Array Technologies Inc

NASDAQ:ARRY

Earnings Call Transcript 2018-Q2

[Operator]

Good day ladies and gentlemen and welcome to the Array BioPharma Second Quarter 2018 Earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Andrea Flynn, Senior Director, Investor Relations and Corporate Communications. Please begin.

[Andrea Flynn]

Thank you. Good morning and welcome to Array BioPharma’s conference call to discuss our financial results for the second quarter of fiscal 2018. You can listen to the conference call on Array’s website at arraybiopharma.com. We’re using slides today to accompany our remarks. The slides can be downloaded on the Investor Relations homepage of our website, and a replay of the conference call will also be available as a webcast on 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.

Before I turn the call over to Ron, I will remind you of 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, Chief Executive Officer]

Thanks you, Andrea. Starting on Slide 3, we are thrilled this morning to share median overall survival, or median OS data from the Phase III Columbus trial in patients with BRAF mutant melanoma. Median overall survival was a remarkable 33.6% months for patients treated with the combination of encorafenib and binimetinib, or COMBO450, compared to 16.9 months for patients treated with vemurafenib as monotherapy. Treatment with COMBO450 reduces the risk of death compared to treatment vem with a hazard ratio of 0.61 and a P-value less than 001. This finding, which exceeded our expectations, further validates previously reported median progression-free survival, or median PFS, and overall response rate, or ORR results from the Columbus trial, and taken with the attractive tolerability profile suggests that the combination of encorafenib with binimetinib has the potential to become a promising new treatment option for patients with BRAF mutant melanoma.

Recall that the 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 have not identified any potential review issues and that they are not currently planning to hold an advisory committee as part of their review process.

Recruitment continues in the randomized portion of the Beacon CRC trial in patients with BRAF mutant colorectal cancer based on an attractive safety profile and with encouraging clinical activity observed in the safety lead-in. We were excited to share updated results from the safety lead-in just a few weeks ago at ASCO GI, which demonstrated an eight-month medium PFS in a population where current standards of care have historically demonstrated median PFS of only 1.8 to 2.5 months. Further, these results demonstrated a 48% confirmed ORR, including three complete responses in a population where current standards of care have historically demonstrated ORRs in the range of only 38%. Based on these unprecedented results, we are exploring potential fast-to-patient opportunities with regulators and will provide an update when appropriate.

Separately, this past year we initiated three exciting non-exclusive clinical trial collaborations, one with Bristol-Myers Squibb, one with Merck, and one with Pfizer to investigate the safety and efficacy of our MEK inhibitor, binimetinib with anti-PD1, or PD01 therapy, in several solid tumor populations, including metastatic colorectal cancer patients with microsatellite stable tumors, or MSS CRC. The trials with BMS and Merck are underway and we expect the Pfizer trial to start in mid-2018. Novartis continues to substantially fund all ongoing trials with encorafenib and binimetinib 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 $88.5 million for the 12 months ending December 31, 2017, of which $22.4 million was recorded in the quarter ending December 31, 2017. Total revenue and upfront collected from Novartis since the start of the 2015 agreement is $348.7 million.

Now moving to Slide 4, we’re pleased to having placed strong ex-U.S. partnerships to maximize the potential of encorafenib and binimetinib around the world. In the U.S., we have built broad experienced commercial and medical affairs teams as we execute our go-to-market strategy for a planned upcoming launch. Our Europe-focused partner with a strong legacy in oncology and over 1,000 employees dedicated to this therapeutic area, including commercial, research and development capabilities, has made enco and bini a top priority for their team. Finally, in Ono we selected a Japanese market leader in immuno-oncology with rights to the first-to-market PD1, 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 products in this important geography.

Under the agreements with PF and Ono, in aggregate we stand to receive nearly $600 million in potential milestone payments and the prospect that over half of future development costs could be offset by contributions from our partners. In Europe and other territories, PF will deliver 35% royalties on annual combined net sales of enco and bini which exceed only €100 million, and in Japan and South Korea Ono will provide 25% royalties on annual combined net sales of both products which exceed only JP¥10 billion, which is approximately USD$90 million.

Next on Slide 6, the results of the Columbus trial were in our view quite remarkable, exceeding our expectations not only in the treatment effect size for median LS and median PFS, but also in the tolerability profile. As a reminder, Columbus is a global Phase III trial involving more than 900 patients divided into two parts. Part 1 is a three-armed randomization of BRAF mutant melanoma patients between the combination of binimetinib plus 450 of encorafenib, which I’m referring to as COMBO450, vemurafenib, and encorafenib monotherapy at a dose of 300 milligrams, which I’m referring to as ENCO300. The primary endpoint of the entire Columbus trial is the Part 1 comparison of median PFS between COMBO450 and vemurafenib.

In earlier Phase I/II trials, the maximum tolerated dose of enco monotherapy was found to be 300 milligrams, whereas in combination with bini, 450 milligrams of encorafenib was well tolerated, and that was the dose taken forward and evaluated in Part 1 of Columbus. To further inform the FDA’s combination rule, we designed Columbus Part 2 to assess and characterize the contribution of bini to the combination by holding the dose of encorafenib to 300 milligrams daily in the combo arm, allowing for comparison to the same dose used as a monotherapy in the comparator arm.

