Array BioPharma's (ARRY) CEO Ron Squarer on Q4 2016 Results - Earnings Call Transcript

| About: Array BioPharma (ARRY)

Array BioPharma Inc. (NASDAQ:ARRY)

Q4 2016 Earnings Conference Call

August 04, 2016, 09:00 AM ET

Executives

Tricia Haugeto - Director, Corporate Communications, IR

Ron Squarer - CEO

Dave Horin - CFO

Victor Sandor - CMO

Andy Robbins - COO

Analysts

Michael Smith - Leerink Partners

Mara Goldstein - Cantor Fitzgerald

Yun Young - Jefferies

Stephen Willey - Stifel

Ted Tenthoff - Piper Jaffray

Peter Larson - Suntrust Robinson

Eric Joseph - JPMorgan

Operator

Good day, ladies and gentlemen. And welcome to the Quarter Four 2016 Array BioPharma Inc. Earnings Conference Call.

At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]

I'd now like to introduce your host for today's conference Ms. Tricia Haugeto. You may now begin.

Tricia Haugeto

Thank you, [Sera]. 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 2016.

You can listen to this conference call on Array's website at arraybiopharma.com. Also, we're using slides to accompany our remarks. The slides can be downloaded on the Investor Relations home 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; who will lead the call today. In addition, David Horin will provide a financial update and Dr. Victor Sandor, our Chief Medical Officer and Andy Robbins, our Chief Operating Officer will be available to answer questions as needed.

But before I hand over the call to Ron, I'd like to read the following Safe Harbor statement. The matters we're 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, 2015 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 to Array's CEO, Ron Squarer.

Ron Squarer

Thank you, Tricia and good morning and thank you all for joining our call today.

I am on Slide 3 of the presentation, where we outline the topics for the call today. The recent filing of the NDA for Binimetinib and NRAS-mutant melanoma represents an important milestone for Array. We also look forward to announcing top line results from our Phase 3 COLUMBUS trial in BRAF-mutant melanoma in the third quarter of calendar 2016 and advancing both the Phase 3 BEACON CRC trial in BRAF-mutant colorectal cancer and a new immuno-oncology Phase 1/2 trial of our CSF-1R inhibitor ARRY-382, combined with a PD-1 inhibitor.

In addition, our results from our Phase 2 trial with ARRY-797 will be presented at the end of this month at the European Society for Cardiology meeting. I'll cover these topics during the call and then turn to our financials.

But before I move on, I want to introduce and welcome Jason Haddock, Array's new CFO who joined the company last week. Jason will be replacing David Horin, who has been acting as Array's interim CFO as Jason joined Array just last week, David will be providing financial update today and will continue to be involved with the Array going forward in a supportive role.

Jason has more than 15 years of financial and operational experience in the biopharmaceutical industry. He held leadership positions of increasing responsibility at Bristol-Myers Squibb, a global pharmaceutical company with a strong focus in immuno-oncology therapies in a variety of accounting, planning, commercial, analytic and business development capacities.

Jason last recently served as CFO and COO at Berg Health an oncology-focused research, diagnostics and development company, where he oversaw the implementation of financial and operational processes, procedures and policies to transform and scale the company's practices as it planned for growth and corporate evolution.

So moving to Slide 4, development and commercialization of Binimetinib and Encorafenib remain the top priority for Array. We continue to make important progress on these drugs in melanoma and colorectal cancer as outlined here.

As we look forward to these near-term catalysts, it's important to reflect on the transformative deal that positioned us for success. Last year we finalized our agreement with Novartis to regain rights to Binimetinib and acquire right to Encorafenib.

The deal included over $100 million in upfront net cash value and Novartis continues to substantially fund all ongoing trials with Binimetinib and Encorafenib that were active or planned as of the close of the Novartis agreements in 2015, including the NEMO and COLUMBUS Phase 3 trails.

The reimbursement revenue from Novartis was approximately $107 million for just the previous 12 months of which $33.4 million was recorded over the past quarter alone. We estimate that eventually Novartis was contributed over $300 million in payments to Array for the development of Binimetinib and Encorafenib.

Moving to Slide 6, we show the NEMO results that were presented at ASCO in June. The study met its primary endpoint demonstrating a significant increase in median progression-free survival for Binimetinib when compared to dacarbazine in patients with NRAS mutant melanoma.

While there is no statistically significant difference demonstrated in overall survival, the median overall survival it's favored the Binimetinib arm. Binimetinib was generally well tolerated and the adverse events reported were consistent with previous results in NRAS mutant melanoma patients.

Grade 3, 4, adverse events reported in greater than or equal to 5% of patients receiving Binimetinib included increased CPK and hypertension. Patients with metastatic NRAS-mutant melanoma have limited treatment options, beyond immunotherapy and these patients face clinical outcomes and high mortality.

And Array submitted an NDA for Binimetinib to the Food and Drug Administration at the end of June 2016 and we're planning for Oncology Drug Advisor Committee, ODAC Meeting as part of the regulatory review process.

Array is also currently preparing for an Application Orientation Meeting with the FDA in September of 2016, which we expect will include the discussion of the NDA package including clinical risk and benefit.

So, moving on to BRAF melanoma on Slide 8, we look forward to sharing top line results from COLOMBUS this quarter. The study design for the COLOMBUS trial appears here, activating BRAF mutations are present in approximately 50% of patients with Metastatic melanoma and two separate trials in this patient population Binimetinib plus Encorafenib demonstrated encouraging clinical activity and an attractive tolerability profile, including low incidence of pyrexia, and little-to-no incidence of rash or photosensitivity.

On Slide 9, we refer to the Logic 2 Trial, which provides evidence for differentiated safety profile Logic 2 is a 140-patient Phase 2 study in patients with BRAF mutant melanoma. The data from this trial represented at the latest ESMO meeting.

