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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Array BioPharma Inc.:
We have audited Array BioPharma Inc.'s internal control over financial reporting as of June 30, 2012,
based on criteria established in
Internal Control -- Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Array BioPharma Inc.'s management
is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management's
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, Array BioPharma Inc. maintained, in all material respects, effective internal control over
financial reporting as of June 30, 2012, based on criteria established in
Internal Control -- Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the balance sheets of Array BioPharma Inc. as of June 30, 2012 and 2011, and the
related statements of operations and comprehensive loss, stockholders' deficit, and cash flows for each
of the years in the three-year period ended June 30, 2012, and our report dated August 16, 2012
expressed an unqualified opinion on those financial statements.
/s/ KPMG LLP
Boulder, Colorado
August 16, 2012
F-4
ARRAY BIOPHARMA INC.
Balance Sheets
(Amounts in Thousands, Except Share and Per Share Amounts)
June 30,
2012
2011
ASSETS
Current assets
Cash and cash equivalents
$
55,799
$
48,099
Marketable securities
33,378
15,986
Prepaid expenses and other current assets
3,930
6,477
Total current assets
93,107
70,562
Long-term assets
Marketable securities
473
623
Property and equipment, net
12,059
15,698
Other long-term assets
2,434
2,491
Total long-term assets
14,966
18,812
Total assets
$ 108,073
$
89,374
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable
$
6,466
$
4,460
Accrued outsourcing costs
5,394
5,248
Accrued compensation and benefits
7,530
6,431
Other accrued expenses
1,390
2,312
Co-development liability
9,178
-
Deferred rent
3,489
3,333
Deferred revenue
42,339
47,874
Current portion of long-term debt
150
150
Total current liabilities
75,936
69,808
Long-term liabilities
Deferred rent
11,480
14,968
Deferred revenue
13,228
39,306
Long-term debt, net
92,106
91,390
Derivative liabilities
656
540
Other long-term liabilities
473
4,220
Total long-term liabilities
117,943
150,424
Total liabilities
193,879
220,232
Commitments and contingencies
Stockholders' deficit
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 10,135 shares
designated as Series B convertible preferred stock; 2,721 and 10,135 shares issued and
outstanding as of June 30, 2012 and 2011, respectively
8,054
30,000
Common stock, $0.001 par value; 120,000,000 shares authorized; 92,063,645 and
57,020,003 shares issued and outstanding, as of June 30, 2012 and 2011, respectively
92
57
Additional paid-in capital
437,401
346,853
Warrants
39,385
39,385
Accumulated other comprehensive income (loss)
(1)
3
Accumulated deficit
(570,737)
(547,156)
Total stockholders' deficit
(85,806)
(130,858)
Total liabilities and stockholders' deficit
$ 108,073
$
89,374
See accompanying notes to the financial statements
F-5