Array BioPharma's CEO Discusses F4Q2013 (Qtr End 6/30/13) Results - Earnings Call Transcript

Aug. 8.13 | About: Array BioPharma (ARRY)

Array BioPharma, Inc. (NASDAQ:ARRY)

F4Q2013 Earnings Call

August 8, 2013 9:00 am ET

Executives

Ron Squarer - CEO

Mike Carruthers - CFO

Kevin Koch - President and Chief Scientific Officer

Mike Needle - Chief Medical Officer

Tricia Haugeto - Senior Manager, Communications

Analysts

Matt Lowe – JPMorgan

Howard Liang - Leerink Swann

Stephen Willey – Stifel Nicolaus

Ed Tenthoff – PiperJaffray

Shin Kang - Wells Fargo

Operator

Welcome to the Q4 2013 Array BioPharma Incorporated Earnings Conference Call. My name is John and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. Please note that this conference is being recorded

Now, I’ll turn the call over to Tricia Haugeto.

Tricia Haugeto

Thank you, John. Good morning and welcome once again to Array BioPharma’s Conference Call to discuss our financial results for the fourth quarter and full year of 2013. You can listen to this conference call in Array’s website at arraybiopharma.com. Also, we are using slides today accompany our remarks, so slides can be downloaded on the Investor Relations on page of our website. In addition, a replay of the conference call will be available as a webcast from our website.

I’d like to introduce Array’s Chief Executive Officer, Ron Squarer, and our Chief Financial Officer, Mike Carruthers, who lead the call today. I would also like to introduce Kevin Koch, our President and Chief Scientific Officer, and Mike Needle, our Chief Medical Officer who will be available to answer the questions as needed.

But before I hand over the call to Ron, I would like to read the following Safe Harbor statement. The matters we are discussing today include projections or the forward looking statements about the future result, research and development goals of Array and its collaborators and future financial performance of Array. These statements are estimates based on management current expectations and involve risks and uncertainties that could cause them to differ materially from actual results.

We refer you to risk factors discussed in our filings with the SEC including our annual report filed on Form 10-K, for the year ended June 30, 2012 and in other filings Array makes to the SEC. These filings identifying important risk factors that could cause actual results to differ materially from those in our projections or forward-looking statements.

Now, I’d like to turn over to Array’s CEO, Ron Squarer.

Ron Squarer

Thank you, Tricia, and good morning to everyone. Thank you for joining our fourth quarter and full fiscal year call. Turning to Slide 3, I’d like to review the great progress we’ve made this past fiscal year across our development stage portfolio, including our wholly-owned Hem/Onc programs, our MEK partnered programs and our novel oral CRTh2 antagonist for asthma.

First on 520, we reported during the quarter promising interim data from two combination trials ARRY-520 with Velcade and ARRY-520 with Kyprolis. These trials included patients with relapsed or refractory multiple myeloma and both show that the combination was generally well tolerated and demonstrated activity in heavily pretreated population. In particular, in the ARRY-520 Kyprolis trial the disease control rate was 82%, the clinical benefit rate was 53% and it included a complete response. In both trials we’re now dosing at the maximum plan dose for both drugs. I’ll drill down further on this in just a bit.

We’re well into the expansion phase with dose escalation trial with ARRY-614. As we presented at ASH in December, this new formulation is demonstrated to improve bioavailability and target coverage including higher peak plasma concentrations in overall exposure as compared to the prior formulation. Based on enrollment, we remain on track to provide guidance regarding next steps for ARRY-614 by the end of this calendar year.

Turning now to the MEK inhibitors. We were excited earlier the summer to announce the start of MILO the first Array sponsored Phase 3 trial. In the global trial, we’re studying the benefits of MEK162 and patients with low-grade serous ovarian cancer resistant to standard chemotherapy. In addition to MILO, Novartis, who’s co-developing MEK162 with Array, initiated their own Phase 3 trial last month called NEMO in patients with NRAS melanoma.

Last week, Novartis posted to ClinicalTrials.gov their Phase BRAS mutant melanoma study called Columbus. This trial is based on the strength of data presented at ASCO would show promising clinical activity and a differentiated synergistic safety profile when combined with Novartis’s BRAF inhibitor LGX818 and I’ll be covering that data briefly in a bit.

AstraZeneca also made strong progress this year with Selumetinib initiating a first-line thyroid cancer patient trial called ASTRA and building on the strength of results shown as ASCO last year AstraZeneca has announced plans to initiate a Phase 3 KRAS mutant non-small cell lung cancer trial this fall. We’re also very encouraged to see the Selumetinib uveal melanoma study at this year’s ASCO which demonstrated significant benefit more than doubling of PFS and that was statistically significant for these patients when compared with current standards of care.

Altogether with MEK162 and Selumetinib, we expect to have at least six pivotal trials enrolling by the end of this calendar year.

Finally, as we announced last month, our 180 patient randomized Phase 2 trial of ARRY-502, a CRTh2 antagonist and allergic asthmatic, met its primary and key secondary endpoints with statistical significance. We were excited by its potential to become the first new oral medication for asthma patients since Singulair was introduced over 15 years ago. We’re seeking an experienced committed partner to take ARRY-502 to its potential.

