A stock that quadruples in 12 months makes investors happy campers. That's exactly what Array BioPharma (NASDAQ:ARRY) has done. And most of those impressive gains came over the last six months.

Some stocks experience a letdown after a huge run-up like Array has enjoyed. So far, though, the biotech doesn't appear to be losing any momentum. How high can Array BioPharma stock go? 

What brought Array this far

Array BioPharma's big catalyst came in late September 2016. The company and its partner, privately held French biotech Pierre Faber, announced great results from the first part of a late-stage clinical study evaluating BRAF inhibitor encorafenib in combination with MEK inhibitor binimetinib in treating BRAF-mutant melanoma.

In this study, Array's combo was compared against Roche's (OTC:RHHBY) Zelboraf. The median progression-free survival (PFS) rate for patients receiving encorafenib and binimetinib was 14.9 months, significantly higher than the 7.3 month PFS for patients taking Zelboraf. 

$100 bills flying above clouds

Image source: Getty Images.

The biotech reported more good news earlier in September. The U.S. Food and Drug Administration (FDA) accepted Array's new drug application (NDA) for binimetinib in treating NRAS-mutant melanoma. An approval decision by the FDA for the drug is expected by Jun. 30, 2017.

What makes these achievements especially sweet was that Array had originally licensed both binimetinib and encorafenib to Novartis. In March 2015, though, Array regained commercial rights to both experimental drugs and received an $85 million up-front payment from Novartis.

Solid potential 

There are more than 76,000 new cases of melanoma in the U.S. each year. Around 20% of patients with metastatic melanoma have mutations of the NRAS gene.Up to half of patients with melanoma have BRAF mutations, the most common gene mutation for the disease. That's a significant market for Array if it gets a green light from the FDA for its melanoma drugs.

Although anything can happen in the regulatory approval process, the chances for binimetinib look pretty good. The drug could realistically hit the market this summer. Some analysts were initially less than enthusiastic about prospects for the drug, forecasting peak annual sales of less than $50 million in the NRAS-mutant indication.

However, the stellar results for the encorafenib/binimetinib combination likely have analysts rethinking their projections. Recall that the combo treatment blew Zelboraf away in Array's late-stage study. Roche made well over $200 million from the drug in 2016. It wouldn't be surprising for Array's combo to generate higher sales if approved.

Array could get more help from another late-stage drug in its pipeline. The biotech licensed selumetinib to AstraZeneca. Analysts at one point thought that selumetinib could reach peak annual sales of more than $1 billion, but expectations are now that the drug should make less than half that amount. Still, Array is eligible to receive additional milestone payments and double-digit percentage royalties of net sales if selumetinib wins approval. 

Roche has another candidate originally developed by Array in its late-stage pipeline -- experimental hepatitis C virus (HCV) drug danoprevir. With the HCV market in a free fall, however, it doesn't seem likely that Array will make a ton of money off danoprevir even if Roche ultimately wins approval for the drug.

How high?

It's difficult to accurately value a clinical-stage biotech like Array. I think the prospects look good for binimetinib and are even better for the encorafenib/binimetinib combo. However, I also think those solid prospects are largely factored into the stock price. 

That doesn't mean Array BioPharma won't go higher. I wouldn't be surprised if the stock notches additional gains of 10% to 15% this year if the overall market performs well.

Investors shouldn't expect another quadrupling or even doubling of Array's share price, though. Current shareholders should be happy with their huge gains. Other investors might want to be careful about chasing after Array's momentum. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.