Array BioPharma, Inc. (NASDAQ:ARRY) shares are soaring recently following a slate of good news. Is there more room left to run? Read on to find out why I think if management delivers on these three catalysts, this stock can trade higher.
No. 1: Fast-approaching FDA decision
In September, the FDA accepted an application to review approval of Array BioPharma's binimetinib, a therapy for the treatment of advanced NRAS-mutant melanoma.
In trials, progression-free survival in patients given binimetinib every three weeks was 2.8 months versus 1.5 months for patients given the chemotherapy dacarbazine. In patients who had previously received an immunotherapy, including Opdivo, progression-free survival on binimetinib was 5.5 months versus 1.6 months for dacabarzine.
Binimetinib's advantage may not appear significant, but this patient population has few treatment options, and given what appears to be solid safety results, binimetinib could carve out a market niche. Of the 76,000 melanoma patients diagnosed in the U.S. annually, up to 20% have NRAS mutations.
The FDA decision date on binimetinib is June 30, 2017.
No. 2: Second drug candidate on the horizon
Yesterday, Array BioPharma reported results from a phase 3 trial evaluating the use of binimetinib and another one of its drugs: encorafenib.
While binimetinib inhibits the MEK pathway, encorafenib targets the BRAF pathway. Used in combination, these two drugs appear to deliver a potent one-two punch.
Progression-free survival of BRAF-mutant melanoma patients receiving binimetinib plus encorafenib therapy was 14.9 months, which far outpaced the 7.3 months for patients receiving Zelboraf, a late-stage BRAF-melanoma therapy that was approved in 2011.
Array BioPharma plans to file for FDA approval of the two-drug combination next year, and if the FDA green-lights it, the duo could eat away at Zelboraf's roughly $225 million in annualized sales.
No. 3: Label expansion opportunity
Array BioPharma is conducting five registration studies on its cancer drugs, and its R&D program could provide a revenue-friendly label expansion opportunity for binimetinib and encorafenib.
Array BioPharma reached an agreement with the FDA earlier this month on the design of a phase 3 study that combines encorafenib with Erbitux, with or without binimetinib, in BRAF-mutant colorectal cancer patients who have previously been treated with a first- or second-line therapy.
Currently, there aren't any approved targeted therapies available for use in these colorectal cancer patients, and since BRAF-mutations occur in between 8% and 15% of the 134,000 new cases of colorectal cancer diagnosed each year, this could represent a solid opportunity to expand Array BioPharma's addressable market. The trial is expected to complete enrollment in 2018.
Array BioPharma owns the U.S. rights to 7 of the 17 drugs it has in development, including binimetinib and encorafenib. Therefore, the potential commercial opportunity associated with a U.S. approval is significant.
Because net sales of MEK and BRAF inhibitors already on the market are approaching $250 million per quarter and these drugs target important unmet needs, I think that an approval of binimetinib and encorafenib could make Array BioPharma worth more than its current $955 million market cap. Of course, there's always the risk of a FDA rejection, but I think this company has a solid shot at getting these drugs across the finish line.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. Like this article? Follow him on Twitter where he goes by the handle @ebcapital to see more articles like this.
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