Array BioPharma's CEO Presents at Bank of America Merrill Lynch Healthcare Conference (Transcript)

May.16.13 | About: Array BioPharma (ARRY)

Array BioPharma, Inc. (NASDAQ:ARRY)

Bank of America Merrill Lynch Healthcare Conference Call

May 16, 2013, 02:20 pm ET

Executives

Ron Squarer - CEO

Kevin Koch - President & Chief Scientific Officer

Analysts

Tanya Joseph - Bank of America Merrill Lynch

Tanya Joseph - Bank of America Merrill Lynch

Hi, good morning everybody and thank you for joining us for Day Three, our final day. Here at Annual BofA Merrill Healthcare Conference in Vegas. We are certainly excited to be able to host Array BioPharma today. My name is Tanya Joseph and I am part of Rachel McMinn Biotech Executive Research coverage team based out of New York.

And without further ado, it's my pleasure to introduce you to Ron Squarer, CEO and Kevin Koch, President and Chief Scientific Officer. Ron?

Ron Squarer

Thank you very much and good afternoon to everyone. We are going to be making forward-looking statements in the course of this presentation and these statements do involve risk and uncertainty and I would ask you to refer to our 10-K for a full discussion of that risk.

You know, it has been a great period of progress for Array recently, but we also continue to have a lot of great catalysts that are yet to emerge just over the next lets say nine months. 2013 is going to be very important year for us. As we stand here today, we have visibility to a full five pivotal trial and Phase 3 starts that we expect across our MEK Inhibitors. That is the MEK162, which we partnered with Novartis, where they have announced the intention to start an NRAS melanoma, a single agent trial this year should be starting in the very near future, followed quickly by a BRAF melanoma, a pivotal trial which will be in combination with their RAF Inhibitor LGX818 as well as the first Array Phase 3 trial which is with MEK162 in low grade serous ovarian cancer.

AstraZeneca also making great progress; this company has really been moving at a very similar pace and with a great urgency; AstraZeneca is recently I believe is today put out a press release indicating their reaffirming of commitment to that KRAS non-small cell lung cancer population, it's very large about 20% of non-small cell lung cancer; very important. They have also recently stated their intention to start a thyroid cancer. These are in patients who have been resistant to radioactive iodine and they have a lot of data coming out at ASCO and I’ll touch on a little bit of that today and I assume that data has been embargo, but looks very interesting.

Beyond our two partnered MEK inhibitors, we have two wholly-owned Hem/Onc programs that ARRY-520 from multiple myeloma and ARRY-614 from myelodysplastic syndrome and both of these programs are on-track to deliver data to inform our decision to how we are going to move forward by the end of this year. So we are pleased with the progress we have made I am going to touch on that in the presentation today.

Beyond those, we have a long history of partnering programs with great companies, with great economics and we have a full nine partner programs, each in Phase 2 and potential for over $3 billion in milestones and double-digit royalties on many of these deals. And this has been an important part of where we fund the company, $175 million in partnerships from just the last roughly three years and we are continuing to look at partnerships of assets as a continued source of non-diluted capital. We haven’t stated our intention to consider partnership especially geographic for the multiple myeloma and the MDS program. But we also have a couple of clinical stage and also preclinical programs which we are discussing partnerships with a number of companies, as I said are very much a part of the legacy of Array.

I am now on slide four, which is really a summary of the most important parts of our company, the two wholly owned programs at the top where we have indicated that there will be a little data coming out of EHA focused on the carfilzomib combination. But they will be in a position to make a decision on potential top four including potential pivotal trials next year and by the end of the year probably around ASH with 614 similar timeline data from our expansion which is ongoing right now to inform decisions on how to move forward in MDS. The MEK inhibitors and ASCO abstract, last night ACO coming up in a couple of weeks Phase 3 starts over the summer for 162 and soon after for selumetinib, so exciting year forward.

