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Reader Inquiry: Is Recent Weakness In Array BioPharma Warranted?

May 06, 2018 4:14 AM ETArray BioPharma Inc. (ARRY-OLD)26 Comments


  • The stock has performed admirably since my initial article. However, it´s currently the biggest loser in the Core Biotech model account.
  • I provide a recap of the bullish thesis and recent developments.
  • Their June 30th PDUFA date is coming up and approval is expected (with the usual caveats).
  • BEACON CRC safety lead in data was highly promising.
  • Recent weakness is an opportunity to establish a pilot position or add to one´s stake.

Shares of Array BioPharma (NASDAQ:ARRY-OLD) have risen by 57% since my original article was published last August (at one point they´d nearly doubled before the recent pullback).

The stock was later added as one of our 20 holdings in the Core Biotech model account and is currently our biggest loser, in the red by 21%.

In my latest update piece from December, I restated the following keys to the bullish thesis:

  • A compelling rationale for the approval of the combination of binimetinib and encorafenib for the treatment of patients with BRAF-mutant advanced, unresectable or metastatic melanoma, supported by strong data from the pivotal COLUMBUS trial.
  • Large market opportunities targeted, an example being the global melanoma market for MEK/BRAF inhibitors of over $1 billion.
  • The company´s vast pipeline and past history of advantageously monetizing its noncore assets, just as had occurred with the Amgen (NASDAQ:AMGN) drug development deal for autoimmune disorders with the larger company footing the bill. Other positive prior pacts included collaborations with Merck (NYSE:MRK) and Bristol-Myers Squibb (NYSE:BMY) along with monetization of rights in Japan and South Korea.


Figure 1: ARRY daily advanced chart (source: Finviz)

Figure 2: ARRY 15 minute advanced chart (source: Finviz)

When looking at charts, clarity often comes from taking a look at distinct time frames in order to determine important technical levels and get a feel for what is going on. After positive news in late January the stock hit highs at over $18, but from there has fallen victim to lower volume selling and is trying to find a bottom at $13.

Reader Inquiry

In the marketplace service ROTY (Runners of the Year), we search for stocks that are attractive across multiple time frames with high % upside potential within the near to medium term. Catalyst ideas typically have upcoming material events (such as

This article was written by

Jonathan Faison profile picture

Founder of 500+ member ROTY Biotech Community (try the 2-week free trial to see if it adds value for you). Quality over quantity- enjoy connecting with readers.

Analyst’s Disclosure: I am/we are long ARRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (26)

Abstract drop for Beacon for ARRY is tomorrow. Nice ending rally today before tomorrow.
subrkaus3 profile picture
yes added the past couple of days. Especially after $EXEL fail, $ARRY data looks more compelling and stock is appealing at current levels.
Stop copying me :)
Milford55 profile picture
Do you still like ARRY? It’s at 14$ today.
An opportunity to add...
arry,pgnx, dvax
All nice picks.
The $400 Million is US sales just in BRAF/MEK inhibitors in Melanoma (Columbus trials). With a implied duration of therapy of four to five month. What size would the potential market opportunity look like if you could get your duration of therapy up to seven, eight, nine months?

The worldwide sales number is $1 billion with 25 and 35 percent royalty rates.

This also does not include any other sales on other indications like Colorectal Cancer. The BRAF CRC patient population is even larger than the size of the population of patients with BRAF melanoma. (Beacon CRC).

So at a minimum, you could add another $400 million plus in the US and $1 billion worldwide to those potential sales numbers.
Then add the additional potential market opportunity when you go from 5.9 to 12.4 MOS in CRC.
ARRY is a buy imo. This drop in shr price is a gift.
I like buying this before the earnings report. They seem to always be upbeat before the ASCO Conference.
With dilution a concern later in year and not knowing if company will be acquired, it would seem prudent to maybe sell a half Position after the upcoming Likely approvals in late June ? All thoughts welcome
They have 400m and milestone money coming in. Most of their trials are even funded. Dilution should be a ways off even if warranted
Columbus seems to be somewhat baked in to a point. Beacon is the gravy. Hopefully, we’ll hear some guidance as far as talks ARRAY has had with FDA to move Beacon along. The early data definitely supports a path to a speedy approval. In fact, it already benefits from a SPA and safety data from Columbus. Johnathan, what’s your thoughts?
Jonathan Faison profile picture
Agree but prefer to avoid speculation until we receive more guidance from mgmt - looking forward to earnings on May 9th and management commentary
Vitamanrocks1 profile picture
Do you feel the pdufa on June 30 could serve as a 'sell the news' event which happens fairly often in biotech, meaning add a few days after?
Jonathan Faison profile picture
Happens fairly often I agree but with the stock at relative lows I actually think regulatory decision could provide a nice bump if the stock hasn´t already rebounded beforehand.
astute pathways profile picture
Sell the news is mostly if they are low on cash,and market is expecting dilution
Vitamanrocks1 profile picture
True and agreed but have seen it happen before.
It probably depends on how much approval is baked in and where the SP is at.
It may fill gap and hit 200dma 12.71 then I would Add Big imho
When you say we in your article who do you refer to? Also please don’t invent facts or pull the numbers out of thin air. Like you have with the size of the market enco and bini and numerous others. Or reference your source. Array in a presentation stated that the market 400 million, where did you get a billion?
Read the CC transcripts. They clearly say a 1B Market worldwide.
Terra 2000 profile picture
Thanks Jonathan, but what worries me are the insiders sell
Jonathan Faison profile picture
Much of insider selling is options exercised but I agree would be nice to see some buying

http://bit.ly/2IepqIm (scroll to bottom)
Milford55 profile picture
Agree, exactly my concern
TY Jonathan
Jonathan Faison profile picture
Appreciate you reading
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