I’ll now provide a brief update on ARRY-520 on Slide 5 as we’ve said in the past ARRY-520 is a highly selective KSP inhibitor which preferentially acts on hematopoietic cells over epithelial cells. We believe 520’s unique mechanism has the utility when used after IMiDs and proteasome of inhibitors have failed and contextually in combinations with them in earlier lines of patients. Most importantly, what's emerged consistently over our multiple studies is that we have little to no non-hematologic toxicity and that our hemostats of both transient, non-cumulative and predominantly asymptomatic.

On Slide 6 are the details of our covered regarding our early indications of activity in the ARRY-520 plus Kyprolis study despite over 80% of these patients being dual refractory or intolerant and a full third of patients having already seeing ARRY-520 or Kyprolis. Most importantly, as mentioned, the combination was tolerated, did not appear to show additive toxicity relative to the observed events for either drug alone. Nearly half of the patients enrolled in that study remain on study today.

The interim results from our ARRY-520 Velcade clinical trial which represented at IMW in April is covered on Slide 7. Initial signs of activity including responses and prolonged stable disease were absorbed in this heavily pretreated population with the majority refractory to prior Bortezomib treatment. As in the combination with Kyprolis the combination was generally well tolerated with toxicity being transient, non-cumulative and predominantly asymptomatic. As I mentioned, we are now treating patients at full dose of both ARRY-520 and Velcade.

Turning to ARRY-614 on Slide 8, we are studying low-risk int-1 HMA failure patients. These patients have about a 12 month median survival, so poor prognosis, no therapeutic options and ongoing blood transfusions. As you may recall, our prior formulation of ARRY-614 required 12 capsules per dose. So, we reformulated to a new formulation which is two to three times more bioavailable. We achieved the MTD earlier this year and in an expansion phase now that should be reading out by the end of the year.

I’d now like to provide some details about the top-line results from our ARRY-502 Phase 2 trial in patients with asthma. So turning to Slide 10, we recently shared results from our Phase 2 trial ARRY-502 in allergic asthma patients. Despite the availability of treatment options the ongoing burden of asthma remains extremely high. This is partially due to a large proportion of patients not being well controlled on current medications and due to poor compliance with inhaled drugs. By some estimates as many as 80% of asthma patients are poorly controlled at this time.

The CRTh2 mechanism addresses the pathway not specifically targeted by existing asthma therapy and the Th2 gene signature spans mild, moderate and severe persistent asthma. We’ve not disclosed this specific Th2 related biomarker referred to in the data but have disclosed that we are evaluating a number of Th2 related markers. ARRY-502 is an oral drug and for reference, Singulair, an oral medication for allergic asthma, generated approximately $5.5 billion in annual sales in 2011. No oral medication for asthma has been FDA approved since Singulair in 1998.

Now, on Slide 12 I’ll review the design of this study, the Phase 2 study briefly. We enrolled 184 patients with mild to moderate persistent asthma randomized 1:1 to 502, 200 milligrams BID or placebo. This study was designed to measure change in pre-bronchodilator Forced Expiratory Volume in one second or FEV1 over a 28-day period. In addition, we pre-specified a series of key secondary endpoints to further inform the clinical activity and safety of the drug. As mentioned, we used a number of Th2 related markers to select patients and believe that overall the patients recruited into the study represent approximately half of all asthma patients.

So, on Slide 11, the data, we achieved statistically significant results in the primary and several key secondary endpoints of the trial across all 502 treated patients we absorbed an FEV improvement about 4% versus placebo. A pre-defined endpoint using the medium baseline value of a Th2 associated biomarker was also evaluated. Patients in this population which represented half of our treated patients achieved a statistically significant enhanced improvement in FEV1 of nearly 7% versus placebo.

By inference this group would represent approximately 25% of all asthma patients or more than 6 million patients in the U.S. alone. That would be the high group with the pre-defined biomarker.

To put the results in perspective, we show on the chart how the results of our Phase 2 four week trial compared to the results from a Phase 2 four week trial with Singulair and asthma patients and are encouraged by the results. We’re further encouraged to have achieved statistical significance on several key secondary endpoints.

On Slide 13, you can see that positive safety and tolerability of course are critically important for any potential asthma treatment and in this trial the frequency of adverse events was lower for 502 than placebo with no series adverse events absorbed on 502. We absorbed fewer asthma exacerbations on 502 versus placebo and importantly only one exacerbation led to this continuation compared to five in the placebo group. In fact, there were only four drop-outs in total in the ARRY-502 Group compared to 11 in the placebo group.

I’d now like to provide some more details about the progress with our two partnered MEK Inhibitor on Slide 15. We remain encouraged at the progress recently reported by both of our MEK partners, Novartis and AstraZeneca, which are summarized here on this slide. I’ll now touch on some important data presented on these programs earlier in this quarter.

Regarding so Selumetinib on Slide 16 and ASCO in June Memorial Sloan-Kettering presented unprecedented results from our Phase II trial in uveal melanoma. The data showed that patients receiving Selumetinib had a progression free survival advantage nearly 16 weeks compared to seven weeks for chemo more than doubling the results of the current standard-of-care. Memorial Sloan-Kettering has announced plans to initiate a 100 patient confirmatory randomized trial with Selumetinib.

