Array Technologies Inc

NASDAQ:ARRY

Earnings Call Transcript 2018-Q4

[Operator]

Good day, ladies and gentlemen, and welcome to the Q4 2018 Array BioPharma Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will host a question-and-answer session and our instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call may be recorded.

It is now my pleasure to hand the conference over to Ms. Andrea Flynn, Head of IR. You may begin.

[Andrea Flynn, Senior Director, IR and Corporate Communications]

Good morning. This is Andrea Flynn. Welcome to Array BioPharma's conference call to discuss our financial results for the fourth quarter and full year of fiscal 2018. You can join this conference call on Array's Web site at arraybiopharma.com. We are using slides to accompany our remarks today, which can be downloaded from the Investor Relations section of our Web site, and a replay of the conference call will also be available as a webcast on our Web site.

I'd like to introduce Array's Chief Executive Officer, Ron Squarer; and our Chief Operating Officer, Andy Robbins; as well as our Chief Financial Officer, Jason Haddock, who will lead the call today. Dr. Victor Sandor, our Chief Medical Officer, will be available to answer questions as needed.

Before I turn the call over to Ron, I’ll 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, 2018 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.

Today, we are going to be discussing results related to BRAFTOVI and MEKTOVI in BRAF-mutant melanoma. For reference, the important safety information is provided in the appendix of the slide deck.

I’ll now turn the call over to Array's CEO, Ron Squarer.

[Ron Squarer, CEO]

Thanks, Andrea, and good morning to everyone. I’m starting on Slide 3. We’re thrilled to launch BRAFTOVI in combination with MEKTOVI for patients with BRAF-mutant melanoma in the U.S. after FDA approval on June 27. BRAFTOVI and MEKTOVI were available for sale beginning on July 2 and patients began receiving the combination therapy that same week.

As we’re only six weeks into launch, it is too early to share specific sales estimates or prescription trends but we are excited to report that early demand from melanoma prescribers for our combination has been strong. In addition, we’d like to point out that to-date, the weekly NSP and NPA IQVIA data are not representative on what we know to be true from the buying patterns of our channel partners.

Now based on the therapeutic profile generated from our Phase 3 COLUMBUS trial, including median overall survival, an excess of 30 months, and median Progression Free Survival of nearly 15 months and an attractive tolerability profile, we’re confident that our commercial team is well positioned for success.

And shortly after approval, we were pleased with the National Comprehensive Cancer Network or NCCN that they updated the clinical practice guidelines in oncology for melanoma to include BRAFTOVI and MEKTOVI as a Category 1 first-line and second-line treatment option for this patient population.

A Category 1 recommendation is the strongest endorsement the NCCN offers and indicates that based on high-level evidence, there is uniform NCCN consensus that the combination of BRAFTOVI and MEKTOVI is an appropriate therapeutic choice for BRAF-mutant melanoma patients.

This is excellent news for our patients, providers and payers as these guidelines help shape how patients are treated as well as the access that is granted to new therapies. Shortly after FDA approval, we submitted a supplementary new drug application to seek inclusion of overall survival data from the COLUMBUS trial in the BRAFTOVI and MEKTOVI labels. And we look forward to working with the FDA on this potential update.

And outside the U.S., the BRAFTOVI and MEKTOVI marketing authorization applications have been accepted and validated with the European Medicines Agency or EMA and most recently the EMA’s Committee for Medicinal Products for Human Use or CHMP adopted a positive opinion recommending approval of BRAFTOVI and MEKTOVI for the treatment of adult patients with unresectable or metastatic melanoma with the BRAFV600-mutation.

The final European Commission decision, expected by the end of September, will be available to all 28 member states, as well as Liechtenstein, Iceland and Norway. Further, the manufacturing and marketing approval applications have been accepted and are under review by Japan’s Pharmaceuticals and Medical Devices Agency.

Now moving to colorectal, we’re very pleased to announce that last week the FDA granted Breakthrough Therapy Designation to BRAFTOVI, in combination with MEKTOVI and cetuximab for patients with BRAFV600E-mutant metastatic colorectal cancer as detected by an FDA-approved test, after failure of one or two prior lines of therapy for metastatic disease. BRAFV600E-mutant metastatic colorectal patients have a mortality risk more than double that of metastatic CRC patients without the mutation, and currently there are no therapies specifically approved for this high unmet need population.