On Slide 10, we are encouraged by the clinical activity observed in Logic 2 looking specifically at MEK/BRAF naive patients the interim objective response rate was 68% with a six-month progression-free survival estimate of 79%. As of the data cut-off the median duration of exposure was just over four months and 96% of these patients remained on study in Part 1.

On Slide 11, we show the results for approximately 90 naive and non-naïve patients that indicate the combination of binimetinib and encorafenib was generally well tolerated, including only 12% incidence of pyrexia, little to no incidence of rash of photosensitivity and a low rate of Grade 3, 4 adverse events. So, these data are consistent with a smaller dataset from a separate Phase 1B2 trial of the combination of binimetinib and encorafenib presented at ASCO last year.

And then these two separate datasets suggest an attractive and potentially differentiated tolerability profile.

For reference on Slide 12, we listed safety results from recent clinical trials for other MEK/BRAF combination therapy and BRAF melanoma. And two large randomized trials of the dabrafenib plus trametinib called COMBI-d and COMBI-v, patient experienced greater than 50% incidences of pyrexia along with frequent chills and hypertension, while in a large randomized trial of vemurafenib and cobimetinib, patients experienced high levels of photosensitivity.

And given the relatively long expected duration of therapy from MEK plus BRAF and BRAF melanoma patients, often well tolerated combination is critical to ensuring optimal patient outcomes.

Now on Slide 13, we take a closer look at the levels and impact of pyrexia in patients who patients who participated in the trials with dabrafenib and trametinib. The results show that pyrexia occurs frequently with more than half the patients experiencing the side effect.

And importantly, one half of these patients experience three or more events and at least half of patient require dose modification including interruptions, reductions and/or discontinuation as a result of their Pyrexia.

On Slide 14 we take a closer look at the levels and impact of the photosensitivity on patients who participated in the CoBRIM trial with vemurafenib and cobimetinib. The results show that photosensitivity was frequent, persistent and sometimes severe. 47% of patients experienced some degree of photosensitivity.

The mean direction of photosensitivity was three months and lasted as long as 14 months for some patients. Only 63% of patients with photosensitivity reactions experienced resolution while on study.

For results from the COLUMBUS study confirm the previously presented tolerability profile from two separate trials we believe binimetinib and encorafenib have the potential to deliver meaningful advantages over existing MEK plus BRAF therapy options.

Now historically MEK/BRAF combinations in BRAF melanoma trials have been shown to be highly active with demonstrated overall response rates as high as 70% with median PFS in 9 to 12 month range reported in three Phase 3 studies known as COMBI-v, COMBI-d and CoBRIM.

So on Slide 15, as we await COMBIs results, we note that point estimates from medium PFS increased by up to 2.4 months over the 9 to 12 month period from the initial presentation of results to final mature result presentations regarding these three Phase 3 trials.

Now we're shifting to colorectal on Slide 17. We were also pleased to report results from our Phase 2 BRAF mutant colorectal cancer trial at ASCO this year. CRC is third most common cancer in the U.S. and BRAF-mutant CRC represents a particularly difficult-to-treat subset of colorectal cancer that impacts approximately 8% to 15% of patients.

Now in our Phase 2 study, 120 patients with the BRAF-mutant colorectal who had progressed after one or more prior therapies were randomized to receive the doublet regimen of encorafenib and cetuximab or the triplet regimen of encorafenib, cetuximab and Alpelisib PI3K alpha inhibitor.

Now results showed promise in clinical activity in patients as median OS for both the doublet and triplet arms exceeded a year, which is substantial when compared to several historical published benchmarks for this population, which range between only four to six months of OS.

Grade 3, 4 adverse events occurring greater than -- occurring in greater than 10% of patients included anemia, hyperglycemia and increased lipase. Now as Alpelisib added toxicity with only marginal additional activity the BEACON CRC Phase 3 trial utilizes Binimetinib raise MEK inhibitor in the triplet arm.

On Slide 18 we show the several historic published benchmarks for median overall survival and BRAF-mutant colorectal cancer in the second line setting and beyond. The Encorafenib containing-regimens reported overall survival estimates in excess of one year, which is two to three times longer than the historic published benchmarks for this population shown here.

On Slide 19 we show historical published benchmarks for overall response rate in PFS and BRAF-mutant colorectal cancer as compared to our study. And median PFS was greater than four months for both arms of our study were several historic PFS benchmarks ranged between 1.8 and 2.5 months.

And the confirmed objective response rates were 22% and 27% for the doublet and triplet regimen respectively where ORR benchmarks range between 6% and 8%.

Now for reference on Slide 20, we list recently published results from other BRAF inhibitor-based approaches in BRAF-mutant colorectal cancer. In a Phase 2 trial of dabrafenib plus trametinib, only 10% of BRAF colorectal patients achieved an objective response and while the combination of vemurafenib with irinotecan and cetuximab delivered a response rate greater -- response rate of 35% it was at the expense of significant toxicity. Our results from that trial showed greater than 80% incidence of diarrhea, nausea and fatigue.

We believe the combination of robust clinical activity and tolerability demonstrated in our Phase 2 study may ultimately benefit patients by positioning us favorably to establish encorafenib-based therapies as a potential standard of care for BFRA colorectal cancer patients in the future.

Building on these encouraging results during ASCO, we announced the initiation of BEACON, a global Phase 3 clinical trial in BRAF colorectal patients assessing the efficacy of encorafenib and cetuximab in comparison to a cetuximab and irinotecan-based therapy.

As shown on Slide 21 the primary endpoint of the trial was overall survival of the triplet compared to the control on secondary end points addressed efficacy of the doublet compared to the control arm, and the triplet compared to the doublet.

Other secondary trial endpoints include progression-free survival, objective response rate, duration of response safety and tolerability; health related quality of life data will also be assessed. The trial will be conducted in over 250 investigational sites in North America, South America, Europe and the Asia Pacific region.

