Array Biopharma Sees Positive Study Results From COLUMBUS Phase 2, But Commercialization May Prove Daunting

Following Array Biopharma Inc (NASDAQ: ARRY) reporting positive top line results from part 2 of a late-stage study of its combo treatment candidate for metastatic and BRAF-mutant melanoma, Leerink thinks it will require a sizeable commercial effort to capture share in a market that has plateaued, particularly in the U.S.

Array Biopharma said Binimetinib and Encorafenib, being evaluated in a Phase III study dubbed Columbus, showed the combo was generally well-tolerated and safety profile was consistent with the Columbus Part 1 results. The company said it's on track to file NDA by June or July 2017.

Value Driver

Analysts Michael Schmidt, Varun Kumar and Jonathan Chang are of the view that the combo is the main value driver of Array Biopharma. BRAF+ melanoma currently contributes about 50 percent to the stock's valuation, the analysts added.

The analysts pointed to the fact that Part 2 of the trial was supplementary to the primary analysis in COLUMBIS Part 1, which was read out positively last September.

Given the positive outcome of COLUMBUS trial Part 1 and 2, Leerink thinks the likelihood of approval of the combo in mid-2018 remains high. Given the clearance of the last hurdle, the firm is of the view shares could benefit incrementally.

On The Sidelines

Leerink remains Market Perform rated on Array Biopharma shares, based on its view that the commercial opportunity for the MEK/BRAFi doublet in BRAF+ melanoma is limited in a competitive market with a profile that is incrementally differentiated from approved agents.

"Longer term we think ARRY's MEK/BRAFi have potential in other indications such as BRAF+ colorectal cancer, but we remain on the sidelines given lack of significant value creating catalysts in the near term in our view," the firm said.

Although Leerink believes potential label expansion in colorectal cancer is compelling longer term, it expects pivotal trials on that to take several years to complete.

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