Continue to look at partnership opportunities for our Pain program, 797; we expect to make a decision on how to proceed with that program by the end of the year. And another area of big milestone for us this summer a read out on our CRTh2 asthma program which is blinded, so we don't have good -- we don't have any indication on the outcome, but we certainly select the patients carefully to ensure the highest likelihood of success with a positive Phase 2 there we would expect substantial upfront milestones and royalties. In our recent history, we have done deals that are usually tens of millions upfront, hundreds of millions of milestones and double digit royalties across our partner portfolio, so watch for that data gong forward.

Now just going little bit deeper into our four critical programs, the MEK’s and the wholly-owned Hem/Onc programs, so I’ll start with Novartis. Important to note how attractive this deal is for Array, especially in the U.S., we are looking at potential we call it sort of high double digit royalties outside the U.S. more traditional double digit royalties. We have to detail that very important co-development rights where our contribution to the agreement which is the collaboration is capped annually and in total and at a pretty reasonable level. And so by initiating a Phase 2 trial as we have in cooperation with Novartis, we don't expect additional cash to go out of Array because we had anticipated that sort of capped contribution in any case to maintain our economics. So we are very excited to be able to explore whole new indication without significant change in our cash outflow.

But also as I mentioned, we do expect to see two more pivotal Phase 3 type trials begin dosing this year; MILO is our ovarian study, Low Grade Serous Ovarian Cancer, just a quick review of the trial, 300 patients randomized two-to-one looking at MEK162 versus a physician’s choice of chemo, primary endpoint progression free survival and we had interacted with both FDA and EMA in designing this trial and this study design currently reflects that input, so we believe this is a trial appropriate for registration both in the US and Europe.

Turning to AstraZeneca, also a very important collaboration; we expect the potential for double digit royalties assuming success, but AZ really is responsible for development and commercialization. Now we have a great relationship with them, constant communications and we have found them to be very interested in our views and quite responsive to them. AstraZeneca has invested at a wonderful rate in this program with selumetinib. Currently, there are 48 trials ongoing containing selumetinib, 31 of them in Phase 2 and you know perhaps one of the biggest trials that we expect with selumetinib is this KRAS lung trial building on great data at ASCO last year with a statistically significantly greater than doubling in PFS and impressive improvements in OS and on other measures such as patient reported outcome.

AstraZeneca also has posted the Astra pivotal trial in thyroid cancer based on data also shown at ASCO last year showing about a 71% response rate in resensitizing patients to radioactive iodine. They have been very forthcoming about their views on selumetinib in recent communications since Pascal Soriot has joined frankly calling it a $1 billion asset and also championing its differentiation from other MEK inhibitors out there; you know really focused on combined ability and what it means is the KRAS lung trial is a combination, it’s a double with docetaxel at full dose of selumetinib and full dose of docetaxel and what they have been pointing to is the fact that trametinib typically when combining especially with cytotoxic substitute significant down dosing or dose reduction well below their MTD, so they are very pleased not just with the docetaxel combination but other chemo combinations that could be important in earlier lines of therapy going forward. So AstraZeneca really focused and investing very, very aggressively in the drug.

Now ASCO, some of you have had a chance to review last night the ASCO abstracts, the meeting is coming up soon, perhaps one of the most exciting bits of data about our MEK portfolio is unfortunately going to be held until June 1st and that is the Phase 2 study selumetinib versus temozolomide in uveal melanoma; its quite a large study that was run out of the Memorial-Sloan Kettering and also looking at GNAC mutant uveal melanoma. Sufficed to say the fact that it’s being held and it will participate in an ASCO press conference as well as be an oral presentation suggests this data is strong, there is stronger historic data from 2011 also with selumetinib but different formulation showing a greater than doubling of PFS when selumetinib was used in this population. Could represent a very fast path to market which is why we think this could be important while the KRAS lung and thyroid studies emerge.