Now we’re very pleased that Breakthrough Therapy Designation provides us with the opportunity to work closely with the FDA to expedite our effort to bring an important treatment option to these patients in absolute critical need. In fact, based on consultations with the FDA and EMA, we plan to amend the BEACON CRC protocol to allow for an interim analysis based primarily on confirmed overall response rate and durability of response, which would support an accelerated approval submission with positive results.

Now this interim analysis may also support regulatory submissions in other regions and we anticipate top line results from this analysis in the first half of 2019. This timing allows for the subset of patients required for the interim analysis of ORR to achieve an objective response and for the durability of responses to be appropriately evaluated.

Our enthusiasm for this program continues to be reinforced by the strength of the data from the BEACON CRC safety lead-in which we presented at ESMO GI in June. At the time of the analysis, the median overall survival had not yet been reached. However, the overall survival data were mature through 12.6 months and the observed overall survival was 62% at one year. Based on these results, excitement among global investigators continues to increase.

Our three non-exclusive immuno-oncology clinical trial collaborations with BMS, Merck and Pfizer continue to advance. And finally, consistent with our focus on commercialization, we are very pleased to welcome Carrie Cox as Chairman of our Board of Directors. As an experienced corporate director with a wealth of commercial expertise and a distinguished career in the biopharmaceutical industry, Carrie’s leadership will help drive the success of BRAFTOVI and MEKTOVI and advance our innovative treatments for patients in critical need.

Now all of us at Array are deeply grateful to our former Chairman, Kyle Lefkoff, for his dedication and service to the company and acknowledge his many important contributions as Array evolved into a fully integrated commercial stage biopharmaceutical company. And Kyle will continue as a director and we look forward to his insight and guidance as a valued member of our Board of Directors.

And with that, I’m now going to turn the call over to Andy for an update on the recent launch of BRAFTOVI and MEKTOVI in advanced BRAF-mutant melanoma.

[Andy Robbins, COO]

Thanks, Ron. Moving now to Slide 4, we are thrilled with the FDA approval of BRAFTOVI + MEKTOVI for advanced BRAF-mutant melanoma as well as the NCCN Category 1 recommendation we recently received. We are very pleased with our labels and believe they reflect an attractive and differentiated offering for BRAF-mutant melanoma patients.

In the U.S., we have over 60 customer-facing employees across sales, market access and medical affairs focused on communicating the benefits of our new combination therapy to healthcare providers to commonly treat melanoma patients.

From national key opinion leaders to community oncologists to patient advocacy organizations and key P&T committee members at national and regional payer organizations, the reception from the melanoma community has been overwhelmingly positive to-date.

Now on Slide 5, our team was well prepared for launch and therefore able to act rapidly following approval. BRAFTOVI and MEKTOVI were available for sale beginning on Monday, July 2 and patients began receiving the combination therapy that same week.

We have seen strong uptake in the academic setting where our data indicate the majority of BRAF-mutant melanoma patients received treatment. Based on customer interactions around the country, we believe our profile is compelling and prescribers have shown a willingness to try BRAFTOVI + MEKTOVI in their practice.

As Ron mentioned in his introduction, it is still early in our launch phase but we are very encouraged with the feedback we’re hearing from prescribers and look forward to providing additional color on our launch performance during our next financial results call.

Moving to Slide 6, we have in place strong ex-U.S. partnerships to maximize the potential of BRAFTOVI + MEKTOVI around the world. Pierre Fabre, with the strong legacy in oncology including over 1,000 employees dedicated to this therapeutic area, has made BRAFTOVI and MEKTOVI a top priority for their team.

As mentioned earlier, we are anticipating EC approval by the end of September and we expect Pierre Fabre would launch soon thereafter. Ono, a Japanese market leader in immuno-oncology has a powerful track record of success in developing and commercializing oncology products in Japan, including the first-to-market anti-PD1 therapeutic Opdivo or nivolumab, and we look forward to their expertise in introducing our products to patients in Japan and Korea.

Under the agreements with Pierre Fabre 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, Pierre Fabre will deliver 35% royalties on annual combined net sales of BRAFTOVI and MEKTOVI which exceed only €100 million while in Japan and South Korea, Ono will deliver 25% royalties on annual combined net sales of both products which exceed only ¥10 billion, which is approximately US$90 million.