On Slide 22, we also announced a global partnership to conduct the BEACON study with Pierre Fabre and MEK KGA. Now array will act as the global sponsor of the study. PF who licensed commercial rights to binimetinib and encorafenib for Europe and other global markets from array in December 2015 elected to co-fund 40% of the cost of the BEACON CRC trial.

Merck KGaA is the owner of Cetuximab outside the United States and Canada and we'll supply Cetuximab to all trial sites outside of the United States and Canada as part of the collaboration. And if successful, results would support regulatory submissions for all three parties.

With the initiation of this study, Array has the potential to be both first to market for this large population to treat patients, and depending on the results are potentially best. We are excited by the Phase 2 results and look forward to begin enrolment on BEACON.

Now moving on to Slide 24 and I'm pleased to introduce our new immunoncology program utilizing ARRY-382. Now, great progress has been made in harnessing the immune system to fight tumor cells.

Currently there is an emerging focus on combining different mechanism of the immune modulation to enhance outcome in patients. But to this end, we are pleased to announce a new clinical trial combining pembrolizumab, a PD-1 inhibitor with ARRY-382 a wholly owned novel oral small molecule inhibitor a Colony-Stimulating Factor-1 receptor or CSF-1R.

CSF-1R is a receptor tyrosine kinase that's expressed on the cell surface of phagocytes including tumor associated macrophages or TAMs. Now these cells play key role in cancer growth within the tumor macro environment largely through production of chemokines and cytokines, which suppress T cell activity.

As TAMs are dependent on CSF-1 for survival, inhibiting the receptor represents a new approach to relieving T cell's suppression. Combining a CSF-1R inhibitor with a PD-1 inhibitor, which acts through different mechanism to reduce T cell activity suppression has the potential for complimentary or synergistic anti-cancer cell activity.

On Slide 25, we list background information regarding this compound. As you can see, ARRY-382 has attractive drug life properties including high potency and selectivity for CSF-1R. Additionally at a future scientific conference, Array plans to present new preclinical results, which demonstrate the enhanced anti-tumor activity of ARRY-382 in combination with the anti PD-1 therapy.

And we also have the benefit of results from a prior Phase 1 study designed to assess the safety PK and PD of 382 monotherapy for treating cancer patients. These results have been presented and dose and schedule that demonstrates target engagement based on multiple PD biomarkers was identified for further study.

On Slide 26, we detail the new Phase 1/2 study design. This study will enroll up to 18 patients with selected advance solid tumors to determine the maximum tolerated dose and/or recommended Phase 2 dose of ARRY-382 in combination with pembrolizumab.

In addition the safety profile PDA facts and preliminary assessment of activity of the combination will be assessed. Now with appropriate results Array has the option to advance the combination in two expansion trials and patients with metastatic melanoma or advance non-small cell lung cancer.

On Slide 28, we're moving to our wholly-owned rare cardiovascular disease program, ARRY-797, where we look forward to presenting results from our ongoing 12-patient Phase 2 study at the European Society of Cardiology Congress on August 30 later this month.

As shown on this slide, ARRY-797's primary endpoint of mean change in 6-minute walk test at 12 weeks relative to baseline exceeds benchmarks set by a number of drugs for rare diseases recently approved on the basis of the 6-minute walk test as a primary endpoint.

Secondary endpoints in the 797 trial include changes in NT-proBNP, a serum biomarker of heart failure severity and patient reported outcomes, which are directionally consistent with the primary endpoint.

A data for patients followed through 48 weeks suggest a durable effect and taken together, the data suggest a path forward for this program. Array has met with regulators to discuss the design of a study that could be the basis for marketing approval.

And with that, I'm now going to turn the call over to David to walk us through the financials.

Dave Horin

Thank you, Ron. On Slide 30, we show a chart that details our net liquid asset position as of June 30, 2016. Beginning on the left of the slide, with a balance of $111 million in cash and marketable securities, we move next to our net receivable position comparing accounts receivable versus accounts payable and accrued expenses related to Binimetinib and Encorafenib expenses, which are reimbursable under our agreement with Novartis.

On June 30, we had $34 million in accounts receivable due from Novartis, offset by $20 million in accounts payable and accrued expenses to third party vendors. Resolution of these in and outflows will result in a net $14 million in near term cash to Array. We're expecting to collect $5 million in near-term cash payments from our collaborators for work completed in the fourth quarter.

During the fourth quarter, Novartis elected to exercise an option to take a license under its 2014 collaboration arrangement and therefore Array received $2.5 million in cash during the quarter.

Excluding the $2.5 million received from Novartis and adding $4.9 million relates to the net decrease in existing accounts payable and accrued expenses that were paid during the fourth quarter of 2016 the net change in cash, cash equivalent, marketable securities and net accounts receivable was approximately a negative $25 million versus a negative $23 million in the prior quarter.

The increase in net loss was primarily due to the initiation of the BEACON CRC trial. Given the significant receivables from Novartis as of June 30, 2016, we equate this amount to net cash outflows from operations for the quarter.

Net cash outflows from operations for the year ended June 30, 2016, was approximately $87 million, which excludes the impact of significant upfront payments from collaborators and the timing impact of receivable and payable. If one includes the impact of timing differences related to receivables and payables and the receipt of upfront collaboration payment, net cash used in operating activities for the year ended June 30, 2016 was approximately $70 million.

As we stated in the past, our actual cash and cash equivalent and marketable securities balance could be impacted by the timing on a quarterly basis our payments received by Novartis and other counter parties. Also $12 million warrants were outstanding as of the beginning of the past quarter. Certain warrants were exercised for 235,000 common shares. As of June 30, 2016 there were no warrants outstanding.