Also at ASCO, Novartis presented interim results from the study of MEK162 in combination with LGX818, their BRAF inhibitor. As you can see in the green column on this chart 162 plus 818 showed nearly 90% overall response rate in BRAF inhibitor naive melanoma patients including one complete response. While these results are impressive we were particularly excited about the differentiating safety results. The combination showed signs it may mitigate some of the on target adverse events common with single-agent BRAF inhibitor therapy including cutaneous toxicities, myalgia and arthralgia. Unlike other MEK BRAF combinations, in this study there were no incidence of fever or photosensitivity and a low incidence of rash as we see MEK162, LGX818 went in combination.

Based on the strength of this data that I just shared here on Slide 18 is the Phase 3 trial Novartis posted last week to ClinicalTrials.gov trials randomized three-arm study comparing the efficacy and safety of both LGX818 plus MEK162 and LGX818 monotherapy as compared with Vemurafenib in patients with locally advanced unresectable or metastatic melanoma with BRAF V600E mutation. We believe this trail along with the 17 other Novartis sponsor trials currently running represents Novartis’s very high level of commitment to MEK162 fast track development.

I’d now like to drill down a bit on our new collaborations. This is on Slide 20. We were pleased to have announced several new partnerships over the last few months. The clinical deal in our HER2 and our highly selective HER2 inhibitor ARRY-380 put a lot of tremendous opportunity for Array downstream and the two preclinical deals have the potential to provide over $800 million of milestones along with royalties on any commercialized product so.

Second with Oncothyreon under this agreement to develop ARRY-380 for breast cancer we receive an upfront payment of $10 million and retained the potential for global commercialization rights and half of commercial profit. Oncothyreon has committed to fund multiple combination studies to test ARRY-380 with other approved breast cancer products. 380 is the only selective small molecule HER2 inhibitor in clinical development and in Phase 1 trails were shown to be well tolerate with no treatment related SAEs and minimal GI or skin related events. Pre-clinically, 380 is demonstrated impressive increases in overall survival in HER2 models of intracranial tumors relative to other tested small molecule kinase inhibitors.

Loxo is a biopharmaceutical company recently established and initially funded with $30 million led by Aisling Capital. We signed a multi-year license collaboration agreement for an undisclosed Array invented preclinical oncology development candidate. Loxo will fund Array’s research and we’ll be responsible for target selection and conducting clinical trials. Array is eligible to receive up to $434 million in milestone payments and to receive royalties on sales of resulting drugs. In addition, Array received an equity position in the newly formed company.

Regarding Celgene, finally we announced a collaboration with them for an Array inventive preclinical program targeting novel inflammatory pathway. Array received an up-front payment of $11 million and Celgene will have an exclusive option to license multiple clinical development candidates. Array is eligible to receive up to $376 million in milestone payments and receive royalties on sales of any resulting drug.

I would now like to turn the call over to Mike Carruthers to discuss financials.

Mike Carruthers

Thank you, Ron. Our revenue for the fourth quarter was $25 million. This quarterly revenue level is a record for Array and was driven by earnings an initial – Phase 3 milestone for MEK162 in June and as a result of the partnership with Oncothyreon around ARRY-380 that we announced in late May. Supported by this strong revenue our loss per share for the quarter was only $0.06, before the $11 million non-cash charge for the early payment of the Deerfield debt. Recall that with our proceeds of the new debt we issued in early June we fully paid off Deerfield, reduced our interest rate to 3% and extended the due date to 2020. The $11 million non-cash charge is to write-off the debt discount that was still left at the time of the early payoff.

We ended the quarter with $109 million in cash. This does not include $16 million that we have already received in July or will receive by the end of September. This aggregate $16 million is from the MEK162 milestone and the new Celgene deal. So, pro forma cash is actually $125 million at June 30.

Please go to Slide 23. This is the time we provided guidance for fiscal 2014. Revenue will be approximately $48 million and loss per share is $0.72. We show $30 million for license and milestone revenue. This does not however reflect our expectations for partnering ARRY-502. Collaboration revenue shows a $5 million increase for fiscal 2014 which results from the recently announced deals including Loxo and Celgene.

This week, we announced a companywide reduction in staff focused on the discovery organization. After the 20% reduction Array will have approximately 200 employees whose capabilities support our strategy. For now, our discovery capabilities will be funded through high value collaborations to retain this important capability for future proprietary research. Those collaborations include Clovis, GlobalBlood and the two new deals previously discussed. We will continue to focus our development and commercialization efforts on our Hem/Onc programs. This staff reduction will resolve in greater than $10 million in annual savings.

Finally, the interest expense for fiscal 2014 shown on the slide at $9.3 million, includes the non-cash component such that our actual cash interest is less than half of what is shown here. The actual cash interest for fiscal '14 is reduced by nearly $3 million from the prior year as a result of the new debt that replaces the Deerfield debt.

And with that, I’d like to turn it back over to Ron.

Ron Squarer

Thank you, Mike. Concluding on Slide 25, we remain on track with pivotal trial decisions on ARRY-502 and ARRY-614 by the end of the calendar year. We look forward to at least six pivotal trials enrolling on our partnered MEK program and based on positive Phase 2 with ARRY-502 we are seeking to partner that drug.

Now, before turning the call over the Q&A, I would like to point out that we also received notification this week that Amgen has elected to end its glucokinase activator partnership with Array and return AMG151 to us. While we do not have specific plans for AMG151, at this time, we will be evaluating the data and may provide future updates. I would remind investors that Array currently has a total of 14 clinical stage products in our pipeline 10 of which are in either Phase 2 or already in Phase 3 and our partnered programs in total could provide as much as $2.7 billion in potential milestones.