Again, in Columbus Part 1, the median OS result exceeded our expectations, coming in at a remarkable 33.6 months for patients treated with COMBO450 compared to 16.9 months for patients treated with vemurafenib. Columbus Part 1 results, including the primary endpoint of median PFS and safety, were originally presented at the 2016 SMR Congress. There, COMBO450 demonstrated a median PFS of 14.9 months compared to 7.3 months with vemurafenib monotherapy. The vem median OS of 16.9 months announced today and the 7.3 months of median PFS previously presented at the SMR Congress are both consistent with results from historical pivotal trials in which vemurafenib was used as a standard of reference, which is an important validation of our results today.

At the time of the planned analysis comparing COMBO450 to vem monotherapy, a preliminary analysis of OS in patients treated with 300 milligrams of encorafenib alone, ENCO300, demonstrated a median OS of 23.5 months. As reported at SMR, the median duration of exposure at the time was approximately 51 weeks for patients receiving enco-bini versus 31 weeks and 27 weeks for the enco and vem monotherapy arms respectively. We’re were pleased to see then the median dose intensity for both enco and bini was approximately 100% for patients treated with COMBO450, which was impressive given the long duration of treatment. Also as previously reported, COMBO450 was generally well tolerated and reported adverse events, or AEs were overall consistent with prior enco-bini combination clinical trials in BRAF mutant melanoma patients. Grade 3/4 AEs which occurred in more than 5% of patients of patients receiving COMBO450 included increased GGT, increased blood CK, and hypertension. The incidence of selected any grade AEs of special interest, including toxicities commonly associated with commercially available MEK/RAF combination treatment for patients with COMBO450 included pyrexia at only 18%, retinal pigment epithelial detachment at only 13%, and photosensitivity at only 5%.

Now on Slide 7, we show OS results from three separate historical Phase III trials of commercially available BRAF and MEK targeted therapies in BRAF mutant melanoma patients. The coBRIM trial of vem and cobimetinib demonstrated a median OS of approximately 22.3 months, while the COMBI-D and COMBI-V trials of dabrafenib and trametinib demonstrated median OS of 25.1 and 25.6 months respectively. Of note, where vemurafenib was used as a control, it demonstrated a median OS of approximately 17 to 18 months, which is similar to the performance of vemurafenib in our trial announced today. We have not conducted head-to-head studies comparing encorafenib and binimetinib against the other BRAF MEK combination therapies, and the data I’ve referenced come from separate Phase III trials.

Now moving to Slide 8, we describe key characteristics of the global melanoma market opportunity. On the left, it is estimated that approximately 50% of advanced melanoma patients have activating BRAF mutations; on the right, we can see that over 29,000 individuals succumb to melanoma each year across the U.S, Europe and Japan.

On Slide 9, I’d like to walk you through the current market performance of BRAF and MEK inhibitors. As you will see, projected 12-month rolling revenue is tracking to exceed $400 million annually in the U.S. alone and is estimated to be approaching $1 billion annually worldwide. While Novartis did secure approval for BRAF non-small cell lung cancer this past summer, the vast majority of these sales are associated with BRAF melanoma. Usage of BRAF MEK combos continues to grow in the U.S. at a rate of over 20% during the past 12 months, led by the Novartis combination.

Now on Slide 11, we move to our Beacon CRC trial, which continues to be an important part of our development strategies. We detail here the global Phase III clinical trial in patients with BRAF colorectal cancer, assessing the efficacy of enco and cetuximab with or without bini in comparison to cetuximab in irinotecan-based therapies. The primary endpoint of the trial is median OS of the triple therapy combined to the control arm. Secondary endpoints include median OS comparisons of the doublet to the control and the triplet to the doublet. The study includes a 30-patient safety lead-in phase to establish combinability of the agents in the triple therapy. As mentioned, we initiated the randomized portion of the trial based on the attractive safety profile and with the encouraging clinical activity observed in the safety lead-in, and recruitment is well underway.

On Slide 12, we show certain separate historic standard of care benchmarks for median OS, ORR, and median PFS in patients with BRAF mutant colorectal. Recall that the primary endpoint of the Beacon CRC study is median overall survival. In the enco- cetuximab arm of our Phase II trial, we were pleased to report a median OS of greater than one year, which is more than double several separate historical standards of care which are published as benchmarks for this population. A recent SUAVe study indicated in the first grade bar shows a median OS of 5.9 months for patients on the cetuximab and irinotecan control arm of the study. These results taken together provide directional benchmarks for median OS for our Beacon CRC study in the doublet and control arms respectively.

As I mentioned earlier, we reported an eight-month median PFS with a 48% confirmed ORR at ASCO GI last month from our Beacon CRC triplet safety lead-in. As you’ll see here, the historic median PFS and OR benchmarks for treatments in this patient population range between 1.8 and 2.5 months, and 4% to 8% respectively. Of note, the recent SUAVe trial control arm result was 2 months of median PFS and 4% of ORR.

Now on Slide 13, I’ll review the details from the Beacon CRC safety lead-in which were presented at ASCO GI. Thirty patients were treated in the safety lead-in and received the triple combination of bini, enco and cetux. Out of the 30 patients, 29 had BRAF V600E mutation. Microsatellite instability high, or MSS high was detected in only one patient. As mentioned, in patients with BRAF V600 mutation, the estimated median PFS at the time of the analysis was eight months. The confirmed overall response rate in patients with BRAF V600E mutations was 48%, and three patients achieved complete responses. Further, the ORR was 62% in the 16 patients who had received only one prior line of therapy.

Moving to Slide 14, we show tumor response by patient. The bars in dark blue show patients who have had one prior regimen; the bars in light blue show patients who have had two prior regimens. Remarkably, out of 29 patients with both a BRAF V600E mutation and a post-baseline assessment, 27 showed tumor regression.