It had also point to the MEK162 plus BRAF and plus LGX818 poster. So this is the combination that Novartis intends to move forward with in BRAF melanoma. Now, NRAS melanoma, the first trial should kick off. That single agent represents about 20% of melanoma, BRAF represents about 40% of melanoma also with longer durations of treatment and Novartis is very excited about this combination. Now from the abstract, if you read it, you certainly see efficacy that is impressive, but I think it also begins to point to some differentiation from other MEK-inhibitors. Specifically, you’ll note the abstract states that there was little or no pyrexia or fever or rash in photosensitivity and so these are issues that have been very troublesome with other BRAF or RAF inhibitor MEK combination. So I believe that Novartis feels [Elvis] wants to be first, but it’s not first and best and I think they believe that the MEK162 LGX818 combination will be best-in-class.

Turning to our wholly-owned (inaudible) program, we had the opportunity to put out a lot of data on 520. It is a new mechanism, not an image, not a protozoan inhibitor and it acts preferentially on hematopoietic cells over epithelial cells based on MCL-1 survival dependence, and what this means is that we don't see much if any non-hemotox, no neuropathy, alopecia, or minimal GI. And more importantly and as important that the hematologic toxicity has proven to be transient, non-cumulative and predominantly asymptomatic meaning that Neutropenia that exist tends not progress to more serious conditions and as you know Neutropenia asymptomatic for patients. So very excited about the utility of this drug after IMiD, proteasome inhibitors, but also in combination with them, looking for synergy.

I am going to just hit the absolute highlights of the data we’ve managed to show, this was updated IMW just last month, our full complete single agent data showing activity in the ballpark of Carfilzomib and pomalidomide, but with in a very good tolerability shown through that low discontinuation rate 9%, interesting overall survival measure 19 months it is early data of course but certainly encouraging. And this was in patients who had seen six prior lines of therapy. We combined with that as Pom did and as with Pom saw an improvement in response. Now up into the 20s here in this data, with improvements in also the medium duration of treatment, but important to note that our patients saw 10 prior mediums lines of therapy versus Pom-Dex at five, Pom-Dex had 73% dual refractor as we are 100% dual refractory and still a low discontinuation rate. And the good news here is we also have a patient selection marker called AAG alpha-1-acid glycoprotein that we have identified that simply it's a plasma protein unrelated we believe to myeloma not prognostic, but it binds tightly with 520, doesn’t bind with other multiple myeloma treatments but it does reduce the life we have the patients can benefits for 520. It’s about 20% to 25% of patients we want to focus on the 75 to 80 most likely to benefit.

When we use AAG this is what we would predict. First of all this is the data from all of our studies showing a red line at normal AAG levels below normal. All of our responders occurred above normal, none of our responders occurred and you can see patients progressing very quickly. So we would like this to be part of the way we take the product to market. Now using AAG here you would predict that 520 plus Dex going from the 20s in response to the 30s, very exciting number and even the single agent getting into here in this data at about 24%. So AAG we believe is going to be an important part of the way the drug is used. Now we’ve had a chance to put out some important additional combination data, this was with Carfilzomib in Velcade refectory patients. This was at ASH 2012 and IMW in combination with Velcade. Now we have seen interesting clinical benefit with car and a small first nine patients about almost 60% clinical benefit rate. We have seen the complete response in the very earlier patients and not yet at our full dose and with the Velcade combination most of these patients are refractory to prior Velcade treatment also seeing a good response. But the important message here is that across all of these studies, we are able to dose 520 at essentially what we predict to be its full dose and achieve full dose treatments of the other combination that I’ve described.

