Staff Writer

Roche AG's Genentech subsidiary agreed to pay Array BioPharma Inc. $28 million up front and as much as $685 million in milestones, plus double-digit royalties, for rights to the preclinical ChK-1 inhibitor ARRY-575.

The kicker? Genentech's got its own ChK-1 inhibitor in Phase I, but the economics of the Array deal apply no matter which compound is ultimately advanced.

"What you want to do in all deals . . . is have the two organizations aligned," Array CEO Robert Conway told BioWorld Today.

Alignment can be difficult to achieve. Consolidation has broadened the pipelines of the remaining big pharma players, making it virtually impossible for biotechs to find a partner that doesn't have competing interests internally. And once the deal is signed, biotechs have little to no recourse if the pharma scientists give preferential treatment to their own molecule and back-burner the biotech compound. (See BioWorld Insight, Aug. 1, 2011.)

The Array-Genentech deal structure avoids such issues. Genentech already is conducting Phase I cancer trials with its own ChK-1 inhibitor, GDC-0425 (RG7602). Now the pharma also will handle all development and costs of advancing Array's ChK-1 inhibitor, ARRY-575, which is being prepared for an investigational new drug application. At some point, it is likely that one of the two compounds will be selected to continue moving forward and the other will be shelved, but Array will get its milestones and royalties regardless of how that plays out, as long as one of the drugs keeps advancing.

"The economics follow either program forward," Conway said. "It eliminates conflicts."

Conway attributed Array's ability to structure such a deal partially to the fact that the two companies have been collaborators since 2004. One compound from their original collaboration, AKT inhibitor GDC-0068, is in Phase I trials for cancer. (See BioWorld Today, Jan. 7, 2004.)

The fact that partnering for ARRY-575 was a competitive process involving multiple parties didn't hurt either, Conway said.

Nor did Array's skill and experience in deal-making. The Boulder, Co.-based biotech was started as a drug discovery platform company, so "we've had this core competency in partnering in our DNA from the day the company was founded," Conway said.

And deal-making remains a huge part of Array's business model. The biotech has 11 partnered programs with 14 drugs in clinical development. Those deals could lead to some $3.3 billion of nondilutive funding in the future, but even if the biobucks don't pan out, Array has already realized $160 million in partnering revenues over the last two years and upward of $500 million since the company was founded, Conway said.

The most advanced of Array's partnered programs is MEK inhibitor selumetinib (AZD6244), partnered with AstraZeneca plc. Enrollment was completed last year in a Phase II trial of melanoma patients with the BRAF mutation and a Phase II trial of lung cancer patients with the KRAS mutation. Data are expected this year. (See BioWorld Today, Dec. 19, 2003.)

Just behind selumetinib is MEK inhibitor MEK162 (ARRY-162), partnered with Novartis AG, which recently started a Phase II trial for malignant cutaneous melanoma with BRAF-V600E or NRAS mutations. Several Phase Ib studies also are under way. (See BioWorld Today, April 21, 2010.)

Array also has partnerships with Amgen Inc., Celgene Corp. and several others.

Beyond its partnered programs, Array has recently been tightening the focus on the programs it still holds internally. In June, it laid off about 20 percent of its work force, mostly in research, and narrowed its internal pipeline to prioritize ARRY-520 for multiple myeloma, ARRY-614 for myelodysplastic syndromes, ARRY-797 for pain and ARRY-502 for asthma.

Phase II data for ARRY-520 are expected this year, with Phase II data for ARRY-797 coming early next year. ARRY-614 and ARRY-502 are in Phase I.

Array also reported fiscal year-end earnings Monday night, posting revenues of $19 million for the fourth quarter and a net loss of $21.8 million, or 38 cents per share. The company had $65 million in cash as of June 30 – not including the money tied to the Genentech deal.

Array shares (NASDAQ:ARRY) gained 34 cents, or 16.6 percent, to close at $2.39 on Tuesday.