ARRY SA: One Small Cap That Everyone Should Own
Aug 25, 2017 8:15:32 GMT
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Post by tomsylver on Aug 25, 2017 8:15:32 GMT
Array Biopharma: One Small-Cap Biotech That Should Be In Everyone's Portfolio
Aug. 24, 2017 2:28 PM ET|12 comments| About: Array BioPharma Inc. (ARRY), Includes: BIIB, CELG, LOXO, MRTX, NVS
(1,426 followers)
Summary
Phase 3 data from the COLUMBUS study provides enough evidence that the combination of Binimetinib and encorafenib should be approved for BRAF Melanoma patients.
The market opportunity for BRAF Melanoma is expected to reach in the billions in the coming years.
Multiple partnerships with big pharmaceutical companies might be enough to provide a good enough cash infusion as a safety net from dilution depending upon timely delivery.
Array Biopharma (ARRY) is a small-cap biotech that is developing small molecules to help treat patients with cancer. This is a biotech company that should be on everyone's radar, because it has a lot going for itself. Most importantly, it is expected to present data at the upcoming European Society for Medical Oncology (ESMO). The company will present data from its successful phase 3 study in patients with BRAF mutant melanoma cancer. In my opinion, this company provides excellent long-term value for biotech investors. Not only is it already seeking approval for its BRAF mutant Melanoma drugs Binimetinib and encorafenib, but it has already established partnerships with many big pharmaceutical companies.
Phase 3 Data
The phase 3 study was known as the COLUMBUS study. One key thing to note about this trial was that it was split into two different parts. The first part of the study recruited a total of 577 patients. They were randomized into three different dosing groups. The first group of patients received 45 mg of binimetinib plus 450 mg of encorafenib (This combo is known as COMBO450). The second group of patients received 300 mg of encorafenib. The final group of patients received 960 mg of vemurafenib. One quick thing to note is that vemurafenib (marketed as ZELBORAF) is an FDA approved drug developed by Roche (OTCQX:RHHBY) to treat Melanoma patients with the BRAF mutation. The primary endpoint of the COLUMBUS trial was met. That is because treatment with COMBO450 was superior in Progression-free survival (PFS) compared to vemurafenib alone. The COMBO450 drug arm achieved a PFS rate of 14.9 months compared to those on vemurafenib who achieved 7.3 months. Part 2 of the study recruited a total of 344 patients that were randomized to receive 45 mg of binimetinib plus 300 mg of encorafenib or 300 mg of encorafenib alone. The second part of the study was established just so that the company could see how much binimetinib contributed to the combination of COMBO450. The results from the second part of the study will be presented at the ESMO conference scheduled for September 9, 2017. Array announced on June 5, 2017 that it had fully submitted its New Drug Application (NDA) for COMBO450 in patients with BRAF Melanoma. In my opinion, the data from the COLUMBUS study will provide enough efficacy to support FDA approval for the drug combination of binimetinib and encorafenib.
BRAF Mutation Melanoma
It is estimated that there are more than 87,000 new cases of Melanoma in the United States. At least up to 50% of patients with metastatic melanoma have activating BRAF mutations. Currently marketed drugs targeting BRAF/MEK mutations are nearing $1 billion in annual worldwide sales. The Melanoma market is expected to reach $5.64 billion by 2023. With at least 50% of Melanoma patients having the BRAF mutation, the market potential would be valued at half of $5.64 billion or at $2.82 billion. That is still a pretty good market opportunity.
Financials
According to the 10-K SEC filing, Array Biopharma has cash and cash equivalents of $235.1 million as of June 30, 2017. The company believes that its cash on hand will be able to fund operations for at least the next 12 months. It states that the funds it receives from collaborations may not come in a timely manner. That means that it may have to raise cash if necessary to maintain operations. That could come in form of sale of debt or equity securities, licensing out programs, or making new deals with milestone payments.
Risks
The biggest risk for Array would be if the FDA does not approve binimetinib and encorafenib for patients with BRAF Melanoma. In that case, the stock could fall. If that happens it won't be the end of the company, because it boasts a large pipeline. Matter of fact, it is receiving some of its revenue from collaborations with drug candidates in the pipeline. The risk of dilution is a possibility, but that highly depends upon if and when Array receives any of its collaboration revenue. If Array doesn't receive such revenue on time from its partners, it could be forced to raise some cash. That will likely have a short-term negative effect on the stock.
Multiple Collaborations
What makes Array Biopharma a good small-cap biotechnology company to own is its ability to generate meaningful collaborations. Such collaborations have provided it with a lot of revenue over the many years. This is a good thing, because most small-cap biotech companies raise cash by diluting shares. Some pharmaceutical companies Array Biopharma has partnered with over the years have included: Novartis (NVS), Loxo Oncology (LOXO), Pierre Fabre, Mirati Therapeutics Inc. (MRTX), Ono Pharmaceutical Co., Ltd., Celgene (CELG), Biogen Idec (BIIB), and many others. Some of these collaborations are ongoing, while others were terminated with rights given back to Array. The good news is that Array received a lot of collaboration revenue because of a lot of these partnerships. In my opinion, the pipeline the company has should allow it to continue to develop meaningful collaborations that may provide it with additional cash.