With that, I’ll turn the call back to Ron.

[Ron Squarer, CEO]

Thanks, Andy. On the next few slides I will just briefly review the updated results of the COLUMBUS trial that were presented at ASCO in June. As mentioned in the past, these results really exceeded our expectations not only in the treatment effect size for OS and PFS, but also in the tolerability profile.

The median OS results achieved was a remarkable 33.6 months for patients treated with BRAFTOVI and MEKTOVI compared to only 16.9 months for patients treated with Vemurafenib. The combination demonstrated a median PFS of 14.9 months compared to 7.3 months with Vem monotherapy.

The Vemurafenib of median OS of 16.9 months and the 7.3 months of median PFS are both consistent with results from historical pivotal trials in which Vemurafenib was used as a control which is an important validation of our results.

As published, BRAFTOVI and MEKTOVI were generally well tolerated and reported adverse events or AEs are described here in the slide. The incidence of selected any grade AEs of special interest including toxicities commonly associated with commercially available BRAF + MEK inhibitor combinations for patients receiving BRAFTOVI and MEKTOVI included pyrexia at only 18%, serous retinopathy at 20% and photosensitivity at only 5%.

Now moving to Slide 9, the new data showed that there was limited use of post-trial immuno-therapy which is consistent with other published pivotal trials of BRAF and MEK inhibitors in BRAF-mutant advanced melanoma. Further, the use of subsequent immuno-therapies was consistent across treatment groups including that the efficacy results observed can be attributed to the combination of BRAFTOVI + MEKTOVI.

Now on Slide 10, we show median overall survival results from three separate historical Phase 3 trials of commercially available BRAF and MEK targeted therapies in BRAF-mutant melanoma.

The coBRIM trial of Vemurafenib and cobimetinib demonstrated a median OS of 22.3 months, while the COMBI-D and COMBI-V trials of Dabrafenib and trametinib demonstrated a median overall survival of 25.1 and 25.6 months, respectively.

As mentioned, where Vemurafenib was used as a control, it demonstrated a median OS of approximately 17 to 18 months, which is nearly identical to the performance of Vem in our trial. We have not conducted head-to-head studies comparing BRAFTOVI and MEKTOVI against the other BRAF/MEK combination therapies and the data I've referenced come from separate Phase 3 trials.

Moving on to slide 11, I’d like to highlight the latest U.S. market performance for BRAF/MEK inhibitors. Novartis continues to dominate this class with over 80% market share versus Roche. As you can see on this slide, Novartis reported recent quarterly sales of over $112 million suggesting an annual run rate in the excess of $450 million. While they have secured recent approvals outside advanced BRAF-mutant melanoma, the vast majority of this revenue remains tied to BRAF melanoma.

Now moving to colorectal cancer on Slide 13, the strength of BEACON CRC safety lead-in data continues to guide our regulatory strategy. As I mentioned when opening the call, we were delighted to be granted Breakthrough Therapy Designation for BRAFTOVI in combination with MEKTOVI and cetuximab. This designation will provide further access to the FDA as we work to expedite the development and regulatory review of this important combination.

We plan to amend the BEACON CRC protocol to allow for an interim analysis and would seek accelerated approval in the U.S. based on positive results. This interim analysis may also support regulatory submissions in other regions and we anticipate top line results in the first half of 2019. As I mentioned earlier, this timing allows for the subset of patients required for the interim analysis of ORR to achieve an objective response and for the durability of responses to be appropriately evaluated.

Next on Slide 14, we have provided details of the global Phase 3 BEACON CRC clinical trials just for reference. And on Slide 15, while currently there are no therapies specifically approved for this high unmet need population, the median overall survival demonstrated by irinotecan and cetuximab-containing regimens for this population is only around four to six months, while recent experimental BRAF inhibitor-containing triplet regimens reported median OS of only 9.1 and 9.6 months.

As mentioned, the median overall survival for the BEACON CRC safety lead-in had not yet been reached at the time of analysis, at which point the overall survival data were fully matured through 12.6 months, the observed overall survival rate was 62% at 12 months. The related ORR benchmarks in this patient population range only between 4% to 8% with experimental BRAF containing triplet regimens demonstrating response rates of only 16% and 21%. As mentioned earlier, we reported a 48% confirmed ORR from our BEACON CRC triplet safety lead-in at World GI.

