Here's Why Array BioPharma Is Surging Today

Cory Renauer, The Motley Fool

What happened

Shares of Array BioPharma (NASDAQ: ARRY), a commercial-stage biopharmaceutical company, are on the move following positive results from a pivotal cancer trial. Investors looking forward to increasing sales of Array's first two drugs have pushed the stock up 16.8% as of 12:19 p.m. EDT on Tuesday. 

So what 

Last June, the FDA approved the use of Braftovi plus Mektovi for the treatment of advanced melanoma patients with BRAF-mutated tumors, and during the nine months ended March 31, sales reached an impressive $71.8 million. Over the same time frame, Array received $101 million in collaboration and license revenue from Novartis (NYSE: NVS) and Loxo Oncology, which is now an Eli Lilly (NYSE: LLY) company. Braftovi plus Mektovi sales will probably keep climbing because adding this combination to Erbitux significantly improved patients' chances at long-term survival during the pivotal Beacon study.  

The happiest person you've ever seen working in a lab.

Image source: Getty Images.

The Beacon trial enrolled 615 patients with BRAF-mutant colorectal cancer who have relapsed at least once. Patients receiving Array's two-drug combo plus Erbitux exhibited a risk of death 48% lower than those receiving the standard treatment as a monotherapy. We also know that 26.1% of patients responded to what Array is calling the Braftovi Triplet while just 1.9% of patients responded to Erbitux on its own.

Now what

The company expects to submit an application to treat advanced colorectal cancer patients with the Braftovi Triplet in the second half of the year. Last summer the FDA granted the Braftovi Triplet a breakthrough therapy designation that should shorten its upcoming review from 10 months to six, which means Array could post some big revenue gains again in 2020. 

Colorectal cancer claims the lives of around 700,000 people globally each year, and patients who don't respond to their first round of treatment don't have a lot of options. With a clear survival benefit, annual sales of Array's triplet could reach more than $500 million in 2023. That would be more than enough to help this biotech reach profitability and to drive the stock much higher down the road.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.