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Array BioPharma Inc. (NASDAQ:ARRY)

F2Q 2014 Earnings Call

February 4, 2014 9:00 AM ET

Executives

Tricia Haugeto – Director, Corporate Communications and IR

Ron Squarer – CEO

Mike Needle – Chief Medical Officer

Mike Carruthers – CFO

Andy Robbins – SVP, Commercial Operations

Analysts

Cory Kasimov – JPMorgan

Eun Yang – Jefferies

Michael Smith – Leerink

Matthew Andrews – Wells Fargo Securities

Stephen Willey – Stifel

John Sonnier – William Blair

Ted Tenthoff – Piper Jaffray

Operator

Welcome to the Q2 2014 Array BioPharma Inc. Earnings Conference Call. My name is Christine and I will be the operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded

I will now turn the call over to Ms. Tricia Haugeto. You may begin.

Tricia Haugeto

Thank you, Christine. Good morning and welcome once again to Array BioPharma’s conference call to discuss our financial results for the second quarter of 2014. You can listen to this conference call on Array’s website at www.arraybiopharma.com. Also, we are using slides today to accompany our remarks, so slides can be downloaded on the Investor Relations homepage 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, our Chief Financial Officer, Mike Carruthers; and our Chief Medical Officer, Mike Needle, who will lead the call today. In addition, Andy Robbins, our Senior Vice President of Commercial and Strategy, will be available to answer 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 other forward looking statements about the future results, research and development goals of Array and its collaborators and future financial performance of Array. These statements are estimates based on management’s 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, 2013 and in other filings Array makes with the SEC. These filings identify 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 it over Array’s CEO, Ron Squarer.

Ron Squarer

Thank you, Tricia and good morning, everyone. We’ve been sending some snow your way. I don’t know if you’ve noticed it, it should have arrived by now.

I’m on Slide 3. And we’re pleased to share with you a summary of the important progress we’ve made towards late stage product development and commercialization at Array. We’ve taken a major step forward with the announcement that we plan to enter Phase 3 this year with Filanesib, previously known as ARRY-520, our wholly owned heme product for Multiple Myeloma.

Two additional trials are also planned to support the FDA filing for Filanesib, one of which is already underway and the other is on track to begin later this spring. These plans are supported by the positive results we presented in December at ASH which we will review on this call.

Phase 1 trial from our other wholly owned Hematology product, ARRY-614 completed enrollment during the past quarter. And we look forward to having mature data and finalizing next steps for this drug later this year.

The partnered MEK programs continue to make excellent progress with AstraZeneca most recently commencing a Phase 3 trial in KRAS mutant non-small cell lung cancer and Novartis having begun a Phase 3 trial in BRAF melanoma.

We are also initiating a small proof of concept trial with ARRY-797 our oral P38 inhibitor, and a rare genetic cardiovascular disease called LMNA-related dilated cardiomyopathy or LMNA-DCM. We’ll review the scientific rationale and opportunities for this program today.

Also our recently announced collaborations with Celgene, Loxo oncology and Oncothyreon and are all making progress. In fact Oncothyreon, just yesterday announced the initiation of a new combination trial with ARRY-380.

We have $120 million in cash as of the end of December, this positions us well to execute on our clinical development plans especially as we may do more partnering and expect to collect milestone payments from existing collaborations. We’re very excited about the company’s progress, particularly with our wholly owned product Filanesib and look forward to initiating our registration trial for this important drug later this year.

We’re now are going to provide an overview of our development plans for Filanesib as well as a review of the recent clinical results presented at ASH in December.

So, I’m on slide 5. And before we discuss our forward plans with Filanesib I just wanted to remind everyone about the significant market opportunity. Multiple Myeloma is the second most commonly diagnosed hematology malignancy with the prevalence of over 125 patients in the G7.

Existing standard of care has fallen into two classes, IMiDs like Revlimid and then the recently approved Pomalyst and proteasome inhibitors like Velcade and the recently approved Kyprolis. Unfortunately for Myeloma patients the disease remains predominantly incurable and the vast majority of patients go on to progress and die despite the recent advances.

We believe Filanesib given its novel mechanism of action has the potential to both complement IMiDs and PIs and to provide benefits when they have failed. Both Kyprolis and Pomalyst have had very successful launches recently in the relapsed/refractory myeloma market reporting full year 2013 sales of $261 million and $246 million respectively, so quite close.

Based on this performance, both drugs are expected to exceed $1 billion in global annual sales. And as you’re aware, the commercial potential of Kyprolis anchored the greater than $10 billion Amgen Acquisition of Onyx. The rapid adoption of these new products reinforces that physician and patients are anxious for new options. And we believe Filanesib holds important promise in the future.

Now, given how important Filanesib is for us, we’re going to be spending some time on this today. And I’m now going to ask our Chief Medical Officer, Dr. Mike Needle to go through the Filanesib data we presented at ASH and describe the details of our clinical program.

Mike Needle

Thank you, Ron. Turning to slide 6, as presented at ASH, Filanesib is demonstrated clinical activity both as a single-agent as well as in combination with approved proteasome inhibitors, Kyprolis and Velcade.

We have also newly presented non-clinical data showing synergistic activity for Filanesib in combination with Pomalyst. As predicted from its target effect, Filanesib has been well tolerated across multiple clinical studies at its recommended dose, with limited non-hematologic side-effects including no treatment related neuropathy or alopecia and only limited GI side-effects.

On-target myelosuppression was transient, non-cumulative and predominantly asymptomatic with the use of supportive measures.

Also reported at ASH, Filanesib and Kyprolis can be dosed together at the maximally tolerated, [inaudible] maximal planned dose. Combined with our robust single-agent activity this provides us with evidence to advance Filanesib toward global late-stage developments.