I also feel it’s important to clarify that the staff reduction this week which was predominantly focused on rightsizing discovery was not related to the return of AMG 151 to Array.

I’d now like to open the call up to questions-and-answer. Operator?

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And our first question is from Cory Kasimov from JPMorgan.

Matt Lowe – JPMorgan

Hi there, it’s actually Matt Lowe in for Cory today. I guess the first question is just looking for some additional details on the reasons for the workforce reduction, and I guess as a follow-up to that do you believe you have the personnel and financial bandwidth to potentially start pivotal programs for both ARRY-520 and ARRY-614 next year? And then, I also have a follow-up, thank you

Ron Squarer

Yeah. So, Matt, thanks for the question. The reduction in staff as we mentioned predominantly focused on discovery but it is important to note that we retain a robust cutting-edge discovery capability. This shift is simply been that the majority of our team are engaged in collaborations with great partners like Celgene and also you noting here a new trend of companies of VCs essentially forming companies around technology and assets so we've done that now with (inaudible) and Aisling through the newly announced partnerships.

And, we’re and we think this is a very healthy way for us to use our powerful discovery capability and we recall that at Array we have actually put about 18 molecules into human development, 14 of which are still in active, actively being developed with many 10 Phase 2 and beyond. So we think it’s a very important part of our story. But at this time we’re able to maintain the capability and create value for new assets but do it essentially with the funding of important partners.

It’s critical to us to maintain this discovery capability because we believe at the right time we will want to continue to generate new INDs for Array proprietarying this for Array as we have in the past. But as you know, we have some of the important clinical assets to invest in. You looked at there you mentioned ARRY-520 and ARRY-614 we’re collecting the data to determine the path forward with both of these drugs but we certainly believe that we have the internal bandwidth to manage both of these programs and as you know our cash position now is healthy, the one remaining item regarding cash is going to be the ultimate value of the Asthma program ARRY-502 and that is yet to be determined but of course as you can imagine we’ve seen strong interest from the likely parties and we hope to be able to reveal how that’s going over time although in the past we have taken our time to find the right partner and the right deal and so we don’t feel that we should rush this process unless we feel we’ve got the right partner.

Does that every questions Matt?

Matt Lowe – JPMorgan

Yeah that was great. And just as a follow-up are you able to give us any more details on the return of AMG 151 was it a question of safety or not enough efficacy with that program? And then in terms of the partnerships is there any timing you're able to give us on when we might expect the partnership of 502 and then also any update on 797 with partnerships talk to that program? Thank you

Ron Squarer

Array, also with the partnerships, now this time we did those speculate on timing on either of these and just to may be give you color on that. One example that I’ve explained lately is the progression of ARRY-380. So ARRY-380 is a potentially very important molecule this high selective HER2 with the potential may be to cross the blood-brain barrier differentially and help with the brain mets secondary to breast cancer as well as other treatment settings for breast cancer. And we waited to find the right partner there our partner that would allow us to retain ultimately at the potential for global, commercial rights and half the value. And so, because of that I think it’s inappropriate to speculate on when deals will be done especially when you’re looking for the right deal.

Now, regarding Amgen what we’re saying at this time is that we have no specific plans but we’ll update that over time and what you can look forward to is we would expect the data to be published in the future by Amgen really we’ll certainly look at that data and decide what we plan to do with product going forward but at this time we’re saying that we have no specific plans.

And the only other thing I could – probably a question better ask to Amgen but there is certainly been a lot of changes at Amgen since we should find this collaboration change in leadership you could change in strategic focus and so it’s best to ask them if those changes in strategic focus were part of the decision or not it’s not really for us to discuss.

I think I covered all your questions Matt correct?

Operator

Next question is from Howard Liang from Leerink Swann. Please go ahead. Go ahead Howard with your question.

Howard Liang - Leerink Swann

I'm sorry on the 614; you had a discussion with the FDA about Phase 3 endpoints. Can you talk about what could be the endpoints other than collateral; I suppose it would be transfusion dependence with can you talk about your sort of magical number that you’re looking for? And then may be you could just broadly what are the options you’re considering for 520 and 614 for Phase 3 that you might start that in the year?

Ron Squarer

Right Howard, good question so I’ll start with 614. We have met with the FDA you may recall that in the data we presented I guess is recently as ASH in December. We used a let's call it a academic measure called IMW obviously IMW 2006 which is really composite measure IM --

Mike Carruthers

IWG.

Ron Squarer

IWG, sorry I mixed it that with IMW meeting in for myeloma. Here we go. Okay, IWG 2006 which an academic composite that takes into account hematologic improvement across really all three cell lineatures. And while it's a good marker for determining what’s going on with the drug it has not -- it’s not a precedented regulatory endpoint. And so discussions with the FDA range from tightening up -- IM the I --

Mike Carruthers

IWG.

Ron Squarer

IWG 2006 measures to make them, to bring them into a line with stronger clinical relevance up to what you considered to be standard of almost precedented endpoints. For example, I think you mentioned transfusion independence but there is also measures that have been used in this in similar diseases related to bleeding advance and infection. And so essentially our goal through testing the new formulation especially at the couple of doses which we think are appropriate with the new formulation. We're looking for signals across really all cell lineatures to determine if there is a good or a dash let’s say items to focus on going forward. If we feel we need to re-discuss that with the FDA we will and we feel it’s already clear we will be able to use that.