So it appears to be a product that’s going to be well tolerated, patients can be managed well through supported care and we have seen this consistently across the populations, we are excited about that. Touch quickly on 614 you may recall from ASH last year, we updated our first formulation showing roughly a 40% response rate, a couple of different doses in terms of hematologic improvement measured by IWG2006. We are now in a new formulation that's about two to three times more bio-available. We finally have hit MTD, we are in a fairly large expansion cohort roughly 38 to 40 patients and we will have data by the end of the year to determine how to move forward. But what's exciting here in this data is you see multi-linear response in patients that have here two or more cytopenias involved and just to show you how the drug can work this is an actual patient that's been on drug now for about three years; so again well tolerated. The data we have here goes out about 2.5 years but the patients continues on, we just have an update of the data quite yet. Patient came in with grade 3 anemia, grade 4 thrombocytopenia, quickly became almost instantly from day one transfusion independent on red blood cells, a little further down the road transfusion independent on platelets but essentially what you see here is the patient whose hemoglobin levels and endogenous EPO are back where they need to be. It’s almost a practical cure for patient that's been on and this is a in multiple cytopenias this patient had failed by days in (inaudible) which is the population that we are studying. And we are looking to see the expansion data coupled with the FDA feedback suggesting that measures of hematologic improvement can represent a full approval strategy and so we look forward to sharing our plans soon.

So back to our summary and I think we are now in a position to move into Q&A as well. The big catalyst here potential data on the [car] combination at EHA for 520 which is a decision by the end of the year, myelodysplastic syndrome looking at full expansion dataset than the Phase 3 starts and additional data flow across the Novartis and Astra MEK with the possibility that additional studies could be initiated over time, so next due appear to be very, very broadly active having now shown activity in many different settings, and then the big read out this summer of course with our (inaudible) asthma program which is really more about additional sources of capital than a program that we’d necessarily take forward ourselves. So with that I'm going to open up to questions.

Question-and-Answer Session

Tanya Joseph - Bank of America Merrill Lynch

Excellent. We certainly encourage any questions from the audience but perhaps I can kick it off. Actually one with the slide that you (inaudible) I was most interested in which has to do with the timing and go forward strategy on 520 in myeloma and I guess it sounds like you guys are doing really comprehensive work in terms of incorporating the emerging landscape with that (inaudible) etcetera which seems to be one of the first programs that's really able to do than getting a move on. But it sounds like and correct me if I'm wrong my understanding is that you are likely to go forward with the DEX combo in your pivotal trial and sort of running in parallel with these other trials. Is that from a strategy end point a function of feed to market competitively or is there another reason to not wait for sort of more robust data in call in the Velcade or the Kyprolis combo?

Kevin Koch

That's great question, and it is worth taking the time to walk through those topics. So thanks for the question. First of all we are looking very carefully at the recent precedence that you see through both the carfilzomib approval and the pomalidomide approval. And if you recall because of the mechanism and the fact that it’s unique and hence can provide utility in patients who have seen multiple lines and even molecules in terms of both PIs and IMiD, we think there is utility in this heavily pretreated patients. But we also believe not only from the clinical data that we're beginning to share, but also from robust animal data and pre-clinical data that there could be synergy and so because we believe that 520 can have utility in both these populations, we would like to make it available in both populations. Okay, so that’s from a patient and value point of view. From a regulatory point of view, there does seem to be a very clear path towards an accelerated approval in multi-refractory patients as (inaudible) have recently demonstrated. Both have only provisionally approved, there are not full approvals yet and so there is certainly a window of opportunity and more importantly, FDA has been pretty consistent, saying you do need to have seen multiple products but they’ve been surprisingly flexible and how many and exactly which products you need to have seen.

Realistically, if you are recruiting today a highly refractory, multiple refractory patient population, they are likely to be seen most of what’s out there and we take some comfort in the fact that in the datasets we’ve looked at, doesn’t seem to matter what you have seen or how often you've seen it. But that said, being able to treat patients further upstream, essential to be used when a Carfilzomib or Velcade is used is very exciting for us as well. So first barrier is can you combine and we seem to be showing that we can and next is are you able to add significant benefit in that combination and that’s the data that we're going to have emerge this year. So if you take a step back and think about the regulatory path, it could involve both, both an accelerated path and that could be with single agent, with Dex and hopefully using AAG and we're working on how to execute that and then a traditional approach with a PI whether it's Velcade or bortezomib where you are doing a randomized study with 520 versus 520 plus a PI which is a traditional approach to go forward. There is a component of speed with accelerated approval, but there is also the desire to really prove utility in both population.

