Biotech Values

[mcbio]

ARRY - 2Q12 CC notes/musings

1. I think the pop in shares may be due to a combination of things from the CC and not one specific thing. Financial results looked pretty good to me but I think the key thing to focus on each quarter is cash burn. Looks like ARRY burned about $17M in the past quarter. Note too that $4M of this was due to paying off part of the Deerfield debt principal (they are only required to pay interest quarterly). Principal on Deerfield debt is down to $86M (due 2015/2016) per the CC. With $61M in cash as of quarter end, along with current burn, ARRY projects to have just under a year left of cash. This is why I won't be entirely surprised if ARRY does an offering (hopefully small) sometime in 1H12 if they aren't able to ink any more deals in the interim.

2. Perhaps the disclosure that NVS has reached "clinical proof of concept" with MEK162 was the biggest factor for the jump today. I initially thought clinical PoC was related to the ASCO GI disclosure of the CR in bilary tract cancer patients (#msg-70987975 ). After listening to the CC, however, I don't believe that's the case. It was noted around the 47:30 mark that NVS reached this decision after having hit a milestone internally with MEK162 and was based on data that has not been publicly released. Since ARRY ran the single-agent MEK162 trial in biliary tract cancer patient and that data was made public at ASCO GI, NVS must have seen some other positive data on MEK162 to have reached their conclusion.

3. Kevin Koch thinks NVS will combine their BRAF inhibitor with MEK162 sometime in 2012. There was more buzz here on the likely need to combine a MEK inhibitor with a BRAF inhibitor, as opposed to using a BRAF inhibitor alone given recent concerns noted with single-agent use of BRAF inhibitors (#msg-71036127 ).

4. I must have missed it before but slide 25 from the presentation referenced positive recent data for selumetinib against late-stage ovarian cancer. Not sure what this is referring to.

5. ARRY expects to begin a Phase 1 trial on a new, novel diabetes drug targeting GPR119 in calendar 4Q12. I believe they also said they expect to begin partnering talks on this drug in 2H12 as well (they referenced the prior diabetes deal they inked with AMGN on the glucokinase activator as perhaps a guide for what they hope to do with this drug candidate. On that note, ARRY expects to receive a milestone payment once AMGN completes enrollment on a Phase 2 trial for AMG 151, which they expect to occur in 1H12.)

6. Just after the 33-minute mark, in discussing 2012 milestones, Kevin Koch says 2012 will be an "epic year for ARRY" and that he thinks we will be pleased with the data from the milestones.

7. Sounds like only top-line data for selumetinib+DTIC in BRAF melanoma will be available at ASCO in June. ARRY doesn't expect the full detailed data from this trial to be available until 2H12.

8. Regarding ongoing ARRY-797 Phase 2 pain trial, ARRY expects 797 to have efficacy comparable to, or slightly less than, oxycontin with a much better side-effect profile.