ARRY (2019 - Q3)

Good day, ladies and gentlemen, welcome to the Fiscal Third Quarter 2019 Array BioPharma Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Andrea Flynn. Please go ahead. Andrea F

Good morning, this is Andrea Flynn, Senior Director of Investor Relations and Corporate Communications. Welcome to Array BioPharma's conference call to discuss our financial results for the third quarter of fiscal 2019. You can join this conference call on Array's website at arraybiopharma.com. We are using slides to accompany our remarks today, which can be downloaded from the Investor Relations section of our website. A replay of the conference call will also be available on our website following today's presentation. I'd like to introduce Array's Chief Executive Officer, Ron Squarer; our Chief Operating Officer, Andy Robbins; and our Chief Financial Officer, Jason Haddock, who will provide remarks today. Dr. Victor Sandor, our Chief Medical Officer, will also be available to answer questions as needed. Before I turn the call over to Ron, I'll remind you of the following Safe Harbor statement. The matters we are discussing today include projections or other forward-looking statements about the future results, research and development goals of Array and its collaborators, and future financial performance of Array. These statements are estimates based on management's current expectations and involve risks and uncertainties that could cause them to differ materially from actual results. We refer you to risk factors discussed in our filings with the SEC, including our Annual Report filed on Form 10-K for the year ended June 30, 2018 and in other filings Array makes with the SEC. These filings identify important risk factors that could cause actual results to differ materially from those in our projections or forward-looking statements. Today we're discussing results related to BRAFTOVI and MEKTOVI and BRAF-mutant melanoma. For reference, the important safety information is provided in the appendix of the slide deck. I'll now turn the call over to Array's CEO, Ron Squarer.

Thanks, Andrea. Good morning to everyone and thank you for joining us today. We're pleased to announce yet another strong quarter, in which we achieved significant milestones for both our commercial and clinical operations, and made progress toward important additional upcoming value drivers in the remainder of 2019. I'm starting on slide 3. BRAFTOVI plus MEKTOVI continue to receive a positive reception from U.S. healthcare providers treating BRAF-mutant melanoma patients with over $35 million in net product sales in our third commercial quarter. We continued to see strong demand for BRAFTOVI and MEKTOVI, with nearly 3,500 total prescriptions during the quarter and approximately 7,500 total prescriptions to-date.

Thanks, Ron. Moving to slide six. We remain encouraged by the third full quarter performance of BRAFTOVI plus MEKTOVI for advanced BRAF-mutant melanoma, with net product sales of $35.1 million. As Ron mentioned, demand for BRAFTOVI plus MEKTOVI was nearly 3,500 total prescriptions during the third quarter and approximately 7,500 total prescriptions to date. Again, as a reminder, BRAFTOVI and MEKTOVI are written as separate prescriptions, so each time the combination is prescribed, it is counted as one prescription for BRAFTOVI and one prescription for MEKTOVI. The vast majority of prescription fills we've seen to date have been for the combination. We believe the strong demand we have seen is driven by data from our COLUMBUS trial, which showed BRAFTOVI plus MEKTOVI offers the longest observed median progression-free survival and overall survival of any BRAF plus MEK inhibitor. Further, we believe the COLUMBUS trial demonstrated our combination offers attractive tolerability and the safety profile continues to resonate with melanoma prescribers.

Thank you, Andy. Now moving on to slide nine and continuing on the topic of BRAF colorectal cancer where we were delighted that the National Comprehensive Cancer Network, or NCCN, updated their Clinical Practice Guidelines in Oncology for colon and rectal cancer in March to recommend BRAFTOVI in combination with MEKTOVI and cetuximab or panitumumab as a category 2A treatment option for patients with BRAF-mutant CRC after one or two prior lines of therapy for metastatic disease, although our US sales force cannot and will not promote use in CRC until approved by the FDA. And we are also very pleased with the updated results from the BEACON CRC safety lead-in announced at ASCO GI in January. Following consultations with the FDA and European Medicines Agency, we previously amended the BEACON CRC protocol to allow for an interim analysis of trial endpoints, and should the planned analysis based primarily on confirmed overall response rate and durability response in roughly half the enrolled patient population be supportive, we do plan to seek accelerated approval in the US. The interim analysis may also support regulatory submissions in other regions, and we anticipate top-line results from the analysis this quarter. This timing allows for the subset of patients required for the interim analysis to achieve a response and for the durability of responses to be appropriately evaluated. Now on slide 10, we provide the details of the global BEACON Phase 3 clinical trial just for reference. As a reminder, we announced that we completed enrollment in January. On slide 11, while currently there are no FDA approved therapy specifically indicated for this high unmet need population, the median OS demonstrated by EGFR and chemotherapy containing regimens for this population is around four to six months, while recent experimental BRAF inhibitor containing triplet regimens reported median OS of 9.1 and 9.6 months.

