Array BioPharma Inc. (ARRY - Free Report) reported a loss of 17 cents per share for the third quarter of fiscal 2019, which was narrower than the Zacks Consensus Estimate of loss of 21 cents. However, loss widened 54.4% from the year-ago figure due to higher operating expenses.
Total revenues in the quarter fell 2.5% year over year to $64.7 million primarily due to significant decline in collaboration and license revenues, partially offset by product revenues. However, revenues beat the Zacks Consensus Estimate of $51.5 million. The company did not have any marketed product in the year-ago period and hence did not record any product revenues.
Shares of Array BioPharma fell almost 3.4% on May 7 despite the earnings and revenue beat. The stock has increased 56.6% so far this compared with the industry’s rally of 3.2%.
Quarter in Detail
Net product sales, completely from Braftovi-Mektovi combination therapy, in the reported quarter increased 54.6% sequentially to $35.1 million. The combination regimen continues its strong launch uptake into its third commercial quarter. In June 2018, Braftovi plus Mektovi therapy was approved for treating unresectable or metastatic melanoma with a BRAF V600E or V600K mutation.
In February, the therapy was approved in Japan for unresectable melanoma with a BRAF mutation. In March, the National Comprehensive Cancer Network (“NCCN”) updated its guidelines to include Braftovi and Mektovi plus Lilly’s (LLY) chemotherapy, Erbitux, as a recommended treatment for BRAF-mutated metastatic colorectal cancer (mCRC) in second- or third-line setting.
Collaboration and license revenues plunged 53.2% year over year to $19.5 million compared to the year-ago quarter. The plunge was primarily due to the recognition of the Vitrakvi milestones in the prior quarter
Reimbursement revenues were $9.2 million in the third quarter of fiscal 2019 compared with $24.8 million in the year-ago quarter. The company records amounts paid by Novartis related to development and commercialization of Braftovi and Mektovi related to asset transfer agreements as reimbursement revenues. The significant decrease in reimbursement revenues was due to lower activity in the clinical studies transitioned from Novartis.
The company recorded product royalties of $0.9 million during the quarter. There were no such revenues in the year-ago quarter. The company is eligible to earn royalties on sales of Braftovi and Mektovi regimen in Europe and Japan from its commercial partners Pierre Fabre and Ono, respectively.
Selling, general and administrative (SG&A) expenses surged 111.9% to $35.5 million due to higher costs to support commercial activities of Braftovi-Mektovi combination therapy.
Research and development (R&D) expenses decreased 8.1% to $65.5 million, mainly due to lower expenses related to the company’s proprietary clinical studies including the BEACON CRC study.
In January, the company announced median overall survival data from the phase III BEACON CRC study, evaluating Braftovi and Mektovi plus Erbitux for mCRC, which stood at 15.3 months in mCRC patients with BRAF V600E mutation.
During the quarter, the company amended the protocol of the BEACON CRC study to include an interim analysis of study endpoints based on inputs from the FDA and European Medicines Agency. Encouraging interim data may form the basis for accelerated approval of the combination regimen for treating mCRC.
A phase II study – ANCHOR CRC – is evaluating the same combination regimen in first-line mCRC. The company also has immuno-oncology study collaborations with Bristol-Myers (BMY - Free Report) , Merck (MRK - Free Report) and Pfizer (PFE - Free Report) . Additional new clinical studies started in April to evaluate Braftovi and Mektovi in BRAF V600 mutant melanoma brain metastases and non-small cell lung cancer (“NSCLC”).
Array BioPharma currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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