Moving on to Slide 31, revenue for the fourth quarter of fiscal 2016 was $43.2 million compared to $43 million for the prior quarter. Reimbursement revenue from Novartis was approximately $107.3 million for the previous 12 months of which $33.4 million was recorded in the most recent quarter. Cost of partner programs for the fourth quarter of fiscal 2016 was $5.4 million compared to $5.8 million for the prior quarter.

Research and development expense was $49.5 million compared to $48.8 million in the prior quarter. The slight increase in research and development expense is primarily related to the ongoing transition of binimetinib and encorafenib trials from Novartis to Array and is consistent with the slight increase in reimbursable revenue from Novartis.

Looking forward, there are a number of variables, which will impact the net use of cash including the timing of new investments in our proprietary programs. We expect our net use of cash from operations will increase over fiscal 2017 with new investments in binimetinib and encorafenib and preparations for the commercial launch. However, this will be partially offset by reduced spending on other programs as they wind down.

Now I'd like to turn the call back to Ron.

Ron Squarer

Thank you, David. Before opening up to questions, I would just like to summarize on Slide 32, a key upcoming catalyst events across our portfolio. So on June 30, we filed an NDA submission with the FDA for Binimetinib based on NEMO results, which we shared at ASCO.

This quarter we expect to announce Phase 3 top line results from the important and commercially valuable BRAF melanoma program, the COLUMBUS trial. We presented an update on the current Phase 2 trial in BRAF colorectal cancer at ASCO and based on these results initiated BEACON, a global Phase 3 restoration trial.

With the start of BEACON, Array is in a position to be first in class in this very large commercial opportunity. As mentioned, Novartis continues to sense substantially fund all ongoing trials with binimetinib and encorafenib that were active or plan as of the close of the 2015 Novartis agreement including the NEMO and COLUMBUS trials.

Turning to Selumetinib, we expect top line results this summer from SELECT-1, the Phase 3 trial in KRAS-mutant non-small cell lung cancer patients being run by our partner AstraZeneca. If successful, this would represent a very large commercial opportunity. Additionally, last summer AstraZeneca shared exciting selumetinib results in neurofibromatosis type 1 patients and they are currently advancing registration trails in this patient population.

Regarding our rare disease program, we look forward to presenting clinical results at the European Society of Cardiology Congress at the end of this month and taking together the data to date suggest the path forward for this program in addition to these items we were happy to provide the details for a new immunoncology Phase 1/2 trial with our CSF1R inhibitor ARRAY-382 in combination with a PD1 inhibitor.

And with that, I will now open the call to Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Michael Smith from Leerink Partners. Your line is now open.

Michael Smith

Questions, Ron I had one regarding the NEMO trial, are there any additional over survival analysis planned with the longer term follow-up in the study?

Ron Squarer

Yeah, so I'll turn that over to Victor. I think in the actual plan there may be I don’t know if we can disclose that…

Victor Sandor

I don’t know if we've disclosed the specifics of if but there is a final overall survival analysis included in the statistical analysis plan in the design of the study that’s where it basically is defined as when a particular percentage of patients who have died on the study.

Michael Smith

Okay. Thanks and then a question regarding this application orientation meeting with the FDA in September. Ron, can you just give us a sense of the potential outcomes of that meeting a bit less familiar with that mechanism.

Ron Squarer

Yes, Victor has quite a bit of experience with the steps of the regulatory process, now having addressed that.

Victor Sandor

So the application orientation meeting is a standard meeting. It's routinely scheduled around the time of the completion of validation period for the NDA and as the names applies, the purpose is really to orient the agency to the filing and generally include the discussion around the technical navigation around the file documents, but it can include discussion of preliminary key elements of the data including the basis for risk benefit assessment.

So, there is generally not a specific outcome but it's an opportunity for the company and the FDA to engage in number of different issues around filing.

Michael Smith

Okay, thanks and then regarding the COLUMBUS trial just wondering if you have regarding the upcoming data closure for the Phase 3 results, will that include both parts of the study, Part 1 and 2 and can you give us a bit more sense of how you disclose the data and which measures you might be able to disclose in the top line results.

Ron Squarer

So with the highest level Part 1 is going to come first. So, when we announced top line results this quarter, it will be for Part 1. As is common practice, usually the press release announcement relates to the primary end point and whether it's been hit or not and typically a more robust description of the data is reserved for an appropriate scientific conference and there is a couple of conferences that may be relevant to share that data.

Part 2 however, we do believe we will have that data available in the timeframe during which Part 1 would be reviewed to the extensive regulators felt that that information from Part 2 was relevant. Does that answer the question?

Michael Smith

Yeah, thanks and then one last one regarding the CSF1R inhibitor, just wondering whether you see differentiation from the Plexxikon molecule that’s in trials with teplizumab as well.

Ron Squarer

So, I think you're pointing out that there are some other CSF1Rs in the world although with regards to clinical stage they are predominantly or typically molecule antibodies and so while there -- its difficult to predict whether it's a small molecule approach or an antibody approach will be superior, there is the potential for a different activity.

And so I think that’s why it's exciting to come in with a small molecule, generally speaking I think what we're comfortable saying is that as is common with our pipeline ARRY has built here a highly selective molecule.

And so what you see in the industry often are companies that repurpose molecules that may hit a number of targets for a particularly evolving area and that is not the case here. We feel that the drug characteristics of this product are quite attractive specifically for CSF1R.

Andy Robbins

So Michael, this is Andy, the only thing I would add is specifically against the Plaxicon compound, we believe there is the potential that our selective and potency relative advantages could translate into meaningful clinical advantages, but that's the purpose of the study really.

Michael Smith

Thanks a lot.

Operator

Thank you. And our next question comes from the line of Mara Goldstein from Cantor Fitzgerald. Your line is now open.

Mara Goldstein

Hello. Thanks very much for taking the question. Just a follow-up on 382, there is I believe in the clinicaltrials.gov just description there's a fair amount of language around exclusions around KTG prolongation and I'm wondering if that was just standard or there is something related to the molecule we should be aware of?