On Slide 15, we show the number of months each patient has been on therapy. As with the prior slide, the rows in dark blue show patients who have had one prior regimen and the rows in light blue show patients who have had two prior regimens. The rows with an arrow denote patients who were still on treatment at the time of data cut-off. As you can see, the majority of responses were observed at first tumor assessment at six weeks. Responses were ongoing in 43% of responders at the time of the data cut-off. Also of note, nine of the 15 patients or 60% who did not formerly achieve a response [indiscernible] demonstrated prolonged stable disease of greater than six months. These results are unprecedented for this patient population compared to existing standards of care.

As shown on Slide 16, in the BRAF CRC safety lead-in, the triple combination was generally well tolerated. The most common Grade 3 or 4 adverse events seen in at least 10% of patients were fatigue, urinary tract infection, increased AST, and increased blood CK. Two patients discontinued treatment due to AEs with only one of these considered to be related to treatment.

On Slide 17, we show the global colorectal cancer market. On the left side, it’s estimated that approximately 10 to 15% of advanced colorectal patients have activating BRAF mutations; on the right, we can see that over 220,000 individuals succumb to colorectal cancer each year across U.S., Europe and Japan. It’s important to point out that the BRAF CRC patient population is even larger than the size of the population of patients with BRAF melanoma, which as I mentioned earlier is generating annual sales exceeding $400 million in the U.S. and estimated to be approaching $1 billion worldwide for BRAF MEK therapies.

Moving to Slide 19, we outline our ongoing development of binimetinib in combination with PD1, PD01 checkpoint inhibitors. We have announced strategic collaborations with Bristol-Myers Squibb, Merck and Pfizer, but in each case are pursuing a unique trial design to explore different clinical approaches. First with BMS, we’re exploring the combination of bini and nivolumab with and without ipilimumab in MSS CRC patients with a RAS mutation. This trial is supported by BMS and sponsored by Array. With Merck, we’re exploring the combination of bini and pembrolizumab in MSS colorectal patients. In this trial, we are also exploring the combination of bini, pembro and standard chemotherapy regimes in order to enroll first line metastatic CRC patients. Merck is sponsoring and funding this trial. With Pfizer, we have plans to investigate the combination of bini and avelumab in patients with either non-small cell lung cancer or pancreatic cancer. In addition to this doublet combination, we also plan to add the Pfizer PARP inhibitor which may improve outcome for these patients. Pfizer will sponsor and fund this trial, and we expect enrolment to begin in mid-2018. Overall, these trials will generate combination clinical results for bini with leading PD1, PD01 inhibitors across several different patient populations, and we will be excited to share results from these studies as soon as they are possible.

Now I would like to turn the call over to Jason to review our financial highlights.

[Jason Haddock, Chief Financial Officer]

Thank you, Ron, and good morning everyone. Slide 21 depicts our financial performance for the second quarter of fiscal 2018. Our revenue for this quarter is $42.2 million compared to $29.7 million for the prior quarter. Our reimbursement revenue from Novartis increased $4.2 million from prior quarter due to increased development activity related to the close-out of certain transition studies. Our license and milestone revenue increased $7.8 million due to an acceleration of the remaining Asahi Kasei deferred upfront payment we started to recognize into the ARRY-954 collaboration and license agreement we entered into in 2016. Note this is a non-cash item.

As we move to our operating expenses, cost to partner programs for the second quarter of fiscal 2018 is $13.7 million, which is $2 million from previous quarter. This increase is driven by Beacon activity and FTEs working on partner programs. Research and development expense for Q2 is $42.6 million, which is $1.2 million higher than the prior quarter. This increase is driven by increased activity on Novartis transition studies mentioned in the revenue above, partially offset by non-recurring expense related to commercial and clinical supply we highlighted in Q1. G&A for the second quarter is $11.6 million, which is down slightly from last quarter driven by the Q1 stock-based compensation expense related to a departing employee.

This brings our loss from operations for Q2 to $25.7 million compared to $35.5 million from the previous quarter, driven by higher milestone revenue and lower expenses for non-recurring product supply and stock-based compensation expense from the previous quarter.

Other expenses totaled $8.3 million, which represents a $5.8 million increase from last quarter largely driven by a non-cash charge for loss on extinguishment of our 2020 notes which we executed in the quarter.

Net loss for the quarter is $34.1 million compared to our $38 million loss from Q1.

Finally, we closed the quarter with a balance of $420.3 million in cash, cash equivalents and marketable securities. Note this balance does not reflect the $10.8 million net upfront payment we received from Aslan for the global rights for varlitinib which we announced on January 3. Our pro forma balance with this upfront would be $431 million. Further, we expect to receive an additional $10.8 million payment in early fiscal year 2019 as part of the same Aslan transaction.

Cash burned in the quarter was higher than normal due to the purchase of the product supply highlighted in our expenses above, payment of the company’s annual bonus, and interest payments and fees associated with the closing of our convertible debt transaction. Excluding non-recurring operational items, our quarterly burn rate was approximately $31.5 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 prepare to launch.

Now I’d like to turn the call back to Ron.

