Array Biopharma (ARRY) Gets Lucky

Small biopharma stocks sometimes have that one big day, the day that there investors wait for. Array Biopharma (NASDAQ:ARRY) moved higher by 30% early in the day to $3.11. The little firm entered into an agreement granting Amgen (NASDAQ:AMGN) exclusive worldwide rights to Array’s small-molecule glucokinase activator program, including ARRY-403, being tested in a Phase 1 clinical trial in patients with Type 2 diabetes.

Under the terms of the agreement, Array will receive an upfront payment of $60 million and additional contingent payments for certain clinical and commercial milestones. Array is responsible for completing the Phase 1 trial for ARRY-403. Amgen is responsible for future clinical development and commercialization for ARRY-403 and any resulting back-up compounds, with Array able to co-promote in the United States. Array will receive double-digit royalties on sales of ARRY-403. In addition, Amgen will fund an agreed upon number of full-time Array employees as part of a two-year research collaboration intended to identify and advance second-generation glucokinase activators.

Array is hardly in good shape. The company lost $25 million on revenue of $5 million in the quarter ending September 30. Array has cash of $77 million but net long-term debt of $108 million.

Array has a market cap of $143 million.

Douglas A. McIntyre