A couple of caveats I'll just say is that we do feel that with about 40 patients we’ll have a lot to see. But certainly with that population it’s not necessarily clear that we’ll have all of the answers. The drug does work as you know Howard at the progenitor cell level and benefits really bone marrow health. And so for example there is many effects let’s say infection rates or bleeding which we’ve seen to be fairly low in our treated population that without a control ARM of course we don’t really know what kind of benefits providing.

So we’re going to look at the data that’s why we’ve said we want to see the full set of data we’ll be sharing that along with our plans by the end of the year. So hopefully that helps.

Then on 520, we have been fairly consistent. We believe there are couple paths to market both accelerated and full approval. The accelerated paths are highly and recently precedented it would be the fall of essentially what carfilzomib did with single agent or Pom in their study with Dex. We are also considering both accelerated approval paths and full approval paths in combination with PIs. What I mean by that is we’ve received guidance in the FDA that we could use a PI combination to drive an accelerated approval based on ORR and ultimately a full approval with the same strategy with looking at progression free survival.

And so those remain our options. The data is maturing as I said we’ll have it certainly by the end of the year and then we’ll be in a position to go forward.

We’ve talked to the FDA about these endpoints and are comfortable with where we are. I’d say the last item that we’re just working through with them is finalizing details around our marker AAG and how we would use a diagnostic in the trials in the future. And while we’ve already had some discussions with CTRH there will be a formal visit to that agency in the near-term.

Howard that answer your questions?

Howard Liang - Leerink Swann

Just another question and I’ll go back in queue. Regarding the Novartis MEK and BRAF combo what will be the hypothesis why there is reduced toxicity when compared to other combos?

Ron Squarer

Right okay I'm going to have, I think that Kevin address that but what is important to note at this point the impaired data is quite impressive it appears to be a big differentiation in terms of tolerability and patients in this population will be affected to be on drug for a longtime. And so having a substantial tolerability benefit I think it's going to be very important, more important when it’s a very long duration type of treatment. I also will point out that we’re impressed with the commitment that Novartis is making to the study its an impressive study and we believe, they believe, that it is a very much of best-in-class combination and they really think they’re going to come out on top. So for an explanation of why we think we’re seeing this synergy on safety, Kevin?

Kevin Koch

Hey Howard. This is fairly well documented that the nature in which the BRAF mutant inhibitor binds with the BRAF mutant tremor. Each one of the BRAF inhibitors has its own interaction with the target as well as the ability to interact with other members of the RAF family, which is A, B, and C RAF. And then depending on the structure of the compound there is varying degrees of activation of wild-type CRAF and so if you activate wild-type CRAF it appears that you get squamous cell carcinoma rash and a number of other side-effects and that the MEK inhibitor now blocks the wild-type from signaling.

And so depending on the nature of the BRAF mutant inhibitor you’ll get varying degrees of side effects based on the dimerization event, at the same time the MEK inhibitor will then block wild-type activation and apparently what we’ve seen with LGX818 is that we have a superb combination that is just balanced in a most effective way to show this very low side-effect profile combined with very high response rate. So we’re very excited about these results and its quite novel biology but I think it will benefit patients greatly.

Howard Liang - Leerink Swann

Sorry just I thought the reduction of cutaneous side-effects was also seen with other MEK inhibitors in combination?

Kevin Koch

It has been but as you can see on the slide there is significant rash with some of the other inhibitors and the fever which we’ve not absorbed. You could argue that some of those effects are some kind additional off target effects but I think it's harder to explain those side-effects but again the data speaks for itself.

Operator

The next question is from Stephen Willey from Stifel Nicolaus. Please go ahead.

Stephen Willey – Stifel Nicolaus

Yeah hi thanks for taking my questions. I guess just going to back to 614 for a minute. I'm just wondering what the prospects of potentially maybe having some optionality around in adaptive trial design I guess for next year with respect to being able to kind of run a Phase II B 3 study and which you can kind of get your control ARM and maybe confirm the signal or the end point that you want to move forward on and then maybe have some optionality around being able to adaptable to expand that trial into a pivotal is that something that you think the FDA may be on board with a strategy that you may or may not be considering?

Ron Squarer

Yeah Steve, I think that's a good question obviously is exactly the kind of considerations we’re making now but until we have the data to marry with the regulatory expectations yeah I don’t think we’ll be able to comment any more on there but there is a number of options to consider moving forward and then I think its just best we would bring the data to that conversation later this year. Is that okay Steve?

Stephen Willey – Stifel Nicolaus

Yes that’s fine. And then I think you mentioned in your response to your prior question with respect to your 520 options being essentially an accelerated approval study with (inaudible) looking at overall response rate and then I think you also mentioned PFS and I think probably one would potentially be open label (inaudible) and the other would mostly likely have to be controlled because of the venture of the nature of the study so I guess maybe just what’s your thoughts on each of those options are at this point?

Ron Squarer

Yeah, I know you said it just right. Just to recap the considerations we have essentially you could say there are three accelerated options to being the path that car and palm recently took which would be that sort of single arm approach. But the PI approach the third accelerated approach would be randomized and of course the PFS would be randomized.