Slide 7 shows the robust single-agent activity presented at ASH. Using alpha-1-acid glycoprotein or AAG, as a patient selection marker, we demonstrated 24% objective response rate and a 23.3-month overall survival with single-agent Filanesib in a heavily pre-treated patient population.

As we’ve said before, AAG binds tightly to free Filanesib so the estimated 25% to 35% of patients with high AAG levels – that patients with high AAG levels of free Filanesib are lower therefore reducing the likelihood that patients will benefit from our drug. In studies we published AAG does not interact similarly with other commonly used myeloma drugs.

Combining filanesib with Dexamethasone, did not dramatically enhance filanesib activity, as seen was when Dexamethasone is combined with Revlimid or Velcade. Of note, data from this study suggests filanesib remains active in myeloma patient resisting to new IMiD or PI, as detailed on the next slide.

As shown on slide 8, filanesib demonstrated clinical activity and patients previously treated with the newer myeloma agents including Kyprolis, Ixazomib also referred to as Millennium 9708 an oral proteasome inhibitor and Pomalyst suggesting filanesib maintains activity in patients resisting to multiple PI and IMiD drugs. In the AAG population, filanesib had an objective response rate of 31%.

Moving to slide 9, we provide a summary of the clinical data we presented at ASH with filanesib in combination with each of the marketed proteasome inhibitors in relapse and refractory multiple myeloma.

First we demonstrated that for each combination we can deliver the maximum planned does for each agent. Overall, the filanesib combinations were generally well tolerated with no apparent air toxicity.

Second, for each combination we were pleased to see early signs of activity when compared to expected single-agent PI results in these populations. While there are a lot of encouraging data here, in particular I’d like to point out that patients previously – the patient’s refractory to Velcade we showed a 37% objective response rate in combination with Kyprolis and a 30% objective response rate in combination with Velcade.

On slide 10, we would like to summarize our global development plans for filanesib. At the top you’ll see the Phase 3 trial in combination with Kyprolis which is designed to support full regulatory approval both in the U.S. and Europe. I’ll talk more about this trial on the next slide.

In addition to the Phase 3 trial, we will conduct two Phase 2 trials designed to provide supportive data for full approval along with other benefits. The first phase, the first Phase 2 trial which is already enrolling patients is a study of filanesib plus Kyprolis compared to Kyprolis alone.

Prior to initiating the Phase 3 trial in the middle of 2014, we will have the benefit of reviewing combinability data from this Phase 2 to confirm what we reserved in the Phase 1 MD Anderson trial. In addition, this study will help us validate the use of AAG as a patient selection marker and generate data for publication supporting enrollment on the Phase 3 trial.

The other Phase 2 trial, scheduled to start during the first half of 2014 will be a single-agent, single-arm study of filanesib and heavily pre-treated relapse refractory multiple myeloma patients.

In addition to providing important safety and pharmacology data necessary for regulatory filing, this trial will also help validate AAG as a patient selection marker and if successful, could support broader labeling in conjunction with the positive Phase 3 trial.

In summary, we believe this robust plan will help us get filanesib in the hands of physicians and patients as quickly as possible. While demonstrating its effectiveness across multiple settings.

Moving on to slide 11, we described a phase, a planned Phase 3 trial. We plan to announce the exact size of the trial as we get closer to its initiation later this year but expect it would be several hundred patients and in line with other Phase 3 trials and relapse refractory multiple myeloma.

As stated before, it would be powered to support future regulatory filings in both the U.S. and Europe. We plan to enroll patients would be good candidates for Kyprolis therapy and again we’ll provide more precise inclusion, exclusion criteria details as we get closer to trial initiation.

Our decision to move forward with the Kyprolis combination in particular was based on first, our belief that this study will enroll quickly, especially in Europe where Kyprolis has yet to be approved and demand is high.

Second, the opportunity to establish ourselves as the first novel mechanism of action partner for Kyprolis in a large randomized Phase 3 trial. And third, the promising data from the Phase 1 filanesib plus Kyprolis trial presented at ASH.

Turning to slide 12, we believe that our development plan will position filanesib favorably among the late stage novel agents of myeloma. Given the proven effectiveness of both PIs and IMiDs, the emerging treatment landscape for relapse refractory myeloma will likely be sequential doublets all to dating PI and IMiD backlog combination. Our Phase 3 trial will generate the first Kyprolis plus novel MOA doublet in a large randomized trial.

In addition, we believe that filanesib’s single agent activity, especially in AAG selected patients warrants a large single-arm Phase 2 trial. With strong results in a salvage setting, this trial may support laboring with support broader use.

Finally, we believe the future clinical studies in combination with Velcade, and in combination with Pomalyst will help to find filanesib’s overall future position as an important treatment for myeloma. This is supported by the encouraging clinical filanesib plus Velcade data and the non-clinical filanesib plus Pomalyst data presented at ASH. Ron?

Ron Squarer

Thank you, Mike. Obviously Mike and his team are quite focused on the Filanesib program. We remain on track with the plan we described late last year.

As we’re in the process of finalizing our plans for ARRY-614, I’m going to provide only a brief update on that program today on slide 14. With ARRY-614, we have initially targeted patients who are low risk at one MDS which represents the majority of MDS patients and specifically focused our early studies on those who have failed HMA therapies as such as Vidaza and Dacogen.

These patients have no other approved treatment option, received only supportive care including many cases, very frequent blood transfusion. The prognosis is quite poor for these patients, meeting and survival in the range of 12 to 15 months in the 1 HMA failure populations.

So, on slide 15, here we summarize the data presented at ASH. Out patients are valuable for efficacy, 20% achieving towards improvement as defined by the International Working Group of 2006, of particular interest, 44% of platelet transfusion to patients achieved transfusion reductions with a full 31% actually achieving transfusion independent.