[Ron Squarer, Chief Executive Officer]

Thank you, Jason. I’m on Slide 23, and I’d like to end before Q&A with our top priority summary. We were very happy to announce remarkable median overall survival data from our Columbus trial in BRAF melanoma today as well as to share the great progress we made over the past few months with enco and bini in BRAF colorectal. We focus today on our three most promising horizons of value. First is the near-term potential commercial opportunity with the combination of enco and bini in BRAF mutant melanoma. Our NDAs are currently under review at the FDA with a PDUFA date of June 30, 2018, and our MAAs are under review at the EMA. Our second horizon is in BRAF colorectal where we recently presented promising clinical activity from the safety lead-in of our Phase III Beacon CRC trial at ASCO GI. Enrolment is well underway in the randomized portion of the trial in BRAF mutant CRC patients, which we believe may have an even larger addressable population than BRAF melanoma but with limited competition. We’re currently exploring fast-to-patient opportunities with regulators based on the promising data from the Phase II and the Beacon triplet safety lead-in results. Finally, we remain excited about the third horizon related to the potential of MEK inhibitors to enhance the activity of IO therapies, especially in populations which have not been responsive to immunotherapy in the past. Our collaborations with BMS, Merck and Pfizer to combine bini with other IO therapies in CRC and other solid tumors should inform future development strategies for these innovative combinations.

With that, I will now open up the call to Q&A.

[Operator]

[Operator instructions]

The first question is from Anupam Rama of JP Morgan. Your line is open.

[Eric Joseph, JP Morgan]

Hey guys, this is Eric in for Anupam. Thanks for taking the question, and congrats on the impressive LS update here with Columbus. Just wondering if this OS data has in fact been shared with FDA as part of the ongoing review and whether we should anticipate their inclusion within the label. Secondly, just thinking about some of the current sales trends that you noted earlier and the slide presentation, just curious as to what your market research is telling you that’s driving preferential share for the Novartis combination. Is this primary data or patient experience driven, or are there any kind of particular differences with respect to drug access or pricing that you’re thinking about as you prepare for launch here? Thanks.

[Ron Squarer, Chief Executive Officer]

Eric, good morning, and thanks for those questions. We have informed the FDA that we are in possession of the OS data and will be sharing with them detailed results soon. It’s not appropriate for us to comment on label at this time. Of course, when we know our label, we’ll be sharing that. I will remind you and others that we had expected to have overall survival data during the course of the review period, and so I don’t think it would be viewed as a surprise by them to receive these remarkable results.

Regarding the commercial and market share issues, I’ll turn that over to Andy.

[Andy Robbins, Chief Operating Officer]

Hey Eric, thanks for the question. With regards to the dynamics that are going on in the BRAF mutant melanoma market for MEK and RAF, we don’t see any significant differentiators in terms of access between the Roche and Novartis strategies. I would point out when you look at the growth, there were some small price increases, but I don’t think that’s responsible for driving most of the top line growth you’re seeing. I think it really is quantity or volume that’s driving the growth. There certainly is some aspect of Novartis’ approval in BRAF non-small cell lung cancer that’s probably adding incrementally to their top line sales in the past six months, but we do continue to see strength of physician preference for the Novartis combination for MEK and RAF therapy in the melanoma population due to their profile, specifically their tolerability advantage over Roche, not having photosensitivity, not having that early onset rash in the first cycle or two, as well as just their experience of using the Novartis combination for much longer than the Roche combination has been available.

So we continue to believe that we’ll be well positioned if approved based on our impressive activity that we presented in the past and today, as well as our tolerability profile, which we believe will stack up quite favorably.

[Eric Joseph, JP Morgan]

Got it. Thanks for taking the questions, guys.

[Operator]

Thank you. The next question is from Chris Shibutani of Cowen. Your line is open.

[Chris Shibutani, Cowen & Co.]

Thank you very much, and congratulations on the Columbus overall survival update there. If I could shift my question over to Beacon, obviously I believe the baseline expectation for your completion of enrollment is 2018. Ron, I know that you mentioned that you’re discussing potential fast-to-patient opportunities there [inaudible]--

[Ron Squarer, Chief Executive Officer]

We may have lost--you’re back? I heard Beacon, talking to regulators, and a baseline in 2018 for--?

[Chris Shibutani, Cowen & Co.]

Yes, I apologize. I may be a little difficult to hear me - I’m calling from over in Korea, sorry. The trade-offs that you would have to make if you were to accelerate your timelines, could you talk about that as far as patient enrollment or overall survival? Can you talk about how you weigh what might be possible to accelerate the timelines for Beacon?

[Ron Squarer, Chief Executive Officer]

Great, okay. So enjoy the Olympics, I know you have some people you care dearly about who are competing. Just regarding recruitment, yes, we continue to be on track to complete enrolment in the full randomized portion of the trial by the end of this year. When we say that we’re seeking potential fast-to-patient strategies, it would likely involve an interim analysis of surrogate endpoints, and as we’ve stated in the past, I know that folks are anxious to hear how we might achieve it and what regulatory discussions we’ve had. We do remind folks that recruitment of the randomized portion of more rate limiting than anything else, meaning that it’s very unlikely that you would to analyze, or certainly know or release any data from an ongoing Phase III trial until it’s well recruited, or even fully recruited. So we don’t think that feedback and the details of our potential plan are going to be rate limiting as much as having the study be fully recruited, but we would expect to run the Phase III trial out for OS to completion.

So it’s not about stopping the study essentially early and analyzing it; it’s about adding an earlier cut of surrogate endpoints potentially if we’re comfortable with regulatory feedback on these topics.

[Chris Shibutani, Cowen & Co.]

Thank you.

[Operator]

Thank you. The next question is from Jim Birchenough of Wells Fargo Securities. Your line is open.