Ron Squarer

Mara, thanks for the question. So what’s posted currently would be in the historic Phase 1 monotherapy study that as we described, we conclude and this has been published showed appropriate tolerability process for PK/PD established a dose and a regimen.

The clinicaltrials.gov posting for this combination Phase 1, Phase 2 trial we expect to be posted in the next few days, but I'm not aware of any particular concerns with the QT, Victor do you want to -- anything to add, I don't think it was probably just an early cautionary.

Victor Sandor

Yeah, basically until you thoroughly evaluate QT and in the studies you usually have QT restrictions in those studies.

Ron Squarer

We're not aware that that's an issue at this time.

Mara Goldstein

Okay. And if I can just ask on the NRAS filing, would you expect that you'd have an FDA Adcom Meeting for that filing or you haven't gotten that far in discussions with the agency yet?

Ron Squarer

Yeah we do -- we are in fact planning for an ODAC meeting as it is common, but specifically we have shared all of our clinical data, and we do think that a discussion of risk and benefit is going to be part of the review process for this product.

Mara Goldstein

Okay. All right, thanks I’ll jump back in the queue.

Operator

Thank you. And our next question comes from Yun Young from Jefferies. Your line now open.

Yun Young

Thank you. Regarding 797, so we may expect the data by end of this month. What’s the base line 6-minute walk distance for these patients and what kind of a magnitude of improvement and 6-minute walk test that are you looking for.

Ron Squarer

So I'll let hand that over to Victor and I would just say that we're looking for clinically meaningful improvement and one of the reasons we've held off publishing this data is we also think that durability of effect is going to be quite important. So Victor.

Victor Sandor

Yes, so if you look at our clinicaltrials.gov posting for that study, it will outline for you the requirements for base line 6-minute walk test in the Phase 2 study. It's actually a little bit complicated in the sense that there is -- there's a baseline and screening measure, but in essence, the screening needed to be below I believe 350 meters in the screening because there's a certain element of learning with the 6-minute walk with somewhat higher it was 425 or 400.

So that’s the range of the 6-minute walk test for the patients in the study. Now in terms of what is considered a normal 6-minute walk test, a normal 6-minute walk test depends a little bit on your body habitus but it can be anywhere from say about 500, 600 to 800 people who have a very, very long stride.

A benchmark for what is considered a clinically meaningful increase in the 6-minute walk is a little bit difficult to give you definitively, but there have been a number of approvals in different therapeutic settings based on 6-minute walk and those approvals have been based on 6-minute walk changes in roughly the 20 to 40 meter range?

Ron Squarer

We at least suggest that we are in north of I guess you could say 50, from the graphic that we've showed earlier this year. Victor it may be useful to just describe the state of the patients that are being recruited into a study from an overall health point of view?

Victor Sandor

Yeah, that’s the key here, which is that the study was designed with keeping in mind that you want patients who have a disability in terms of their 6-minute walk test. A clear disability in terms of their 6-minute walk test on which we could show an improvement, but at the same time, we need to be sure that the patients are not so disabled so as to make it impossible for them to actually improve.

We also restricted the study with regard to -- so the patients have to be symptomatic. They had to fall within this range of 6-minute walk test and they had to have what’s considered in Class II - IIIa congestive heart failure using the New York Heart Association Class.

Ron Squarer

So these are pretty six folks, unfortunately. So we do think that at least directionally we're suggesting there is an interesting fact here.

Victor Sandor

But Yun we look forward to maybe it’s easier to talk about the data after its public because when you have small datasets, of course people want look at everything they can and we’ll be pleased to do that, after the end of the month.

Yun Young

Sure. And then for this program in the past you mentioned a data put potential partnership opportunity. So are you still looking for a partner for this program?

Ron Squarer

I think Yun what we said is there are three natural choices. I am kind of stating the obvious DOT Alone, find a partner or we’ve talked about and we had some experience with forming an entity that maybe purpose build for such a unique opportunity.

And we're evaluating those auctions going forward and to the extent that we land on one, we'll be announcing that at the right time. But there is certainly important work which is ongoing here at Array regarding this program and we look forward to seeing the reaction, especially of the treating community and the investigator community KOLs when they're able to more easily see the data set.

Yun Young

Sure. The second question is on the KRAS-mutant non-small cell lung cancer, so just looking at the clinicaltrials.gov the SELECT-1 study the patient number is over 3,000 compared to when AstraZeneca initiated the study with a little over 600. So the number of patients really have increased to over 3,000 in this study?

Andy Robbins

This is Andy. Talking with AstraZeneca because we also notice that strange reporting, it's just purely an error based on original intended screening, in order to get to an appropriate number of patients enrolled. And so there was never an intent nor is there now an intent to enroll 3,000 patients. The trial was always designed to look for approximately 500 or 600 patients for the overall.

Yun Young

Okay. That’s helpful. And then there is also SELECT-2 that AstraZenca was running in second line, KRAS-mutant negative in non-small cell lung cancer patient, do you know the status of that trial?

Ron Squarer

Yeah. So from I am understanding SELECT-2 is a quite a different approach in that because SELECT-1 is KRAS specific SELECT-2 is really more unselected patients and from what we understand those results will be shared soon.

We have not received those results at this time and I really do think that regardless of their timing that you really need to see the SELECT-1 results to appreciate that why we have SELECT-2 results whatever they are.

So we are not in possession of those results at this time. But I do expect that at some time in the not too distant future, there will be shared from a timing point of view they should be available soon.

Yun Young

Okay. Thanks very much.

Operator

Thank you. And our next question comes from the line of Stephen Willey from Stifel. Your line is now open.