And those are the three options and I’ll say about 520 at this point is we put a lot of data and its not in one setting, its single-agent, its combination with dex combination with Velcade, combination with Kyprolis we have those. We have that data. It’s maturing, but easier to see consistent tolerability to profile and you see consistent signs of activity. But someone suggest the most important fact that we brought forward on activity is that we show robust single-agent activity and so the thought is so of you can combine well which we do feel comfortable about developing the data.

You would be hopeful with completely non-overlapping mechanisms and completely non-overlapping mechanisms that combining in a two drugs would add benefit over either drug alone. And so I think what I’m trying to say is, we believe all those options are still on the table based on the data that we’ve already shared. But before making a decision of this magnitude for Array we are asking for the time to have as much of our data mature as possible before putting a sort of a stake in the ground. But these designs we just discussed are once we discussed with the FDA so we feel comfortable that they are all on the table and then it's really about the risk and likely its for success and the cost associated with running this trial. So, we’ll have more information about that as I said hopefully by the end of the year.

Stephen Willey – Stifel Nicolaus

And then can you remind us if the 520 study with Kyprolis was far more collaborative study with Onyx?

Ron Squarer

The study has been ran down at M.D. Anderson and it’s a center sponsored by them, but certainly one of the reasons we decided to participate in the study is it gave ARRY-520 or Array early access to what was that is investigational drug and I think we’re very pleased to have that opportunity. I know that Onyx has been very interested in the data as well obviously certolizumab is a successful drug and I think it is anticipated to be a very successful drug at least I think Amgen would tell you that.

And so we feel very lucky to be one of the early combination trials running. There is just really aren’t that many. I’m sure there will be, but there aren’t that many now. So, it was a great opportunity, very cooperative and of course the M.D. Anderson is premier, premise site. We have done great work down there.

Stephen Willey – Stifel Nicolaus

Okay and then just lastly the balance of remaining MEK milestones the Phase IIIs are up and running are those primarily tied now going forward to regulatory events or are there enrollment related milestones like trigger it all?

Ron Squarer

Yeah, we don’t get a lot of visibility to the triggering of the milestones. But I’ll have Mike disclose what he feels we can?

Mike Carruthers

Sure. On selumetinib for example we’ve yet to earn the Phase III milestone we expect to this year yet. For MEK162 they’re actually multiple Phase III milestones and we just earned the first one.

Stephen Willey – Stifel Nicolaus

Okay. Thank you.

Ron Squarer

Great thank you. Steve?

Operator

Our next question is from Ed Tenthoff from Piper Jaffray.

Ed Tenthoff – PiperJaffray

Great thank you very much. Just quickly if I may, can you confirm Mike what you said the EPS guidance was?

Mike Carruthers

Yeah the EPS guidance…

Ed Tenthoff – PiperJaffray

Loss per share, yeah.

Mike Carruthers

$0.72 loss.

Ed Tenthoff – PiperJaffray

$0.72 loss great. Thank you. And then congrats on all the progress collaborative balance sheet that’s really been just a fantastic year. I guess looking at sort of the MEK partnerships obviously we saw the initiation of Phase IIIs. Do you guys have any plans to do studies of your own beyond the ovarian cancer study that you’ve initiated for MEK162?

Ron Squarer

Hi Ed its Ron. Thank you for your optimism. We share it. I would say that its actually an opportunity to perhaps clarify also the MILO Study that I referred to earlier, which is robust style being run in ovarian cancer globally. It is being run by Array, but because of the nature of our co-development agreement in which we are essentially capped at a pretty reasonable number for our contribution each year and it’s a contribution we would definitely be making irrespective of whether or not we were developing the drug. We basically can fulfill our obligation in cash or kind with the study we’re able to do it in kind and even have some of our overhead covered for it.

So, it is possible in the future that we would engage an additional co-development work for Novartis. It’s all by mutual agreement. And that is a possibility especially given the quit large scope of studies which they have running now. If you look at their long list of company sponsored trials with many very exciting combinations with their robust targeted agent portfolio three different PI3Ks just to get started. And so that’s the possibility.

But beyond that with AstraZeneca it is a more of a straight, it is a straight royalty agreement, a license agreement double-digit royalties, which we think are going to be very, very important especially with that anchor indication in lung cancer and all sorts of lung cancer.

Today focused on (inaudible), but you’ll note Ed if you look at clinicaltrials.gov that AstraZeneca is running couple of additional trials in non-small cell lung cancer specifically in combination with first line sight of toxic agents and not only in (inaudible) but an unselected non-small cell lung cancer. So we think that we’re obviously way ahead of anyone else in that space and that could, that anchor franchise in lung could be quite large.

So I think what I am saying is we’re very, very pleased with the intense commitment by Novartis certainly from the day they received a drug in AstraZeneca certainly in a very accelerated manner since Pascal Soriot has joined there that they are going to be developing these drugs very, very widely and our only involvement maybe to essentially collaborate with Novartis if they felt that that we could help them in the future beyond ovarian. But I think we’re in very good hands letting our partners carry those drugs forward.

Ed Tenthoff – PiperJaffray

Excellent I really appreciate that update and looking forward to additional data in the back half.

Ron Squarer

Alright thank you Ted.

