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Array BioPharma Inc. (NASDAQ:ARRY)

F4Q10 (Qtr End 06/30/10) Earnings Call Transcript

August 10, 2010 9:00 am ET

Executives

Tricia Haugeto – IR

Bob Conway – CEO

Mike Carruthers – CFO

Kevin Koch – President and Chief Scientific Officer

Analysts

Eun Yang – Jefferies

Edward Tenthoff – Piper Jaffray

Stephen Willey – Stifel Nicolaus

Operator

Good day, ladies and gentlemen. Welcome to this Array BioPharma fourth quarter and full year 2010 financial results conference call. Just a reminder that today's call is being recorded. At this time, for opening remarks, I would like to turn the call over to Ms. Tricia Haugeto. Please go ahead, ma'am.

Tricia Haugeto

Thank you, Lisa. 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 fiscal 2010. You can listen to this conference call on Array's website at www.arraybiopharma.com. In addition, a replay of the conference call will be available via telephone for the next seven days and via the Internet.

I'd like to introduce Array's Chief Executive Officer, Bob Conway, and our Chief Financial Officer, Mike Carruthers, who will lead the call today. I'd also like to introduce Kevin Koch, our President and Chief Scientific Officer, and David Snitman, our Chief Operating Officer and Vice President of Business Development who will be available to answer questions as needed.

But before I hand over the call to Bob, 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, 2009 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 would like to turn it over to Array's CEO, Bob Conway.

Bob Conway

Thanks, Tricia. Thanks for joining the call this morning to discuss Array's fourth quarter and full year results for fiscal year ending June 30, 2010. I hope everybody got a chance to review last night's press release. We're pleased to report on our progress this past quarter and full year in both our proprietary and partnered programs.

During fiscal 2010, we raised $110 million in non-dilutive capital from our partners, largely from our deals with Novartis and Amgen. Today we have nine partner drugs in clinical development and three significant discovery collaborations, which are beginning to add to our partner development portfolios, as drugs move from the research collaborations into clinical development.

If you add up all the economics in these partner programs, we have potential upside of $2.7 billion in milestone payments and double-digit royalties on multiple programs. As of June 30, we had $129 million in cash and marketable securities. If you add this to our projected milestones, both for the coming year and in future years, we are well positioned to advance our pipeline of 100% owned Array drugs.

Let me start today talking about our partnered programs. And the first programs I’d like to review are our two MEK partnerships. One is with Novartis and the other with AstraZeneca. As you recall, in April 2010, Array partnered with Novartis for the worldwide development of 162 – of ARRY-162, which has now been renamed MEK162. Array received an initial payment of $45 million and is eligible to receive an additional $422 million if certain clinical regulatory and commercial milestones are achieved.

Our agreement provides Array with double-digit royalties on sales of approved drugs outside the United States with a significantly higher royalty rate for US sales, provided Array meets its development for co-funding. Also, Array has a co-detailing right in the United States.

Over the past year, we’ve made tremendous progress with 162, and during fiscal 2010, we filed an IND that cleared FDA on August 15, 2009. We completed a Phase 1 trial and reached MTD in January 2010. In April 2010, we initiated a Phase 1 expansion trial in biliary tract cancer patients at 10 clinical sites in North America. And we also did the Novartis deal in last April.

Going forward, we are initiating a second Phase 1 expansion in KRAS mutant colorectal cancer patients. We are also planning to initiate a very large randomized Phase 2 trial in patients with KRAS mutant colorectal cancer later this calendar year. Novartis is in the planning phase to initiate a number of clinical trials in the coming year.

Our second MEK inhibitor that I’d like to talk about today is our one with AstraZeneca. AstraZeneca presented positive Phase 1 results at ASCO on AZD6244, also known as ARRY-886, which we think was overlooked in the flood of data presented at ASCO this past year. The study evaluated two doses of 6244 in combination with four different chemotherapies and had a 56% response rate in patients with BRAF mutations and observed progression free survival of greater than seven months, whereas no responses were observed in patients with wild-type BRAF.