The related median PFS benchmarks in this population fall only between 1.8 and 2.5 months with recent experimental BRAF containing triplet regimens demonstrating about four months median PFS. And for context, the Array triplet median PFS result of eight months actually exceeds the median OS of irinotecan and cetuximab-containing regimens, which are used as the control arm for the BEACON CRC study.

Looking at the overall survival curve presented at ESMO GI on 16, you can see the data are fully mature through 12.6 months with no censoring prior to that point. The median survival was not reached and the observed survival at 12 months is 62%. Now further follow up will be needed to define the median and we look forward to sharing updates over time.

On 17, we provide updated detailed response rate results which were consistent with prior analysis of the safely lead-in patients. Next, on Slide 18, we show tumor response by patient in the safety lead-in of the BEACON CRC trial and the inset graph depicts tumor response by patient in the irinotecan and cetuximab treatment arm of the recent SWOG data study, which is similar to the control arm of the randomized portion of BEACON CRC.

As can be seen in the inset, the majority of patients there showed significant tumor progression as their best response in contract as presented at World GI 27 out of 28 patients with a post-baseline assessment showed tumor regression and none showed resist-define progression as their best response.

Now on Slide 19, we show the number of months each patient has been on therapy. The rows in teal 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 are still on treatment at the time of the data cut-off. And as you can see, the majority of responses were observed at the first or second tumor assessment at six or 12 weeks. These results are unprecedented for this patient population.

As shown on Slide 20, the triple combination was generally well tolerated in the BEACON CRC safety lead-in and details are provided on this slide. On 21, we now review our three 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 micro satellite stable tumors or MSS CRC.

The trials with BMS and Merck are advancing and we expect the Pfizer trial to start this quarter. Now compared to other recent MEK + IO approaches, each of our collaboration programs on earlier lines of therapy include the addition of a third agent in the regimen and in the case of BMS and Merck utilized leading PD1s versus PDL1.

On Slide 22, 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 unfortunately succumb to colorectal cancer each year across the U.S., Europe and Japan.

Now it is important to point out that the BRAF CRC addressable patient population is even larger than the addressable population of patients with BRAF melanoma for which, as I mentioned earlier, annual sales are trending to exceeded 450 million in the U.S. and over 1 billion worldwide for Tafinlar and Mekinst alone.

At this point, I’m going to turn the call over to Jason to review our financial highlights.

[Jason Haddock, CFO]

Thank you, Ron, and good morning, everyone. I’ll be going over select financial performance on Slide 24 for the fourth quarter and full year of fiscal 2018 and I encourage you to read our full consolidated financial statements and MD&A contained in our 10-K which was filed with the SEC this morning.

We reported revenue of 35.4 million for the fourth quarter of fiscal 2018 compared to 66.4 million for the prior quarter. This decrease was primarily due a one-time upfront license fee from ASLAN Pharmaceuticals received during the third quarter as well as lower Novartis reimburseable activities.

This brings our full year 2018 total revenue to 173.8 million, which is up 23 million from 2017. This increase is primarily driven by over 49 million in collaboration, license and milestone revenue earned on our proprietary and partnered assets received from our partners. This increase was partially offset by 26 million of lower Novartis reimbursement as those underlying studies continue to decrease.

As we move to our operating expenses, cost of partnered programs for the fourth quarter was 16.2 million compared to 17.7 million for the prior quarter. The decrease was primarily due to the timing of clinical trial expense. Full year 2018 expense is 59.4 million, up 24 million from 2017. These increases are driven by BEACON expenses as that program continues to advance.

Research and development expense for proprietary programs decreased to 48.1 million compared to 53.6 million in the prior quarter, primarily driven by lower activity on Novartis transitioned studies. Our full year 2018 R&D spend is 186 million, up 8 million from the prior year.

The increase was driven by activity on our proprietary programs and manufacturing expenses as we prepare for commercialization. These were partially offset by lower activity on Novartis transitioned studies.

Selling, general and administration expense for the fourth quarter was 19.3 million, which was 3.7 million higher than the last quarter, driven by higher commercial and corporate expenses.