Operator

Next question is from John Sonnier from William Blair.

Unidentified Analyst

Hi guys this is (inaudible) in for John thanks for taking my questions. I had a couple the first one is with regards to 502. Should we expect the full dataset at a meeting later this year and if we do could we sort of get some more information about the Th2 gene signature? And also the other question I had was with respect to ARRY-380 in your collaboration with Oncothyreon, if the data proves positive the proof if concept data, who would be responsible for conducting and paying for pivotal study? Thank you.

Ron Squarer

So let me start with 502. So this interesting, its an interesting question (inaudible) its in oncology world where we spend a good bit of our time data is by protocol often released as soon as it can be. I will say in the primary world not so much the case and its important we believe – our potential future partner to retain some of the information as proprietary so its not to signal to competitor. So we really wanted to inform the investment community but the general outcome of the study but to withhold a lot of the details for partner to decide how it wants to move forward. Now yes I do believe over time the data will be presented but we would do that cost collaboration with set partners.

Now on the topic of the markers which we use which we think is a highly proprietary knowledge. In that, in the past there have been attempts to use Th2s in the space but none have ever achieved statistically the significant or robust well a robust response and none were statistically significant. Or had safety that was in consistent with the treatment of this disease. And what we haven’t been specific on the marker I’ll have at least Kevin tell you about the markers which we put in the public domain as related to the study and related to the Th2 signature? Kevin?

Kevin Koch

Yeah. As we said in the last conference call, we used a number of different markers which included things like eosinophils, periostin TARC, FENO, squamous cell carcinoma markers, we looked at urinary PGD2 and IgE in all of these were measured. We do have a poster on our website discussing the levels of these biomarkers. And so, we’ll leave to a future meeting the role of which biomarker was most important in our particular study and how that would apply to other therapeutic indications like things like atopic dermatitis and allergic rhinitis where this drug may have a role.

Ron Squarer

Great, and then the other question was about 380, I can answer that. We are very happy with this structure of our agreement with Oncothyreon. We think that company that certainly have the financial resources and capabilities to run the multiple studies and multiple combinations that we believe will provide insight into the drug’s utility may be you could call it proof-of-concept. They will be funding all of those studies on their own although we are working closely with them through a joint development committee. After that, we have the option to co-develop going forward, and so we would be sharing the cost of the pivotal trial in order to maintain that global commercial control and the --or half of commercial value. But, the deal is structured in a way that we can opt out and still retain substantial royalties moving forward. And so, we feel it gives us sort of the best of all worlds.

If the drug proves to be as viable as we think it might be it will be able to reveal back to the world through those studies and easily justified to forward investment. And the things we’re looking for of course are to validate the tolerability profile which in our earlier trials that looked very positive and to understand the synergy with existing therapies and you can imagine we’ll be looking at protein therapy combination. And then that real special fact are we getting differential and exceptional blood-brain barrier penetration, because if you do and you combine that with very good tolerability profile the opportunity for long-term in almost chronic therapy become relevant. And so, no one will know till the studies are run and that’s why we’re so pleased to have this phase being run but with our partner’s resources initially.

Does that answer the question?

Unidentified Analyst

It does, thanks guys, I appreciate it.

Ron Squarer

Thank you.

Operator

Our next question is from Shin Kang from Wells Fargo.

Shin Kang - Wells Fargo

Hi thanks for taking my questions. Couple of questions on 520 data. I was curious what kind of investigator quo feedback you’ve received related to the updated the 520 carfilzomib data presented EHA, and mostly specifically related to the data if you were to remove the five prior 520 treated patients from the 17 patient data, what would have been the response rate and did you have any objective responses in those patients? Thank you

Ron Squarer

Okay. So, at EHA focus of our data was really on the combination with carfilzomib. And I think that, sure, we speak to a lot of investigators and even at EHA we spoke to a number of both European and U.S. and I guess you call them global thought leaders in this area. And I think what I’ve said before reflects the sentiment that with single agent data there would be a likelihood of an additive effect if the drugs going to be combine. So, the most important thing is for the drug to be combined and we’re dosing at full dose both drugs and it’s early but that’s encouraging. And also that the tolerability profile but that describe you little to no non-hem and hem being relative easily managed and tending not to be cumulative or symptomatic is not just in one study, it’s appears to be in all the studies. But there is the high disease control rates and the MRs and the PRs are encouraging but of course it is early data and difficult to tell. There is a definite need though for additional agents and what I think and also most excited by is the fact that this is a new mechanism does not overlap with IMiDs and proteasome inhibitors which are essentially the standard-of-care.

And like the idea of having an option when they fail and while we can’t prove it at this point it seems to be that our activity is not -- it doesn’t -- it’s not so related to what you fail before which is pretty exciting. But if you can have utility it is important to also explore in combination. So, we have Dr. Needle here with us who actually came out of the MMRC and knows many of these opinion leaders himself. If you would like to characterize how the opinion leader community feels about the need for new agent like this. Mike?

Mike Needle

Well I think, Ron, you captured reasonably well. Obviously although Kyprolis and Pomalidomide are clearly active drugs and clearly offer incremental improvements having five drugs is certainly better than having three drugs. I think there is a general consensus that what’s going to cause the next not incremental step but the next leap forward is going to be a drug that acts by a new mechanism. Obviously, we hope it’s going to be ARRY-520 but there are certainly candidates out there and perhaps may be there is more than one leap forward that could be made in the next couple of years. But, only time and data tells.