This is the first disclosed efficacy data with the new formulation of AZD6244. While previously reported data were with a mix in drink formulation, the new solid dosing form provides twice the drug exposure at a preferred dose. AZD6244 is being tested today in four multi-arm randomized Phase 2 trials.

Two other trials of the first ever Phase 2 combination trials for a MEK inhibitor. The first of those is 6244 in combination with DTIC versus DTIC alone in patients with BRAF mutation positive melanoma. The second is 6244 in combination with docetaxel versus docetaxel alone in patients with KRAS mutation positive non-small cell lung cancer. Both of these trials have completed enrollment of 80 patients each.

The other two Phase 2 trials being run on 6244 in collaboration with the National Cancer Institute. The first of those is 6244 compared to temozolomide in patients with metastatic melanoma of the eye. It is expected 159 patients will be enrolled on this trial. The second of the NCI trials is in combination with irinotecan in second line patients with KRAS or BRAF mutation positive advanced or metastatic colorectal cancer patients. 57 patients are expected to be enrolled in this trial.

Let me move on now to other collaborations. In our Amgen collaboration for AMG 151, also known as ARRY-403, which is a glucokinase activator for type 2 diabetes, remember we partnered this with Amgen in December 10, 2009. We are completing the Phase 1 multiple ascending dose clinical trial in patients with type 2 diabetes with the drug. After the trial is complete, it flips over to Amgen in all future development responsibilities as well as funding will be Amgen’s responsibility. We also continued a research program, which is being funded by Amgen, to identify and advance second-generation glucokinase activators.

In our Genentech collaboration, we advanced our first drug from our research collaboration into clinical development. Genentech announced that GDC-0068, also known by the Roche name, RG7440, an AKT inhibitor discovered by Array and Genentech scientists, advanced into a Phase 1 dose escalation study in cancer patients.

In our Celgene deal, Celgene announced progress on three partnered research programs in April 2010 at their R&D day, on which Array is conducting research; cFMS for oncology, TYK2 for inflammation, and PDGFR in fibrosis. Celgene reported that all three of these programs have the possibility of entering clinical development over the next one to two years. Under the terms of Array’s agreement with Celgene, Celgene has an option to select two of the programs and Array would handle rights to the third.

In the InterMune-Roche collaboration that was announced in April 2010, positive top-line results from a planned interim analysis of the Phase 2b randomized study evaluating this NS3 protease inhibitor for hepatitis C, now called danoprevir, which was co-invented by Array and InterMune. Danoprevir was administered for 12 weeks in combination with other therapies and reported achieving complete early biologic response rate, as high as 90%. This compares to placebo at 20%. So that’s a partial summary of the progress on our partner drugs.

One great thing about the portfolio deals like we have, and there are 16 total programs ongoing, nine are in clinical development, seven are in research, is that a series of potential milestone payments that Array can receive or being built up. In fact, we have an annuity of milestones that could be a significant source of funding for the company.

As our partner portfolio advances, these milestones become more meaningful. For example, two years ago, in fiscal 2008, we had no milestones. Last year, in 2010, we received $10 million in milestones. And in the current fiscal year, we expect to receive $20 million to $30 million in milestones from our partnered programs. And if we are successful in continuing to advance our partnered programs, these milestones should continue to grow. We’re projecting these future milestones would significantly reduce our burn rate this coming year and in future years, and Mike Carruthers will provide some guidance on this in just a moment.

Let’s switch now to our proprietary programs. During the quarter, we made significant progress advancing the proprietary pipeline. We advanced all four clinical programs for the treatment of cancer according to plan.

ARRY-520 or the KSP inhibitor for multiple myeloma, we completed enrollment in a Phase 1 trial with 520. Remember, 520 is a novel KSP inhibitor, in patients with solid tumors, and in a Phase 1/2 trial in patients with AML. We are nearing MTD in our dose escalation trial in the multiple myeloma patients when we’re initiating two Phase 1b combination trials in patients with multiple myeloma very shortly. We also expect to initiate our first Phase 2 trial in multiple myeloma by year-end.