[Jim Birchenough, Wells Fargo]

Yes, hi guys. Congrats on the impressive overall survival data, and good luck to Chris’ kid in the Olympics as well. Just wanted to ask in terms of your market research, what’s the duration of therapy for current MEK/RAF combination, particularly the Novartis combination, and how do you think duration of dosing for bini-enco could help drive incremental revenues? And then I’ve got a follow-up.

[Andy Robbins, Chief Operating Officer]

Hey Jim, this is Andy. Thanks for the question. At JP Morgan, we presented some data that was published at ISPOR as well as some IMS script data that we’ve taken a look at, and it looks like for the actual in-market real world experience, duration of therapy for MEK/RAF combinations in BRAF mutant melanoma is tracking somewhere in the neighborhood of four to five months, which to use was a little bit surprising given the median progression-free survivals that were reported specifically from the Novartis COMBI-D and COMBI-V trials, which are more in the neighborhood of 11, 12 months based on the mature data that they had published. So we think some of that is due to tolerability challenges that combination faces, some of it is due to switching to immuno-oncology, so we do see that there is a potential opportunity for a better tolerated and potentially more active therapy in the future. We think we might be able to fulfill that profile with the data that we’ve presented today or shared today, but we’ll see.

I think your question is in a $400 million U.S. market that has an implied duration of therapy of four to five months, what could that potential market opportunity look like if you could get your duration of therapy up to seven, eight, nine months. Hopefully, we can answer that question for you in the coming years.

[Jim Birchenough, Wells Fargo]

Andy, could you maybe give us some sense of what you’re doing on the reimbursement side to be ready for launch, and how quickly should we expect reimbursement to be in place and what are you doing to make sure patient access isn’t limited by reimbursement?

[Andy Robbins, Chief Operating Officer]

Sure, so we have hired a very experienced team of market access professionals who are already out meeting with payors, IDMs, key customers, to share the Array story, to share the data that they are allowed to share under the compliance that we’ve put in place with these key customers, so that everybody is aware that we’re hopefully coming. Once the FDA, if the FDA approves us, once they take that action, we’ll be in a position to act very rapidly to gain access and reimbursement through all of the appropriate channels and key customers. We feel confident that in BRAF mutant melanoma, there’s already a deep understanding of the impressive activity of MEK and BRAF combination therapy in general, and so we aren’t necessarily educating about a brand-new market, we’re simply educating about a new potential therapy that has what we believe is very impressive activity and a very competitive safety profile.

[Jim Birchenough, Wells Fargo]

Great, thanks for taking the questions.

[Operator]

Thank you. The next question is from Peter Lawson of SunTrust Robinson. Your line is open.

[Peter Lawson, SunTrust Robinson Humphrey]

Hi Ron, congratulations on the Columbus data. On the three collaborations for IO, can you give us any sense in timing of data or when the trials start?

[Ron Squarer, Chief Executive Officer]

Yes, Peter - hi, good morning. So if you recall, we are sponsoring the BMS trial, although it’s a collaboration of course with BMS. Merck and Pfizer are sponsoring and funding the collaborations that we have with them. Because we had obviously more control over the BMS trial, we have been in the clinic since last year and are progressing that trial, and when we have information, we’ll share it. We expect to have something to share in 2018, but it’s difficult to predict exactly when. That trial, as you recall, not only combines binimetinib with nivo, but it also is the first trial to recruit MSS colorectal patients into a trial that will offer both ipi and nivo, which could be a novel path forward. We have chosen to select in that study for patients with RAS mutations, which is about half the patients, but based on scientific evidence and hypothesis, we think that that may enhance the treatment effect size in the study.

So I think what I’m saying is most likely you’ll hear from the BMS trial first. Now, Merck posted their trial last year and we expect them to make progress, and I’m just using this as an opportunity to describe why we’re so excited about it, and that’s because as you know, they are going to be combining bini and pembro with FOLFOX or FOLFIRI depending on whether it’s first or second line patients, and this is an opportunity to essentially jump into first line if the trial is successful, so it’s very much a swing for the fences, huge potential upside if that trial is successful.

Now Pfizer, we can’t describe much detail because it hasn’t been posted yet, other than to say it does involve their PD01 and their PARP together with binimetinib, initially in lung and pancreatic cancer, and so as soon as that’s posted, we’ll share more information. But to have as our third horizon, because we see tremendous value in BRAF melanoma equal to or greater value in BRAF colorectal, commercial I’m talking, and then to have not just a third horizon of immuno potentiation but to have three different partnerships to inform that is very exciting for us, so we’re very pleased with how this lines us up for not just near term but also potential long term value.

[Peter Lawson, SunTrust Robinson Humphrey]

Just on the Pfizer collaboration, is that also a MEK plus PARP without the PD1, or is it--is there any of the triplet in that instance, and is there any rationale around the MEK plus PARP combination?

[Ron Squarer, Chief Executive Officer]

There is a rationale. Unfortunately we’re not able to describe more of the detail in respect to Pfizer and the confidentiality we have there, but as soon as it’s posted to clinicaltrials.gov, of course we’ll share it. But yes, there is scientific evidence and hypothesis that MEK and PARP may enhance each other.

[Peter Lawson, SunTrust Robinson Humphrey]

Great, thanks so much. Thanks for taking the questions.

[Operator]

Thank you. The next question is from Stephen Willey of Stifel. Your line is open.

[Unknown Analyst, Stifel]

Great, thank you. This is [indiscernible] for Steve today. Ron, quick question on the BRAF mutant CRC opportunity. The combination of vemurafenib, irinotecan and cetuximab was recently added to the guidelines, so the question is do you anticipate any impact on enrolment in Beacon because of their inclusion? What are your thoughts on that? Thank you.

