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AstraZeneca In December 2003, we entered into a collaboration and license agreement with
AstraZeneca under which AstraZeneca received a license to three of our MEK inhibitors for
cancer, including selumetinib, which is currently in multiple Phase 2 clinical trials.
Celgene We entered into a worldwide strategic collaboration agreement with Celgene in
September 2007 focused on the discovery, development and commercialization of novel
therapeutics in cancer and inflammation. The most advanced drug is ARRY-382, a cFMS inhibitor
for cancer, which is currently in a Phase 1 clinical trial.
Genentech We entered into a worldwide strategic collaboration agreement with Genentech in
January 2003, which was expanded in 2005, 2008, and 2009, and is focused on the discovery,
development and commercialization of novel therapeutics. The most advanced drug is GDC-0068,
an AKT inhibitor for cancer, which is currently in a Phase 2 trial.
In August 2011, we entered into an oncology partnership with Genentech for the development of
each company's small-molecule Checkpoint kinase 1 (Chk-1) program. The programs include
Genentech's compound GDC-0425 (RG7602) and Array's compound, GDC-0575, both of which
are in Phase 1 clinical trials in patients with cancer.
Novartis We entered into a worldwide strategic collaboration with Novartis in April 2010 to
develop and commercialize our MEK inhibitor, MEK162, and other MEK inhibitors identified in the
agreement. MEK162 is currently in numerous Phase 1b and Phase 2 clinical trials in patients with
cancer.
InterMune (program acquired by Roche) We entered into a collaboration with InterMune in 2002,
which resulted in the joint discovery of danoprevir, a novel small molecule inhibitor of the Hepatitis
C Virus NS3/4A protease. Roche Holding AG acquired danoprevir from InterMune in 2010.
Danoprevir is currently in Phase 2b clinical trials.
Business History
We have built our clinical development and drug discovery programs through spending $520.8 million
from our inception in 1998 through June 30, 2012. In fiscal 2012, we spent $56.7 million in research and
development expenses for proprietary drug discovery, compared to $63.5 million and $72.5 million for
fiscal years 2011 and 2010, respectively.
We have received a total of $577.9 million in research funding and in up-front and milestone payments
from our collaboration partners from inception through June 30, 2012, including $174 million in initial
payments from our strategic collaborations with Amgen, Genentech and Novartis we entered into over the
past 32 months. These three collaborations entitle Array to receive up to over $2.2 billion in additional
potential milestone payments if all clinical and commercialization milestones under the agreements are
achieved, double digit royalties and/or commercial co-detailing rights. With our other existing partnered
programs, Array is entitled to receive a total of over $3.6 billion in additional potential milestone payments
if we or our collaborators achieve the drug discovery, development and commercialization objectives
detailed in those agreements. We also have the potential to earn royalties on any resulting product sales
or share in the proceeds from development or commercialization arrangements resulting from 11 drug
research and development programs.
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Our Strategy
We are building a fully integrated, commercial-stage biopharmaceutical company that discovers,
develops and markets safe and effective small molecule drugs to treat patients afflicted with cancer and
inflammatory diseases. We intend to accomplish this through the following strategies:
Invent targeted small molecule drugs that are either first-in-class or second generation drugs that
demonstrate a competitive advantage over drugs currently on the market or in clinical
development.
Selectively develop and commercialize our drugs to maximize their overall value. As our first drug
nears approval, we plan to build a U.S.-based therapeutically-focused sales force to
commercialize or co-promote drugs we wholly own or for which we retain development rights in
certain geographic areas.
Implement a partnering strategy in which we retain U.S. commercial and/or co-promotion rights for
drugs that can be distributed through a therapeutically specialized sales force and partner select
early-stage programs for continued research and development to receive research funding plus
significant milestone payments and royalties.
Our out-license and collaboration agreements with our partners typically provide for up-front payments,
research funding, success-based milestone payments, co-detailing rights and/or royalties on product
sales. These agreements may also be structured to share in the proceeds received from a collaborator
resulting from the further development or commercialization of resulting drugs.
We intend to continue to pursue partnering opportunities for our research and development programs to
provide funding, development, manufacturing and commercial resources and may seek co-development
or co-commercialization rights worldwide or limited to certain geographic areas. We plan to advance and
commercialize our most promising development assets internally, which we believe will maximize their
value. We are also identifying certain programs to partner earlier during discovery or preclinical
development with the goal of optimizing the potential return for Array on these programs.
Drug Discovery and Clinical Development Programs
We have collaborations with leading pharmaceutical and biotechnology companies under which we have
out-licensed certain proprietary drug programs for further research, development and commercialization.
Our largest or most advanced collaborations include our agreements with Amgen, ASLAN
Pharmaceuticals, AstraZeneca, Genentech, InterMune/ Roche and Novartis. Under some of these
collaborations, such as with Novartis for MEK162, we continue development work that is funded all or in
part by our partners. Under some of our other partnered programs, our involvement in the development or
research phase has ended but we retain the right to receive clinical and commercialization milestones
and/or royalties on sales of any products covered by the collaboration. We also have research
partnerships with leading pharmaceutical and biotechnology companies for which we design, create and
optimize drug candidates and conduct preclinical testing across a broad range of therapeutic areas on
targets selected by our partners. In certain of these partnerships, we also perform process research and
development, perform clinical development and manufacture clinical supplies.
Information about our collaborators that comprise 10% or more of our total revenue and information about
revenue we receive within and outside the U.S. can be found in
Note 2 Segments, Geographical
Information and Significant Collaborators to the accompanying audited financial statements included
elsewhere in this Annual Report.
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