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which designs and runs mechanistic studies in cell biology and pharmacology to provide insight into
clinical development strategy, product differentiation and biomarker support for clinical development. To
date, our average cost to invent a new chemical entity and file an IND application is $17.9 million,
compared to estimates of up to $100 million spent by major pharmaceutical companies. Our discovery
group has created high quality clinical candidates with every wholly-owned and to our knowledge, every
partnered, drug to reach the clinic to date having been shown to modulate its mechanistic target, as
measured by an appropriate clinical biomarker.
Process Research, Development, Formulation and Manufacturing
We have built and we continue to enhance our process research and development and cGMP
manufacturing capabilities to accommodate the productivity of our research platform and support our
clinical development plans. Our capabilities include formulations, physical form characterization and
aspects of clinical supply manufacturing.
Clinical Development
Our current key capabilities within clinical development include clinical science, clinical operations,
clinical pharmacology, safety monitoring, biostatistics, programming and data management, regulatory
strategy and program management. This group leads the development and implementation of our clinical
and regulatory strategies. The clinical group designs, directs and implements all clinical operations,
including identifying and selecting clinical investigators, recruiting study subjects to participate in our
clinical trials, biostatistics, data management, drug safety evaluation and adverse event reporting. The
clinical group also is responsible for ensuring that our development programs are conducted in
compliance with applicable regulatory requirements. The group also works closely with the cross
functional project and clinical teams to facilitate the appropriate and efficient development of our diverse
product pipeline.
Our near term focus is on bringing our most promising drugs through proof-of-concept clinical trials. Our
proof-of-concept strategy is to efficiently conduct studies to demonstrate the value of each program in a
therapeutic area so that decisions to continue, modify or cease development of a program can be made
early in the development process. We believe that our broad development pipeline and productive
discovery platform provide an incentive to design trials for each program with high hurdles to demonstrate
the potential of the drug or to ``fail early.''
Information Technology
We believe that our information technology, or IT, capabilities provide a competitive advantage in each
aspect of our business. Our IT capabilities are essential to increasing our productivity through capturing,
organizing and providing appropriate information to improve decision-making. We accomplished our goal
of creating a paperless discovery research environment, which has empowered our scientists to improve
real time decision-making at the bench. Array has completed a clinical information system that parallels
the comprehensive capabilities of our discovery system, providing company-wide access to real-time
information for each clinical trial as well as the entire drug portfolio. In addition to real-time study data, the
system's information includes planned and actual screening/enrollment at the site level, budget and
actual costs by types of activities, important events and milestones.
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Competitors
The pharmaceutical and biotechnology industries are characterized by rapid and continuous
technological innovation. We compete with companies worldwide that are engaged in the research and
discovery, licensing, development and commercialization of drug candidates, including large
pharmaceutical companies with internal discovery and development functions, biotech companies with
competing products in the therapeutic areas we are targeting and contract research organizations that
perform many of the functions we perform under our collaborations. In addition, we face competition from
other pharmaceutical and biotechnology companies seeking to out-license drugs targeting the same
disease class or condition as our drug candidates are based on, among other things, patent position,
product efficacy, safety, reliability, availability, patient convenience, price and reimbursement potential.
Therefore, we may be unable to enter into collaboration, partnering, or out-licensing agreements on terms
that are acceptable to us, or at all. We also compete with other clinical trials for patients who are eligible to
be enrolled in clinical trials we or our collaborators are conducting, which may limit the number of patients
who meet the criteria for enrollment and delay or prevent us or our collaborators from completing trials
when anticipated. Because the timing of entry of a drug in the market presents important competitive
advantages, the speed with which we are able to complete drug development and clinical trials, obtain
regulatory approval and supply commercial quantities of drugs to the market will affect our competitive
position. Some of our competitors have a broader range of capabilities and have greater access to
financial, technical, scientific, regulatory, business development, recruiting and other resources than we
do. Their access to greater resources may allow them to develop processes or products that are more
effective, safer or less costly, or gain greater market acceptance, than products we develop or for which
they obtain FDA approval more rapidly than we do. We anticipate that we will face increased competition
in the future as new companies enter the market and advanced technologies become available.
Government Regulation
Biopharmaceutical companies are subject to substantial regulation by governmental agencies in the U.S.
and other countries. Virtually all pharmaceutical products are subject to extensive pre- and post-market
regulation by FDA, including regulations that govern the testing, manufacturing, distribution, safety,
efficacy, approval, labeling, storage, record keeping, reporting, advertising and promotion of such
products under the Federal Food, Drug, and Cosmetic Act and its implementing regulations, and by
comparable agencies and laws in foreign countries. Prescription drug products are subject to rigorous
preclinical and clinical testing and other approval procedures by the FDA and by foreign regulatory
agencies. The FDA must approve any new drug, including a new dosage form or new use of a previously
approved drug, prior to marketing in the United States. All applications for FDA approval must contain,
among other things, information relating to safety and efficacy, pharmaceutical formulation, stability,
manufacturing, processing, packaging, labeling and quality control information. The preclinical and
clinical testing and approval process requires substantial time, effort and financial resources, and we
cannot be certain that the FDA will grant approval for any of our product candidates on a timely basis, if at
all. Before an application requesting FDA approval for a new drug product is submitted to the FDA, three
phases of human clinical trials are usually conducted to test the safety and effectiveness of the product.
Phase 1 clinical trials most typically involve testing the drug on a small number of healthy volunteers to
assess the safety profile of the drug at different dosage levels. Phase 2 clinical trials, which may also
enroll a relatively small number of patient volunteers, are designed to further evaluate the drug's safety
profile and to provide preliminary data as to the drug's effectiveness in humans. Phase 3 clinical trials
consist of larger, well-controlled studies that may involve several hundred or even several thousand
patient volunteers representing the drug's targeted population. In addition, biopharmaceutical companies
may elect to conduct, or be required by the FDA to conduct, Phase 4 clinical trials to further assess the
drug's safety or effectiveness after approval. Such post approval trials are typically referred to as Phase 4
clinical trials. During any of these phases, the clinical trial can be placed on clinical hold, or temporarily or
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