Tanya Joseph - Bank of America Merrill Lynch

Yeah. Okay, makes sense, but if say I stepping back again from the clinical data in the regulatory pathway, if we go to take a step towards in the commercial landscape and for commercial uptake. Given the landscape today, what’s your view of do you think that the new world is going to be for the most part unless exceptional differentiation you got to find a way to work with Kyprolis and Pom or do you think that you can do it head to head from a commercially successful that we are not from an achieving approval standpoint?

Ron Squarer

Right. So at this point, I think that the tragedy of myeloma is despite the fact that there are options mostly in proteasome inhibitors that all patients do progress and eventually die. And so we think there is an important commercial opportunity in a new mechanism that can help those patients.

I do think that the opportunity to treat earlier patients helps both in terms of the number of patients you treat and the duration and so I think it's very important. Speculating right now on whether 520 will ultimately be a earlier line or first line agent, I think it's early for better for work as you would expect most or all of our data occurs in this five to 10 prior therapies. But we certainly wouldn’t eliminate that as possibility just that we would only be able to speculate.

Kevin Koch

I guess, I would add that all of these agents are being used in combination, so I don’t view them as actually competitors and do you have a combinable partner and then where, in which monitor PD utilize them. So I would -- what we have often said is that if let's say that Velcade, perhaps carfilzomib, the Velcade revs and dex continues to be part of first line and that government maintenance is really important for that first line. So natural second one is the second Cardiosom because the neuropathy or some of the other issues and so all are positioning either with Velcade or Kyprolis actually put us in a position to get into second line setting.

Depending on the response rates and the safety profile, the positive thing about 520 is that although it has been complaining and has some thrombocytopenia, for most intensive disease are asymptomatic. So you don't have the considerable GI effects, (inaudible), the skin toxicities of some of the other agents. And so I think that while hematologic toxicity are not benign, they are relatively benign to the patient and it’s really demonstrated by our single agent and dex data how patients has been offered two and three years.

So the patients are very happy on this proved clinical. So I think that combination allows you can get into an earlier line, but I think the decisions were recognized that we can be used when all else fails and so we will get utilize and in the U.S., it’s still 10,000 patients who die from multiple myeloma ever year even with all the new agents.

Tanya Joseph - Bank of America Merrill Lynch

Got it. And actually on that point, just a housekeeping topics and I am not an expert actually on the drug, but you made comment on safety with respect to (inaudible) and low grade, is that -- is it like other low grade use that they know, did you not see any material grades (inaudible) I recognized its sub 10% I think?

Kevin Koch

With a very few grade 3, 4 events that are not hematologic in nature and I think that is the strength of what we are doing.

Tanya Joseph - Bank of America Merrill Lynch

(Inaudible)

Kevin Koch

They are smattering of different thing at below 5% and 10%.

Ron Squarer

And not a clear trend.

Kevin Koch

Yes.

Tanya Joseph - Bank of America Merrill Lynch

Okay. And then again this is more of a point of clarification to me, there's going to be interim data on the performance of trial at EHA, but it sounded like I guess my understanding was there might be more material data at HAS, is that right?

Ron Squarer

Yeah. So you know we are working with MD Anderson on this trial and the tendency when there's exciting data emerging is to say the trash and so we have a good relationship with them but that is their preference now. I think at EHA we will be able to continue to share more data on the combined ability which is really the first hurdle and the very important one.

So we don't know exactly what's going to be at EHA, but I would say the real data across single agent dex, carfilzomib and Velcade really which isn't -- really matures all around the same time unless there is some formal decision later this year and we also would of course take into account feedbacks from FDA both on the accelerated path, on the full path, on the use of AAG as a patient selection tool and so it’s not that far away though.

Tanya Joseph - Bank of America Merrill Lynch

It sounds like Phase II -- being informed on Phase III design and process is sort of, is it an immediate post [spring] or is it -- are you seeing it early ’14, is it actually going to happen in the ’13?

