ARRY Edited Transcript earnings CC Q1 2018

Q1 2018 Array Biopharma Inc Earnings Call BOULDER Oct 31, 2017 - Edited Transcript of Array Biopharma Inc earnings conference call or presentation Tuesday, October 31, 2017 at 1:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrew R. Robbins Array BioPharma Inc. - COO * Jason Haddock Array BioPharma Inc. - CFO * Ron Squarer Array BioPharma Inc. - CEO & Director * Tricia Haugeto * Victor Sandor Array BioPharma Inc. - Chief Medical Officer ================================================================================ Conference Call Participants ================================================================================ * Anupam Rama * Chris Shibutani Cowen and Company, LLC, Research Division - MD & Senior Research Analyst * Eun Yang * James William Birchenough Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst * Mara Goldstein Cantor Fitzgerald & Co., Research Division - Director of Research, Head of U.S. Healthcare Research & Senior Analyst * Michael Werner Schmidt Leerink Partners LLC, Research Division - MD, Biotechnology and Research Analyst * Peter Richard Lawson SunTrust Robinson Humphrey, Inc., Research Division - Director * Stephen Douglas Willey Stifel, Nicolaus & Company, Incorporated, Research Division - Director ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and welcome to the Array BioPharma First Quarter of Fiscal 2018 Conference Call. (Operator Instructions) As a reminder, this conference call may be recorded. I would now like to turn the conference over to Tricia Haugeto. Ma'am, you may begin. -------------------------------------------------------------------------------- Tricia Haugeto, [2] -------------------------------------------------------------------------------- Thank you, Grace. Good morning, and welcome once again to Array BioPharma's conference call to discuss our financial results for the first quarter of fiscal 2018. You can listen to this conference call on Array's website at arraybiopharma.com. Also, we are using slides today to accompany our remarks. The slides can be downloaded on the Investor Relations homepage 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, and our Chief Financial Officer, Jason Haddock, who will lead the call today. In addition, 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 will read the following safe harbor statement. The matters we are 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, 2017 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, Array BioPharma Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Trish, and good morning to everyone joining the call today. I'm starting on Slide 3. We're very pleased that encorafenib and binimetinib New Drug Applications and Marketing Authorization Applications have been accepted and validated with the FDA and EMA respectively, based on the strength of data from Part 1 and Part 2 of our global Phase III COLUMBUS trial in BRAF-mutant melanoma patients. The FDA set a target PDUFA date of June 30, 2018, for both applications. In addition, the FDA informed Array that based on their preliminary review of the application they've not identified any potential review issues, and that they are not currently planning to hold an advisory committee meeting as part of their review process. Part 1 results were presented at the 2016 Society for Melanoma Research Congress, or SMR, and Part 2 results were shared at ESMO last month. In May we announced that we selected Ono Pharmaceutical as our partner for development and commercialization of bini and enco in Japan and South Korea. Ono expects to file COLUMBUS regulatory submissions in 2018. We also initiated 2 exciting non-exclusive clinical trial collaborations, 1 with Merck and 1 with Bristol-Myers Squibb, to investigate the safety and efficacy of our MEK inhibitor, binimetinib, with anti-PD-1 therapy in metastatic colorectal cancer patients with microsatellite stable tumors, or MSS CRC. In September we initiated the trial with BMS and expect the Merck trial will begin before the end of the year. And separately, we initiated in May the randomized portion of the BEACON CRC trial based on attractive safety profile and with encouraging clinical activity observed in the safety lead-in, and recruitment is well underway. Results from the BEACON CRC safety lead-in were also presented at ESMO, which showed a 41% confirmed overall response rate in a population where current standards of care have historically demonstrated response rates in the range of only 4% to 8%, and we expect to share additional data from the safety lead-in over the coming year. And based on these unprecedented results, we are exploring potential fast-to-patient opportunities with regulators and will provide an update when more information is available. Novartis continues to substantially fund all ongoing trials with binimetinib and encorafenib that were active or planned as of the close of the Novartis agreement in 2015, including the COLUMBUS Phase III trial. Reimbursement revenue from Novartis was approximately $94.1 million for the 12 months ended September 30, 2017, of which $18.2 million was recorded in the quarter ending September 30, 2017. Total revenue and upfront collected from Novartis since the start of the 2015 agreement is $326 million. So now moving to Slide 4, we're pleased to have in place strong ex-US partnerships to maximize the potential of binimetinib and encorafenib around the world. In the U.S. we continue building broad, experienced commercial and medical affairs teams as we execute our go-to-market strategy for a planned mid-2018 launch, with substantial key talent already in place across functions. Our Europe-focused partner with a strong legacy in oncology, with over 1,000 employees dedicated to this therapeutic area including commercial, research and development capabilities, has made bini and enco a top priority for their team. And finally, in Ono we selected a Japanese market leader in immuno-oncology with rights to the first-to-market PD-1, Opdivo. Ono has a powerful track record of success in developing and commercializing oncology products in Japan, and we look forward to their expertise in introducing our product in this important geography. And under the agreement with PF and Ono, in aggregate we received over $60 million in upfront payments with nearly $600 million in potential milestone payments and the prospect that over half of future development cost could be offset by contributions from our partners. Now in Europe and other territories, PF will deliver 35% royalties on annual