Full year 2018 SG&A expense is 58.5 million, up 19 million from 2017. The increases were driven primarily by cost associated with building our commercial infrastructure, staffing and other operating expenses.

This brings our reported loss from operations for fourth quarter 2018 to 48.1 million compared to 20.6 million in the previous quarter which was primarily driven to the ASLAN milestone we recognized last quarter.

Our total loss for operations for fiscal 2018 is 129.9 million compared to 102.1 million in 2017. This increase is driven by higher spend on proprietary programs and commercial capability, partially offset by increased earned milestones in collaboration revenue for the year.

Other expenses for Q4 totaled 3.2 million, which represents a 2.1 million increase from last quarter, largely driven by a non-cash change in fair value of notes payable. Other expenses for 2018 full year totaled 15.1 million, which is up slightly from fiscal 2017. Note the income tax expense relates to withholding on our upfront from ASLAN.

Net loss for Q4 was 52.4 million or a loss of $0.25 per share compared to 22.9 million or $0.11 loss per share last quarter. Net loss for the full year 2018 was 147.3 million or $0.74 loss per share compared to a net loss of 116.8 million or $0.72 loss per share in the prior year.

The increase in net loss was primarily due to increased research and development expense and cost to establish our commercial infrastructure in preparation of the BRAFTOVI and MEKTOVI launch.

Finally, we closed the quarter with a balance of 413 million in cash, cash equivalents and marketable securities. As we have guided, our cash burn over the past quarters has increased as we progress our proprietary programs and prepare for BRAFTOVI and MEKTOVI launch.

Excluding non-recurring items, our burn rate for Q4 was approximately 39 million. We expect our quarterly burn to continue to tick up as we progress our clinical studies, execute our commercial activities and close out the Novartis transitioned studies.

With that, I’d like to turn the call back to Ron.

[Ron Squarer, CEO]

Great. Thank you, Jason. Now on Slide 26, I’d just like to wrap up with our top priority slide. We are focused as a company today on the commercialization of BRAFTOVI and MEKTOVI in BRAF-mutant melanoma and expect that the additional opportunities to interact with FDA that our recent CRC Breakthrough Therapy Designation provides will help us bring forward the potential approval of these two products in BRAF-mutant colorectal.

Our marketing applications in Europe, in Japan for BRAF-mutant melanoma are under review and finally EC approval is expected by the end of September. We’ve seen a very positive reception from U.S. melanoma healthcare providers during our first six weeks on the market and expect to share more granular performance details on the next quarterly call.

And at this time, I’d like to open up the call to Q&A.

[Operator]

Thank you, sir. [Operator Instructions]. Our first question will come from the line of Chris Shibutani with Cowen. Your line is now open.

[Chris Shibutani, Cowen & Company]

Great. Good morning. Thank you very much for the opportunity for the questions. Obviously, congratulations on the launch of the combination. I did want to ask a question to clarify and make sure everybody understood about the BEACON CRC plans there. With your modification of the protocol, can you give us a sense for where you are in terms of total enrollment for BEACON? I know that you haven’t been specific previously but some general sense since you previous goal had been to try and make sure you fully enroll that. And if you don’t have U.S. continued enrollment, roughly what that geographic breakdown might be? And then as a follow-up to that if you can comment about what the line of treatment experience will be by the time you have the top line readout for BEACON CRC? Thank you.

[Ron Squarer, CEO]

Hi, Chris, thanks. So we have stated that the enrollment on the BEACON CRC trial continues to be strong and we do anticipate full enrollment around the end of the year. The timing related to the interim analysis for the possible accelerated approval is driven by time needed to achieve responses and then for those responses to be evaluated after they are considered mature. And it was important – it always is important to present the type of information and to know that type of information only after your study is fully recruited as we’ve said. So from that point of view, things are going to plan now. I think your additional question related to the line of therapy, is that right? Maybe you repeat that question so we understand it.

[Chris Shibutani, Cowen & Company]

I was just trying to get a sense for since you’re no longer going to be enrolling in the U.S. and you believe you have sufficient numbers, what the rough geographic breakdown would be when we finally think about the total cohort of BEACON that you will report when you do the interim analysis potentially in the first part of '19? And also when we think about that patient cohort that you’ll be reporting on, what might be the percentage of patients’ second line versus other lines? Thank you.

