What happened

After reporting fiscal second-quarter financials that were better than hoped, Array BioPharma (ARRY) saw its shares surge 11.3% as of 3:40 p.m. EST on Tuesday.

So what

Array BioPharma has said in the past that it thinks its Mektovi and Braftovi cancer drugs target indications that could be worth $1 billion. And while sales remain a long way from the billion-dollar mark, the company's latest financial results suggest sales could eclipse the nine-figure threshold in 2019.

A man in a shirt and tie listens through a wall using a plastic cup.

Image source: Getty Images.

The two drugs, which are used to treat metastatic melanoma in patients with a BRAF mutation, delivered net product sales of $22.7 million last quarter, up 62% quarter over quarter. Along with a $40 million milestone paid by Loxo Oncology (LOXO) and reimbursement revenue from Novartis (NVS 1.08%) as part of research collaboration deals, total revenue clocked in at $82.5 million, which was about $30 million higher than industry watchers were anticipating.

Array BioPharma also updated investors on its clinical trial progress, reporting that the combination produced overall survival of 15.3 months in a lead-in safety study targeting BRAF-mutant, metastatic colorectal cancer. If top-line data expected before the end of the second quarter is positive, management plans to ask the Food and Drug Administration (FDA) for an accelerated approval. BRAF mutations occur in about 15% of colorectal cancer patients.

Check out the latest Array earnings call transcript.

Now what

Array BioPharma recently secured approval in Japan, and a rollout in the rest of the world, including Europe, is continuing. If everything goes to plan, Array could potentially collect up to $539 million in remaining milestones from its licensees in those regions, plus double-digit royalties exceeding 20% of sales. 

The company has the potential for ongoing sales growth in the U.S., where it retains 100% of the rights to the therapies, plus the revenue tied to sales overseas by its licensing partners. When you add in an opportunity to see its addressable market expand soon depending on the upcoming colorectal cancer data, it certainly makes Array BioPharma a biotech stock worth watching.