Ron Squarer – CEO
Matt Lowe – JP Morgan
Array BioPharma Inc. (ARRY) The 31st Annual J.P. Morgan Healthcare Conference Call January 8, 2013 6:00 PM ET
Matt Lowe – JP Morgan
Hi everybody, my name is Matt Lowe of JP Morgan. Our next company to present is Array BioPharma. So, I’ll shortly hand over to the CEO Ron Squarer. And the breakout will be down the corridor in the Yorkshire Room, okay.
Good afternoon everyone. I’m very excited to be here today. We have had a great year of progress towards what’s going to be a very exciting year in 2013. And so I’m happy to able to walk folks through the very consistent and steady and I like to think predictable progress that Array continues to make. I’m going to be making forward-looking statements and so we ask you to consult our 10-K, 10-Q for discussion of relevant risk factors.
So, in a nutshell, there has been a lot of very significant events for us over the last year. We describe our company really in three buckets of value, the wholly-owned hem/onc programs for myelodysplastic syndrome and MDS, that’s ARRY-520 and ARRY-614. The MEK Inhibitors partnered with AstraZeneca and with Selumetinib and MEK162 with Novartis, and then a very substantial bucket of value in a long series of partnerships. We’ve also highlighted a couple of additional partnerships we’d like to see deliver near term non-dilutive value to the portfolio.
And so, really starting at the top with 520, we had a fantastic ASH with a lot of data which I’m going to touch on today. We believe that as our data matures, we’ll be talking to FDA in the not too distant future and then we’ll be in a position to make a Phase 3 decision later on this year. But certainly things are moving in the right direction for 520.
With 614, we committed to seeing FDA in 2012 and we did so in December and we’re pleased to share with you today that we have a clear path to market that we’ve agreed with the FDA and some options to explore as well. With that data and our new formulation maturing we believe we’ll have an opportunity to make a decision on Phase 3 later this year as well.
And then, just today as if on cue, Novartis did publish on clinicaltrials.gov the MEK162 NRAS melanoma study. And so, it is official Array now has its first Phase 3 program out there and in the clinic. We do also anticipate them continuing in BRAF and with other potential indications. With AstraZeneca, recently announced additional studies in lung cancer to support their registration path I’ll touch on that today.
And then, we did have a successful Phase 2 in our pain program. We are in partnering negotiations presented some great disease modification data at ACR. And then with 502 we remain on track to find – to look at the data really around the middle of this year, it is a blinded study and so we’re unable to give any more guidance than that. But it could be a very important value generator for the company. So consistent progress and looking forward to a very exciting year.
We continue to call out five potential Phase 3 start – decisions or starts in the case of 162, we’re there and data is going to drive those decisions. But we remain positive and hopeful across the portfolio. And we have now 11 Phase 2 programs with VentiRx and Celgene beginning our 11th Phase 2 and great partners, I’ll touch on in a moment.
We have a strong history of raising non-dilutive capital, having raised about $170 million from partnerships in the last two to three years. Very substantial value associated with our partnerships in terms of milestones and royalties, raised money late last year in order to enable us moving forward with our hem/onc programs, we’re very pleased to be in that position. And we believe that we have several other opportunities for additional non-dilutive financing going forward.
So, the pipeline and you’re familiar with this. The last product I didn’t mention, potential Phase 3 start is Danoprevir currently owned by Roche and we look forward to them announcing their decision during this year.
I’m going to touch now on our hem/onc programs because we’re very excited about the Multiple Myeloma, one of the largest hematologic conditions out there. We are initially focused on the very large refractory population. We have a unique mechanism, not a proteasome inhibitor, not an IMiD, and we think this is important because it holds promise for benefit in late stage patients who have failed both of those mechanisms but also the promise of offering synergy when combined with agents of those mechanisms. And I think the ASH data is really beginning to point in that direction.
So, I’ll start now with the complete single agent data that we presented at ASH. This was, we had initially presented some of this, prior ASH. I think what’s really striking other than a response rate that’s comparable to carfilzomib and you could argue better than POM as a single agent in similar populations, we were very impressed with the 19 months of survival that we’re seeing in that single agent study. Now we believe that Dex is going to be an important part of our path forward. And as with POM, when we add Dex, we do see an improvement. So, a couple of data points to focus on here.
