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for an additional two years of funded research through January 2013. Genentech may terminate the
agreement upon 120 days' notice. Genentech has paid Array a total of $21.3 million in up-front and
milestone payments, and we have the potential to earn an additional $26.3 million for all programs if
Genentech continues development and achieves the remaining clinical milestones set forth in the
Development Status: In June 2011, Genentech advanced one collaborative drug, GDC-0068 , an AKT
inhibitor, into a Phase 1b, open label, dose escalation trial evaluating the safety and pharmacology of
GDC-0068 in combination with either Taxotere (docetaxel) or mFOLFOX6 (fluoropyrimine) plus
oxaliplatin in patients with advanced solid tumors. At the 2012 ASCO Annual Meeting, Genentech
presented results from this trial showing that GDC-0068, when combined with Taxotere or mFOLFOX6,
was safe and well-tolerated up to the single agent maximum tolerated dose (600 mg). There were no dose
limiting toxicities observed during dose escalations; one out of 47 patients discontinued due to
GDC-0068-related adverse events. There were no pharmacokinetic interactions observed between
GDC-0068 and Taxotere or mFOLFOX6. Both combinations show evidence of clinical benefit, including
patients with PI3K/Akt pathway alterations and with prior treatment with taxanes or platinum agents. This
trial continues to enroll and evaluate patients in dose expansion cohorts.
In addition, over the past six months, Genentech initiated two trials:
1. Phase 1b/2 trial with GDC-0068 or GDC-0980, a PI3 Kinase/mTor dual inhibitor, with abiraterone
acetate versus abiraterone acetate in patients with locally advanced castration-resistant prostate
2. Phase 1 trial with GDC-0068 in combination with GDC-0973, a MEK inhibitor being developed in
collaboration with Exelixis, to evaluate the safety, tolerability and pharmacokinetics of GDC-0068 in
patients with locally advanced or metastatic solid tumors.
Genentech GDC-0425 (RG7602) and GDC-0575 (RG7741) -- Checkpoint kinase 1 (ChK-1)
inhibitors program
In August 2011, Array and Genentech entered into an oncology agreement with for the development of
each company's small- molecule ChK-1 program. The programs include Genentech's compound
GDC-0425 (RG7602), and Array's compound GDC-0575 (previously known as ARRY-575), both of which
are in Phase 1 in patients with cancer. Under the terms of the agreement, Genentech is responsible for all
clinical development and commercialization activities. Array received an up-front payment of $28 million
and is eligible to receive clinical and commercial milestone payments up to $685 million and up to double-
digit royalties on sales of any resulting drugs. The agreement will remain in effect until Genentech's
obligations to make milestone or royalty payments have passed or expired.
Either party may terminate the agreement prior to expiration of the term following breach of the
agreement by the other party, and Genentech may terminate the agreement upon at least 60 days' prior
notice to Array. If Genentech terminates the agreement for breach of the agreement by Array, the license
Array granted to Genentech will become irrevocable and the royalty payable to Array will be reduced to a
specified percentage. If the agreement is terminated by Genentech for convenience or by Array for
breach of the agreement by Genentech, the licenses Array granted to Genentech will terminate,
Genentech will continue to be required to pay milestone and royalty payments on any programs for which
Genentech had initiated clinical development and Array's exclusivity obligations will continue so long as
Genentech is developing or commercializing at least one product subject to the agreement. Array and
Genentech have also agreed to indemnify the other party for breaches of representations or warranties
made under the agreement and for certain of their respective activities under the agreement.
Development Status: In April 2012, Genentech initiated a Phase 1 multiple ascending dose trial to
evaluate GDC-0575 alone and in combination with Gemzar
(gemcitabine) in approximately 90 patients
with refractory solid tumors or lymphoma. In addition, Genentech continued to advance GDC-0425 in a
Phase 1 multiple ascending dose trial alone and in combination with Gemzar in approximately 75 patients
with refractory solid tumors or lymphoma.
VentiRx -- VTX-2337 /Toll-Like Receptor (TLR) Program
In February 2007, we entered into a licensing and collaboration agreement with the privately held
biopharmaceutical company VentiRx, under which we granted VentiRx exclusive worldwide rights to
certain molecules from our toll-like receptor, or TLR, program. The program contains a number of
compounds targeting TLRs to activate innate immunity, including VTX-2337. We received equity in
VentiRx as well as an up-front payment and the right to receive potential milestone payments and
royalties on product sales. To date, we have received $1.1 million in milestone payments and have the
potential to earn $57.5 million if VentiRx achieves the remaining clinical and commercial milestones under
the agreement. See
Note 5 -- Equity Investment to the accompanying audited financial statements
included elsewhere in this Annual Report on Form 10-K for a description of the equity interest we received
in VentiRx as a result of this agreement.
Development Status: Phase 1 results on VTX-2337 were reported at the American Society of Clinical
Oncology Annual Meeting in 2011. Overall, VTX-2337 was well-tolerated, with the most common
drug-related adverse events being mild to moderate in severity and including injection-site reactions and
transient flu-like symptoms. The maximum tolerated dose of VTX-2337 was established to be 3.9 mg/m2.
In addition, pharmacodynamic effects--as measured by a defined panel of biomarkers identified in
preclinical studies--provide evidence of the biological activity of VTX-2337 in stimulating an innate
immune response in cancer patients. Twenty five percent of patients (N=8) treated with VTX-2337
experienced disease stabilization based on RECIST criteria at eight weeks. Patients with disease
stabilization at eight weeks received additional doses of VTX-2337, ranging from 1 to 6 additional cycles
(3 to 18 additional doses), until disease progression. One patient with metastatic melanoma
demonstrated tumor regression after cessation of VTX-2337 remains disease free at 18 months
VentiRx has advanced VTX-2337 into clinical trials designed to evaluate the compound in multiple
oncology indications in combination with a variety of anticancer agents, including chemotherapy and
monoclonal antibody therapy. Clinical trials of VTX-2337 currently underway include a combination study
with chemotherapy in late stage ovarian cancer and a combination trial with cetuximab in head and neck
cancer patients.
10. Celgene -- Programs for Oncology and Inflammation, including ARRY-382
In September 2007, we entered into a worldwide strategic collaboration with Celgene focused on the
discovery, development and commercialization of novel therapeutics in cancer and inflammation. Under
the agreement, Celgene made an up-front payment of $40 million to us in part to provide research funding
for activities conducted by Array. We are responsible for all discovery and clinical development through
Phase 1 or Phase 2a. Celgene has an option to select a limited number of drugs developed under the
collaboration that are directed to up to two of four mutually selected discovery targets and will receive
exclusive worldwide rights to the drugs, except for limited co-promotional rights in the U.S. Celgene's
option may be exercised with respect to drugs directed at any of the four targets at any time until the
earlier of completion of Phase 1 or Phase 2a trials for the drug or September 2014. In June 2009, the
parties amended the agreement to substitute a new discovery target in place of an existing target and
Celgene paid Array an up-front fee of $4.5 million in consideration for the amendment. In September