[Ron Squarer, CEO]

Got you, okay. So regarding the U.S., it’s always been a small minority of patients from the BEACON trial would come to – it’s just a very large global 250 sort of target sites around the world and we’ve been adding sites as we moved along and did know that when the product is approved or would be approved, that we’d have to consider whether to continue enrolling for the BEACON trial in those countries today. That’s only the United States. Regarding the line of therapy, we have capped – and this is in the BEACON CRC trial, we have capped third line to a maximum of 35%. And so we would expect the split to be somewhere in the order of 65/35 second versus third line. Does that address your question, Chris?

[Chris Shibutani, Cowen & Company]

Yes, that’s very helpful. And then perhaps one for Jason. We’re getting an increasing number of questions about potential royalty streams. Obviously, as a company we’ve been very productive in the past out-licensing. Is there something that you would be able to share with us as far as giving visibility on potential magnitude and timing of any upcoming royalty that you think that the street should become more confident or aware of as we think about your financials going up, say, over the next 12 to 24 type of months? Thank you.

[Jason Haddock, CFO]

Yes. So we have some substantial royalties that will be coming online but there’s still some uncertainty of the timing of when our partners will commercialize and then how much the uptake they’ll get or what the trajectory looks like. So as we get closer to that, I’ll be happy to provide some better focus or clarity. But at this time we’ll --

[Ron Squarer, CEO]

Maybe just in terms of order, we do expect mostly likely the first event to be with the Loxo TRK which also importantly would come with some cash, let’s call it around the time of launch commercialization, and then royalties would kick in over time. But AstraZeneca presented as you I’m sure saw at ASCO a repeat really amazing performance with selumetinib in neurofibromatosis this time including measures of functional improvement in addition to tumor shrinkage, which we believe should be the basis of an approval in that rare pediatric condition that unfortunately causes morbidity throughout the lifetime of the patient. That we understand – those results will be mature later this year and then that should drive potentially a filing approval. So that also would have milestones. It would then have, I think we’ve stated up to double digit royalties associated with it. Perhaps the most important royalties in the near term though are going to come from our European partner, Pierre Fabre, where as Andy mentioned our royalties fairly quickly reach 35% levels starting out at a high level as well. And then ultimately Japan, maybe the last product that we think about is that in a sort of reasonable timeframe is Genentech has our AKT in two pivotal trials and we’d certainly look forward to seeing the results there as move forward. So there’s a good stream there of partnerships, although I’d take this opportunity, Chris, to remind everyone that we are getting back to building new INDs for Array and expect our first new IND in cancer next year from out of our labs.

[Chris Shibutani, Cowen & Company]

Great. Thank you. I’ll get back in the queue.

[Ron Squarer, CEO]

Thanks.

[Operator]

Thank you. Our next question will come from the line of Eun Yang with Jefferies. Your line is now open.

[Eun Yang, Jefferies]

Thank you. So BRAF-mutant in colorectal cancer, so in terms of potential accelerated approval based on response rate and durability, is there any threshold that you got to achieve or if you show similar to what you have shown 48% over eight months PFS, would that be sufficient for approval?

[Ron Squarer, CEO]

Thank you, Eun. Victor, address that to the extent that we can comment.

[Victor Sandor, CMO]

Yes, so I don’t know how much we can actually comment. We generally don’t like to disclose just for data integrity and study integrity reasons details of the specific analysis plans for an interim analysis. However, as we’ve said, we’ve had had discussions with both EMA and FDA around this and our interim analysis is designed around these discussions. Obviously, we’ve used data from the safety lead-in to sort of structure what we think might happen in the study. And so the interim analysis takes that into account. But beyond that, I really can’t provide much in terms of details.

[Andy Robbins, COO]

Eun, this is Andy. The only thing I’d add is that in oncology often times people are familiar with Subpart-H or accelerated approval strategies, which include a single-arm trial. In this case, this is a randomized trial, so we will have data obviously in the full analysis of the trial, but also at the interim which shows both our active triplet as well as the control arm. And so in addition to the FDA or the regulatory agency potentially trying to judge the data relative to some historical control will actually have an internal control on the trial, which they can compare it to. So I think that’s an incremental step over some other approaches to accelerated approval.

