Array recovery gathers momentum with Novartis deal, spotlight on MEK inhibitors

Analysis

Array BioPharma’s impressive ability to strike lucrative deals with big pharma partners continued with news late yesterday that Novartis has licensed its phase I MEK inhibitor, ARRY-162, and follow-on compound, ARRY-300, for $45m upfront, up to $422m in milestones and double-digit royalties.

Shares in the Colorado-based biotech surged 34% in early trade today to $4.05, building on gains made following a similarly lucrative deal with Amgen in December for a new diabetes agent (Array bounces back on novel diabetes hope, December 16, 2009). Meanwhile, the promising field of MEK inhibition attracts yet more interest, although Novartis’ swoop on Array’s candidates now means there are few, if any, clinical stage MEK assets not already in the hands of a large pharma group (see table below).

Attractive terms

Although the upfront fee covers both MEK inhibitor candidates as well as further MEK products that may yet be identified and developed, it is in line with the average signing on fee last year of $46m for a phase I asset.

The overall value of $467m is, however, significantly higher than the average deal value in 2009 and is yet further evidence, if any was needed, that big pharma is prepared to make increasingly large bets on earlier stage pipeline assets (Product deals continue decline in 2009 but early stage assets gain value, February 23, 2010).

Adding $45m to the $115m that Array held in cash at the end of December, and factoring in a quarterly cash burn of around $25m, the company probably now holds around $135m in cash. Yet even with today’s share price gain Array is only valued by the market at $200m, despite holding a number of mid-stage clinical assets, targeting novel pathways, in blockbuster therapy areas of oncology and diabetes, sufficiently promising to attract big pharma partners.

The problem for Array so far has been that for every impressive licensing deal which has raised hopes, the company has yet to deliver the knock out blow with really strong phase II data from any of its novel candidates.

Fledgling class

A case in point is AZD6244 (ARRY-886; selumetinib), another of Array’s MEK inhibitors and probably the most advanced MEK candidate in development.

Already licensed to AstraZeneca, the drug failed in phase II trials to treat melanoma, a notoriously difficult tumour to tackle, sparking a dramatic share price slide from which the stock has never recovered, the financial turmoil of the last couple of years accentuating those losses (Array drug fails, but all may not be lost, December 20, 2007). Prior to the melanoma failure with AZD6244, Array’s shares traded at around $12.

Indeed, ARRY-162 itself now licensed to Novartis failed to meet its primary endpoint last September in a phase II trial in rheumatoid arthritis, another setback which wiped out some share price recovery in 2009.

The table below, taken from EvaluatePharma, displays the clinical stage MEK inhibitors in development, as disclosed by the companies working in this field. As yet no MEK candidate has progressed into pivotal phase III trials and the first really positive set of clinical data from these compounds is still awaited.

Nevertheless, the field of MEK inhibitors, referred to in full as mitogen-activated protein kinase kinase (MEK) inhibitors, remains of significant interest, particularly to big pharma.

Exactly a year ago, Bayer licensed RDEA119 from Ardea Biosciences for $35m upfront as part of a deal valued up to $442m (Ardea chasing the winning combination, April 29, 2009). This deal also included rights to additional MEK inhibitors, almost exactly the same terms of Array’s deal with Novartis.

As such, all disclosed clinical stage MEK inhibitor assets have already been partnered or already being developed internally at a large pharma company.

What the MEK inhibition field and Array desperately needs therefore is some impressive proof-of-concept phase IIb data and advancement of a couple of candidates into phase III trials. Without this doubts will continue to dog both the sector and Array.

MEK inhibitors in clinical development
Status Product Company Originator Indication Summary
Phase II AZD6244 (ARRY-886; selumetinib) Array BioPharma + AstraZeneca Array BioPharma Solid tumour indications [Phase II]; Melanoma [Phase II]; Non-small cell lung cancer (NSCLC) [Phase II]
GSK1120212 Japan Tobacco + GlaxoSmithKline Japan Tobacco Leukaemia, acute myeloid (AML) [Phase II]; General cancer indications [Phase I]
RDEA119 (AR119) Ardea Biosciences + Bayer + Valeant Pharmaceuticals Valeant Pharmaceuticals General cancer indications [Phase II]
E6201 Eisai Eisai Psoriasis [Phase II]; General cancer indications [Phase I]
MEK inhibitor (AS703026) Santhera Pharmaceuticals + Merck KGaA Santhera Pharmaceuticals Pancreatic cancer [Phase II]; Leukaemia, acute myeloid (AML) [Phase II]; Solid tumour indications [Phase I]
Phase I ARRY-162 Array BioPharma + Novartis Array BioPharma General cancer indications [Phase I]; General inflammatory disorders [Phase I]; Arthritis, rheumatoid [Suspended - Phase II]
ARRY-300 Array BioPharma + Novartis Array BioPharma General cancer indications [Phase I]
AZD8330 (ARRY-424704) Array BioPharma + AstraZeneca Array BioPharma Solid tumour indications [Phase I]
XL518 (RG7420) Exelixis + Roche Exelixis Solid tumour indications [Phase I]
CIF (RG7167) Chugai + Roche Chugai Solid tumour indications [Phase I]
TAK-733 Takeda Takeda Melanoma [Phase I]
WX-554 Wilex + UCB UCB General cancer indications [Phase I]

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