Robust pipeline at minimal cost
Funding research is the biggest issue with early stage companies. In Array’s case it is an even bigger issue because of the number of compounds it is working on. Despite that, the company has been able to manage funding through strategic partnerships without having to dilute equity. In fact, it has received more by way of upfront and milestone payments than it has spent on discovery and development. Out of the $589 million received (against $563 million actually spent) since inception in 1998, $133 million has been from Novartis, Amgen and Genentech (now Roche).
The majority of the company’s value stems from partnerships with AstraZeneca plc (ADR) (NYSE:AZN) and Novartis for Selumetinib and AZD8330 – MEK Program and MEK162 and MEK300 – MEK Inhibitor Program. Any partnership that the company enters for its asthma candidate can only add to that value.
Regardless of encouraging results and potential of pipeline products, it is crucial that the fundamentals of early stage biotech companies like Array Biopharma Inc (NASDAQ:ARRY) are also examined.
Array’s revenue has been growing continuously for the last three years – from $53.88 million in FY 2010 to $85.14 million in 2012. In addition, there has also been a more than significant drop in net loss – from $77.63 million to $23.58 million.
At the same time, considering the state of its balance sheet, with $88 million in cash and short term investments and annual burnout of more than $70 million, the company depends largely on the results of its ongoing evaluation programs and milestone payments from its partners that include Celgene and Eli Lilly.
Considering the potential of its healthy pipeline, I would suggest investors to consider buying Array Biopharma Inc (NASDAQ:ARRY) for the long term, at least till end of 2014.
The article This Cancer Biotech Is Looking for Other Green Pastures originally appeared on Fool.com and is written by Dr. Kanak Kanti De.
Dr. Kanak Kanti De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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