On July 8, 2009, biopharmaceutical company Array BioPharma Inc. (ARRY) presented top-line results from two phase I trials for its lead p38 inhibitor ARRY-797. While one of the studies evaluated ARRY-797 in healthy volunteers in a seven-day dose escalation trial, the other one involved evaluating the inhibitor in a 28-day trial in stable rheumatoid arthritis patients taking methotrexate. The latter study compared two doses of ARRY-797 to placebo.

Although a good tolerance level and a pharmacokinetic profile consistent with earlier trials were revealed by preliminary analysis, the company intends to conduct further detailed studies regarding the inhibitor. Complete results are expected to be presented in 2010.

Early stage of drug development programs & cash burn concern us

All the R&D programs of the company are still in a very early stage. The lead candidate, the ARRY-886 MEK inhibitor program, just entered phase II clinical trial. The negative phase II results from its lead candidate AZD6244 (ARRY-886) is a further cause of disappointment.

The company has a collaboration agreement with AstraZeneca (AZN) for co-development and commercialization of the candidate. We cannot rule out other trial failures especially considering the early stage characteristics of the company’s programs. The company has also collaborated with Celgene Corporation (CELG) for the discovery, development and commercialization of novel therapeutics in cancer and inflammation.

The company’s fragile cash position is also a concern. It has no products in the market and majority of its revenues come from collaborations, license fees and milestone payments. The company laid off 40 employees (about 10% of its work-force) and plans to scale back its discovery research activities. It also intends to enter new drug discovery collaborations which will provide fresh research funds.

We feel that given the early-stage in the pipeline and the company’s reliance on third-party clinical support, Array possesses a higher risk profile than most investors may be interested in undertaking. So we are neutral on the company’s shares at present.

Read the full analyst report on “ARRY”
Read the full analyst report on “AZN”
Read the full analyst report on “CELG”
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