Array BioPharma set to earn up to $467 million from oncology deal with Novartis

US drug developer Array BioPharma revealed yesterday that it has entered into an agreement with Swiss drug giant Novartis for the worldwide development of the small-molecule MEK inhibitors ARRY-162, currently in a Phase I cancer trial, its back-up, ARRY-300 and other MEK inhibitors, that could earn the company as much as $467 million, sending its shares up 25.8% to $3.80 in extended trading last night. .

Under the terms of the deal, Array will initially receive $45 million comprising an upfront and milestone payment and is eligible to for an additional $422 million if certain clinical, regulatory and commercial milestones are achieved. In addition, Array plans to co-develop ARRY-162 in one or more specific indications and fund a portion of development costs. The agreement provides Array with double-digit royalties on sales of approved drugs outside the USA, with a significantly higher royalty rate for US sales provided that Array meets its co-funding obligations. Array also has a co-detailing right in the USA for approved drugs.

This is the second major licensing deal within six months for Array, which entered an agreement granting fellow USA-based Amgen exclusive worldwide rights to its small-molecule glucokinase activator program, including ARRY-403, currently being tested in a Phase I clinical trial in patients with type 2 diabetes, under the terms of which the company received an upfront $60 million and is due additional contingent payments for certain clinical and commercial milestones (The Pharma Letter December 15, 2009).