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develop under the agreement. The agreement provides Array with double- digit royalties on worldwide
sales of any approved drugs, with royalties on U.S. sales at a significantly higher level. We will pay a
percentage of development costs up to a maximum amount with annual caps. We may opt out of paying
such development costs with respect to one or more products; in which case the U.S. royalty rate would
then be reduced for any such product based on a specified formula, subject to a minimum that equals the
royalty rate on sales outside the U.S. and we would no longer have the right to develop or detail such
The agreement with Novartis will be in effect on a product-by-product and country-by-country basis until
no further payments are due with respect to the applicable product in the applicable country, unless
terminated earlier. Either party may terminate the agreement in the event of a material breach of a
material obligation under the agreement by the other party that remains uncured after 90 days prior
notice. Novartis may terminate portions of the agreement following a change in control of Array and may
terminate the agreement in its entirety or on a product-by-product basis with 180 days prior notice. Array
and Novartis have each further agreed to indemnify the other party for manufacturing or
commercialization activities conducted by it under the agreement, negligence or willful misconduct or
breach of covenants, warranties or representations made by it under the agreement.
MEK162 has been administered to more than 430 patients/volunteers in clinical trials for either safety
assessment or the treatment of oncology or inflammatory disease. The drug has demonstrated an
acceptable safety profile and has shown clinical activity in the ongoing cancer studies.
Development Status: MEK162 was identified by Novartis as reaching clinical proof of concept in
November 2011. There are ten clinical trials of MEK162 ongoing, including two Phase 2 trials, three
Phase 1b trials in combination with different PI3 kinase inhibitors and two Phase 1b trials in combination
with different RAF inhibitors. Promising data on MEK162 in an ongoing Phase 2 trial of patients with
BRAF and NRAS mutated advanced melanoma were presented at the 2012 ASCO Annual Meeting. In
this trial, MEK162 showed clinical activity and good tolerability in patients with BRAF or NRAS melanoma.
This is the first targeted therapy to show activity in patients with NRAS mutated melanoma. The ongoing
Phase 2 open-label trial is being conducted by Novartis and continues to enroll patients. As of February
2012, eight of the 35 patients with BRAF mutations evaluable for response had partial responses,
including two confirmed partial responses, and 13 patients demonstrated stable disease. The disease
control rate was 60 percent among these patients. Of the 28 patients with NRAS mutations who were
evaluable for response, six had partial responses, including three confirmed partial responses, and 13
patients had stable disease. The disease control rate was 68 percent among these patients. The median
progression-free survival was 3.55 months [95% CI 2.00 - 3.81 months] for patients with BRAF mutation
and 3.65 months [95% CI 2.53 - 5.39 months] for patients with NRAS mutations.
Common adverse events of all grades were consistent with data reported for the MEK inhibitor class and
included rash, diarrhea, acneiform dermatitis, edema, creatine phosphokinase elevation, central serous
retinopathy-like events, nausea and fatigue.
InterMune (program now owned by Roche) -- Danoprevir Hepatitis C Virus NS3/4
Protease Program
In 2002, we entered into a collaboration with InterMune for the discovery of novel small molecule
inhibitors of the Hepatitis C Virus, or HCV, NS3/4A protease. As a result of drug discovery activities under
this collaboration, scientists at Array and InterMune jointly discovered danoprevir. In October 2010 Roche
acquired danoprevir from InterMune for $175 million. InterMune thereafter ceased all further development
efforts under the collaboration. Under the terms of Array's collaboration agreement with InterMune,
InterMune has an obligation to make milestone payments to us based on the selection and progress of
danoprevir, as well as royalties on commercial sales of danoprevir. To date, we have received $1.8 million
in milestone payments and have the potential to earn an additional $9.0 million if all clinical and
commercialization milestones for danoprevir are achieved under the agreement.
Development Status: In 2011, Roche expanded its portfolio of investigational medicines for hepatitis C
through the purchase of danoprevir. The hepatitis market is evolving and, to meet the different needs of
people infected with HCV, future treatment options are likely to include interferon-free, as well as
interferon-containing triple- and quadruple-combination therapy regimens. Roche has several oral,
direct-acting antiviral agents in late-stage development for HCV, including danoprevir, which is currently
in a Phase 2 clinical trial. Roche is conducting two Phase 2 trials, MATTERHORN and INFORM-SVR, of
danoprevir in combination with mericitabine, a nucleoside polymerase inhibitor being developed by
Roche, with and without interferon, or IFN, in two Phase 2 trials. Roche also conducted a Phase 2 trial,
DAUPHINE, of danoprevir in IFN-containing regimens for HCV.
In April 2012, Roche announced data at the Annual Meeting of the European Association for the Study of
the Liver Congress from the DAUPHINE and INFORM-SVR studies. The DAUPHINE trial showed high
sustained viral response (SVR) rates, maintaining undetectable viral levels 12 weeks after stopping
treatment, and good tolerability with danoprevir in IFN-containing regimens for HCV. In this trial, up to
93% of genotype 1 and 100% of genotype 4 patients achieved SVR12 with ritonavir-boosted danoprevir,
IFN and ribavirin, considered a clinical cure. In the INFORM-SVR Phase 2 trial, 71% of genotype 1b
patients achieved SVR12 with boosted danoprevir, mericitabine and ribavirin as part of an IFN-free
regimen. Results from a third MATTERHORN Phase 2 trial evaluating danoprevir in combination with
mericitabine are currently expected during the second half of 2012.
ASLAN Pharmaceuticals -- ASLAN001 (ARRY-543) -- HER2 /EGFR Program
In July 2011, we entered into a collaboration agreement with ASLAN Pharmaceuticals to develop Array's
HER2 / EGFR inhibitor, ASLAN001 (ARRY-543), which is currently in Phase 2 development in patients
with gastric cancer in Asia. Under the agreement, ASLAN is funding and developing ASLAN001 through
clinical proof of concept. Upon achievement of proof of concept, ASLAN will identify a global partner for
Phase 3 development and commercialization. Array will share a significant portion of the proceeds of
such partnering transaction.
The agreement with ASLAN will remain in effect for two years after conclusion of the initial development
plan, unless ASLAN has entered into a license agreement with a third party for the further development
and commercialization of the program, in which case the agreement shall remain in force and effect.
Either party may terminate the agreement prior to expiration of the term following breach of the
agreement by the other party. ASLAN is responsible for diligently advancing development ASLAN001
under an agreed upon development plan.
ASLAN001 is a novel, selective and oral HER2 / EGFR inhibitor, and has shown clinical activity in both
HER2-positive and EGFR-positive tumors. Over 200 patients have received ASLAN001 either as
monotherapy or in combination with chemotherapy.
Gastric cancer is a major public-health problem in East Asia. Patients with locally advanced, metastatic or
recurrent disease have a poor prognosis, with an overall median survival of approximately 11 months.
EGFR and HER2 receptors are commonly overexpressed together in gastric cancer. Data from pivotal
studies of Herceptin
(trastuzumab), indicate that the activity of this drug is limited to the subset of
patients whose disease has amplified copies of the HER2 gene. We believe ASLAN001 has the potential
to augment or supersede the activity of Herceptin in this population, and in the broader population of
gastric cancers that co-express both EGFR and HER2 receptors.