ARRY-614 is our p38/Tie-2 inhibitor, and we continued dosing patients with MDS in a Phase 1 trial of ARRY-614 to determine the safety, maximum tolerated dose, pharmacokinetics and to obtain preliminary efficacy data of this compound in the MDS patient population.

ARRY-543 is our ErbB family inhibitor for solid tumor. And we completed enrollment in three Phase 1b trials of 543 in combination with capecitabine, docetaxel and gemcitabine, respectively. The maximum tolerated dose of 543 in combination with these agents was achieved in each of the trials last quarter. Trial results will be disclosed at an appropriate upcoming scientific meeting.

The final drug is ARRY-380. It’s a HER2 oral, selective inhibitor for cancer. In fact, we believe it’s the only selective HER2 oral treatment of cancer in clinical research today. Array reached the maximum tolerated dose in a Phase 1 trial of ARRY-380 in patients with advanced cancer now, and we are expanding the trial at the maximum tolerated dose in patients with HER2 positive metastatic breast cancer.

I’d like to highlight now our improved financial condition and performance in fiscal 2010 and compare it to fiscal 2009. Revenues for 2010 were $54 million compared to $25 million last year, an increase of $28 million. Our net loss was down to $77 million in 2010 compared to $128 million in 2009, an improvement of $50 million. Loss per share was $2.67 last year. In 2010, it was $1.55, an improvement of $1.12.

Net cash flow from operations was a positive $18 million in fiscal 2010 compared to a negative $92 million in fiscal 2009, an improvement of $110 million. Finally, cash and marketable securities at year-end was $130 million, up from $58 million last year, an increase of $71 million.

One final point I’d like to make, and this is something we talked about on the last conference call, is the work that we’ve done valuing both our partnered and proprietary programs. This was updated, as we prepared our strategic plan for our Board of Directors at our recent Board meeting and the vast difference we see between the value of individual programs and the current market capitalization of Array.

Based on our current assumptions, our analysis, the estimated risk-adjusted net present value of potential income from our partner drugs alone significantly exceeds the current market capitalization of Array. This is in addition to what we believe is our most valuable asset, our pipeline of 100% owned Array drugs. Mike Carruthers will provide more detail on this in a moment.

In fact, let me pass it over to Mike Carruthers, our CFO, right now to drill down on the financials. Mike?

Mike Carruthers

Thank you, Bob. Array’s revenue for the fiscal fourth quarter was $18 million, which was just slightly under the record quarterly revenue level that was established in the prior sequential quarter. This result includes a partial quarter of revenue generated from concluding the Novartis deal from MEK162 in mid-April. We also received from Novartis the $45 million initial payment during the fourth quarter just ended.

The strong revenue combined with reduced R&D spending kept our loss per share for the quarter down at $0.30 per share. In addition, both the revenue and loss per share beat the consensus estimate. One trend you may have noticed is that our cost of revenue line in the statement of operations has increased in both the last two quarters. This is because the costs for Amgen 403 and Novartis 162, both now partnered, are flowing through this cost of revenue line instead of the R&D line. Costs for 403 will diminish to zero after the first quarter of fiscal 2011.

We also believe that our recorded expense from 162 will run at a reduced rate for the next few quarters. And this is driven by the structure of the Novartis development cost-sharing. Our cash equivalents and marketable securities as of June 30 was $129 million. Our cash burn for the quarter continued on a positive trend with only $16 million used before counting the initial $45 million payment from Novartis.

Now I’d like to provide an update to our guidance for fiscal 2011. Recall that at the last conference call we gave directional guidance. And today I will reiterate the targets we laid out last time and provide a bit more color. The outlook for fiscal 2011 supports an ongoing improvement in financial results. While not quite as dramatic as the improvement in 2010 compared to 2009, we expect the trend will continue at a very positive level in 2011.