Low risk MDS patients with severe thrombocytopenia have a particularly poor prognosis. And the use of repeated platelet transfusions in these patients is often limited by the development of ALO immunization. In our studies, the most common treatment related efforts, events across all doses were rash, nausea and atrial fibrillation with the majority of these events being mild or moderate severity.

We’re awaiting a mature data from the ongoing expansion phase of this trial. And with this results plan to engage regulatory authorities and discussions and further development plans.

Now, to note, there are no current competing clinical trials designed to measure transfusion independent platelet as the primary end-point in low risk MDS patients. So there is an opportunity here for new therapies in area of high unmet medical need. And at this time and the real competitive programs in the marketplace.

So, now I’d like to introduce our small proof-of-concept trial with ARRY-797 and LMNA related dilated cardiomyopathy or LMNA DCM. A rare genetically linked cardiovascular disease.

Patients with this disease face a very poor prognosis with nearly 70% experiencing and major cardiac event, heart transplant or cardiovascular death by age 45.

On slide 17, LMNA DCM is caused by genetic mutation and the-lamin A/C gene coupled with the diagnosis of dilated cardiomyopathy degenerative disorder of the heart. Patients with this disease who do not succumb to sudden cardiac death will progress and ultimately require a heart transplant.

Currently a specific diagnosis of LMNA-related DCM does not change treatment practices versus the management of dilated cardiomyopathy from other causes. And as a result, genetic testing is infrequent. So, there are currently less than 1,000 patients in the U.S. diagnosed out of an estimated 6,000 to 8,000 patients likely to be living with this disease in the U.S.

So, moving to slide 18, evidence exists that in a setting of LMNA-DCM lamin A/C mutations lead to loss of functional lamin protein resulting in activation of the P38 in map K pathway.

Well, other map kinase pathway have been implicated in this disease, non-clinical data suggests that the P38 pathway is the most relevant driver. Now the loss of functional lamin protein leads to structural changes in cardiac tissues such as alterations to cardiomyocytes and AV nodal cell nuclei, which leads to apoptosis and cardiac tissue remodeling.

And structural reorganization which affects the heart’s contractual function. LMNA-DCM is defined by the 8 proptotic survival signaling pathway rather than the overt inflammatory response. And this is quite important because P38 inhibitors have historically, traditionally been studied in inflammatory diseases.

ARRY-797 inhibits activation of P38 potentially withdrawn appropriate modulation of downstream transfusion factors best preventing ovarian apoptosis remodeling and progressive cardiac dysfunction in this disease.

On 19, we describe the trial, we’re initiating a 12-patient small investment, proof of concept study of 797 in patients with LMNA DCM. This study was designed following discussions with the FDA and will be run at Mirador, Colorado, Hopkins and Brigham and Women’s.

The primary end-point is changed from waist line in a six-minute walk test at 12 weeks. Other end-points that will include left and right ventricular function, quality of life safety and pharmacokinetics. Preliminary results from this trial are expected late this year but the trial is in fact initiating right now.

I’d like to briefly provide details on our MEK inhibitors on slide 21, we remain encouraged by AstraZeneca’s progress with selumetinib importantly AZ announced in October the start of their select 1 Phase 3 KRAS non-small cell lung trial for which we received a milestone payment.

Select 1 trial is a randomized double-blind placebo controlled trial that will evaluate the safety and efficacy of selumetinib plus (inaudible) as a second-line therapy and locally advanced or metastatic KRAS mutant non-small cell lung cancer with primary end point of PFS.

Now, there are currently three pivotal trials with selumetinib, KRAS lung, thyroid and uveal. Uveal will likely be the first indication with July 2015 data readouts, so we see the profitability of revenue from selumetinib 2 Array in 2016.

On slide 22, we note that AstraZeneca continues to explore combinations of selumetinib with chemotherapies in addition to the registration trials described prior. Listed in blue here are other ongoing trials in non-small cell lung cancer. And as you can see AZ, is exploring the utility of selumetinib in broader populations of non-small cell lung cancer including in selective populations. And these trials are exploring combinations with GEM, CYST, CARBO, PACK and pemetrexed the commonly used serotoxins in this disease.

There are 46 selumetinib trials currently ongoing demonstrating AAG is in fact committed to broad clinical development with its product.

On slide 23, turning to Novartis, I’d like to point out that MEK162 now has a generic name, it was fun to try and pronounce this, Binimetinib is the name. In October, Novartis initiated a Phase 3 trial with Binimetinib, the Novartis BRAF inhibitor, LGX818 and BRAF-mutant melanoma based on the safety net they ordered ASCO.

The Phase 3 trial called Columbus is a robust randomized three-arm study comparing the efficacy and safety of LGX818 plus Binimetinib and LGX818 is mono-therapy as compared to vemurafenib in patients with locally advanced unreceptible or metastatic melanoma with BRAF mutation.

But there are currently three Phase 3 trials enrolling with Binimetinib in advanced cancer patients. And BRAF melanoma low grade serous ovarian cancer and the BRAF mutant melanoma trial I just described. NRAS mutant melanoma will likely be the first indication for Binimetinib with the projected regulatory filing in 2015.

And 24, I will point out the Novartis, continues to explore novel combinations of Binimetinib with a robust pipeline. Novartis agents focused on few mutant populations, we’re excited by the new trial of Binimetinib in combination with panitumumab in colorectal and pancreatic cancer. Where KRAS mutations drive about 35% and 60% of these tumors respectively.

Also not listed here is a new NTI trial with Binimetinib and full fox in patients with metastatic colorectal cancer, who have failed prior standards of therapy. So, colorectal and pancreatic cancer both very large populations and of course continue to be very high unmet diseases and we are pleased to see Novartis studying Binimetinib in these populations.

