less than 6 months.
? Results are well beyond ORR for standard of care of 4% to 6%, and
21% ORR for other RAF/MEK/ERBITUX combinations. With PFS
potentially beyond 6 months, we would note standard of care PFS of
just 2 months, and overall survival (OS) of only 6 months. Expert
feedback at the meeting suggests that ERBITUX + encorafenib +
binimetinib (EEB) data are transformational, and should quickly
become a standard of care 2nd-line and likely migrate quickly to
frontline use. Based on expert feedback we expect BEACON to enroll
very rapidly with data likely well before our current 3Q19 estimate.