We continue to believe that the revenue will grow to about $75 million. The deals completed in the last half of fiscal 2010 drive much of the improvement, but in addition, we think that a significant level of milestones will be achieved. And that should provide $20 million to $30 million in cash and around $10 million in revenue recognition.

This will push license and milestone revenue line to about $59 million with the remainder coming from collaboration revenue to reach $75 million for the year. With these results combined with reduced cost as a result of the Amgen and Novartis deals, we think loss per share can be held to about $1 for fiscal 2011 and that our burn including milestones should be around $50 million.

The full year line item spending guidance can be summarized as cost of revenue and SG&A will be about the same in fiscal 2011 as in 2010. And our R&D costs will decline to about $69 million. We can provide more color on MEK162 Novartis cost-sharing arrangement at the end of the first quarter. But at this time we can say that we should be net cash flow positive by about $5 million for 162 in fiscal 2011.

On a quarterly basis in 2011, we expect the first quarter to look a lot like the quarter just ended, and the remaining quarters should be a bit better and are dependent on achieving collaboration milestones I referred to.

Now I’d like to switch gears and talk about the accumulation of value that is occurring at Array. A significant half of our discounted cash flow derived value is supported by programs we have partnered. We have taken a close look at the potential future milestones and royalty stream from our most significant collaborations, including those with Novartis, Amgen, AstraZeneca, InterMune, Celgene and Genentech.

We have considered the probabilities and timing of each lead drug in these collaborations making it to market as well as likely sales levels once on the market. What may be surprising to many of our followers is that the resulting risk-adjusted net present value is north of $400 million, and that is just for these partnered programs. When we do the same analysis for our 100% owned pipeline, we get a similar level of value such that the combined value of 14 partners and wholly-owned programs is over $800 million.

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

Bob Conway

Thanks, Mike. Let me do one final thing and that's review our milestones for calendar 2010, which we provided in January of 2010. Remember, on a fiscal year financially, but the milestones we've always provided on a calendar year basis. And we’re in pretty good shape across all of the milestones that we enumerated back in January. And let me just go program-by-program.

ARRY-403, also known as Amgen 151, our glucokinase activator for type-2 diabetes, we said we’d complete a MAD trial in type-2 diabetic patients and initiate a second-generation discovery program, and we’re on track for both of those.

ARRY-152, now known as MEK162 for cancer, that’s our Novartis deal, we said we’d complete the Phase 1 escalating dose trial, which we have. We will initiate and complete a Phase 1 expansion trial in biliary tract cancer patients this year and initiate Phase 1b combination trials.

ARRY-520 is our KSP inhibitor for cancer. We said we’d complete Phase 1 expansion trial in solid tumors. Enrollment is completed on that now. We said the same thing about the AML trial, the 1b trial. Again, enrollment is completed. Finally, we said we’d complete and report the Phase 1b trial in multiple myeloma patients, and we’re just about at the MTD in the multiple myeloma patients escalating dose trial. So we are in good shape on all three of those. And then we plan to initiate a Phase 2 trial in multiple myeloma patients by the end of the year.

In ARRY-380, that’s our selective HER2 inhibitor for metastatic breast cancer, we said we would complete and report on Phase 1 escalating dose trial and initiate an expansion trial this year and initiate and complete a bio-equivalency trial to enable the commercial formulation. We’re on track on all of those.

ARRY-543, our HER2/EGFR drug for solid tumors, we said we'd complete and report on three Phase 1b trials. We’re on track for that as well. ARRY-614, our p38/Tie-2 inhibitor for MDS, we said we'd complete and report on a Phase 1b/2 trial this year, and I think we're on track for completing that.

We said we would file two INDs for new drugs this year. And we’re on track for doing that. The first of those would be the Genentech AKT inhibitor that we talked about earlier. And finally, we said we'd partner one or more proprietary programs this year, which we have with the Novartis deal. So that’s an overall summary of the milestones that we laid out in January, and we are I think on track for completing most of those by the end of the year.

Lisa, the operator, let me pass it back over to you and see if there are any questions this morning.

