Array BioPharma has decided to cut 70 jobs, or about 20% of its staff. The reductions are primarily in discovery research and support positions. The company hopes that the move will provide a more appropriate balance between the discovery and development groups.
Array says that it now has a smaller yet fully capable discovery research organization focused on advancing partnered programs with Amgen, Celgene, and Genentech as well as select wholly owned late-stage discovery programs. The company intends to focus on ARRY-520, a KSP inhibitor; ARRY-614, a p38/tie-2 inhibitor; and MEK162, a MEK inhibitor. All candidates are in clinical development.
As a result of the restructuring, during fiscal 2012, Array expects to reduce its annual net cash used in operating activities by approximately $20 million. It anticipates using approximately $40 million for operating activities, which includes milestones received from existing collaborations. The firm had reported about $77.47 million in total operating expenses for the first nine months of this fiscal year and roughly $127.44 million in full fiscal 2010.
The company will record a one-time restructuring charge in the fourth quarter of fiscal 2011, currently estimated to be $3.5 million. Array had $76 million in cash, cash equivalents, and marketable securities as of May 2, 2011. The firm also received a $10 million Phase II milestone fee from Novartis for the MEK162 program during the third quarter.
In April 2010, Novartis paid $45 million for worldwide rights to the small molecule MEK inhibitor ARRY-162, currently in a Phase I cancer trial. The agreement also covered its back-up, ARRY-300, and other MEK inhibitors. Array is eligible to get a total of $422 million in clinical, regulatory, and commercial milestones.
MEK is a protein kinase in the RAS/RAF/MEK/ERK pathway, which signals cancer cell proliferation and survival. It has been shown to be frequently activated in cancer, in particular in tumors that have mutations in the RAS and RAF pathways, Array explains.
Array also has a collaboration with Amgen, which made an initial $60 million payment for the small molecule glucokinase activator program. The deal gives Amgen exclusive, worldwide rights to ARRY-403, currently in Phase I for type 2 diabetes, and additional back-up candidates.
Amgen agreed to fund a particular number of full-time Array employees as part of their two-year research collaboration intended to identify and advance second-generation glucokinase activators. Amgen will take over clinical development of all compounds after Phase I is completed.
Array’s relationship with Celgene is the oldest. Inked in September 2007, the deal covered cancer and inflammation and gave Array $40 million up front. Array is responsible for all discovery and up to Phase I or Phase IIa development. Array is entitled to receive, for each of two drugs, potential milestone fees of approximately $200 million tied to development and regulatory success plus $300 million if certain commercial milestones are achieved.
As for Array’s focus on internal development, the firm says that its attention is on ARRY-520 and ARRY-614. The former is in Phase II trials against acute myeloid leukemia and multiple melanoma (MM). ARRY-614 is in a Phase I myelodysplastic syndrome (MDS) study. Phase II data on ARRY-520 in MM and Phase I results for ARRy-614 in MDS are expected later this year, says Robert E. Conway, CEO.