Now, I’d like to turn the call over to Mike Carruthers, who will provide a summary of our financial performance during the quarter.

Mike Carruthers

Thank you, Ron. I’m pleased to share with you the financial results for the quarter. Starting on slide 26, our revenue for the second fiscal quarter was $14 million, a portion of which came from the Phase 3 milestone from AstraZeneca for the start of the non-small cell lung cancer trial known as Select 1 with selumetinib.

The collaboration revenue and cost of partnered programs this quarter also included new collaborations in the last six months with Loxo and Oncothyreon. Cost to advance Binimetinib through clinical trials under our co-development arrangement with Novartis are included – also included in cost of partnered programs.

Recall the actual cash out of pocket for the Novartis agreement is a fraction of the total development cost and are capped annually and in total.

Moving to the next line of spending on our financial results slide, our R&D line declined from the same period last year by about $4 million, because the ARRY-502 randomized Phase 2 asthma study that completed this summer contributed heavily to the prior comparative period. This provides some headroom as we look to start or ramp-up the Filanesib registration and supporting studies in the coming months.

We ended the quarter with a $120 million in cash, which includes $22 million from sales of Array common shares through our ATM program during the quarter. The average price of shares sold under the program to date is $6.34 per share. This cash level also – is also after making the annual payment to Novartis during the quarter of $11 million. This amount is up slightly from the payment we made a year ago of $9 million.

For reference, we’ve included on the next slide, number 27, our guidance for the fiscal year. There is no change to the full-year guidance. We are including for the first time our estimates for the next quarter, where we’re looking for $8 million in revenue and loss per share of about $0.21.

Recall the quarterly reporting on included the milestone payment from AstraZeneca and therefore next quarter will come in at a lower level.

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

Ron Squarer

Great, thanks Mike. We’re just concluding now on slide 28, with a summary of key upcoming events and catalysts for Array. So, one important upcoming event of course is the start of our Phase 3 filanesib probably in mid ‘14 or mid this year.

During this year we will continue to update it from multiple ongoing filanesib clinical trials including the Phase 2 randomized combination trial with Kyprolis. Now between Binimetinib which we developed with Novartis and selumetinib partnered with AZ, there are six pivotal trials which will be ongoing with these Array invented MEK inhibitors. And we look forward to new data and trials emerging over time across both of these products.

As announced today, data from a proof of concept study with ARRY-797 and a rare cardiovascular disease is expected to be available by the end of the year.

And finally, we look forward to sharing additional data on ARRY-502 for asthma at Quad AI in March as we continue to engage potential partners in discussions. We believe Array has made great strides in the company and especially with our decision to move filanesib into Phase 3 and we look forward to providing updates on this program in the future.

And with that, I’d like to turn the call back to the operator for Q&A with one small caveat. We’re a Colorado based company. So, we will not be taking questions about the Super Bowl today.

But with that, we will open up for Q&A.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from Cory Kasimov from JPMorgan. Please go ahead.

Cory Kasimov – JPMorgan

Hi, good morning guys. Thank you for taking the question. I will avoid talk of the Super Bowl. So for 797, I guess first of all based on your discussions with investigators, what type of improvement in six-minute walk test in just 12 patients would be considered clinically meaningful?

Ron Squarer

So, just at the highest level, the feedback that we’ve received is that while drugs have been approved with very minor improvements in six-minute walk there is a benchmark out there that’s often discussed of around 10% but I reiterate that products have been improved with numbers lower than that.

Cory Kasimov – JPMorgan

Okay. And then I recall that this was an asset that you were looking to partner in the past, now if you get promising proof of concept with this new study in an orphan indication would you still be looking to partner it or is it something you would like to keep for yourself?

Ron Squarer

Right. So, I will say first of all regarding pain, we are putting partnering discussions on hold while we collect this data. And the answer to the question as to how we would proceed is very dependent on the results.

Obviously we’ve picked a size of trial which requires that this drug be highly useful in this disease. And if that is observed then in this environment where ultra-orphan disease does garner significant value, specifically significant pricing, we think that this could be a valuable asset in this specific disease alone. And so, I think we’re going to see the results and be very clear as to our forward plans once they’re in hand.

Cory Kasimov – JPMorgan

Okay, great. And then one quick question on Filanesib. With carfilzomib as the primary backbone for Phase 3, can you talk about the potential impact in consideration that you gave for the dose ranging and scheduling work that is still being with that drug?

Ron Squarer

Okay. So, currently and this is about the combination of Filanesib and Kyprolis. So, currently as you recall, as Mike described, we are running a Phase 2 program, it’s been running since November accruing well. And the purpose of that initially is just to reconfirm the kind of combinability – positive combinability that we saw in the prior trial, run out of MD Anderson when we combined Kyprolis and Filanesib.

And then, we are – we do expect mid-year with the safety and tolerability insight in hand to move forward into the Phase 3. We do expect that it is certainly possible that we would have an interim read on that, on that trial for ORR. But essentially we’re going to be collecting the data through the trial.

Now, all I’ll say is that the current trial is planned at the approved proposed dose of 20/27. I will say that we are collecting data as well with our partner institutions at higher doses including an up to 20/56. So we’ll have some insight about higher doses of Kyprolis combined with Filanesib as we go. Cory, did that answer your question?

Cory Kasimov – JPMorgan

Yes. And I was also wondering just kind of on the scheduling if this went to a once weekly, if that has any impact at all on your thinking. But I mean, obviously you have the same thing with Velcade, so I would assume it does not?

Ron Squarer

I’m going to ask Mike to respond.

Mike Needle

No, in the Kyprolis study, was giving the doses, two days in a row on days one to 15 and 16. Now and with Kyprolis it’s not an issue because that’s also two-day in a row infusion.

