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Array BioPharma Inc. (ARRY - Free Report) recently entered into an agreement with Oncothyreon Inc. to develop and commercialize ARRY-380 (ErbB2).  ARRY-380 is an orally active, reversible and selective small-molecule HER2 inhibitor.

We note that ARRY-380 has already completed phase I studies in patients with pre-treated metastatic breast cancer. The study revealed that the candidate was well tolerated and had anti-tumor activity.

ARRY-380 also demonstrated superiority with respect to overall survival in an intracranial HER2+ breast cancer xenograft model, in comparison to Tykerb (lapatinib) and neratinib. We note that Tykerb is marketed by GlaxoSmithKline (GSK - Free Report) .

Array is expected to receive an upfront fee of $10 million on the initiation of the collaboration. As per the terms of the agreement, Oncothyreon will be responsible for the development of ARRY-380 in multiple proof-of-concept studies in patients suffering from metastatic breast cancer, including patients having brain metastases. These studies will evaluate ARRY-380 in combination with other approved breast cancer drugs.

Following their completion, Array and Oncothyreon plan to jointly conduct a phase III program on ARRY-380 which will be supported by the proof-of-concept studies. Both Array and Oncothyreon will have the right to come out of further development and commercialization but will still receive royalty payments. Array expects to receive double-digit royalty payments on the candidate’s approval.

While Array will be responsible for the worldwide commercialization of the candidate, Oncothyreon will enjoy co-promotion rights to the candidate in the US. The companies will be however sharing the commercialization costs and profit equally in the US. Oncothyreon is entitled to receive double-digit royalty on net sales in the ex-US market. Moreover, the companies will share any proceeds from sublicense of marketing rights equally.

Array BioPharma presently carries a Zacks Rank #3 (Hold). Meanwhile, companies like Jazz Pharmaceuticals Public Limited Company (JAZZ - Free Report) look better positioned with a Zacks Rank #1 (Strong Buy).

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