Question-and-Answer Session

Operator

Thank you, sir. (Operator instructions) We will take our first question today from Eun Yang of Jefferies.

Eun Yang – Jefferies

Thank you. Bob, in the past, you mentioned that for 543, you (inaudible) partner in order to moving into Phase 2. So just want to get an update on that program. And also 380, selective ErbB2 inhibitor, you are looking for a partner. So can you comment on your partnership opportunity there? And lastly, in terms of ARRY-797, p38 MAP kinase inhibitor, you are evaluating alternative development path in sub-chronic pain supportive care indications. So can you give us an update on that as well?

Bob Conway

Okay. That’s great. With both 543 and 380, we have ongoing discussions for partnerships with both of those drugs. And what we’d be looking for there is likely a geography partnership. We’d get a partner to invest in the development of both of those drugs in exchange for potentially a territory somewhere in the world. And those discussions are continuing on. And we’ll keep you apprised as they move forward. In 797 for p38, we are working with a number of KOLs on that program to evaluate potentials for moving the drug forward. And we haven’t made any decisions yet, but we are evaluating different alternatives. So that’s where we are in both of those programs, Eun.

Eun Yang – Jefferies

Thank you.

Operator

Our next question today will come from Edward Tenthoff, Piper Jaffray.

Edward Tenthoff – Piper Jaffray

Great. Thank you very much. Just looking into the back half with EORTC over in Berlin this year, and then ASH down in Orlando, what do you think you may be able to show at those conferences?

Bob Conway

Ted, we have made a – we will have additional scientific data coming out later this year on our clinical trials, but the thing we’ve always have waited, as you know, is specifically saying we’re going to present this at ASH, we’re going to present this at EORTC. And so the abstracts have been selected and published. And the reason for that is very simple that going out and saying that diminishes your chances of getting that appropriate spot.

Edward Tenthoff – Piper Jaffray

You’ll never know what it will be attempted [ph] to, it’s true.

Bob Conway

Exactly. We’ll have data on a number of things towards the end of this year. That’s the thing what you’re talking about.

Edward Tenthoff – Piper Jaffray

Yes, that’s right. I asked because there are so many studies that are really kind of maturing here, which I think is going to be good to get visibility into the pipeline. Maybe just shifting gears a little bit then – and again, congrats on the two great MEK partnerships. When you look at the portfolio kind of from the 30,000-foot view, what is really catching investors’ attention? Is it different programs? And can you give us kind of a general barometer on – obviously it’s August now, and things slow down a little bit in the summer, but where is the overall partnering interest for you guys in the oncology space in general?

Bob Conway

I think what partners or what investors – and it varies investors-by-investor obviously. I think the MEK programs, and Array having two MEK programs with great companies like AstraZeneca and Novartis, it’s certainly very high on everybody’s list of things that they are interested in. And the first MEK inhibitor, the 6244, has now completed the only two Phase 2 combination trials for a MEK inhibitor in clinical development today. So it completed enrollment at least. So we are excited about all that. I think there is a lot of investor interest there.

A lot of investor interest on the Amgen deal we did in the glucokinase activator. Just based on the size of that market, there is tremendous interest there. And then across the rest of the partner portfolio with the InterMune-Roche drug, the Celgene collaboration, the Genentech collaboration, in our priority programs, I think that 520, our KSP inhibitor, and 614, our p38/Tie-2 drug for MDS, both have a lot of interest today. And then 380, our selective ErbB inhibitor – ErbB2 inhibitor, if there was one huge idea in cancer, that would be it, in the sense that an orally active Herceptin, the potential for an orally active Herceptin, tremendous economics associated with that drug. So I think those are the programs, and being a little warm winded [ph] here. Those are the programs that people concentrate on the most.

Edward Tenthoff – Piper Jaffray

Great. Thank you.

Operator

(Operator instructions) And next, we’ll hear from Stephen Willey, Stifel Nicolaus.

