What happened

Shares of Array BioPharma (ARRY), a clinical-stage biotech focused on cancer, dropped 13% in May, according to data from S&P Global Market Intelligence. The big drop has this Fool scratching his head, given all the positive announcements made during the period.

Businessman scratching head in front of wall with arrows on it

Image source: Getty Images.

So what

Here's a look back at the most important news items during the month:

  • Array and pharma giant Merck (MRK -0.08%) entered into an agreement to study Array's binimetinib with Merck's top-selling drug Keytruda, in treating metastatic colorectal cancer patients with microsatellite-stable tumors. A study is expected to kick off later this year, and next steps will be determined based on the results. The agreement calls for the trial to be funded by Merck.
  • The company announced upbeat results from part 2 of its COLUMBUS study. This trial was testing the combination of Array's clinical compounds binimetinib and encorafenib as a treatment for BRAF-mutant melanoma. The data showed that the combination therapy increased progression-free survival to 12.9 months, compared to only 9.2 months in patients who used encorafenib as a monotherapy. The company stated that a New Drug Application filing remains on track for the summer of this year.
  • Array reported a net loss of $35.3 million, or $0.21 per share, in its fiscal third quarter. The company ended March with $207 million in cash on its balance sheet.
  • The company announced a clinical partnership with Bristol-Myers Squibb (BMY -0.50%) to study binimetinib in combination with Bristol's Opdivo and Yervoy, as a potential treatment for metastatic colorectal cancer in patients with microsatellite-stable tumors. This early-stage study is expected to start later this year, and the results will determine next steps. Both Array and Bristol will be funding the study.
  • Array entered into a licensing and commercialization agreement with Ono Pharmaceutical (NASDAQOTH: OPHLY). The deal provides Ono with the right to develop and commercialize both binimetinib and encorafenib in Japan and South Korea. In return, Array received a $31.6 million payment up front; it could be entitled to receive up to $156 million in milestone payments and double-digit royalties if the drugs prove to be a hit.

And yet, despite all of this positive news, shares still ended the month down by double digits. My hunch is that Array's stock simply got caught up in the mini-sell-off in the biotech sector, as measured by the SPDR S&P Biotech ETF:

ARRY Chart

ARRY data by YCharts.

Now what

Clinical-stage biotechs like Array are always prone to big intra-month moves, so I wouldn't place too much emphasis on the stock's recent fall. Instead, investors should stay focused on the long-term potential of pipeline drugs such as binimetinib and encorafenib, both of which appear to have decent shots at finding their way to market in the not-too-distant future. If they ultimately get the green light, then the stock price will take care of itself.