An Array of Good News

With every passing month, Array BioPharma (Nasdaq: ARRY  ) looks ever more like successful rival Exelixis (Nasdaq: EXEL  ) . Today, the small development-stage biopharmaceutical firm announced that it had signed a partnership deal with Celgene (Nasdaq: CELG  ) .

Array gets $40 million in up-front cash, while Celgene gets the option to pick up the rights to as many as two compounds from four mutually agreed-upon therapeutic areas. Array will handle all of the drugs' development through phase 1 or phase 2a testing. In return, it's eligible for as much as $200 million in regulatory and development milestones on each of the drugs, if Celgene chooses to continue with them. Celgene gets worldwide marketing rights to these compounds, with a co-promote option for Array in the U.S. If the drugs make it to market, Array could get even more milestone and royalty payments -- a sweet deal indeed.

Like a handful of other tiny biopharmas, including Exelixis and Pharmacopeia (Nasdaq: PCOP  ) , Array is a discovery powerhouse. These drugmakers stand out for the sheer number of novel molecule discoveries they've ushered into clinical studies, or partnered on with large pharmas for such trials. Array expects to have 10 drugs in the clinic by the end of 2008.

Impressively, Array isn't relying on any one drug for success. It has multiple shots on goal in its pipeline, covering a range of intriguing drug targets and different indications. For example, it gets a slice of InterMune's (Nasdaq: ITMN  ) exciting protease inhibitor for hepatitis C, not to mention AstraZeneca's (NYSE: AZN  ) MEK, which targets cancer compounds. Signing the Celgene deal, and getting a healthy amount of cash up front, only further validates the strength of Array's discovery work.