Stephen Willey

Yeah, good morning. Thanks for taking the questions. Maybe just a follow-up on a couple of previously asked questions. So can you tell us whether or not we’ll specifically be seeing an overall survival analysis from NEMO within pre-specified patient population of patients previously receiving immuno-therapy?

Ron Squarer

So I think we’ve been definitive on that stating that statistical analysis protocol dictates that you only analyze statistically subset if the primary endpoint has been hit. So it’s not our plan to analyze that statistic.

Stephen Willey

Understood. And then just with respect to COLUMBUS you talked about what are top line data release might look like, but also just wondering if we should expect to see any granularity around the safety data as well?

Ron Squarer

No so what I have said is that typically these press releases are focused on whether the primary endpoint has been hit or missed. Going beyond that in terms of what color is provided I think we're going to have to wait and see. But what I am comfortable of course is that we would announce the primary endpoint outcome.

Stephen Willey

Okay. And then with respect to 382, can you talk about the doses that you are considering to move forward at this point in combination with pembrolizumab and then I guess when you look at the prior dose escalation data, it looks like there was a little bit of liver signal at some of the higher doses and I guess just given that autoimmune hepatitis is an area of interest for the anti-PD1, just wondering how you're thinking about the combination of those two drugs?

Ron Squarer

So I will turn that over to Victor.

Victor Sandor

I think it’s safe to say that the idea would be to escalate the dose to highest dose we can which the idea would be to escalate it to the 400 milligram dose, which was established as the recommended dose in the Phase 1 study.

I think you noticed that there is a liver signal in the sense that there is some increases in AST and ALT. Things for the most part those were low grade advance and not -- they were also for the most part at the 500 milligram dose although they were seen at the 400 milligram dose as well to a lesser extent I believe.

So yes, you do worry about those kinds of overlapping type toxicities, but I think that the mechanism for those toxicities are completed different in the sense that the one, is likely related to direct drug effect on liver which you often see increases in liver enzymes that are generally benign unless they are associated with increases in bilirubin and things like that versus a direct autoimmune effect. So obviously something to keep an eye on but nothing that we're overly concerned about at the moment.

Stephen Willey

Okay. And then just lastly just a housekeeping question. So is the amount of reimbursable revenue remaining from Novartis in the $14 million range, is that how we should interpret the characterization of the net liquid asset position?

Andy Robbins

This is Andy. The net $14 million is essentially if we halted all work immediately right now and didn’t go forward with anything, that’s how much we would expect to collect net of our ARPR. But as Ron mentioned in his script the COLUMBUS trial is ongoing and the NEMO trial and there is still patients on many of the Phase 1, 2. So we would expect to continue having expense to develop those trials and subsequently get reimbursement from Novartis for those.

Ron Squarer

As there are well over 30 trials running at the time we entered into this agreement with Novartis. But with this number that you are referring to is we are calling it net ARPR for Novartis reimbursement and as you see it has fluctuated quarter-to-quarter simply because of the relative timing of invoices and cash or exchanging hands.

I would say directionally the actual amount of reimbursement quarter-to-quarter hasn’t changed as much as the specific timing which is a result of just a cut-off in a particular day. And we tried to explain that we're going to have to live with these ups and downs in this thing that we are calling a net Novartis reimbursable receivables because as the trials wind down and eventually they will, although as you know these trials tend to even after patients are -- even after enrolment is well done and even results are analyzed patients stay on often for years.

But eventually these will begin to shrink and those net receivables turn it back into cash and that's what we've been emphasizing these, can’t find really a much better way. We've been trying to be -- we're trying to be as transparent as possible. Does that help?

Stephen Willey

It does, it does, thanks for taking the question.

Operator

Thank you. And our next question comes from Ted Tenthoff from Sun Trust Robinson Humphrey. Your line is now open.

Ted Tenthoff

Hi Ted Tenthoff from Piper, is my line open?

Ron Squarer

Yeah I did the…

Ted Tenthoff

Not that I knew of, so I’ll keep my eyes open a lit, once a process through earnings I'll take a look at the news as well. Thanks for taking the question, excited about the data coming out and definitely intrigued by this 382 opportunity. I guess a lot of my questions have been answered, but I wanted to ask on selumetinib.

Really get a sense of what to expect from the study? The data was back in 2012 that we at ASCO, little bit different toxic profile here with the first in MEK inhibitor versus a current orals, what should we be looking for from this data and what could be the path forward on annexes part?

Ron Squarer

Ted, yes, thanks for the question. And I think this is assuming a successful trial and approval where does this really go. I’ll have Andy address that. I'll say regarding toxicity is the fact is this is a docetaxel containing doublet, docetaxel is certainly a toxic agent. It's our expectation that Astrazeneca learned from its Phase 2 trial regarding the need for aggressive use of antibiotics and growth factors.

And of course we don't have the results. So we don't know what the toxic profile looks like, but in the line in which it is appropriate for it to be used, it would be a high unmet new population and so with proper management of side effects, I think it can provide assuming of course that it's a positive trial provide important activity to patients. But Andy if you want to talk about where you think it might fit.

Andy Robbins

Yes, so Ted, I think Ron answered your key question about safety. With prophylactic gene antibiotics, I think we'd be hoping that the relative rate of high grade neutropenia and then infections that lead to very serious side it side effects would be reduced relative to what we saw in the Phase 2.

As you know this is in a KRAS selected population so that is high unmet need in a poor prognosis there's nothing else indicated specifically for that mutational sub population. We are also certainly aware of the advent of the checkpoint inhibitors in non-small cell lung cancer.

We are observing as I think everyone on the call is then moving upstream, so eventually we do believe they will make their way to first line. So a positive select one trial still can be highly relevant in a second line KRAS mutant non-small cell lung cancer population.

Ted Tenthoff

Great, okay cool. Looking forward to all the data coming out.

Ron Squarer

Great thanks for the question Ted.