With Velcade there is an element of inconvenience because there is a second day of Filanesib infusion, but for Kyprolis there is no issue whatsoever.

Cory Kasimov – JPMorgan

Okay. Thanks for taking the questions.

Ron Squarer

Great.

Operator

Thank you. Our next question comes from Eun Yang from Jefferies. Please go ahead.

Eun Yang – Jefferies

Thanks very much. A question on 797, I thought that you guys were seeking partnership and there was kind of [close] [ph]. I’m wondering what prompted you to do this small study and eliminate really the [same] [ph] patients?

Ron Squarer

Right, so, good morning Eun. Thanks for the question. So, basically the history here of this is that there has always been a strong scientific rationale for the use of P38 inhibitors in apoptotic survival signaling driven disease as opposed to the pathways, the inflammatory pathways that have been studied over time.

In fact, we did have an opportunity to collaborate and had access to animal models through the collaboration that allowed us to test this hypothesis. And so, what I would say is the decision to explore this extremely high unmet ultra-orphan indication came from a combination of scientific rationale, non-clinical data which I just described and in fact a anecdotal data from a single patient IND, where the patient taking the drug who did have this disease showed improvement.

And of course now with the 12-patient study, we will have a more robust dataset to understand what the benefit here is. And so, in this environment where very powerful treatment [of that sizes] [ph] are very much rewarded in the ultra-orphan space we believe this may be a very important value driver for Array and provide great benefit to patients who really have no alternative.

And so, that’s part of the rationale. Now we are – we were pleased with the pain data that we generated and believe it’s important. As all of you know primary care is a tough marketplace, big pharma is not sure it’s in primary care. And you know the good news for pain, if you are developing a product if there hasn’t been a new drug approved broadly active in pain for decades, you could argue going back to NSAIDs as [inaudible] pretty mild improvement.

The bad news is that a new drug hasn’t been approved broadly for pain in decades. And so there is certainly challenges there. So, we think that this sort of scientifically driven targeted use of drugs which is of course very common in today’s biotech environment is one that is quite suited for this drug. And we should have an answer as to the potential in this disease very soon.

Eun Yang – Jefferies

Okay. And then 614, we are expecting go-no-go decision by early this year. So, the fact that you’re running Phase 1 study and then planning to meet with the FDA, should we assume that that’s based on go-decision?

Ron Squarer

Right. So, what we mentioned is that the data would be [entering] [ph] by early this year. I think we’ve been able to characterize very well at ASH in December the clearest or utility for this drug. And while we have activity across all lineages, red blood cells, white blood cells and platelets, it is in fact the platelet effect that appears most dominant.

From prior discussions and from reading the regulatory landscape, it does appear that showing patients who are transfusion dependent becoming transfusion independent, it does appear that is a hard regulatory end-point.

And so, I think we’ve characterized what the drug does best. And so, at this point, we do want to validate with regulatory authorities, what type of plan may represent a good next step for the product. And whether that plan could in fact drive an approval or whether additional research would have to be done.

We also want to get a sense of how many patients it would take to move forward. But the reality is that being dependent on platelets or having severe thrombocytopenia is in fact as we mentioned one of the worst – one of the worst prognostic factors for low risk int 1 MDS disease. And so clearly we happen to have our most pronounced effect in an area of very high unmet need.

And so, Eun, we all letting the data mature. We’ll talk to regulatory authorities, we’ll be [inaudible] our plans and then we’ll announce next steps. One of the things I mentioned in the slides, just to recount is that currently there is no competing programs in this disease and while we always want to move as quickly as possible this is not an area where there is a fast-moving environment, specifically in platelet disease, low-risk Int 1 MDS.

So, we’ll be keeping you posted on how we plan to move forward. Does that answer the question, Eun?

Eun Yang – Jefferies

Sure. So, in terms of the timelines, when do you think that you would be able to meet the FDA?

Ron Squarer

Right. So, I think what we’re saying is we’re going to collect the data means with regulators. And we’ll have guidance on this during the year without having specific. And of course again, there is not a tight regulatory, I’m sorry, tight competitive environment driving a particular start date for this program.

Eun Yang – Jefferies

Sure. And then my last question, so on both MEK inhibitors, my understanding is that competition of (inaudible) patents expire in 2023, pardon me if I’m wrong. But are there any other patents that could protect those two programs beyond 2023?

Ron Squarer

Yes. So, naturally as you’re expecting in addition to patents there would be some regulatory extension. And just in terms of maybe I’ll ask Mike, what have we been on record say in terms of regulatory perspective, it really depends on when we launch. But I think that in addition to the patents we expect some extension and that we have a very – very robust timeline for both AstraZeneca and Novartis to achieve peak sales.

Recall, we’re looking at data for filing, in the 2015 timeframe for both programs. And so, we do expect them to be on market relatively soon. I don’t know that we’ve been more specific in estimating what the regulatory extension would be but as we get close to market, we will certainly provide that data.

Eun Yang – Jefferies

Thank you.

Ron Squarer

Great Eun, thank you.

Operator

Thank you. Our next question comes from Michael Smith from Leerink. Please go ahead.

Michael Smith – Leerink

Hi, good morning. I had a question on the filanesib Phase 3 study. You said you expect the study to unroll fast. What’s your expectations with regards to timing for the interim and final analysis?

Ron Squarer

Yes, let me take a shot at that first. So, the reason we say fast is certainly absolute but it’s also relative. What we know is that we are going to be having European arm to the study. And that currently there is this window of opportunity where Kyprolis is not available but for in a trial setting. And so we think there will be great demand for that reason to enroll in this trial.

We also picked Kyprolis for a number of reasons which might that Dr. Needle described. But we do know that by studying Kyprolis as a partner we are going to be looking at patients who are let’s say more refractory than as we were combining with let’s say Velcade initially.