[Ron Squarer, Chief Executive Officer]

Yes, thanks for the question. So you’re referring to an update in the guidelines that came as a result of the SUAVe study, and we presented that data today in our presentation. I will say that because of the desperate situation that BRAF colorectal patients face, there is enthusiasm to have any new treatment modality. But I will remind you that regarding the response rates, which came in at 16%, those are both confirmed and unconfirmed, and of course our doublet data from our Phase II alone was around 20% and the data with our triplet, as we described today - I’m just focused on response rates here, was 48% overall and in the 60s for the second line patients. So while I appreciate the excitement that thought leaders had to have any new option, the data is not--you know, does not appear to represent a step change in therapy, not to mention it is a highly toxic combination. So what I’m saying is it is an available treatment option, but it definitely needs to be viewed with those caveats.

Regarding the impact on recruitment, Andy, perhaps you’d like to comment?

[Andy Robbins, Chief Operating Officer]

The only other thing I’d add is that the Beacon CRC trial is a global study with several hundred sites around the world. Many of the patients will be enrolled outside of the United States and clearly the VIC combination will not, in our opinion, be available commercially in any of those territories. So while certain patients may elect to get VIC in the U.S. at probably the top NCCN hospitals, we think that the impact to enrolment for the Beacon CRC trial will be very limited.

[Unknown Analyst, Stifel]

Okay, thank you.

[Operator]

Thank you. The next question is from Ted Tenthoff of Piper Jaffray. Your line is open

[Ted Tenthoff, Piper Jaffray]

Great, thank you very much. Thanks for a thorough update. I’m particularly excited about the overall survival date as we move towards launch. I know you’ve talked about this in a lot of different ways, but how specifically do you think that overall survival data will help you convince docs to switch over beyond the tolerability? Is this a real differentiator, do you believe, adding to the overall clinical package for bini in onco?

[Ron Squarer, Chief Executive Officer]

Yes, so I’ll start and then perhaps, Andy, if you want to add anything. Ted, good morning and thanks for the call. We have to be careful with cross-trial comparisons, and so with all the caveats that these are not head-to-head results, what you see is the Roche combination coming in at 22.3 months of median overall survival, the COMBI-D, COMBI-V Novartis results coming in around 25 months, and Array coming in at 33.6, so numerically you see very, very different numbers. There’s a lot of reasons why Roche has not penetrated this market, but it is possible that at least their overall survival results contributed to that, and with the caveat that of course nobody should be doing cross-trial comparisons, it might imply that some people do.

Now, I will also point out, I know we’ve shared this but I think it’s important to emphasize the fact that vemurafenib behaved as expected and it has behaved in other trials, both from a median OS as we described today and from a PFS point of view when we published the PFS data earlier, that does suggest that the patient populations may have some similarities. So while again cross-trial comparisons should be done with caution, I’d prefer to have these numbers than let’s put it the other way.

Now, we’ve always been pleased and saw early and were able to assess earlier the very unique tolerability profile where the issue associated with on-market MEKs and RAFs, which include pyrexia, which leads to a lot of down dosing, discontinuation interruptions, or photosensitivity appear to not be as much of an issue with us. So the nice situation is that we’re able to both present a strong activity and strong tolerability profile.

So I don’t know, Andy, if you want to add anything more?

[Andy Robbins, Chief Operating Officer]

Ted, the only thing else I’d add is that as Ron mentioned, we won’t have head-to-head comparative data of our MEK in BRAF versus another MEK in BRAF, but I think what gives us confidence and what we believe will give physicians confidence is that the totality of the evidence across several endpoints - overall survival, progression free survival, response rate, dose intensity, durability, all of those numbers are trending in very attractive directions. There’s no anomalies, there’s no, well, why is that number lower. It looks like from our profile, everything heads in the unprecedented direction.

Ron also mentioned our tolerability profile, where we don’t seem to have any new toxicities or adverse events relative to what physicians are used to dealing with, so we’re not bringing anything new to the table. Then finally from a commercial strategy perspective, we’re not going to go to market thinking that we have the best profile. We’re going to go to market thinking that we need to compete as though we are one of three choices for physicians, so we will put in place very attractive patient access and patient assistance programs to make sure that physicians don’t have to jump through any additional hoops to get our drugs in the hands in their patients.

So put all those three things together, we believe that we’ll come out in the market with a very attractive and hopefully very successful commercial launch.

[Ted Tenthoff, Piper Jaffray]

Excellent update, really looking forward to seeing the conversion to a commercial company this year.

[Ron Squarer, Chief Executive Officer]

Yes, the only caveat I’d say is I know that the analyst community is better at gauging peak sales than trajectory, so there are technical steps to making a drug available, and available and reimbursed to patients. So the ramp is going to be what the ramp is, but certainly huge opportunity to the upside on the [indiscernible].

[Ted Tenthoff, Piper Jaffray]

Thank you.

[Operator]

Thank you. The next question is from Eun Yang of Jefferies. Your line is open.

[Eun Yang, Jefferies]

Thank you for taking the questions. Two questions. The first one is in Beacon Phase III trial, about two-thirds of patients are second line and about one-third is third line. In the safety lead-in portion, about 29 patients, have you looked at response rate and estimated median PFS in second line versus third line?

[Andy Robbins, Chief Operating Officer]

Yes Eun, at ASCO GI, what we reported is that for true second line patients, patients that had received only one prior therapy, the objective response rate confirmed ORR with 62%, and so if you do the math, I think based on the number of patients who were classical third line, had received two prior therapies, the objective response rate in that population was, I think, 31%, and blended together that gets you to the 48% objective response rate.

