What happened

Shares of Array Biopharma Inc. (NASDAQ:ARRY), a biopharmaceutical company developing new cancer therapies, gained 30.5% in August, according to data from S&P Global Market Intelligence. More details from new drug candidates that could become this company's first approved products gave the stock some lift. 

So what 

Array Biopharma is definitely on to something with its lead candidates as a treatment for certain melanoma patients, but an extremely complex late-stage clinical trial program underway makes it difficult to measure odds of success for its lead candidates, binimetinib and encorafenib. 

Happy person looking at phone with cash money raining down.

Image source: Getty Images.

In a nutshell, binimetinib makes investors nervous. Earlier this year, Array withdrew a new drug application it had previously submitted to the FDA for binimetinib as a treatment for melanoma patients with tumors that harbor an NRAS gene mutation, because it didn't provide a strong enough clinical benefit.

Now, Array is pursuing the melanoma patients with tumors that are positive for BRAF gene mutations, with a combination of binimetinib and encorafenib. There was some concern that binimetinib might not have been pulling its weight, but the abstract from a study to be presented at a scientific conference later this month suggests the combo has a solid shot. Adding binimetinib to encorafenib significantly lengthened progression free survival for these patients compared to encorafenib alone.

Now what

Investors will want to look for more details about the combo when the company presents trial data at the European Society for Medical Oncology this weekend. Based on the data so far, it appears the combo has a shot at unseating Roche's Zelboraf from its position as standard treatment for BRAF-positive melanoma patients.

If the encorafenib and binimetinib combination earn an approval, it could generate more than $250 million in annual sales at its peak. With a recent market cap of about $1.7 billion, a successful launch for the combo looks to be already priced in. Although the company has other irons in the fire, another unexpected issue with binimetinib could lead to heavy losses from present levels.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.