Shares of Array BioPharma Inc. (ARRY) shot up in after-market hours trading after the company announced reaching a definitive agreement with Novartis (NVS) to regain full worldwide rights to oncology candidate binimetinib, an MEK inhibitor.
The candidate is currently in phase III. We note that Array BioPharma had granted Novartis worldwide exclusive rights to develop and commercialize binimetinib under a license agreement in 2010.
This agreement will hereafter be terminated.
As per the terms of the new agreement, Array will receive up to $85 million and acquire all patent rights to binimetinib. On the other hand, Novartis has agreed to provide transitional regulatory, clinical development and manufacturing services to Array BioPharma.
We note that the candidate is being evaluated in three phase III trials – NRAS-mutant melanoma (NEMO), low-grade serous ovarian cancer (MILO) and BRAF-mutant melanoma (COLUMBUS). A potential regulatory filing for NEMO is expected in the first half of 2016.
The agreement is however conditional on the potential closure of transactions announced by Novartis and GlaxoSmithKline PLC (GSK) in Apr 2014. The deal with GlaxoSmithKline is expected to be completed by the first half of 2015.
Novartis will conduct and solely fund each trial till both the companies arrive at a transition date following which it will reimburse Array for all remaining out-of-pocket expenses. Novartis will retain supply obligations for binimetinib for all clinical and commercial needs for up to 30 months after closing.
Array BioPharma will have continued access to several Novartis pipeline compounds, including but not limited to LEE011 (CDK 4/6 inhibitor) and BYL719 (α-PI3K inhibitor), for use in currently ongoing combination studies and future trials.
Array BioPharma is a clinical-stage biopharmaceutical company that currently does not have any approved product in its portfolio. Hence, the company regaining full rights to one of the lead candidates in its pipeline will boost its growth prospects.
Array BioPharma carries a Zacks Rank #2 (Buy). Right now, Biogen Idec Inc. (BIIB) also looks attractive with a Zacks Rank #1 (Strong Buy).
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