[Eun Yang, Jefferies]

Okay. And then with this interim look, is there modification to the final assessment of the overall survivor data and then number of patients that you originally planned for 650 patients?

[Ron Squarer, CEO]

The primary focus of the interim analysis will be that durable response rates. But it is common that at the time of these types of analysis, other endpoints are measured and so we’re really not in a position to comment on the specifics of that. But I do think that the regulatory agencies of course will look at the totality of the information we provide them.

[Victor Sandor, CMO]

Yes. Just to comment a little bit further. Just – so again we’re not going to get into the specifics of the statistical analysis plan and how that’s structured. But suffice it to say that we’ve again designed this in such a way that we retain sufficient power and that the structure of the final analysis is preserved in a way that we believe it will allow for a final assessment in the trial.

[Eun Yang, Jefferies]

All right. Thank you very much.

[Operator]

Thank you. And our next question will come from Anupam Rama with JPMorgan. Your line is now open.

[Anupam Rama, JPMorgan]

Hi, guys. Thanks so much for taking the question and congrats on all the progress. I know you guys submitted the OS data for COLUMBUS to the FDA about a month ago. Can you talk about the timelines to inclusion of that data within the label and what does your market research suggest about how the inclusion within the label might shift the launch curve? Thanks so much.

[Ron Squarer, CEO]

Yes, so I’ll have Andy address the sort of market dynamics. I’ll just say that we submitted the data as rapidly as possible. We’ll continue to work with the FDA to see it included and we’ll provide updates as we have them.

[Andy Robbins, COO]

Yes. So Anupam, as you can see on our Web site, our promotional materials, we are already using our overall survival data in our messaging in the market. We believe strongly that it’s consistent and not misleading when compared to the totality of the evidence from the COLUMBUS study and the labels we received for both BRAFTOVI and MEKTOVI. So while I’d echo sort of Ron’s comments about working with the FDA to get it into the label as rapidly as possible, I don’t see a significant change on an uptick curve for getting the data formally into the label as opposed to what we can communicate today. The data will be the same, will be the first – it will still be the first targeted therapy to achieve more than 30 months of median overall survival with a 33.6 months of median overall survival as well as our landmark analyses, which we presented at ASCO.

[Anupam Rama, JPMorgan]

Great. Thanks so much for taking the question.

[Operator]

Thank you. And our next question will come from the line of Stephen Willey with Stifel. Your line is now open.

[Stephen Willey, Stifel Nicolaus]

Hi. Good morning. Thanks for taking the question. I hopped on a little bit late, I’m sorry if this is redundant. But just wanted to make sure that I was clear on BEACON. So is it your intent to fully enroll the trial and run a response based interim on all patients once enrollment has been cleared and completed, or is timing here really dictated by just making sure that some significant proportion of patients have a minimum median follow up?

[Ron Squarer, CEO]

So it is the latter. We will be using a substantial subset of the overall trial. We need to allow for sufficient time for responses to occur and then for those responses to be evaluated as durable, which is why we’ve given the sort of broad swap after the point at which we believe we’ll be fully recruited in the trial, which is around the end of the year and that’s what we are suggesting. We will – that is when we’re suggesting we’ll have that interim readout.

[Stephen Willey, Stifel Nicolaus]

Understood. And then how does the interim contemplate the presence of the doubled arm, if at all? I guess I ask the question just because I think we’ve seen EMA kind of recently reemphasize this notion of the combination rule with another – within another tumor type and just kind of curious as to how that factors in here.

[Victor Sandor, CMO]

Yes. So the interim analysis would include all three arms and the statistical analysis plan is designed in such a way as to incorporate those analyses. So again, I don’t want to sort of get into the specifics of the statistical analysis plan, but again the discussions with the health agencies did include the combination rule and what data might be required to meet that rule. But just to reiterate things that we’ve said in the past as that rule, certainly as far as the FDA is concerned and also as far as the EMA is concerned, it has a lot to do with the totality of the data that’s available at the time and not necessarily with any one particular piece of statistical data.

[Stephen Willey, Stifel Nicolaus]

Got it. And then just lastly, I guess you made a comment about providing some color on launch performance on the next call. Just kind of curious as to what metrics we might be expecting to hear about. Thanks.