Conclusion
Array Biopharma is a small-cap biotech stock that should be on everyone's radar. The company's ability to partner out drugs from its pipeline should continue to create long-term value for shareholders. In addition, the fact that it can combine some clinical assets like binimetinib and encorafenib successfully gives it a good advantage in the cancer space. The upcoming presentation at ESMO could possibly act as catalyst to boost the share price.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Aug. 24, 2017 2:28 PM ET|12 comments| About: Array BioPharma Inc. (ARRY), Includes: BIIB, CELG, LOXO, MRTX, NVS
(1,426 followers)
Summary
Phase 3 data from the COLUMBUS study provides enough evidence that the combination of Binimetinib and encorafenib should be approved for BRAF Melanoma patients.
The market opportunity for BRAF Melanoma is expected to reach in the billions in the coming years.
Multiple partnerships with big pharmaceutical companies might be enough to provide a good enough cash infusion as a safety net from dilution depending upon timely delivery.
Array Biopharma (ARRY) is a small-cap biotech that is developing small molecules to help treat patients with cancer. This is a biotech company that should be on everyone's radar, because it has a lot going for itself. Most importantly, it is expected to present data at the upcoming European Society for Medical Oncology (ESMO). The company will present data from its successful phase 3 study in patients with BRAF mutant melanoma cancer. In my opinion, this company provides excellent long-term value for biotech investors. Not only is it already seeking approval for its BRAF mutant Melanoma drugs Binimetinib and encorafenib, but it has already established partnerships with many big pharmaceutical companies.
Phase 3 Data
The phase 3 study was known as the COLUMBUS study. One key thing to note about this trial was that it was split into two different parts. The first part of the study recruited a total of 577 patients. They were randomized into three different dosing groups. The first group of patients received 45 mg of binimetinib plus 450 mg of encorafenib (This combo is known as COMBO450). The second group of patients received 300 mg of encorafenib. The final group of patients received 960 mg of vemurafenib. One quick thing to note is that vemurafenib (marketed as ZELBORAF) is an FDA approved drug developed by Roche (OTCQX:RHHBY) to treat Melanoma patients with the BRAF mutation. The primary endpoint of the COLUMBUS trial was met. That is because treatment with COMBO450 was superior in Progression-free survival (PFS) compared to vemurafenib alone. The COMBO450 drug arm achieved a PFS rate of 14.9 months compared to those on vemurafenib who achieved 7.3 months. Part 2 of the study recruited a total of 344 patients that were randomized to receive 45 mg of binimetinib plus 300 mg of encorafenib or 300 mg of encorafenib alone. The second part of the study was established just so that the company could see how much binimetinib contributed to the combination of COMBO450. The results from the second part of the study will be presented at the ESMO conference scheduled for September 9, 2017. Array announced on June 5, 2017 that it had fully submitted its New Drug Application (NDA) for COMBO450 in patients with BRAF Melanoma. In my opinion, the data from the COLUMBUS study will provide enough efficacy to support FDA approval for the drug combination of binimetinib and encorafenib.
BRAF Mutation Melanoma
It is estimated that there are more than 87,000 new cases of Melanoma in the United States. At least up to 50% of patients with metastatic melanoma have activating BRAF mutations. Currently marketed drugs targeting BRAF/MEK mutations are nearing $1 billion in annual worldwide sales. The Melanoma market is expected to reach $5.64 billion by 2023. With at least 50% of Melanoma patients having the BRAF mutation, the market potential would be valued at half of $5.64 billion or at $2.82 billion. That is still a pretty good market opportunity.
Financials
According to the 10-K SEC filing, Array Biopharma has cash and cash equivalents of $235.1 million as of June 30, 2017. The company believes that its cash on hand will be able to fund operations for at least the next 12 months. It states that the funds it receives from collaborations may not come in a timely manner. That means that it may have to raise cash if necessary to maintain operations. That could come in form of sale of debt or equity securities, licensing out programs, or making new deals with milestone payments.
Risks
The biggest risk for Array would be if the FDA does not approve binimetinib and encorafenib for patients with BRAF Melanoma. In that case, the stock could fall. If that happens it won't be the end of the company, because it boasts a large pipeline. Matter of fact, it is receiving some of its revenue from collaborations with drug candidates in the pipeline. The risk of dilution is a possibility, but that highly depends upon if and when Array receives any of its collaboration revenue. If Array doesn't receive such revenue on time from its partners, it could be forced to raise some cash. That will likely have a short-term negative effect on the stock.
Multiple Collaborations
What makes Array Biopharma a good small-cap biotechnology company to own is its ability to generate meaningful collaborations. Such collaborations have provided it with a lot of revenue over the many years. This is a good thing, because most small-cap biotech companies raise cash by diluting shares. Some pharmaceutical companies Array Biopharma has partnered with over the years have included: Novartis (NVS), Loxo Oncology (LOXO), Pierre Fabre, Mirati Therapeutics Inc. (MRTX), Ono Pharmaceutical Co., Ltd., Celgene (CELG), Biogen Idec (BIIB), and many others. Some of these collaborations are ongoing, while others were terminated with rights given back to Array. The good news is that Array received a lot of collaboration revenue because of a lot of these partnerships. In my opinion, the pipeline the company has should allow it to continue to develop meaningful collaborations that may provide it with additional cash.
Conclusion
Array Biopharma is a small-cap biotech stock that should be on everyone's radar. The company's ability to partner out drugs from its pipeline should continue to create long-term value for shareholders. In addition, the fact that it can combine some clinical assets like binimetinib and encorafenib successfully gives it a good advantage in the cancer space. The upcoming presentation at ESMO could possibly act as catalyst to boost the share price.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