Stephen Willey – Stifel Nicolaus

Yes. Thanks for taking the question. Just quickly on 520, you made a comment with respect to being close to realizing the MTD in that trial. And I guess based on the ASCO data, it looks like you have fairly close to achieving the MTD pretty early on in the dose escalation. So maybe just if you can give us some more color around that, and the Phase 1bs, just to clarify, will be dosed in combination with G-CSF?

Kevin Koch

I’ll take that, Bob.

Bob Conway

This is Kevin Koch, our Chief Scientific Officer.

Kevin Koch

Right now, we are close to MTD. There is a steep dose response curve, as we’ve seen with this agent. We are trying to titrate the dose to get to where we want to be. We will be running the 1b with G-CSF. And it’s interesting we have a pretty extensive biomarker strategy to identify the patients who are going to benefit to the greatest extent with this drug. As you saw from the ASCO data, we now have several patients on for past six to eight months. And there seems to be a binary event between response and prolonged stable disease versus patients that come off very quickly. And so we should be beginning to get that data both from the expansion but also in the – from the dose escalation studies. And we’re pretty excited about some of the things we are seeing.

One of the things about the drug is those take up to three or four months before you see the maximal effect, which is interesting. People have thought of (inaudible) as being – would be a rapid response and would be kind of a yes-no answer. It turns out that with this (inaudible), at least this molecule, tends to get a long time to get to the maximal effect, which is an interesting result. I don’t think actually other people may have seen this as well though. So it’s a novel target, and this makes it developing novel biology.

Stephen Willey – Stifel Nicolaus

Yes. I guess when you think about anti-mitotics in the liquid tumor space, I mean, I kind of take them as solid tumor drugs. Do you think that there is something that we’re seeing here with respect to this KSP agent, which is allowing you to receive this delayed response in myeloma patients?

Kevin Koch

Well, it has a high volume of distribution and has a prolonged half-life. But why it takes three months to see the maximal effect is unknown at this point. But the patients tolerate the drug very well. Our recruitment has actually picked up. So you can kind of watch your drug, and it’s not really – if patients aren’t being enrolled very quickly, you can watch it and you can know that the investigator is not very excited about it. We have patients lined up for this drug. So I think the 1b expansion is a single agent should go rapidly, and I think the combination study with bortezomib, dexamethasone should also go quite rapidly. And we’re going to start that, I think, this quarter.

We should actually start that – we're very excited about the potential of that. As a single agent, this drug has seen, I would say, responses to a greater extent than any drug that’s now either on the market or in Phase 3. Meaning, as a single agent, this is quite active in these patients that have five-plus prior treatments and have failed IMiDs and bortezomib. So from the standpoint of the population we’re treating, I think this drug as a single agent has looked very good. And now it’s a matter of demonstrating that, understanding why it’s looking so good as a single agent, and then going into some of these combinations to where you can see response rate go from 10% to 15% to up to 50%. And that’s going to be where it’s very exciting.

Stephen Willey – Stifel Nicolaus

That’s helpful. Thank you. And then just a couple of clarification questions. You mentioned two INDs for 2011; one being the Genentech AKT inhibitor. Would the other one be out of the Celgene program or would this be internally developed Array compound?

Bob Conway

It could be either. And we’ll let you know when we file, and it clears.

Stephen Willey – Stifel Nicolaus

And then just lastly, the decision for – by InterMune and Roche to switch to a PK boost on danoprevir, that does not change that agreement at all. Correct?

Bob Conway

No, the agreement is the same. We signed it in – four or five years ago, and it continues on for this drug that was invented between Array and InterMune.

Stephen Willey – Stifel Nicolaus

Okay. Thank you very much.

Bob Conway

Okay, thanks.

Operator

(Operator instructions) We do a follow-up from Eun Yang.

Eun Yang – Jefferies

Thanks very much. On the MEK inhibitor with AstraZeneca 6244, AstraZeneca is doing a multiple Phase 2 combination studies with chemotherapy. But in the past, if I remember it correctly, AstraZeneca and Merck were kind of starting a combination study with MEK inhibitor and AKT inhibitor. Can you give us a status update? And also I want you get your thoughts on combination – the MEK inhibitor in combination with chemo versus in combination with another targeted therapy? And which one do you think has kind of a better (inaudible) efficacy as well as safety profile?