And as a result you would expect PFS to be shorter driving a shorter trial and in fact even a smaller trial but which would help with speed. So, those factors together we think it will help. Now we’ll provide more guidance when we actually post the trial and announce the specific details including the size of the trial.

But just as a benchmark what we observe is that trial of this nature in myeloma typically taking a couple of years to recruit. And as we mentioned we may have this interim ORR analysis to drive a potential accelerated approval, this is a plan that the FDA not only supports even recommends.

And as you might expect, typically you wouldn’t do an interim read on a Phase 3 unless you’re very well recruited with the trials because your sense of maybe when we would be – have that data to drive a potential submission. So, Mike, why don’t you make sure I answered the question or if we need to go any deeper?

Michael Smith – Leerink

No, thanks. It’s helpful. And then I had a follow-up on the two MEK inhibitors you have some figures in the slides in regards to milestone payments remaining. Are those, does that include commercial milestones as well or are those clinical and/or regulatory?

Ron Squarer

Now, I’m going to turn it over to Mike Carruthers, our CFO just to be consistent with what we’ve been saying in the past.

Mike Carruthers

Sure. The milestones include commercial milestones as well as regulatory and in the case of Binimetinib, there is additional clinical milestones for additional Phase 3 trial.

Michael Smith – Leerink

Okay, got it. Thank you.

Operator

Thank you. Our next question comes from Matthew Andrews from Wells Fargo Securities. Please go ahead.

Matthew Andrews – Wells Fargo Securities

Hi, good morning. Thanks for taking the questions, a follow-up on 614 from Eun’s earlier questions. First of all, what do you expect the primary end-point would be for the Phase 3 program, would it be platelet, independent IDBG (ph) criteria? Second of all, since these are HMA failures, what is your sense about what the appropriate comparator would be?

And then lastly, with you conducting a global 520 study Phase 2 as well and then the Phase 3 Ovarian study with MEK162, do you believe this is a Phase 3 program you can do on your own or that might be something you want to license to a partner ahead of initiation? Thank you.

Ron Squarer

Great, Matt. Thanks. We’ll take these one at a time. And I’m going answer a couple of them and hand over to Dr. Needle, especially on what the likely comparator would be.

But so, what we’re saying about end-points really is that from our view of the landscape and discussions with regulators. Historically it would impact the transfusion independence in patients who are transfusion dependent would likely be the regulatory end-point. Although as we mentioned we are going to be validating a protocol with regulatory authorities before we would sort of certainly post and go on record and start that study. So that’s our current thinking.

Now you talked about part and we’ll come back to the comparator in a moment. You talked about how we would run all these programs, and what I would say is that we have been talking to potential partners, both on filanesib and on 614 especially following ASH in December although we’ve certainly kept the lines of communication open.

We’ve always said is, if we see a collaboration, we think adds significant value, we would certainly consider it. So, we’re absolutely not dogmatic in going in alone here on these programs. We’ve implied that we’re looking more for regional collaboration. But I think the messages were open to at least listen to any proposal that may create value for these products for Array and our shareholders.

And so, with that I would just say our first goal on 614 is to figure out what it would take either as a next step or actually to get to market. And we would consider whether we do that ourselves or with others. The good news for Array is that we are focused on high unmet need niche orphan or even ultra-orphan conditions aware of the size of the trials, tend to be more manageable.

But certainly we also think about making sure that we have the right resources to succeed across all programs. So this is the question we are considering. And basically the summary of the answer is, we may go alone, we may partner depending on what the trial is.

Now back to what the trial might be, I’m going to turn over to Mike to talk about what comparators we did use in a 614 pivotal.

Mike Needle

Thanks Ron. The only comparator that we use is a placebo in fact. And the reason you need a placebo control is that although in the trial it would clearly state a threshold probably 10,000 – platelet count of 10,000 as the threshold for transfusion. There is a certain amount of subjectivity of based on clinical grounds whether a patient might need a transfusion outside that range. And so for that reason the only way to control for those bios is to have a placebo control.

Matthew Andrews – Wells Fargo Securities

Got it. So there wouldn’t be an investigator choice and it would just be placebo?

Mike Needle

It would be placebo.

Matthew Andrews – Wells Fargo Securities

Okay.

Mike Needle

Board of care would be used by in both arms.

Matthew Andrews – Wells Fargo Securities

Got it, okay. One question for Andrew if I may, and selumetinib, can you just discuss your thoughts around key global opportunity for uveal melanoma as well thyroid cancer?

Andy Robbins

Yes. So, what’s on record from AstraZeneca they believe that the drug is a $1 billion compound. And that’s certainly across all the indications. I think the faster patient opportunities of uveal and then potential thyroid certainly are not going to $1 billion genuine opportunities. But we do see from a global perspective that they will add materially in let’s call it $100 million to $200 million range, by our estimates.

Matthew Andrews – Wells Fargo Securities

Okay, got it. All right, thank you.

Operator

Thank you. Our next question comes from Stephen Willey from Stifel. Please go ahead.

Stephen Willey – Stifel

Yes, good morning guys. Thank you. I was just wondering if there is any color you can provide just around the level of ECG improvement that was seen in the one elimination if that was true, 614 under the physician’s sponsor ID?

Ron Squarer

Yes, Stephen. I appreciate the question. And really at this time, I think what we are saying is that there was improvement. We’re not characterizing with that improvement. Whilst and we are using the totality of the scientific rationale, the non-clinical data and this anecdotal data to inspire our decision to move forward.

I think it’s most responsible to run the 12-patient trial. And we think it will be done in a reasonable amount of time and then provide the benefit, full characterization to benefit there. Now, of course we wouldn’t be doing this if we didn’t think it was logical. But when the data is in we’ll let everybody know how it’s looking.