First of all when we add Dex, in the first cohort, there has been another two thirds of patients to go. But in the first cohort we’re now in the 20s in terms of response rate, we believe this is sufficient to justify an accelerated path or path to market in Multiple Myeloma based on carfilzomib’s recent success.
But I will point out that in these patients this was on average their 11th line of therapy. So we’re talking about patients who have seen 10 median prior therapies, which is pretty unprecedented and speaks to the benefit of a new mechanism. We also revealed the use of a selection biomarker AAG, I’ll touch on it in a second. But essentially by using AAG to select the 80% of patients most likely to respond, we would anticipate response rates now into the 30s, a substantial increase in progression free survival, almost a 60% increase would be predicted and this could be an important part of the way we move forward.
AAG appears in normal levels, in about 80% of Multiple Myeloma patients, we don’t believe it’s a prognostic factor. But in those patients, where it’s elevated, it does bind tightly to free 520, thereby limiting the likelihood that patients will benefit. And so, by excluding those patients we think we can offer a better path forward.
Here is the data we presented at ASH, it’s a scatter plot, with red line being normal AAG levels and we’ve seen no responses above that level, we’ve seen all responses below. Other thing to note here, which is quite impressive is the amount of time patients have been on drug with patients out into the 30 months and beyond. So, patients continue to tolerate and enjoy the benefit.
So, that’s the late stage patients, after failure, many failures. But as I mentioned the other potential important utility for this drug would be in combination. And this is early data, in combination with carfilzomib product that as you all know is doing very well. First of all in the first cohort we have another sort of 5X by the time this study is done, but we’re already seeing about 56% clinical benefit rate, I will point out. Then in our first three patients we saw a complete response. And I believe in the entire carfilzomib registration package there was only a single CR. So, we’ll continue to pursue this. But the initial results are encouraging and would allow 520 to be used in patients that are certainly further upstream
As I mentioned we’ll be talking to FDA, as our data emerges, probably before the studies are complete – and believe that their path forward is probably in combination with Dex potentially utilizing AAG or validating it. And then separate trial we would expect to be run in combination with carfilzomib. We also have a Bortezomib trial underway and we continue to generate important data to inform decision making on this program.
So, that’s our first hem/onc program, our second 614. Just as a reminder, very large disease and we’re initially focusing low risk one patients which represent the majority of those patients. After failing HMAs, Vidaza and Dacogen these patients have no therapeutic option, nothing approved, they receive supportive care in ASH this year, some of our partner institutions published their median survival of about 15 months, so very, very tough prognosis for these patients, very important that we develop this product for them.
The data at the prior ASH showed substantial response rates. We updated it in the last – this past ASH across the populations here. But essentially showing a 40% response rate in patients who would not expect to have spontaneous improvement in hematologic status. We do have important Multi-lineage response. And if we replicate this data with our new formulation, I think it would certainly justify us moving forward. In the past we’ve shared with you important disease modification evidence where we are really reducing aberrant progenitor apoptosis and modifying the course of the disease.
So, at ASH what we’re able to do is simply show that our new formulation is doing exactly what it was designed to do. It is two to three times more bio-available, it has a reduced intra and intra-patient variability. We know roughly what the profile of response is, and the responses should be emerging sort of now in forward in the study and so we’re expecting to follow the study for a few more months before verifying that in fact we have replicated this important effect.
What is important is that we’ve been to FDA, they are with some concern that overall survival might have been the only path forward. We’re pleased to have come to agreement with FDA on measures of hematologic improvement which we believe we can hit based on the prior formulation results. And the FDA is even open to discussing alternative hematologic improvement measures. And so we’ll be leaving that open as an option but we’re comfortable we have a path forward now.
Moving on to the MEK inhibitors, as a reminder these are very broadly active mechanisms, acting on the RAS, RAF, MEK pathway. There has been activity shown now with the mechanism in lung cancer, various forms of melanoma, ocular uveal melanoma as well, ovarian as well as thyroid biliary and even hepatocellular carcinoma. And we do believe the strong biology at work here; we do see activity in populations that are – have KRAS and RAS and B-RAF mutations. These are large populations and we do see a tight lining up with activity in those mutation sub-populations. So, biology certainly is being predictive here.
