Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Array Biopharma (NASDAQ:ARRY), a clinical-stage biopharmaceutical company focused on developing therapies to treat cancer, shot higher by 24% after announcing that it and Novartis (NYSE:NVS) would end their licensing agreement for late-stage MEK inhibitor binimetinib.

So what: Normally stocks don't rocket to the moon when a well-established licensing partner like Novartis walks away. However, on top of regaining the worldwide rights to binimetinib once again, after a series of transactions between GlaxoSmithKline and Novartis are completed, Array is eligible to receive up to $85 million from Novartis. Further, of the three clinical trials yet to be conducted, Novartis will be responsible for conducting and funding the entire COLUMBUS trial and a good chunk of the NEMO and MILO studies. Novartis will also be on the hook for funding and conducting testing on the companion diagnostic melanoma test being developed in conjunction with binimetinib, and is still on the line for binimetinib supply obligations for up to 30 months after closing of the deal.

Now what: To make this abundantly clear: Novartis is to pay for the lion's share of phase 3 clinical trial costs for binimetinib, continue to develop and pay for the companion diagnostic test, handle all supply obligations for up to 30 months, and it's giving all worldwide rights of the drug back to Array Biopharma. Sounds like a great deal for Array!

Assuming all goes well in its phase 3 studies, Array plans to file for a new drug application sometime during the first half of 2016. Of course, now we have to wonder if binimetinib is approved whether or not Array can handle marketing the drug on its own. Additionally, melanoma is quickly becoming crowded with new therapies, meaning today's valuation around $600 million might be more than fair all things considered. For the time being I'm perfectly happy watching Array Biopharma from the sidelines.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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