With regard to median progression free survival, we didn’t split it out specifically but we reported that the overall median progression free survival for the entire population was eight months, and that the median PFS between second and third line was very consistent.

[Eun Yang, Jefferies]

Okay. The second question is in terms of the pipeline for 382 CSF-1R inhibitor, I think in the past you mentioned that you are looking to the industry to provide some new insight about the program, so just want to ask you, given what’s out there, since last year how has your thinking about development plan been influenced or shaped?

[Ron Squarer, Chief Executive Officer]

Sure Eun, this is Ron, and good morning. Regarding 382, what I would say is as you’re aware, Five Prime appears to have recruited about 200 patients in which they only shared 30 patients’ worth of data - I think it was at SITC, and all pancreatic, and so we did view that result as a proof of concept that CSF-1R can potentiate IO in a way that makes a population, that historically has not been responsive to IO therapy, responsive. So now the question is, how good is that combination, and so what we’ve stated already is that we are expanding into pancreatic patients beyond what we’ve already said, which is melanoma and lung cancer.

We also, as you might recall, had a deep and durable responder in ovarian, granted an all-comer trial, and so we’ll sort of keep an eye out to see how that evolves as well. But the immediate answer to your question is that we are going to be assessing pancreatic patients in addition to melanoma and lung, based on that result that was in the public domain and we will continue observe progress. I think there was just this week a new announcement or press in the last week of another antibody approach. Of course, we think a small molecule approach can be differentiated between [indiscernible] and AstroZeneca. So we’ll keep an eye on it here and hopefully we can help patients that can’t currently benefit from IO therapy.

Does that answer the question, Eun?

[Eun Yang, Jefferies]

Yes. Then also, I think in the past you mentioned that this is the kind of program that you might want to find a partnership, so has that thinking evolved or do you want to keep it, or are you looking into some partnership opportunities?

[Ron Squarer, Chief Executive Officer]

You know, it’s difficult for us to predict how we’re going to pursue partnerships going forward, but in reality as a soon-to-be, assuming our plans hold, commercial entity in the oncology space, we certainly have an interest in progressing additional proprietary wholly-owned programs going forward, and so we’re certainly in no rush to partner 382, if ever, so we’ll see how that progresses going forward. In fact, in general we’re reaching a point in our evolution that our research engine, which we have been partnering with, I could easily say, tremendous success with some of our partner programs is going to increasingly be a focus back at Array in developing exciting IDs, mostly likely in the oncology space. So that’s probably more of the trend towards continued programs and development of programs in oncology within Array, but we certainly are not dogmatic and so we can’t be black and white about it going forward.

[Eun Yang, Jefferies]

Okay, thank you very much.

[Operator]

Thank you. The next question is from Mara Goldstein of Cantor Fitzgerald. Your line is open.

[Mara Goldstein, Cantor Fitzgerald]

Thanks very much for taking the question. I just wanted to ask two things. One is a follow-up to the idea of taking an interim review at Beacon, and when you are discussing looking at it based on surrogate endpoints, is it based on--will you base that on duration of treatment doing a cut, or on number of events? Then secondarily, I’m hoping that you could perhaps provide for us just sort of a rough benchmarking of what you perceive to be the commercial sales forces in the MEK space and the BRAF MEK space, and where you think that you will end up from just a broadly speaking number size.

[Ron Squarer, Chief Executive Officer]

All right. Just regarding the first question, I’ll have Andy answer the second, we haven’t finalized or settled on a potential approach for a fast-to-patient strategy for BRAF colorectal, but it doesn’t--you know, there is an obvious list of options that includes response rate with some follow-on period, as well as potentially PFS, so I think we’re going to be looking at all the options and gauging regulator feedback as appropriate there. But I think those examples that I gave directionally are likely to be the option set.

Then regarding the commercial sales force landscape, Andy?

[Andy Robbins, Chief Operating Officer]

Yes, hi Mara. So what we know from competitive intelligence is that while Novartis has a sales force that’s probably close to 70 to 100 people, they don’t only sell Mekinist and Tafinlar, they have other products in their bag, so if you kind of go through the weighting that we believe that they’re using, they would have an implied FTE force of somewhere in the neighborhood of 50 representatives. From a Roche and Exelixis perspective, Exelixis has a relatively small field force, maybe the single digits or low double digits, that promotes cobimetinib, obviously their focus on cabo as a company. Genentech, our understanding is that they have pulled back investments to promote Zelboraf and Cotellic and maybe to shift their focus to their PDL1 inhibitor. So we think that from an FTE or share of voice perspective, they will be far less than Novartis.

Our plan is to go out with a customer-facing of about 40 to 60 individuals that’s across field representatives, access professionals and medical science liaisons, and we think that that will position us quite favorably in the competitive space.

[Mara Goldstein, Cantor Fitzgerald]

Thank you very much.

[Operator]

Thank you. The next question is from Michael Schmidt of Leerink Partners. Your line is open.

[Michael Schmidt, Leerink Swann]

Hey guys, thanks for squeezing me in, and congrats on a truly great quarter. I had two questions, and they really relate to future clinical development plans. I’m just wondering, maybe in context of the terrific OS data in melanoma and obviously we now know that BRAF MEK inhibitors are very active in the adjuvant setting as well based on the Novartis data recently, how do you think about potentially addressing that significantly larger opportunity in stage 3 melanoma patients?