Stephen Willey – Stifel

Okay. And just another 614 question. I think in the ASH study or in the study that was presented in the last, there were – I think 23% of patients that were platelet insured, usually dependent of baseline. And I’m just wondering if you have any ideas to the percentage of patients and the expansion goals that are now being enrolled that are platelet transfusion dependent on baseline. Just to get some more competence around the same size here before you go talk to FDA?

Ron Squarer

Yes. So I think your question is pointing to how many patients are out there, is that a fair question you want to know?

Stephen Willey – Stifel

Well, I guess, more of a question of how many patients have you treated or will you have treated with the 614 whom are platelet transfusion dependent at baseline, in the sense of gathering confidence just around a sample size as you maybe think about enrolling a Phase 3 that looks at that end-point specifically?

Ron Squarer

Yes, I think you read it off the AZ abstract quite nicely I think. We’re sort of suggesting them, it’s in the range of 20% to 25% of ATM low risk with the risk in one patient would be platelet dependent. So, the expansion phase patients were reported as part of the development either in the AZ abstract, we’re still following some of them to see availability for efficacy, the actual percentages in sort of ratio, I think you pegged it right.

Stephen Willey – Stifel

Okay. And then, just quick kind of statistical question. Just kind of wondering if the proposed interim that you would take in the Phase 3 looking at ORR in a study of proof of PFS as the primary. If that would actually be – if that would require some spend on the offer side, just given that it’s a little bit of a different end-point than what you’re looking at from a primary perspective?

Ron Squarer

Talking about the Phase 3 with the interim. And what we’ve said in the past and I think we’ll – at this point we remain consistent. When we post there is no sense of trial of course, we’ll be able to be more specific. But we are going to have to devote some outlet to the interim. And our focus as you can imagine is going to be on the full proof of PFS results.

And the way you kind of compensate for giving up a little alpha on the interim is just adding a few patients on the end, and so we’re working through these details now to get to the right now. But you are correct in your assumption that there will be some statistical penalty although it would be in a way our choice how much we want to give to the interim. And as I in the guidance I’ve given is, the majority and the focus is on the full PFS end-point.

Stephen Willey – Stifel

Okay. Thank you.

Ron Squarer

Did I answer the question correct?

Stephen Willey – Stifel

It does, thanks.

Operator

Thank you. Our next question comes from John Sonnier from William Blair. Please go ahead.

John Sonnier – William Blair

Thanks for taking the question. Ron, you offered a lot of scientific rationale as to why you’re moving 797 forward in this alternative indication. I suppose an alternative explanation might be that the QT prolongation I just saw on the pain study, proved to be a more meaningful collaboration to chance than maybe you expected. And as a result of that – you’re moving into a therapeutic study that has a different risk profile, more higher medical need and potentially a higher threshold for the risk associated with the drug. Can you comment on that?

Ron Squarer

Yes, so, first, I think it’s important to note just in terms of the status of the patients that we’re sending for LMNA-DCM is one of the clear. It is interesting that the majority of these patients that we would be studying actually either have pacemakers or inter-cardiac defibrillators. And of course we’re going to be performing rigorous ECG monitoring through the trial. I just wanted to address that.

But back to 797, in our ‘08 trial, we’ve done quite a bit of work to characterize that mild QT prolongation as in fact very low risk. And to better understand the signal there, we did evaluate in several assays, including XVIVO cardiac left ventricular wedge. And the wedge model is in fact sort of standard test or gold standard I should say for characterizing the risk profile.

And sometimes serving in those models did not cause early after depolarization (inaudible). And so, and that was in well accepted, in well acceptable models potentials. So based on all that data we concluded there is low to sort of no, but all right, let’s call it low risk of arithmetic with 797. That’s a clinically relevant plasma concentration.

And so, this data has been available during our partnering discussions. And we have pointed out the drugs that are commonly used on the market today that have similar QT prolongations and don’t in fact lead to a high risk and these would certain antibiotics into psychotics and even some of the reptile dysfunction growth.

And I think it’s safe to say there are other options for 797 beyond LMNA-DCM. But this is a potentially very compelling opportunity. Now we don’t want to overstate it because we don’t really have the clinical data to prove that this is going to be the forward path, just the anecdotal clinical data from the single patient and then the animal and scientific rationale. So it remains to be seen.

But as I’ve said before and we’ll – and I believe we’ll persist primary care, many of the big pharmas are exiting, tearing down sales forces, eliminating whole therapeutic areas. And so, there is no doubt that high unmet need orphan type diseases are much more the focus of our industry today.

That doesn’t mean the need is not out there, right, because we have tremendous issues with opioid addiction. And that’s many most patient’s pain is of course uncontrolled. And there is tremendous need out there but the – the number of companies and their appetite for primary care is in fact – it’s not as pinnacle today.

And so this will be I think a common theme, not that you can’t find partners, you can’t develop or shouldn’t develop drugs for large primary care indication. But that it is not going to be an overnight result. But it will take time to line up partner, agree on a plan and get commitment that things are actually going to happen as opposed to your assets were disappearing to kind of a black hole of prolonged development.

So, it’s really the opportunity that’s driving us into LMNA-DCM, this is a very severe disease I described. And you have this disease you have to have a less than 40% ejection fraction to be diagnosed plus the genetic mutations. So these are patients who are – who are not doing well. And if one was to show a market improvement in their condition, it would be quite meaningful.

And so we think that it’s a worthwhile endeavor. So we look forward presenting you the results and we’ll see the results this year. Does that answer the question, John?

John Sonnier – William Blair

Is the structural change in the industry away from primary care that you described? Also what you would attribute the lack of securing a partnership of 502, is that the same attribution. Because I was actually on this call last year, which you said we’ll get the top line results in the Phase 2 in the summer. And you hope to then part of the asset. So, maybe you can provide some color there?