I’ll start with Novartis, as I mentioned, they have announced their Phase 3 trial. We’re very pleased because the economics in this deal are very healthy, high double digit royalties in the US and very healthy royalties outside the US. We also have co-commercialization and co-development rights where our contribution is capped both annually and in total at a very reasonable level. And we are exploring potential Phase 3 registration paths of our own with 162 where Novartis will be contributing most of the cost.
So, regarding the trial that’s ongoing right now, announced 393 patients versus DTIC. The study was as expected but what was nice in today’s announcement is the predicted end of the study around October 2014, we think this is reasonable and could lead to revenue in 2015. And so we’re very excited as the company at our stage to have the prospect of revenue with very comfortable royalties in the not too distant future. Novartis also has committed to pursuing BRAF melanoma in combination with LGX818 there BRAF inhibitor.
They believe it’s best in class and that MEK162 is best in class and we believe they’re going to pursue that later this year. So the two studies that I referred to in BRAF and NRAF are listed here in yellow but I’ll point out there are a number of other ongoing studies at Novartis with 162 including PI3K combinations even in lung cancer, I note that we are in ovarian ourselves with Paclitaxel based actually on Selumetinib data I’ll touch on in a moment.
AstraZeneca, new CEO, oncology focused, Pascal Soriot, has been through the plans with the team. And apparently has endorsed them. There are 65 trials ongoing with Selumetinib, 39 Phase 2s a number of large studies that are both company sponsored and investigator sponsored. And some of these with breakthrough data could represent additional registration paths. But the news in the last couple of weeks is about building on the KRAS data at ASCO, what we recall is a greater than doubling statistically significant improvement in PFS and KRAS Non-Small Cell Lung Cancer which other agents had not yet shown benefit in, a near doubling in overall survival.
And right now what AstraZeneca is doing is, a quick study to examine which dose regimen of docetaxel to move forward with, looking at two approved regimens the 60 and the 75 to determine which would provide the best profile. They’re doing this in not only in KRAS but in non-specific – non-small cell lung cancer, we believe this study will go fast and they certainly wouldn’t need to complete the study in order to inform their Phase 3 start. So we look forward to them continuing to pursue lung cancer, making a decision and ultimately initiating first patient in the upcoming period.
Other thing to note is the new leader of the Selumetinib team launched Caprelsa, their thyroid drug not too long ago, the data was oral and ASCO pointed to a 71% response rate resensitizing patients to radioactive iodine. And we think that thyroid could be an important additional path to market for Selumetinib. This is the ovarian data that we were impressed with showing single agent and 11-month PFS in low grade serous ovarian carcinoma. And as I mentioned we are studying ovarian with Paclitaxel with 162 at this time.
And so, as I mentioned, an important part of our business model is additional sources of non-dilutive financing. We have a great roster of partners, many of whom are here at this meeting. We’re very pleased with them. They include Genentech, Celgene, Lilly, ASLAN, Amgen and Roche. And they continue to look forward to important value from them.
Now, I did mention, we are partnering a pain program, we may partner an asthma program and that we have other programs available to us internally. Some we’ve mentioned in the past HER2, we have a track inhibitor and as well as a diabetes asset GPR119.
I want to give you a sense of the kind of deals that we’ve struck in the past, this Genentech deal, just about a year ago, pre-clinical almost $30 million upfront, almost $700 million of milestones, double-digit royalties. We have the Novartis deal here and the Amgen deal for an early program $60 million upfront, $670 million nearly in milestones and double-digit royalties.
So, additional partnerships will be an important part of our story in addition to of course the money that we raised last year to fund the two wholly-owned hem/onc programs going forward. And so, from a financial point of view, with the pro forma cash at the end of our last quarter plus the newly raised money we were at $139 million, we will be updating this of course at our next quarter call. But it does just give us the freedom to pursue these critical programs going forward.
The catalysts in milestones upcoming haven’t changed significant, and that’s part of our story as a consistent movement forward ultimately towards pivotal trials, registration trials and commercial revenue.
And so, I think with that we were best to take the time to answer questions at our breakout session which is across the – at the Yorkshire room. Okay, so, we’re going to be reconvening in the Yorkshire room to take questions.
[No Q&A session for this event]
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