combined net sales of bini and enco which exceed only EUR 100 million, and in Japan and South Korea Ono will provide 25% royalties on annual combined sales of both products which exceed only JPY 10 billion, which is less than $90 million. Now moving to Slide 6, BEACON CRC continues to be an important part of our development strategy, and here we provide the details of the study, a global Phase III clinical trial in patients with BRAF colorectal cancer, assessing the efficacy of encorafenib and cetuximab with or without binimetinib in comparison to cetuximab and irinotecan-based therapy. The primary endpoint of the trial is overall survival, or OS, of the triplet therapy compared to the control arm. Secondary endpoints include an OS comparison of the doublet to the control arm and the triplet to the doublet. The study includes a 30-patient safety lead-in to establish combinability of the agents in the triple therapy. As mentioned, we initiated the randomized portion of the trial based on attractive safety -- an attractive safety profile and with encouraging clinical activity observed in the safety lead-in, and recruitment is well underway. So on Slide 7, recall that the primary endpoint of the BEACON CRC study is OS. In the encorafenib/cetuximab arm of our prior Phase II trial, we were pleased to report a median OS of greater than one year, which is more than double several separate historic standard-of-care published benchmarks for this population. Our recent SWOG group study in -- result is indicated in the first gray bar, which shows a median OS of (technical difficulty) months for patients on the cetuximab and irinotecan control arm of that study. Now these results taken together provide directional benchmark for both overall survival for our BEACON CRC study in the doublet and control arms respectively. Now on Slide 8, we show certain separate historic standards of care benchmarks for both ORR and median PFS in patients with BRAF CRC. As I mentioned earlier, we reported a 41% confirmed ORR at ESMO from our BEACON CRC triplet safety lead-in, while in our prior Phase II study with only the doublet of encorafenib and cetuximab the confirmed overall response rate was 22%. As you can see here, the historic ORR benchmarks for treatments in this patient population range only between 4% to 8%, including the recent SWOG control arm result of only 4% ORR using irinotecan and EGFR-containing regimens. Historic median PFS benchmarks in this patient population fall between only 1.8 and 2.5 months, including the SWOG trial control arm result of only 2 months median PFS. So in the ESMO safety lead-in presentation, with an August 9, 2017, cutoff, 76% of patients remain on study with a median duration of therapy past 5.6 months. Now this represents the minimum median duration of therapy we've observed, and we'd expect this to increase over time in future analyses. So now on Slide 9, I'll review the detailed results from the BEACON CRC safety lead-in. 30 patients were treated in the safety lead-in and received the triplet combination of binimetinib, encorafenib and cetuximab. Out of the 30 patients, 29 had a BRAF V600E mutation. Microsatellite instability-high, or MSI-high, was detected in only one patient. As mentioned, the confirmed overall response rate or ORR was 41%, including a complete response. Now in patients with BRAF V600E mutation, a group of patients with historically poor outcomes -- in the 17 patients with BRAF mutation with only 1 prior therapy, the observed overall response rate was 59%. Now the randomized portion of the study restricts the patients with 2 prior lines of therapy to a maximum of 35% of the total. Now on Slide 10, we show tumor response by patient. Red -- the bars in red show patients who had 1 prior regimen; the bars in blue, patients who have had 2. Remarkably, out of the 28 patients with both a BRAF mutation and a post-baseline assessment, 27 show tumor regression. On Slide 11 we show the number of months each patient has been on therapy. As with the prior slide, the rows in red show patients who've had 1 prior regimen; the rows in blue show patients who have had 2. The rows with an arrow, of which there are many, denote patients who were still on treatment at the time of data cutoff, and we're pleased to see that 76% of patients overall were still on therapy after a median duration of exposure of 5.6 months, and these results are unprecedented for this patient population compared to existing standards of care. On Slide 11 (sic) [12], in the BEACON CRC safety lead-in the triplet combination was generally well tolerated. The most common Grade 3 or Grade 4 adverse events seen in at least 10% of patients were nausea, vomiting, increased blood CK and urinary tract infection, all of which occurred in only 10% of patients. Three patients discontinued treatment due to AEs, with only one considered treatment-related. Now moving to Slide 14, we now have in place clinical research collaborations with both Merck and Bristol-Myers Squibb to study binimetinib plus anti-PD-1 therapy in patients with microsatellite stable metastatic CRC, or MSS CRC. The vast majority of patients with colorectal cancer have the MSS phenotype. These new studies have the potential to strengthen our position both on the I/O front the CRC field. The trial in collaboration with Merck, which is expected to start during the quarter, will investigate the safety and efficacy of binimetinib with Merck's Keytruda. The trial in collaboration with Bristol-Myers Squibb, which began last month, will investigate the safety and efficacy of binimetinib in combination with BMS's Opdivo and Opdivo plus Yervoy regimen, and I'll review the trial design for this study on the next slide. These collaborations are based on the synergistic activity we have seen with binimetinib when combined with anti-PD-1 therapy in preclinical models, and based on emerging clinical data demonstrating that MEK inhibition may enhance the activity of anti-PD-1 therapy. In each study we expect to establish recommended dose regimens for use in future clinical trials as well as explore the preliminary anti-tumor activity of the proposed combinations. Under the Merck agreement, Merck will act as the sponsor of the clinical trial and Array will supply binimetinib. Under the Bristol-Myers Squibb agreement, Array and BMS will jointly support the study, with Array acting as the sponsor. On Slide 15, we show the trial design for our ongoing study with Bristol-Myers Squibb. This is a multicenter, open-label Phase Ib/II study to evaluate the safety and assess the anti-tumor