Operator

Thank you. Our next question comes from the Peter Larson from Suntrust Robinson. Your line is now open.

Peter Larson

Just on 382, when do you think we can see the first days in them?

Ron Squarer

Hi, Peter good morning. So in terms of data, of course we wanted to be very clear. We're in initially starting a dose escalation arm relatively small. I think we're estimating about 18 patients at which point we'll look at the results of both from a tolerability and potentially although it's not really the focus of the trial from an activity point of view and decide how to move forward.

Victor, what would you estimate typically for a study of this nature, because it all depends on how many cohorts you need?

Victor Sandor

Cohorts you need to get your, we are estimating two cohorts with three to four months per cohort which is a reasonable estimate for a Phase 1 type study then to give you some sense of the next six to eight months would be where you would be looking.

Andy Robbins

And I would just -- this is Andy, I'll just point out that certainly we're looking for a combined ability in the Phase 1 dose escalation portion of the study which will take those months. Sometimes people like to look for activity. We do point out that there is a highly active drug on board in the PD-1 inhibitor.

So early preliminary response rate data is going to be confounded by having in active drug like that is part of the combo. So it's going to take a little while for us to get to meaningful clinical activity data.

Ron Squarer

Now Peter maybe I'll use this as a opportunity to discuss this strategy here. So, we suggested that -- first of all there exist powerful scientific let’s called preclinical evidence of the use of CSF1R and PD1. We have our own preclinical work which hasn’t yet been published but we expect to publish in the future.

But in reality it's difficult to point to clinical data that supports this hypothesis although I think the industry is very helpful given the robust scientific evidence that exists. But the goal of this study partially is simply to enable Array to be in a position to act if and when new clinical evidence emerges and to be able to absorb that evidence in determining the best ways forward. And so that’s the explanation for the timing and for the structure of to study.

Peter Larson

Got it. Thank you and then the 797 data just going back to that, what should we expect to see I guess book tests what secondary endpoints will be presented, anything we should really hone in on that data?

Ron Squarer

Yeah look, there is a lot of measures that we took. What we’ve been pointing to of course is the mean absolute change in 6-minutes walks measured in meters over baseline, certainly we look at a marker called pro-BNP, which is a general marker of cardiac disease severity and one that is let’s call it more objective than other types of measures especially patient reported outcomes although we will also be looking at patient reported outcomes.

There will be other data presented related to ejection-fraction and what not but I do think that the focus will be or will likely be on that 6-minute walk in pro-BNP.

Peter Larson

Got it. Thank you. And then just thinking around timing of a partners, is it now or do you think you really need Phase 3 data before you enter those discussions?

Ron Squarer

Yeah, so I don’t think we’ve disclosed anything regarding that now. One thing I can say is that there is no immediate competition and we continue to do the work that needs to be done to ultimately progress into the next stage.

As we mentioned, we had regulatory discussions. We continue to let’s say address drug supply CMC companion diagnostic issues and so, I think that we’re going to be continue to evaluate the options and determine how to move forward.

Peter Larson

Great. Thank you so much.

Operator

Thank you. And our next question comes from the line of Jim Birchenough from Wells Fargo. Your line is now open.

Unidentified Analyst

Hi, thanks for taking the question. This is [Ju] for Jim. Some questions are regarding in anticipation of the COLUMBUS data. In terms of comparing and contrasting with the Roche and GSK come MEK/RAF combos would you comment on whether the PFS data is there any caveat that could prevent a direct comparison for example the baseline significant difference in the baseline characteristics or some other design element of the study.

And also for the benefit of comparing the overall survival, we’re wondering if there is any -- whether the for example the Roche and GSK trials differs the whether they allow crossover into the combo arm and whether continued dosing beyond limited progression is allowed and also perhaps just comment on whether the post progression immune-oncology drug use might be different from your trials as the COLUMBUS trial versus the Roche and GSK trial. Thanks.

Ron Squarer

Okay, let me see if we can address some of the issues. So, basically first I would say that the study-to-study comparisons are always a challenge. We’ve actually gone a step further and pointed out an artifact of COMBI-v, COMBI-d and CoBRIM in our presentation even pointing out the fact that initial PFS results in those studies do seem to creep up over the year between initial more and more mature data.

So I think until things settled in, it will be hard to make that comparison at this point. Based on the LOGIC-2 data, which of course wasn’t complete at the time we presented it, we think that our activity is looking similar to other options and that we think the more important and powerful differentiation would be on these tolerability items quite important for these long durability studies.

Now we get into the realm of speculation and so I want to be clear about that. We have a lot of prior immunotherapy, there will be a certain number of patients who receive prior immunotherapy and that could have an effect on PFS.

Our hypothesis is that later lines of therapy after immunotherapy are not the same as later line of therapy after chemotherapy or even targeted therapy, and that there is hypothesis that you can see at least activity that's no worse, and even in theory better because while patients may have progressed or not responded the immunotherapy effect seems to persist and could assist targeted agents going forward.

And then in terms of our PFS results, sheer speculation but with lower toxicity and potentially lower dose reductions or dose discontinuations that could assist with PFS.

And finally we are the only MEK RAF combo in which the RAF is dose well above its single agent MTD. So in our case our single agent MTD for the RAF, MEK RAF and BRAF inhibitor is 300 milligrams, we are dosing at 450 in Part 1, but again no way to know what the effect dose will have. I maybe just ask my colleague if I missed any point.

Andy Robbins

Maybe I'll just add a couple of things and then see as Victor has anything else to add. This is Andy. I think it's also going to be important to look at the relative proportion of elevated LDA aged patients in our trial when comparing to the COMBI trials and coBRIM programs certainly as a prognostic and predictive factor for melanoma and MEK RAF therapy, you would want to take a look at those rates.