Ron Squarer

I think we have time for another question. Let me just on that last topic, the thing that really strikes me when I look at the multiple myeloma environment as you will hear folks say it’s crowded, but it tends to be crowded with IMiDs and proteasome inhibitors which have improved over time but they are still of the same mechanism. And what really, really strikes when I hear about of market being crowded is that all patients still progress and die. And the unmet need is extremely high. And so, and as you know in our data we presented with our combination with Dex we were treating 11th line patients median. And so, clearly there’s a lot of unmet need out there, there are options but we have not practiced disease by a long shot. So thank you for the question.

Operator

And the last question is from Howard Liang from Leerink Swann. Please go ahead.

Howard Liang - Leerink Swann

Thanks very much for taking the follow-up. Just may be I wondered if you can talk about the nature of data at ASH and second, if you could give us an update on the status of the KRAS mutant non-small cell lung cancer Phase 3 trial versus Selumetinib, just what’s taking so long to get it started?

Ron Squarer

Okay. So, regarding the data at ASH I think what we’re pointing to is we will be able to share what we know about -- well, single agent is done, we presented final data at ASH last year so then what we’re going to be showing is updates on our Dex combination trial, updates on our carfilzomib combination trial and updates on the bortezomib trial. I’d say we’ll probably will be more robust data on Dex and Car only because there's studies will beat further along. Regarding bortezomib we’ve just started treating patients recently at in a full dose of both drugs we’re pleased and I would say that fully we presented IMW which is the acronym I was mixing up earlier. But I think the point is if we had one study that’s one thing; we seem to have activity and insight about multiple settings, multiple combinations that I think can inform a forward decision.

Unidentified Company Speaker

Also the ARRY-614.

Ron Squarer

Okay, 614. At 614, not a lot to add there. As I said, it’s an expansion, it’s near 40 patients we’re looking at couple of doses, we’re looking at as many endpoints as we think are relevant to inform a forward decision there. The interesting thing with the drug like 614 is that because it may have many effects and we’ve seen that across lineatures. The way you get it to market may not be the way you ultimately would expect it to be used or ultimately the data you would present about it. You kind of want to pick an endpoint which is hard and accepted and can get you there, but the full utility of the drug may come further in time. And then, was the question the timing for KRAS non-small cell lung cancer, I'm sorry, what was the question?

Howard Liang - Leerink Swann

Yeah, just why it’s taking so long to get it started.

Ron Squarer

Yeah. So, I don’t know that I have a great explanation other than to say that this is a huge opportunity and I think they knew it in that it’s not, as I mentioned, KRAS the data were stunning of course at ASCO unprecedented in that population and that we’re way ahead of folks, but now as you see they seem to be looking at non-small cell lung cancer in general, a huge commercial opportunity, but you’ve got to do some pretty robust studies there. And when they were making these decisions they were rudderless a bit, they had no CEO, and Pascal upon his arrival really I think set things straight. We had a - I think I mentioned in the past I had a wonderful opportunity at ASCO to have an evening with not just Pascal but his entire team and our team to really connect with them and we’re just very, very pleased at how aligned we were on the potential for this drug. Anyhow Pascal has already come out early instead its an billion plus drug and moving forward. So, I think its really about if you’re going to do it they want to do it right and that’s what they’re doing; they’re not just looking at docetaxel doublet options for second line, but they are looking at multiple first line combinations.

I think they have that data trickling in already, so I think they kind of have a feel for whether this drug is truly combinable with cytotoxics which Pascal saying is its powerful differentiating feature. You might note in his investor materials and Astra’s investor materials he is coming straight out and saying selumetinib combines with cytotoxics without a need for dose adjustment, and he is basically comparing it let’s say the other MEK that’s out there GSK’s MEK and saying not only are they unable to almost dose at their MTB as a single agent, but when they combine with any type of cytotoxic there is dramatic need for down-dosing suggesting that patients having a hard time. And so, I think that the data has supported him, but I think it’s just a lot about having a cancer guy at the helm of the company.

Now AZ as you know had some cancer experience but I almost call their cancer legacy primary care type cancer drugs with hormonals and what not, I think it takes an experienced leader like Pascal to fully appreciate what they have and understand what they need to win. So, it's been I mean I don’t I wouldn’t want to criticize prior leadership at AZ, but it’s a new company under Pascal and his team, there has been changes of leadership in development and R&D, and we’re pleased to get to meet the people in charge and in charge of our program. And so, we’re very excited and it’s hard to revisit the past, but looking forward we’re very pleased. Does that help, Howard?

Howard Liang - Leerink Swann & Company

Great. Thanks so much for taking the follow-ups.

Operator

That was our final question, Ron. I will turn it back over to you for any final remarks.

Ron Squarer

Great. Well, thank you very much and thank you to the operator. With that I would like to recognize the critical contribution made by the employees who are part of our recently announced staff reduction. This action was not based on individual performance, but on an evolution of our company strategy. I also want to thank our patients, partners and shareholders for their continued confidence and support. And with, that we will close the call. Thank you all very much.

Operator

Thank you, ladies and gentlemen, that concludes today’s conference. Thank you for participating. You may now disconnect.

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