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or reverse-engineer our trade secrets or other technology. The failure of our employees, our consultants
or third parties to maintain secrecy of our drug discovery and development efforts may compromise or
prevent our ability to obtain patent coverage for our invention.
Our patent strategy is designed to protect inventions, technology and improvements to inventions that are
commercially important to our business. We have numerous U.S. patents and patent applications on file
with the U.S. Patent and Trademark Office and around the world. The source code for our proprietary
software programs is protected both as a trade secret and as a copyrighted work.
U.S. patents issued from applications filed on or after June 8, 1995, have a term of 20 years from the
application filing date or earlier claimed priority. All of our patent applications were filed after June 8, 1995.
Patents in most other countries have a term of 20 years from the date of filing of the patent application.
Because the time from filing patent applications to issuance of patents is often several years, this process
may result in a period of patent protection significantly shorter than 20 years, which may adversely affect
our ability to exclude competitors from our markets. Currently, none of our patents covering drugs
currently under development will expire prior to 2023. Our success will depend in part upon our ability to
develop proprietary products and technologies and to obtain patent coverage for these products and
technologies. We intend to continue to file patent applications covering newly developed products and
technologies. We may not, however, commercialize the technology underlying any or all of our existing or
future patent applications.
Patents provide some degree of protection for our proprietary technology. However, the pursuit and
assertion of patent rights, particularly in areas like pharmaceuticals and biotechnology, involve complex
legal and factual determinations and, therefore, are characterized by some uncertainty. In addition, the
laws governing patentability and the scope of patent coverage continue to evolve, particularly in
biotechnology. As a result, patents may not be issued from any of our patent applications or from
applications licensed to us. The scope of any of our patents, if issued, may not be sufficiently broad to
offer meaningful protection. In addition, our patents or patents licensed to us, if they are issued, may be
successfully challenged, invalidated, circumvented or rendered unenforceable so that our patent rights
might not create an effective competitive barrier. Moreover, the laws of some foreign countries may not
protect our proprietary rights to the same extent as do the laws of the U.S. Any patents issued to us or our
strategic partners may not provide a legal basis for establishing an exclusive market for our products or
provide us with any competitive advantages. Moreover, the patents held by others may adversely affect
our ability to do business or to continue to use our technologies freely. In view of these factors, our
intellectual property positions bear some degree of uncertainty.
Employees
As of June 30, 2012, we had 250 full-time employees, including 137 scientists and 49 clinical and
regulatory employees, of whom 69 have PhDs or MDs. None of our employees are covered by collective
bargaining agreements and we consider our employee relations to be good.
Our Corporate Information
Our principal executive offices are located at 3200 Walnut Street, Boulder, Colorado 80301 and our
phone number is (303) 381-6600. We were founded in 1998 and became a public company in November
2000. Our stock is listed on the NASDAQ Global Market under the symbol ``ARRY.''
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Available Information
Electronic copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and other documents we file with or furnish to the SEC are available free of charge (i) on the
``Investor Relations'' section of our website at http://www.arraybiopharma.com or (ii) by sending a written
request to Investor Relations at our corporate headquarters. Information on our website is not
incorporated by reference into this report.
Additionally, the documents we file or furnish with the SEC are available free of charge at the SEC's
Public Reference Room at 100 F Street, NE, Washington D.C. 20549, or can be accessed free of charge
on the website maintained by the SEC at http://www.sec.gov. Other information on the operation of the
Public Reference Room is available by calling the SEC at (800) SEC-0330.
ITEM 1A. RISK FACTORS
In addition to the other factors discussed elsewhere in this report and in other reports we file with the SEC,
the following factors could cause our actual results or events to differ materially from those contained in
any forward-looking statements made by us or on our behalf. In addition, other risks and uncertainties not
presently known to us or that we currently deem immaterial may impair our business operations. If any of
the following risks or such other risks occur, it could adversely affect our business, operating results and
financial condition, as well as cause the value of our common stock to decline.
Risks Related to Our Business
If we need but are unable to obtain additional funding to support our operations, we could be
required to reduce our research and development activities or curtail our operations and it may
lead to uncertainty about our ability to continue to operate as a going concern.
We have expended substantial funds to discover and develop our drug candidates and additional
substantial funds will be required for further development, including preclinical testing and clinical trials, of
any product candidates we develop internally. Additional funds will be required to manufacture and
market any products we own or retain rights to that are approved for commercial sale. Because the
successful development of our products is uncertain, we are unable to precisely estimate the actual funds
we will require to develop and potentially commercialize them.
We have historically funded our operations from up-front fees and milestone payments received under
our collaborations and out-license transactions, the issuance and sale of equity securities and through
debt provided by our credit facilities. We believe that the cash, cash equivalents and marketable
securities as of June 30, 2012 will enable us to continue to fund operations in the normal course of
business for at least the next 12 months. However, we will continue to depend on funding our operations
from these sources for the foreseeable future. Our ability to obtain additional funding when needed,
changes to our operating plans, our existing and anticipated working capital needs, the acceleration or
modification of our planned research and development activities or expenditures, increased expenses or
other events may affect our need for additional capital in the future and may require us to seek additional
funding sooner than anticipated.
Our ability to successfully raise sufficient funds through the sale of debt or equity securities when needed
is subject to many risks and uncertainties and, even if we are successful, future equity issuances would
result in dilution to our existing stockholders. We also may not successfully consummate new
collaborations that provide for additional up-front fees or milestone payments or we may not earn
milestone payments under such collaborations when anticipated or at all. Our ability to realize milestone
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