Ron Squarer

Yes, so, just in terms of guidance because it’s important not to have these things hang out too long. We are interested in providing sort of an update on where we are with the R2 program by mid-year this year. So, at that time we’ll reveal either done a deal and it would have been announced or we’ll give you a good sense of where we are.

But I would say, it very much follows a similar let’s call it path in that, there is certainly we’ve talked to all and are in discussions with many. But certainly have had discussions with all of the players in the space. And the results from our Phase 2 trials are certainly compelling given that we’re oral and hasn’t met any oral medication asthma introduced in 16 years since singular.

And that our tolerability safety profile is actually very good leading to the possibility of not just primary care type profile but the ability to combine with other drugs and the combinations specifically of interest are in fact inhaled prodigal steroids. And potential other orals.

And so, I think I hope that when we came out of the gate with our data, as showing that’s pronounced fact nearly 7% improving in FVV 1 in the patients, half the patients who were high for the marker, which we will be revealing actually Sally Winslow, one of our leaders in asthma in the world would be revealing at Quad AI.

In that top half for marker, we had 7% improve in FVV. We think that’s an important agent given that so many patients with asthma are poorly controlled, many of them because of just frankly compliance with inhaled agents. So there is a great need out there for an oral drug.

But you are right. And I hope I had suggested that primary care is not specialty oncology or ultra-orphan. And that first companies have to figure out if they’re in primary care, if they’re in respiratory then they have to figure out if they’re in asthma. And then they have to figure out how this drug fits with their profile.

The good news is the data was positive and it is the first ever published data on a randomized Phase 2 trial where you have both a positive efficacy readout and a safety profile that would suggest you could move forward. Certainly the first for Phase 2 but I’d say the first four overall in asthma program going forward.

So, we’re continuing the discussions and we will give an update mid-year as you know for those who look at cash that we would – we always prefer to fund Array through these types of partnerships. And so, in a way as we do our planning for the future, we very much would like to see an upfront payment in the lines of what we’ve managed to do historically with some of our assets. And so more news on that going forward but not, I would never have expected it to be a cash profit.

Ron Squarer

Does that answer the question?

John Sonnier – William Blair

Yes, that’s good. Thanks.

Operator

Thank you. Our final question is from Ted Tenthoff from Piper Jaffray. Please go ahead.

Ted Tenthoff – Piper Jaffray

Great. Thank you very much. Most of my questions have been answered. Lots going on. Two just repeats from me, because I was on my cell-phone a little bit earlier in the call for Mike. Mike, you said, third – fiscal third quarter guidance was $8 million and a loss of $0.21?

Mike Carruthers

That’s right, yes.

Ted Tenthoff – Piper Jaffray

And then for the ATM, what were the shares amount an average price so far?

Mike Carruthers

It was, we said that we had sold $22 million worth of ATM shares in the average price to date. That was during the quarter and the average price to date was $6.34.

Ted Tenthoff – Piper Jaffray

$6.34. All of the ATM was taken down in the quarter?

Mike Carruthers

No.

Ted Tenthoff – Piper Jaffray

Okay, so to date.

Mike Carruthers

Yes.

Ted Tenthoff – Piper Jaffray

Okay. So that means some of it came subsequent to the end of the quarter?

Mike Carruthers

No, it means some of it came in the prior quarter.

Ted Tenthoff – Piper Jaffray

Okay, perfect, helpful. And then just one quick final question on filanesib if you will. With Kyprolis and this question was touched on I think maybe first with respect with the cardiovascular questions.

We had a chance to talk to some of the experts at our hematology regarding this. But specifically to start Pomalyst has had, is there any reason to start doing kind of Phase 2 comp-up studies with Pomalyst or anything like that? And I apologize if I missed that on the Q&A earlier?

Ron Squarer

No, Ted. Thank you for the question. And what we did say is that currently our focus is on driving towards this Phase 3 and concluding this Phase 3 with Kyprolis for a lot of reasons which we described and a lot of good reasons.

We have also said though that we would like to see a program with Velcade, which could be frankly more important than Kyprolis in Europe or certainly very important. And that what we presented at ASH in December was very compelling albeit non-clinical data showing a powerful, very powerful synergy between specifically Pomalyst and filanesib. And so there is certainly a rationale there.

And we are looking at how and of course we need to do Phase 1 with IMiD before we could go forward. And so we’re looking for ways to do that. And then the only other overlay and maybe it’s a good way to sort of summarize is that as a company, with resources that we have we decided I think prudently to be focused and to focus Kyprolis as a path to market.

But we do remain engaged in discussions with potential partners and often those discussions are about would a regional partner help to facilitate additional trials which would expand the use of the drug.

The one thing that I take comfort in is that we are running a robust or plan to run historic in the near future a single-agent trial of Phase 2, which is partly designed to provide evidence that we have important single-agent activity, we’ve certainly seen it today, it’s one of the reasons we decided to go forward could eventually help to support labeling in the right context.

And if you think about it, if you got a combo approval and robust single-agent evidence and especially labeling eventually, you could see physicians around the world using two approved products. And that it would be much easier for us to explore those combinations that you described. Certainly a lot of evidence. It’s really just about focus and using our resources wisely so we can pick them as efficient approach to get to market. So, does that answer the question Ted?

Ted Tenthoff – Piper Jaffray

Totally. I appreciate it very much.

Ron Squarer

Great. Thank you, Ted. Hope you’re not buried in snow out there?

Ted Tenthoff – Piper Jaffray

Now more than okay. Have a good one guys.

Ron Squarer

All right. Okay. Thank you very much. So, with that we’re concluding the Q&A. I’d like to thank our employees here at Array for their commitment ingenuity and diligence that continues to fuel our success. I also want to thank our patients, our 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. And thank you ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.

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