And then I'll speculate that and this is pure guess that the relative rate of COLUMBUS discontinuation IO therapy is likely to be higher than dose from coBRIM and COMBI just based on the time at which they were run. So I think that has the potential to do interesting things with the long term read out certainly not the PFS, but the OS of COLUMBUS trial.

Victor Sandor

I don’t have much to add to that beyond just the general comment that across trial comparisons, but there is always issues with that. So we'll have to also take into the data.

Ron Squarer

Yes, the totality of the data is probably more relevant.

Victor Sandor

To see what the patient characteristics actually are on the study.

Ron Squarer

So we are at the hour. We are going to continue the call. We understand that people have other issues that need to drop off, we just aware that there are some important analysts who may still want to ask questions. So we will continue. So, operator do we have additional questions?

Operator

We have one question from the line of Anupam Rama from JPMorgan. Your line is now open.

Eric Joseph

Hey, guys. This is Eric. Thanks for squeezing it in here. Just a couple of quick questions from my side. First on 797, sorry if I missed it, but just wondering if you could kind of give us a sense of the minimum level of follow-up that you might see at ESC whether it's going to be meaningfully different from the three month follow-up that you saw in the presentation.

And then on 382, just wondering in the first -- in the Phase 1 proportion will not be viewed as proof of concept from a biomarker perspective. Will you be screening patients for PD-1 expression and either the Phase 1 or the expansion cohort?

And just kind of thinking back to the monotherapy Phase 1 study with 382, were there any learning with respect to modulation of genotype there that give you confidence going into the combination trial? Thanks.

Ron Squarer

Great. Anupam thanks for these questions. Let me start with 797, I think Victor is going to weigh in on 382. So what we have shared to date is that we have patient experience actually after 48 weeks and that at least directionally at the time we suggested that the effects appear to be at least sustained through that period both from a 6-minute walk point of view and from a biomarker point of view.

But there are two more releases it's the nature of a publications, there is an abstract that will come out just before DSC meeting, the abstract was submitted in the past of course and then I believe there will be even fresher data at the meeting itself and without going too much detail, I think that we would be likely in a position to share data even beyond 48 weeks.

Now remember this is a small study to begin with and so you are really talking about very limited data points throughout every time point that is measured, certainly when you get out to the outer time point you're talking about small ends.

But again this is a proof of concept study in a very severe rare disease that does not really have specific options for treatment and so from a directional point of view looking at the totality of the data and so the individual patients which we were doing and just can provide some direction so, that’s 797 progress to 32, Victor do you want to repeat the question.

Victor Sandor

Repeat the question, I kind of the were quite few of them there.

Eric Joseph

Yeah so, I think initially will this represent proof of concept will the proof of concept be focused more on biomarkers or other items and have we learned is it PD-1A marker going to be used in diagnostics.

Victor Sandor

Yeah, so to start with, what the end points are I think that there will certainly be a large number of biomarker end points that I don’t think we've disclosed specifically what they are, but you might imagine with there are some well known biomarkers associated with CSF1R in addition things like increases in CSF1, changes in monetize and tumor enhance and also some urinary biomarkers in terms of bone turnover.

Even I think there was a previous question with regard to changes in AST and ALT with enzymes and even those can be considered in some instances biomarkers for CSF1R because there is a potentially mechanistic explanation there in terms of macro phases and cells. So, all of that stuff will be measured as part of the clinical study.

In terms of whether there will be PD-1, PD-1 screening that will definitely be part of the study again that standard biomarker that we would be measuring in patients coming after the study.

Ron Squarer

Does that address the question or did you have something more on that.

Eric Joseph

No, that’s great. Thanks for taking the questions.

Ron Squarer

Okay. Thanks for calling in. Go ahead.

Operator

Thank you. And our last question comes from the line of Michael Smith from Leerink Partners. Your line is now open.

Michael Smith

Hi, guys. Thanks for taking the follow-up. I just had another one on COLUMBUS and I’m not sure if you answered it earlier but is that study part of an overall survival analysis and when might that occur?

Andy Robbins

Yes, overall survival is not a controlled end point in the study. And I'm actually not sure whether we've disclosed the timing of that in terms of when the analysis…

Ron Squarer

But if you could think the expected overall travel from MEX…

Andy Robbins

You can imagine that in terms of the expected overall survival here, you're getting up to two years. So the timing in terms of the event for that would be substantially beyond the timing of the primary PFS analysis, but OS is an alpha controlled secondary endpoint in the testing hierarchy in the study.

Michael Smith

Great, thanks. And then one last one, just in terms of maximizing the opportunity for your MEK inhibitor just in the context of the data that was presented at ASCO from Roche regarding their atezolizumab combination in colorectal cancer, which triggered their Phase 3 trial, I just wondering how you think about that opportunity in terms of combining our PD-1 with MEK in colorectal going forward?

Ron Squarer

Yes, look it's very exciting. Clearly we are interested in colorectal and are pursuing it with both MEK and BRAF melanoma. But we're excited to see the results of immunotherapy plus MEK and I think roughly could be designed most of non-BRAF colorectal. We've just initiated our BRAF colorectal trial and we're in the process of determining the best path forward in that PD-1 MEK combination.

And as soon as we have nailed that down, we'll be happy to share it. But I view it as very positive news for a company who believes -- Array who believes colorectal going to be important part of our franchise in the future.

Michael Smith

Great Ron, thanks so much.

Ron Squarer

Okay great. And we're blessed with some fantastic analysts and appreciate it for those who stayed on pass the hour. As I said, we're looking forward to top line results for COLUMBUS and SELECT this summer. Certainly in the quarter as well as results from the Phase 2 797 study at the SC Congress and it's certainly an exciting time.

With that, I’d like to thank our employees here at Array for their commitment, ingenuity and diligence that continues to fuel our success and to thank our patients, partners and shareholders for their continued confidence and support. I will now close the call. Thank you all very much.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a great day.

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