Replies to post #151447 on Biotech Values

[mcbio]

Are you at all concerned about the cash burn and the limited cash on hand?

Assuming that the cash burn will increase significantly as ARRY moves 520 and 614 into late-stage trials--perhaps in the $15-18 million/quarter range--that means there is only a couple of quarters' window in which ARRY has time, before they have to dilute. Assuming Squarer can't get a decent deal done soon on 797, there is not much else from which cash can be generated. (I don't expect a significant milestone from AZN, assuming AZN moves Selumetinib into Phase III trials before the end of the year--a distinct possibility, I believe--because we know the economics of ARRY's deal with AZN are not to Squarer's liking.)

I think this is the main reason the stock has been declining.

A pending dilution could be why the stock has declined and I can't say I will be completely surprised if one does occur. The stock didn't get hit when they diluted last time, though, so I'm not afraid of more dilution necessarily. I care much more about actual clinical results. They have about 15 months' cash based on ending quarter balance and burn, though I'm not sure how much that will go up when/if they push 614 and 520 into pivotal trials next year.

Now I know you're going to say that you'd put up with some dilution in order to advance the pipeline. But it seems to me that the dilution will have to pretty substantial to advance both 520 and 614 on their own. And ARRY already has about 100 million shares outstanding, fully diluted. (And I won't even mention the Deerfield debt.)

They still have multiple assets for which they are guiding for nice partnerships on and you don't seem to be giving much credit for that potential, which I think is worth paying attention to given their prior track record in partnering. (Deerfield debt isn't due until 2015/2016.)

BTW, why do you think the partnership with Amgen on diabetes was not mentioned in the PR? Do you think the program is in trouble?

Let's listen to the CC and see if it is mentioned. If not, perhaps something happened, but then I would think that ARRY would disclose that, if so.