[Ron Squarer, Chief Executive Officer]

Michael, thanks for the question and for the reaction to the data. Look, there are a number of life cycle opportunities that we are examining. I will point out that given this franchise of MEK and RAF, those three horizons of value that I described are quite sizeable in and of themselves. A natural question in colorectal is we are focused on second and third line - what about first, and we’re going to think about how to address that. There are other RAF-driven populations that we’re going to think about and we’ll announce those as we move forward, but I think on your specific question, perhaps we’ll have Andy chime in.

[Andy Robbins, Chief Operating Officer]

Michael, just a few thoughts on the adjuvant setting. Certainly in conversations with some of the top melanoma opinion leaders, I think that they--I don’t want to speak for them, but I think that they are pretty favorable about the profile of binimetinib and encorafenib, especially in light of some of the data that we’re publishing today, so my speculation is that they would be interested in figuring out a way to study our combination in multiple settings for their melanoma patients.

We also believe, though, in those conversations that PD1 monotherapy will probably take the lion’s share of the adjuvant or stage 3 patient population based on the profile that they’ve delivered in their adjuvant studies, and so without--I think it’s a safe statement for us to say we’re probably not going to march out tomorrow and start an 800 patient adjuvant trial, but to Ron’s point, we are going to investigate creative ways to generate clinical data in multiple settings where BRAF MEK combination therapies are potentially useful for patients, whether that’s with cooperative group trials, company-sponsored trials, investigator-initiated research. Our goal is going to be to generate those clinical data to inform how binimetinib and encorafenib can be used in all of those relevant settings.

[Michael Schmidt, Leerink Swann]

Okay, and then I guess frontline colorectal or BRAF colorectal obviously makes a lot of sense given the data from ASCO GI and ESMO. What is the gating factor for you to eventually start a frontline trial? Do you think you need to see the Beacon CRC data, for example, or is there maybe an earlier path to further develop that indication?

[Ron Squarer, Chief Executive Officer]

All I would say is with all the cautions of cross-trial and especially cross-tumor results, I think that we’ve seen consistent and impressive and we would argue almost unexpected and unprecedented results in both melanoma and colorectal, granted with a 30 patient safety run-in, so if you were only seeing it happen here or there, you might be a little more nervous, but I think that we’re sitting on some very active products. In terms of how we prioritize life cycle going forward, I think that we’ll describe that as we make those decisions.

[Andy Robbins, Chief Operating Officer]

Michael, I wouldn’t be surprised to see Array and our partners try to move aggressively into first line BRAF mutant colorectal cancer. We understand that that’s a very attractive space, and so I don’t think that there’s any reason we need to wait for the Beacon CRC trial to read out and be complete. First line BRAF colorectal is certainly very high on our list of life cycle management opportunities.

[Ron Squarer, Chief Executive Officer]

We’re coming up on the hour. I think that we might just take two quick questions and then call it a day. I understand that some folks may have to drop off. Any other questions?

[Operator]

Yes, we have a question from Jim Birchenough of Wells Fargo Securities. Your line is open.

[Jim Birchenough, Wells Fargo]

Hey guys, just anticipating one question we may get on the Columbus overall survival data. Is there any difference in post-progression therapy that you’re aware of between what you’re seeing in Columbus and what we’ve seen with historical trials?

[Ron Squarer, Chief Executive Officer]

Yes, so Jim, we’re going to share full results at an upcoming scientific congress and publish these, and we would probably only be able to answer it then. But I will point you back to the fact that vemurafenib in the Columbus trial, both for PFS that we represented earlier and today with OS, is very consistent with historic results, so I don’t think--you know, we’re leaving some details of course for medical conferences and publication, but I think that’s an important takeaway today.

[Jim Birchenough, Wells Fargo]

Great, well thanks for taking the follow-up, and congrats again.

[Ron Squarer, Chief Executive Officer]

Thank you very much. We’ll take the last call now, if there’s a question.

[Operator]

Yes, the last question is from Peter Lawson of SunTrust Robinson. Your line is open.

[Peter Lawson, SunTrust Robinson Humphrey]

Ron, from your market research, the growth you’re seeing in the BRAF MEK market, is that coming from approval in non-small cell lung cancer or is that kind of a baseline acceleration in melanoma?

[Andy Robbins, Chief Operating Officer]

Hey Peter, this is Andy. While we can’t pinpoint it nearly as well as I’m sure Novartis could do for you, because they are clearly the market leader, our speculation is that there is probably a slight lift from their approval in BRAF lung, there’s probably a slight lift from some relatively incremental price that they took during 2017. But if we had to guess, a lot of it is coming from volume, and much of that is probably coming from--if you just think about the timing in the U.S. market of when IOs were introduced and how long patients in first line therapy last on IO, it may be a bolus of those first line IO patients progressing and using MEK BRAF inhibitors in the second line. Again, it’s speculation - we don’t have the granularity, but we do think a lot of that growth is lifting from patient volume, not some of the other dynamics.

[Peter Lawson, SunTrust Robinson Humphrey]

Great, thanks so much.

[Ron Squarer, Chief Executive Officer]

Thank you, Peter, and for everyone who called in today, thrilled to share such important news this morning. Now, I’d like to thank our employees here at Array for their creativity, commitment, and strong sense of urgency that continues to fuel our success. I also want to thank our patients, partners, and shareholders for their continued confidence and support. We will now close the call. Thank you all very much.

[Operator]

Thank you. Ladies and gentlemen, this concludes the program. You may now disconnect. Good day everyone.