Kevin Koch

Also from our – in our hands, we’ve seen excellent activity in both combinations with MEK inhibitors as well as targeted agents. I think the real enthusiasm right now is the combined MEK inhibitors with AKT inhibitors, Pl-3 kinase inhibitors, mTOR inhibitors, and also BRAF inhibitors. That’s all various companies with various inhibitors and various combinations. Novartis is a great partner in that way and that they have one of each flavor of the most combinable drugs that are targeted right now. As far as cytotoxic combinations, which are now the mainstay of many combinations like in colorectal with irinotecan.

I think there will be differences between the drugs and MEK inhibitors out there and tolerability, in combination with chemo. And I think we’ve shown our drug at least frequently to be well tolerated. We think that the data reported by AstraZeneca shows that the combinations with at least probably DTIC and Taxotere are easily well tolerated. And we haven’t heard any other data from any other MEK inhibitor. So, of course, we think ours is combinable and that we will be able to demonstrate efficacy in some of these targeted patient populations like the KRAS CRC and the KRAS non-small cell lung cancer.

I think also the developing data around resistance mechanisms and squamous [ph] cell carcinoma with the pure selective BRAF mutant inhibitors bodes well for the use of MEK inhibitors in combination in the melanoma population, either in combination with BRAF inhibitors or as a second-line therapy after failure on the BRAF mutant inhibitors. So I think all of those bode well for the MEK mechanism to actually make it to market. I think there is a consensus in the academic community, in clinical community, that the MEK inhibitor will get to the market. I think we have two of the top choices right now.

Eun Yang – Jefferies

I think given the factor that with the 6244 as a monotherapy, it wasn’t better than what is currently on the market, such as chemotherapy. So do you think that the future development of a MEK inhibitor, even including Novartis, is it going to be a combination kind of development or do you think the MEK inhibitor still has a chance to work as a monotherapy?

Kevin Koch

This is a critical question, Eun. And I think that people – they completely missed it as ASCO. Meaning that there is a new formulation of 6244. The original formulation only had about half the exposure as the maximum tolerated dose. Meaning, there is a very steep dose response curve with MEK inhibitors and that the new formulation has double the exposure at the preferred dose or maximum tolerated dose. So our point would be that every piece of data on MEK out there having to do with 6244 was at a dose that was under-dosed by at least 2X. Now if you think of what kind of result you would get with half the dose of Tarceva, you can think about how we view what MEK will do in particular combinations and as a single agent in targeted patient populations and remains to be seen we’re going to get this data next year, how it works in both monotherapy but also in combination with an optimal dose of MEK inhibitor.

Eun Yang – Jefferies

Okay. That’s great. And my last next question, can you comment on – in terms of the potency of the product between the new formulation of 6244 versus the Novartis program ARRY-300 [ph] or 162?

Kevin Koch

We still believe that 162 has certain advantages over 6244 on the ability to deliver the drug at a maximum tolerated dose and continues an addition of the target. We remain to be seen – we don’t have head-to-head comparison. So I think it will be difficult to argue at this point. But we believe that 162 has some advantages in that realm.

Eun Yang – Jefferies

Thank you.

Bob Conway

Thanks, Eun.

Operator

And everyone, at this time, there are no further questions. I’ll turn the conference back over to our speakers for any additional or closing remarks.

Bob Conway

Great. Thanks very much, operator. Appreciate your help this morning. I’d just like to close thanking our 334 employees for their compared to hard work and creativity over the past quarter and during all of fiscal 2010 and thank our partners and shareholders for the continued confidence and support. We’ll look forward to talking to you again at the upcoming investor conferences in New York and Boston over the next – in September and October, and look forward to updating you in November on our continued progress. Thanks very much, everybody. Thanks for joining the call.

Operator

Ladies and gentlemen, that does conclude today’s conference. Thank you all for your participation.

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