[Andy Robbins, COO]

Hi, Steve. It’s Andy. Certainly by the end of our first full quarter, we’ll disclose our net sales for the quarter. We would also hope to provide some insight as to prescription trends so probably at that point from a new prescription NRx basis. And so I think that those would be the two data points I’d be looking for at that time.

[Stephen Willey, Stifel Nicolaus]

All right. Thanks for taking the questions.

[Operator]

Thank you. And our next question will come from the line of Peter Lawson with SunTrust. Your line is now open.

[Peter Lawson, SunTrust Robinson Humphrey]

Thanks for taking the questions. Just Andy, thanks for the launch dynamics. Just wondering if you could tell us anything around the – where it is being used initially, which lines, whether the mix is academic versus community and any issues around reimbursement?

[Andy Robbins, COO]

Thanks, Peter. So we’re still I think today probably six weeks into the launch, so it’s probably early for me to comment on most of those things. What I can say is we haven’t seen any unexpected challenges with the payer community. We still perceive that BRAF melanoma is an indication where they’re familiar with MEK and BRAF inhibitors. It’s not a significant budget impact to the large national payers because of the epidemiology underlying the population. And of course we’re working closely together with both national and regional payers to get our products on policy. But as you are probably well aware, that takes some number of months. But we can say we haven’t – just to reiterate we haven’t seen any unexpected challenges of getting our drugs reimbursed. So the follow-up to Steve’s question and your question, on our call in November after the first full quarter, I think we’ll probably feel more comfortable answering some questions like which lines of therapies are being used, some of the dynamics about where prescribers are or how they’re seeing BRAFTOVI and MEKTOVI fit into their treatment armamentarium. So we’ll provide some additional color in addition to just the statistics I quoted before.

[Ron Squarer, CEO]

Yes. But the message just to be clear is very early, too early to predict long-term trajectory but that demand has been strong and that the feedback has also been very, very positive. So we want to be prudent with how we describe it, but that’s what we’re seeing at this point.

[Peter Lawson, SunTrust Robinson Humphrey]

And then just thinking about the SG&A spend with the build-out in 2019, how should we be thinking about that?

[Ron Squarer, CEO]

So just from a sales and marketing perspective, Peter, we had the entire sort of quarterly impact of the full sales force in our fiscal Q4 from 2018, so in this most recent quarter. So from a headcount perspective, I wouldn’t see any significant uptick in spend. Of course, in the launch phase, there will be potentially a small increase in discretionary spend from a marketing perspective. But I think overall SG&A should not be dramatically different in fiscal '19 relative to the run rate of the Q4 fiscal '18.

[Peter Lawson, SunTrust Robinson Humphrey]

Got you. Thank you so much.

[Ron Squarer, CEO]

Great, Peter, thank you. We’ll take one more call this morning. If there’s a question, one more question?

[Operator]

Yes, sir. Our last question will come from the line of Ed Tenthoff with Piper Jaffray. Your line is now open.

[Edward Tenthoff, Piper Jaffray]

Great. Thanks for squeezing me in, guys. Looking forward to hearing more about the launch. Most of my questions were answered. But I want to get an update on 382 quick and see what we can be expecting for data through the back half of this year into 2019.

[Ron Squarer, CEO]

Yes. So beyond of course the MEKTOVI/BRAFTOVI franchise that we’re focused on, we’re progressing additional opportunities, one of them being 382. The other you could suggest related is the combination of the MEK with leading PD1s in MSS colorectal. And the timeline generally speaking is going to be similar for those. We’re going to be enrolling – continuing to enroll patients and examine the data. But because it’s immunotherapy, it’s important not to judge early in one direction or the other because it’s not necessarily about response rates as much as sort of durability of actions. So I think we’ll be in a better position to discuss those programs early next year.

[Edward Tenthoff, Piper Jaffray]

Great. Thanks, Ron.

[Ron Squarer, CEO]

Great. And with that, we’re going to close the Q&A. And 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; also to thank our patients, partners and shareholders for their continued confidence and support. And we will now close the call. Thank you all very much.

[Operator]

Ladies and gentlemen, thank you for your participation on today’s conference. This does conclude our program and you may all disconnect. Everybody, have a wonderful day.