activity of binimetinib administered in combination with nivolumab or nivolumab plus ipilimumab in adult patients with advanced metastatic colorectal cancer with MSS disease and the presence of a RAS mutation who have received at least 1 prior line of therapy and no more than 2 prior lines of therapy. And the trial contains a Phase Ib study to determine the maximum tolerated dose and recommended Phase II dose of the combinations, followed by a randomized Phase II to assess the efficacy of the combinations. This is the first trial to be initiated with ipi/MEK and PD-1 inhibitors in colorectal patients. Moving to Slide 17, we describe the key characteristics of the global melanoma and colorectal cancer market opportunities. On the left it's estimated that approximately 50% of advanced melanoma patients and 10% to 15% of advanced colorectal patients have activating BRAF mutations, and due to the relative incidence of these populations the annual treatable population for both BRAF CRC and BRAF melanoma are actually similar in size. On the right, we can see that over 229,000 individuals succumb to colorectal cancer or melanoma combined each year across the U.S., Europe and Japan. The unmet need in advanced CRC and melanoma remains high, and with the advancement of our BEACON CRC Phase III study and NDAs for COLUMBUS, Array is working towards potentially bringing new treatment options to these patients. Both Merck and BMS have recently been granted FDA approvals for their PD-1 therapies for the treatment of CRC patients with microsatellite instability-high, or MSI-high. The MSI-high population is a very small percentage of metastatic CRC and the overlap of this population with BRAF CRC is also estimated to be small. In the CRC pie chart, we depict this estimated overlap. So at this time I'm going to turn the call over to Jason to review our financial highlights. -------------------------------------------------------------------------------- Jason Haddock, Array BioPharma Inc. - CFO [4] -------------------------------------------------------------------------------- Thank you, Ron, and good morning, everyone. I'm on Slide 19, which depicts our financial performance for the first quarter of fiscal 2018. As you can see, our revenue for this quarter is $29.7 million compared to $33.8 million for the prior quarter. Our reimbursement revenue from Novartis is down $3.7 million as our development activity continues to trend down on the -- our transition studies. Our collaboration revenue is up $2 million for the quarter, which is driven by increased BEACON spend in addition to higher activity with our research collaborations. Our license and milestone revenue decreased $2.4 million due to the $3 million Genentech milestone we recognized last quarter, partially offset by a full quarter of Ono license revenue from our $31.5 million upfront we received last quarter. As we move to our operating expenses, cost of partnered programs for the first quarter of fiscal 2018 is $11.8 million, which is up $1.7 million from previous quarter. This increase is driven by BEACON expenses as that program advances. Research and development expense for the first quarter is $41.4 million, which is $2.3 million higher than the prior quarter. This increase is driven by a $6.4-million nonrecurring expense related to commercial supply, partially offset by the lower Novartis reimbursed activity as mentioned in the revenue above. G&A for the first quarter is $12 million, which is up from last quarter by $1.1 million, driven by a non-cash charge for stock-based compensation expense related to a departing employee. This brings our loss from operations for Q1 to $35.5 million compared to $26.3 million from the previous quarter, driven by the lower milestone revenue and higher nonrecurring expenses for our commercial supply and stock-based compensation expense. Other expenses totaled $2.5 million, which represents a $0.8 million decrease from last quarter, largely driven by a change in fair value expense on notes payable. Net loss for the quarter is $38 million compared to our $29.6 million loss from last quarter. Finally, we closed the quarter with a balance of $464.3 million in cash, cash equivalents and marketable securities. Our balance represents an increase of $229.3 million from previous quarter, driven primarily by the net $243 million we raised in our September follow-on offer, offset by our normal operational burn. Excluding nonrecurring operational items, our quarterly burn rate was approximately $28 million, which is slightly higher than previous quarter. We expect our burn to increase in future quarters as we continue to advance our proprietary programs and build our commercial capability. Now I'd like to turn the call back to Ron. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [5] -------------------------------------------------------------------------------- Thank you, Jason. And I'm just going to summarize our top priorities on Slide 21 and then open up for questions. So we're pleased to share with you the great progress we made over the past few months with binimetinib and encorafenib. NDAs and MAAs were filed for BRAF-mutant melanoma with the FDA and EMA, and we look forward to supporting global health authorities as they conduct their reviews. We remain excited about the potential of MEK inhibitors to enhance the activity of I/O therapy, especially in patient populations which have not been responsive to I/O in the past. Our collaborations with Merck and BMS to combine binimetinib with other I/O therapies in MSS CRC should inform future development strategies for these innovative combinations. Enrollment is well underway in the randomized portion of our Phase III BEACON CRC trial and we are currently exploring fast-to-patient opportunities with regulators based on the promising data from the Phase II study and the BEACON triplet safety lead-in results. And finally, we're pleased to have strong geographic partnerships in place, including most recently our agreement with Ono Pharmaceutical as our Japanese partner, which will ensure we are well positioned for global development and commercialization for binimetinib and encorafenib. And with that, I'll open up the call to Q&A. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from Anupam Rama with JP Morgan. -------------------------------------------------------------------------------- Anupam Rama, [2] -------------------------------------------------------------------------------- Ron, maybe -- I was thinking, if you can describe how you're thinking about the 382/CSF1-R data upcoming here at SITC. What are the push/pull levers here for go-forward development, and what would be a win scenario in your view? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [3] -------------------------------------------------------------------------------- Great. Good to hear from you, Anupam. Thanks for calling in. So yes, we are going to be presenting data from essentially our dose escalation of 382 or CSF1-R. The purpose of that study was in -- to put us in a position to react to sort of growing knowledge of the CSF1-R field. Specifically, we also understand that Five Prime will be presenting data related to its combination with BMS's PD-1, and we wanted to be in a position to understand what we could as we move forward. Now we are in expansion populations now, looking at melanoma and lung cancer, but we're -- clearly would be in a position to react to new knowledge as it evolves. And if you ask me, what I'd like to see is a clear proof of concept that CSF-1R does have an immunoenhancing or potentiating effect. And then, of course, we'd want to see what potential liabilities the current programs which are being studied have, and look forward to using a small-molecule approach in 382 which is highly selective and very potent, and at least in a Phase I has shown itself to be well tolerated. We'll be describing the profile as -- from the dose escalation at SITC, but of course we have already expanded into the specific patient populations, so we were comfortable certainly with the tolerability that we saw in the dose escalation. And so that's what we can say today. I think as we learn more over the weekend and share our data at SITC, we'll be able to probably add a little bit to that. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- And our next question comes from Chris Shibutani with Cowen. -------------------------------------------------------------------------------- Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [5] -------------------------------------------------------------------------------- I wanted to ask you about the CRC partnerships with Bristol and Merck. In particular, with Bristol you are studying multiple combinations, not just with a PD-1 but also with a CTLA-4. Perhaps for Andy or Victor, if you're there, can you comment upon what you think the rationale is for a CTLA-4? What do we know about some potential benefit there in that particular indication? Why would we potentially expect maybe a differentiated result from just the doublet? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [6] -------------------------------------------------------------------------------- So Victor, you want to take that? -------------------------------------------------------------------------------- Victor Sandor, Array BioPharma Inc. - Chief Medical Officer [7] -------------------------------------------------------------------------------- Yes, sure. I think that there's quite a bit of evidence that adding a CTLA-4 to a PD-1 in other settings where a PD-1 is active is certainly -- it's certainly a large part of the answer. These 2 drugs -- they act at very, very different parts in the immune response to tumors, 1 more related to sort of the priming and the other more related to the effector mechanisms, and I think that the thinking is that the combination may be more effective, as it is in other disease areas. And there's also, of course, preclinical data that would drive this. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [8] -------------------------------------------------------------------------------- So Chris, the only thing I'd add strategically is Roche, who is ahead of the pack in this area, doesn't own a CTLA-4 and hasn't, at least to our knowledge, studied it. And so we're not only looking at the CTLA-4 MEK PD-1 but also at PD-1 MEK. But this really gives us an opportunity, as the first in that type of study to potentially differentiate, and so we'll learn that over time. And so that's one of the reasons we're excited about it. -------------------------------------------------------------------------------- Chris Shibutani, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [9] -------------------------------------------------------------------------------- And with the Bristol study you're getting underway in September, can you give us a sense for timing and communications? Is it conceivable we could see some results, say, at ASCO? And if you are the sponsor, will you be able to be in position to control more of the communications or disclosure of those results? -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [10] -------------------------------------------------------------------------------- This is Andy. I think it's probably early for us to comment on a specific conference. I would certainly want us to be in a position where we share data from that trial in some way, shape or form during 2018. I think what we've said previously is that, since it is open-label and both Bristol and Array will have a chance to look at the data as they emerge, there is the possibility that you see a more strategic announcement from us, like we're moving into a larger randomized trial, prior to us actually presenting the data at a scientific congress. So just keep that in the back of your mind. As far as the sponsorship and Bristol, we'll continue to work with them to put the data out in the right forum. But I do think holding control of that study and sponsorship of the study should put us in a position to be more transparent about data as they emerge. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- And our next question comes from Jim Birchenough with Wells Fargo. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [12] -------------------------------------------------------------------------------- Just on the fast-to-market strategy for BRAF colorectal, could you maybe talk about the time lines for sitting down with FDA and whether it would be focused on the lead-in portion of the BEACON study or perhaps PFS data from the randomized portion? And then, second to that, just, is there an interim analysis focused on PFS in BEACON? Can you remind us? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [13] -------------------------------------------------------------------------------- Great. Jim, thanks for the question. So we're not in a position to give much insight here at this point, other than the statement that given the strength of the data and how unprecedented it is in this population with limited or I should say no useful therapies, that we are going to explore this. Look, we're in constant communication with the FDA, and I'd say that the conversation about possible early paths to patient is ongoing and will be ongoing. And when we reach a point where we feel we've come to agreement, that's when we will indicate what the path is. Now I think just responding to your question that -- there's the question of what can you do with the 30-patient run-in and -- or will you -- or will we use potentially data from the ongoing Phase III randomized portion of the study. I think that it's going to be tough -- I think that'll be a good characterization -- to rely only on 30 patients, single arm, to drive that, or to drive a path to market, especially when you have an ongoing and robust trial underway. There are no -- other than traditional safety looks at the ongoing Phase III trial, I can't say that we have a specific interim built in. But I think that your reference to surrogate endpoints -- not OS, which is the primary endpoint -- may be relevant. And so I think there you have the possibility of considering, would an analysis of ORR or PFS be relevant in trying to get the product available to patients. The critical point, though, is we need to maintain the integrity of the Phase III and ensure that a full approval is ultimately going to be yielded from it. So I appreciate the question and, as I said, when we feel that we've come to some sort of agreement and then can be more specific, we will be. But we are working on it. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- And our next question comes from Peter Lawson from SunTrust Robinson. -------------------------------------------------------------------------------- Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [15] -------------------------------------------------------------------------------- Ron, just following up on Jim's question -- so will we see some kind of interim readout for the BEACON CRC? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [16] -------------------------------------------------------------------------------- So I don't -- there's nothing planned at this time. The run-in data, Peter -- the run-in data will continue to evolve. As you recall, as of the data cutoff that we showed at ESMO, we hadn't hit PFS. And so -- which is, I think, a good thing. And -- but over time we'll have PFS, and over hopefully a very long period of time we'll have OS. So we'll have more data flow about the performance of the triplet. Of course, there's a lot of evidence of what the control arm is likely to do. We had a Phase II result that went all the way to OS with the doublet. And so that's going to be helpful in order to assess the ultimate likelihood of success with BEACON, which of course we're quite confident about. But if we do find a path working with regulators that would allow us to get to market earlier and would involve, let's call it, interim-type analyses, we'll certainly share those if they are material and in the right form. So that's all we can say at this point. -------------------------------------------------------------------------------- Peter Richard Lawson, SunTrust Robinson Humphrey, Inc., Research Division - Director [17] -------------------------------------------------------------------------------- Got you. And then just on CSF-1R, is it -- should we be thinking about you heading towards non-small cell lung cancer and melanoma or are there other indications you're kind of thinking through? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [18] -------------------------------------------------------------------------------- Yes, look, there's a rationale for both of those populations, and that's why we're using those as the initial cohorts. We're also looking to learn more about and establish some more knowledge of the proof of mechanism and how the drug's performing. But I think what we're trying to say is there's other work that's gone on in this area -- I would say quite a bit of work over time. We understand that at least BMS and Five Prime have looked at a number of different settings. We're not sure what we're going to learn at SITC over the weekend, but I think any available knowledge that emerges would help to inform our path going forward. As I said earlier, our hope is to see strong proof of mechanism suggesting that CSF-1R could be important. That would be motivating and that would help to inspire the -- and shape the path forward. -------------------------------------------------------------------------------- Operator [19] -------------------------------------------------------------------------------- And our next question comes from Stephen Willey with Stifel. -------------------------------------------------------------------------------- Stephen Douglas Willey, Stifel, Nicolaus & Company, Incorporated, Research Division - Director [20] -------------------------------------------------------------------------------- Maybe just a follow-up on the CSF-1R conversation. Have you had a conversation with Merck with respect to their desire to pursue potentially other tumor types beyond the lung and melanomas expansion cohorts that are currently enrolling? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [21] -------------------------------------------------------------------------------- Now so at this time, as I said, we're focused on those preplanned populations that we were -- that's what we're doing now. And it's really going to be based on knowledge, I think, that comes from BMS/Five Prime and maybe someday from other parties. We -- Roche has been pretty quiet, but that's going to inform how we go forward. -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [22] -------------------------------------------------------------------------------- Steve, this is Andy. I think what's important for us is, next weekend after SITC, we'll demonstrate we're going to be in a place where we have a tolerable, combinable dose that we think is effective with Keytruda, and from that point we'd be in a position to jump into many different directions based on how the emerging field evolves, whether that's Five Prime/BMS or some of the other competitors. And I think based on what they present, it might be an excellent opportunity for us to have conversations with someone like Merck to see, are they interested in pursuing exciting science and clinical results like we would be. -------------------------------------------------------------------------------- Stephen Douglas Willey, Stifel, Nicolaus & Company, Incorporated, Research Division - Director [23] -------------------------------------------------------------------------------- Understood. And then, Andy, maybe another question for you. Just kind of wondering how you guys are thinking about what I think most are presuming will be an adjuvant label for Novartis in the BRAF melanoma setting, and how that may impact or not impact the addressable opportunity within the metastatic setting. -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [24] -------------------------------------------------------------------------------- Yes. Good question, Steve. So a couple thoughts on that. First, talking to the folks who actually treat patients out in the world, both in the academic centers and the community, I think their long-term excitement is heavily tilted towards monotherapy PD-1 in the adjuvant setting. So they see the nivo data and we have to tease out the M1cs from the stage 3s in that set that was presented at ESMO as probably the leading adjuvant therapy in melanoma for the next 3 to 5 years until other data unseats it. There will be patients who are eligible to receive Mek/Taf in the adjuvant setting. I think what's interesting is the tolerability of that combination is unlikely to result in long, durable treatment. So what we see from reports at ISPOR and AMCP and from some of the GPOs we talk to as a practical duration of therapy, at least in the metastatic setting, of far less than the PFS that Mek/Taf produced in their registration studies. And so if you translate some of their tolerability challenges into the adjuvant setting, #1, there's not going to be as high a tolerance for 104-degree fevers on a regular basis for these patients; but #2, we don't perceive that they're going to be on therapy for 8, 9, 10 months, a year plus. And in the adjuvant setting for stage 3s and certainly for stage 2 patients, the RFS even on placebo is relatively healthy, 40%-plus at 3 years. So if they have 5 months of treatment or 6 months of treatment and then they go 18 months before they progress or regress into a metastatic setting, we think there's still a significant opportunity for re-treatment with Mek/Raf in the metastatic setting. But certainly we're encouraged on behalf of the patients that some of these therapies have shown such interesting and positive results in the adjuvant setting. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [25] -------------------------------------------------------------------------------- Yes. No. I think that, just to build on what Andy's saying to sort of the punchline is our view and the view of experts is it's going to be I/O first. And not to put a -- just to show you an optimistic view, it would -- might suggest that Mek/Raf in general moves or is used more often in the first line, possibly in the metastatic setting. And so that's our prediction of the future even in those patients, as Andy said, who might perceive Mek/Raf in the adjuvant setting, certainly a possibility and expectation for re-treatment, given that that's it -- there are only 2 modalities available to patients, I/O, targeted therapies, and they're likely to cycle through it in every way they can. -------------------------------------------------------------------------------- Operator [26] -------------------------------------------------------------------------------- And our next question comes from Mara Goldstein with Cantor Fitzgerald. -------------------------------------------------------------------------------- Mara Goldstein, Cantor Fitzgerald & Co., Research Division - Director of Research, Head of U.S. Healthcare Research & Senior Analyst [27] -------------------------------------------------------------------------------- On the MEK/PD-1 combination development with Bristol, where you are the sponsor for that trial, do your partners have any role in that? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [28] -------------------------------------------------------------------------------- So to the -- -------------------------------------------------------------------------------- Tricia Haugeto, [29] -------------------------------------------------------------------------------- PF. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [30] -------------------------------------------------------------------------------- (inaudible) if you want to discuss it. The Bristol (inaudible). -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [31] -------------------------------------------------------------------------------- You're talking about our Ono and Pierre Fabre partners? Is that (inaudible)? -------------------------------------------------------------------------------- Mara Goldstein, Cantor Fitzgerald & Co., Research Division - Director of Research, Head of U.S. Healthcare Research & Senior Analyst [32] -------------------------------------------------------------------------------- Correct. Yes. -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [33] -------------------------------------------------------------------------------- So for now, we just entered into the agreement directly with Bristol-Myers, and we're going to go forward with that. The -- it is a Phase I/II study, so we are in discussions with our European and Japanese partners about, if it were to extend to a global study as sort of the next stage after proof-of-concept, their level of interest. And I can suggest that their level of interest is quite high based on those discussion. But for now the study is designed to be primarily a U.S.-focused study to get those results as rapidly as we can. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [34] -------------------------------------------------------------------------------- Yes. And just to characterize it, it's a -- it is -- as we said, it's being co-funded with BMS. It's, in the scope of drug development, a relatively inexpensive investment until you decide to go to pivotal. And pivotal beyond our partners, of course, BMS, may also be interested in participating there. So we want to collect that data quickly, both sort of with ipi and without, with PD-1 and PD-1 plus ipi, and then decide to move forward quickly. But in general, as we look across our portfolio at the many opportunities that we may have going forward, one of the reasons that we wanted to ensure we had a healthy cash position is that we would be able to act quickly if there -- if these opportunities arise. -------------------------------------------------------------------------------- Mara Goldstein, Cantor Fitzgerald & Co., Research Division - Director of Research, Head of U.S. Healthcare Research & Senior Analyst [35] -------------------------------------------------------------------------------- Okay. And if I could just ask, because it was in the press release but we haven't spoken to it in a while, just the trial for ARRY-797 and what the plan will be there for the coming year. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [36] -------------------------------------------------------------------------------- Yes. So we continue to progress as before towards the start of a Phase III trial in the near future. And as we've mentioned, we are intrigued and considering the possibility of creating a stand-alone company highly focused on not just the disease but specifically on patient recruitment and preparing the market for an ultra -- sort of an ultra-rare opportunity. There -- and so we're going to be doing that in parallel as we prepare for study startup. So everything's been continuing as before. Drug supply; interactions with regulators; building relationships with clinical trial operations partners. And so we're going to start that trial either within Array or within an independent company, we think, in the not too distant future. So nothing's changed there, although we still -- our position is still that we are interested in forming a company, and to the extent that we do and we're able to describe that, we will do so in the not too distant future. Hope that helps. -------------------------------------------------------------------------------- Operator [37] -------------------------------------------------------------------------------- And our next question comes from Eun Yang from Jefferies. -------------------------------------------------------------------------------- Eun Yang, [38] -------------------------------------------------------------------------------- In melanoma, now the PDUFA date is set for June next year, once the bini and enco got approved, I want to ask you about the market dynamics, because it -- bini and enco would be the third entrant to the market, and currently Novartis is capturing the large market share in the BRAF melanoma. Do you think that's the first-to-market advantage or are there other things playing for the market dynamic currently? And then what do you think you need to do in order to gain market share from those 2 competitors? -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [39] -------------------------------------------------------------------------------- Hi, Eun. This is Andy. I'll try to share my thoughts on your question. Thanks for that. So certainly Novartis had the first-mover advantage when it comes to the combination of MEK and BRAF in melanoma. Roche was out first with BRAF monotherapy with Zelboraf and they had captured essentially the entire market as the lone approved drug, I guess with Yervoy, back before PD-1s and MEK/RAF combos. But once Novartis came on board with the combination, they had clearly-differentiated efficacy and tolerability as it's now, I think, well accepted that adding a MEK to a BRAF mitigates some of the BRAF toxicities. And so the entire market switched over to Mekinist and Tafinlar when GSK launched it and then subsequently sold it to Novartis. When Roche came out with Cotellic in the combination with Zelboraf, then they sort of had an equivalent offering, I would say. They had similar efficacy endpoints in their pivotal trial, coBRIM, and then they also had some significant tolerability challenges with photosensitivity and early-onset rash, which is what we -- from what we can gather, more severe in a practical sense than with Mekinist and Tafinlar. So our understanding of the market dynamics when that second entrant came in is that there was really no compelling value proposition for physicians to switch from Mekinist and Tafinlar to Zelboraf and Cotellic, which is reflected in the relative share that we see today in the market, as you point out. We are confident based on the results of the COLUMBUS trial that we do have a differentiated offering, based on both the unprecedented efficacy levels that we've generated in that trial as well as the tolerability profile which we believe is differentiated. And certainly when you look at things like pyrexia, which is associated with Novartis' dabrafenib as an off-target molecule-specific toxicity, as well as the early-onset rash and photosensitivity that Roche exhibits, we don't seem to have those same issues in our tolerability profile. So from both looking across efficacy endpoints -- and again, it's hard to do cross-trial comparisons, and we're not in the business of doing that. We'll let the market and the healthcare professionals make those decisions. But we do think that we have an offering that will provide benefit to patients both from a long-term outcomes perspective as well as a tolerability perspective. So we're going to utilize that as our go-to-market strategy; certainly employ some other creative tactics that maybe a small, more flexible and nimble biotech company can use, that giant pharmaceutical companies that have strategic portfolio considerations may not be able to use. And we'll see how we do once, hopefully, knock on wood, the FDA gives us our approval and nod to go ahead. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [40] -------------------------------------------------------------------------------- Yes. Eun, this is Ron. Thanks for calling in. The only subtle things I'm going to add relate to, first of all, we're we've been pleased to see the strength of the MEK/RAF market in general in that things have kind of settled -- I'd say that Roche has settled in as a distant follower. So we're really focused on Novartis and they've shown -- MEK/RAF as a class has shown great strength, continuing to grow in certain quarters, and that's important in that there's a sort of equilibrium now with, I think, I/O therapy, sometimes used first; sometimes MEK/RAF used first. But any kind of concerns about the end of targeted therapy in melanoma, I think, are well behind us. And as we've said in the past, we think that the MEK/RAF market globally is in the neighborhood of $1 billion revenue, and that's what we're entering. There's one other thing to think about for our future. We have not yet analyzed overall survival, and of course we will eventually be in a position to do so. And we think there is going to be an interesting artifact that, because of a likely much higher level of post-study I/O treatment, the numbers may be larger than seen before. Now the relative overall survival result for the combination versus the control arm may be similar. And we don't know that, but certainly like to see the best result possible. But the absolute number is going to be strong. And to the extent that the treating physician looks at the absolute number -- which over time we'll be able to share -- that could be an interesting factor as well. So there's a lot of things that we believe are going to help us make an important mark in what is a very large population. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- And our next question comes from Michael Schmidt with Leerink. -------------------------------------------------------------------------------- Michael Werner Schmidt, Leerink Partners LLC, Research Division - MD, Biotechnology and Research Analyst [42] -------------------------------------------------------------------------------- I just had one regarding the Loxo drug and I was wondering -- since you guys originally developed this agent, I was wondering if there are any milestones associated with the potential approval of this drug next year and what -- if you can remind us of the economics in general, that would be helpful. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [43] -------------------------------------------------------------------------------- Yes. So we've been very pleased with the progress that Loxo has made, not just with 101 but with the -- we'll call it the follow-up, and now with the RET. And all of these molecules have milestones and royalties associated with them. I don't (technical difficulty) if you want to... -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [44] -------------------------------------------------------------------------------- Yes. I don't know that we've split out the specific number, but I think what we can say is that there will -- we will be happy when Loxo commercializes their first molecule. It would be an important milestone for Array. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [45] -------------------------------------------------------------------------------- Right. And I think they're talking about filing maybe even this year with an approval in new year, and there will be a milestone associated with that, and with the other molecules if they are approved over time. -------------------------------------------------------------------------------- Michael Werner Schmidt, Leerink Partners LLC, Research Division - MD, Biotechnology and Research Analyst [46] -------------------------------------------------------------------------------- Is there a royalty potentially? -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [47] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [48] -------------------------------------------------------------------------------- Yes. Yes. For each program there is a royalty associated with it -------------------------------------------------------------------------------- Michael Werner Schmidt, Leerink Partners LLC, Research Division - MD, Biotechnology and Research Analyst [49] -------------------------------------------------------------------------------- And do -- any more information on that? Single digits, double digits, or anything along those lines? -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [50] -------------------------------------------------------------------------------- It's -- single digits is the right way to think about it. Yes. I just -- I know that was your question, but these were preclinical collaborations. Great success. But at the time that we entered into these agreement, preclinical, and those are -- the terms reflect that. So thank you, Michael. -------------------------------------------------------------------------------- Operator [51] -------------------------------------------------------------------------------- And our follow-up question is from Jim Birchenough with Wells Fargo. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [52] -------------------------------------------------------------------------------- The question's really around reimbursement for the MEK/RAF combo. And clearly there's differentiation that we all can appreciate and oncologists can appreciate. But could you maybe describe your early discussions with payers, and do you think they appreciate the differentiation, or is this a market where we're going to have to think about deep discounts to get preferred status? I ask the question in the context of what's been a more challenging reimbursement environment for some competitive categories. -------------------------------------------------------------------------------- Andrew R. Robbins, Array BioPharma Inc. - COO [53] -------------------------------------------------------------------------------- Yes. So thanks for the question, Jim. So I think our current perception right now is that the impact on an individual payer basis of BRAF-mutant melanoma patients is relatively limited when -- versus when you think about something like front-line non-small cell lung cancer or breast cancer. And so I want to choose my words carefully because you never want to put yourself in a position where you regret what you say. But I think that the difference -- if you -- let me put it this way. If you look at the difference in end market pricing today between Novartis and Roche, there is a noticeable spread. So Novartis's 2-drug MEK/RAF WAC is in the $20,400-per-month range and Roche is in the $18,000-and-change range. And it doesn't seem like that's really gotten Roche much traction in the market. So I don't think the payers, at least in this corner of the oncology world, are putting a lot of pressure on the MEK/RAF franchises to contract or discount. Obviously, you have to see what emerges; but based on just the volume on an individual pair basis, I don't think it's going to rise to the level where it changes their annual budgets. -------------------------------------------------------------------------------- Ron Squarer, Array BioPharma Inc. - CEO & Director [54] -------------------------------------------------------------------------------- All right. Well, great, and thank you to everyone who called in today for your continued interest and support. And now I'd like to thank our employees here at Array for the commitment, ingenuity and diligence that continues to fuel our success. I also want to thank our patients, partners and shareholders for their continued confidence and support. We'll now close the call. Thank you all very much. -------------------------------------------------------------------------------- Operator [55] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.