Ron Squarer

Yeah, I think the data we will see as we go through the year and the feedback we received from the FDA will allow us to make the decision and I think at that point unless something goes terribly wrong with the data emergence as you would kind of plan for success. So that's the way I would view it.

Tanya Joseph - Bank of America Merrill Lynch

Got it. And it's the detection marker which is interesting because you can sort of identify the populated, is that going to be -- is that kind of ready to go with Phase III, are you going to sort of use it for to inform Phase III or is it an interesting thing to have going forward?

Kevin Koch

Experiencing, the good news is there are multiple commercially available preapproved testes out there and so it’s not a diagnostic that necessarily have to be created for use. That said there's a process to use these types of tools or selection tools and I think it’s best we leave that to the pending discussions with the FDA to clarify exactly how to use it. But I think generally speaking FDA has proven itself to be quite cooperative in helping the senior multiple myeloma products come to market. And if you think about it, if you don't think patients can benefit you don't want to treat them, you want to give them the opportunity to potentially -- the drug you certainly wouldn't want to expose them to a drug not likely to benefit them.

Tanya Joseph - Bank of America Merrill Lynch

Are there any questions in the room on 520 because if not I'm going to move to 797, if I may. All right, so on 797 and this is getting to again on Phase III. There was some observation of prolonged [TTC eligible] which my first question is actually what that quantifiable amount was because I guess and you know I recognize normally into 450 or 470 you may see now. So, a, if we could sort of characterize where you (inaudible) and the other point of clarification just for me looking at your 1Q call it seems to be there was a bit of confusion around if you guys were actually additional clinical work to see if higher doses are multiple ascending dose studies, it’s higher dose that had a beneficial effect on this, but then I thought that you said that you weren't, so a little bit confused about.

Ron Squarer

Let me clarify the second part and then Kevin can tell you what the numbers are which is we believe buckets into a low level and a low risk. The work we've done is really to characterize how the agent interacts with things like the herb channel and characterize and that's preclinical work to characterize the risk bucket that Kevin will describe in a moment. We do not intend or have plans for additional clinical work in pain. We've done different parts of pain, dental. We've done rheumatoid arthritis and our most recent trial was in arthritis which was on top of NSAIDs and so we feel that we won't be doing anymore clinical work in pain but the work we've done in the characterizing the profile, Kevin do you want to describe the QT profile?

Kevin Koch

Yeah, so at the 400 milligram BID dose we saw an 8 millisecond increase. This is not a typical relative to a number of other drugs that are around the market. I think the risk is low both from the clinical perspective. Pre-clinically we've done some work with what's called the veg model in canines that can show that you would bucket this compound in a low risk category.

Also the drug was positioned as the drug that would treat patients who were going on to knee replacement and so the mortality rate in a patient who is going on to knee replacement, one in 600, depending on which study you look at, largely because of thrombosis after in a 90-day period after surgery. And so in this particular case, the FDA has to consider what's the population you are going in to and what's the risk associated with the QTC and again we're actually looking at populations that would make sense for the drug to ease the regulatory path.

Ron Squarer

Just the absolute in terms of the total number for QT we didn’t pass?

Kevin Koch

We didn’t know and went above 500 and no one more than a 30% increase. So we have published that data at the ACR.

Tanya Joseph - Bank of America Merrill Lynch

And then I guess we're out of time. Just to quickly wrap up, there is no change to the year end partnership thoughts on (inaudible).

Ron Squarer

Yeah, we're continuing to pursue partnership. As I said, we're not going to go forward ourselves in pain. It's not been a perfect indication for a company. We're focused on hematology, oncology and we are really looking for the right path forward in terms of in pain, in terms of a partnership. And then the other important partnership is as I mentioned would be the [asthma] program, so there is probably two things to watch for additional source of capital this year.

Tanya Joseph - Bank of America Merrill Lynch

Got it. All right. Well, we are out of time. Thank you very much. We appreciate that.

Kevin Koch

Thank you.

Tanya Joseph - Bank of America Merrill Lynch

Have a good day everybody.

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