Under a deal that depends on Novartis AG's big, pending asset swap with Glaxosmithkline plc (GSK), the BRAF inhibitor encorafenib (also known as LGX818) – stranded with Novartis since December, when the pharma giant returned MEK blocker binimetinib rights to Array Biopharma Inc. – is joining its sister at Array, and the phase III combination trial called COLUMBUS in BRAF-positive melanoma (encorafenib's fate in which had been unsure), will go on.

"From our perspective, these two products have great potential either separately or together," Ron Squarer, CEO of Boulder, Colo.-based Array, said during a conference call with investors. Still, Array is "very pleased with the outcome" that did not leave them separated, he said.

Wall Street was, too. Shares of Array (NASDAQ:ARRY) closed Friday at $7.11, up $2.06, or 40.8 percent.

The binimetinib deal in December, which brought an $85 million payment from Basel, Switzerland-based Novartis, and the LGX818 arrangement, which involves only a small and undisclosed sum due from Array to Novartis, are contingent on the success of Novartis' $26.6 billion transaction with GSK, of London, disclosed in April. (See BioWorld Today, April 23, 2014, and Dec. 5, 2014.)

"It's critical for us to get to [closing of the Novartis/GSK pact]," Squarer explained. "We will have had an opportunity to fully understand the datasets" related to both compounds, and can "not only describe what our plans for these two agents would be going forward, but the plans for Array and its portfolio at the same time," along with guidance "about where our cash position is, and how that cash would be deployed."

If Array fails to find a European commercialization partner for LGX818 as well as binimetinib within a time frame that has not been made public, a trustee will sell the European rights, but Array could get cash up front, milestone payments and royalties, Squarer said. "The period that we have to partner both of these assets in Europe is not public and won't be public," he said, but called the term "sufficient," as long as "there is the kind of interest we would expect for this great combination, not to mention these two drugs separately that could be valuable on their own."

A trustee, anyway, would be "trying to achieve the same goal ultimately that we would be attempting to achieve in the proscribed period," Squarer said. The European Commission probably "has in its mind what [the best] partner would look like," he said, but the regulators' interest "is really no different" from Array's.

'HIGH LIKELIHOOD OF ON-TIME PARTNER'

Meanwhile, Novartis has conceded to keep running COLUMBUS through June 2016 or until the end of patient visits, at which point Array will take over the study and be reimbursed by Novartis for half the costs. Novartis will supply encorafenib for clinical and commercial use for up to 30 months after closing and will also assist Array in the technology and manufacturing transfer of the compound, also providing Array continued access to pipeline compounds for use in currently ongoing combo studies – and potential future ones. "Based on these two agreements as they exist currently, we have no financial obligations to Novartis going forward in any scenario," Squarer said.

Array is testing binimetinib as a single agent in phase III trials against low-grade serous ovarian cancer and NRAS-mutant melanoma.

NRAS cases make up about 20 percent of melanomas, Squarer said, and Array "expect[s] to be first and potentially alone in that indication for some time." In ovarian cancer as well, the matter is "less of a differentiating question and more of a will-the-trial-be-successful" question, he said.

"The only competitive indication we're pursuing is BRAF melanoma," Squarer said, "knowing that we wouldn't be first, because there's the potential for differentiation," specifically in tolerability with the MEK-BRAF combo. "On efficacy, it's very difficult to predict what might come," he said, though there's "no reason to believe it would be any less effective" than other therapies, and the duration of effect is "quite substantial," nine months to as long as a year.

"To have a regimen that is easier to live with, and to live well with, will be critical," he said.

Andrew Robbins, senior vice president of commercial operations for Array, said the company does not expect to bring aboard any other of Novartis' oncology candidates.

Wells Fargo analyst Matthew Andrews said the encorafenib news was "not entirely surprising," since Array "has made it clear that it wanted to obtain the encorafenib rights, considering the phase I/II combination data in BRAF melanoma," which represents twice the market opportunity as NRAS, along with the binimetinib combo potential, though it wasn't certain under whose watch COLUMBUS might proceed.

"With 35 binimetinib and/or encorafenib studies under way, three pivotal registration studies ongoing (earliest data expected in the second half of this year in NRAS melanoma), and meaningful trailing support lowering overall development costs for Array and a future partner," Andrews saw a "high likelihood" that the firm will sign a European partner before the clock runs out. In a research report, he maintained his "outperform" rating on the shares.

Edward Tenthoff, analyst with Piper Jaffray, viewed the latest headlines as "a positive surprise" and "another win" for Array. "With the $85 million from Novartis for the return of binimetinib, we estimate Array will hold pro forma cash of $216 million, and retains a $132 million convertible note due in 2020," Tenthoff wrote in a research report, reiterating his "overweight" rating on Array with a $9 price target.

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