Thank you, Ron, and good morning everyone. Slide 22 outlines our select financial performance for the third quarter of fiscal 2019 and I encourage you to read our full consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC this morning. We reported revenue of $64.7 million for the quarter, of which $35.1 million was from BRAFTOVI and MEKTOVI sales in the third quarter. Net revenue from product sales is recorded net of estimated rebates, chargebacks, discounts, fees and vouchers. These gross net adjustments represented 16.1% of gross product sales for the third quarter. Our collaboration revenue for the quarter was $19.5 million, which is down from last quarter by just over $30 million driven by Vitrakvi milestone we received in Q2. We also received royalties of nearly $1 million related to the global sales of BRAFTOVI and MEKTOVI. Note, these royalties were offset or were subject to an offset at 50% for cumulative cost related to the marketing authorization application in Europe. We've exhausted the majority of currently identified expenses and do not anticipate that offset to materially affect future royalties. We do expect the royalties will become even more meaningful in the coming quarters. Finally, our Novartis reimbursement revenue was $9.2 million for Q3. As we move to our operating expenses, our research and development costs were $65.5 million for Q3, which is up $3.4 million from last quarter. The increase in R&D expense was primarily driven by proprietary trial activities related to the BEACON CRC trial, as well as POLARIS and PHAROS, our BRAFTOVI and MEKTOVI lifecycle trials. SG&A for the third quarter was $35.5 million, which was $5.1 million higher than last quarter, primarily driven by BRAFTOVI and MEKTOVI commercialization activities, as well as general corporate expenses. This brings our reported loss from operations for the third quarter of fiscal 2019 to $37.5 million compared to $10.8 million in the previous quarter, primarily driven due to the recognition that Vitrakvi milestones in the prior quarter and slightly higher expenses. Net loss for Q3 was $37.5 million or $0.17 per share compared to a loss of $11.4 million or $0.05 per share for Q2. Finally, we closed the quarter with a balance of $479 million in cash, cash equivalents and marketable securities. Excluding non-recurring items, our net burn rate for Q3 remains consistent with prior quarters and was in the mid $40 million range. Now, I'd like to turn the call back to Ron.

Great, thank you, Jason. So to conclude the presentation, I'll review our top priorities and value drivers on slide 24. We remain focused on the commercialization of BRAFTOVI and MEKTOVI in BRAF-mutant melanoma and are encouraged by the results from our third commercial quarter with over $35 million in net product sales. The regulatory process continues to advance outside the U.S. with the recent BRAFTOVI and MEKTOVI approvals in Europe in late 2018 and in Japan in early 2019. Furthermore, we're thrilled to announce the NCCN guidelines now recommend BRAFTOVI in combination with MEKTOVI and cetuximab or panitumumab as a Category 2A treatment option for BRAF-mutant CRC patients. Following consultation with the FDA and EMA, we have planned an interim analysis based primarily on confirmed overall response rates and durability of response, which we believe could support an sNDA submission with positive results. This interim analysis may also support regulatory submissions in other regions and we do anticipate top line results this quarter. Further, the ANCHOR trial in first-line BRAF metastatic CRC setting continues to advance and we're pleased to further expand our lifecycle investment with the initiation of POLARIS and PHAROS and in BRAF-mutant melanoma brain metastases, as well as BRAF-mutant metastatic non-small cell lung cancer, respectively. We are excited about our continued commercial and clinical progress and look forward to providing additional updates on our key value drivers and our growing research portfolio throughout the remainder of 2019. With that, I'll now open up the call to Q&A.

Our first question comes from Chris Shibutani with Cowen. Your line is now open.

Great. Good morning. Thanks very much, congratulations on such a strong continued launch. I did want to pose some questions regarding the Colon opportunity, two if I may. With the NCCN guidelines, can you comment on what you're actually seeing, share any observations and help perhaps frame expectations for how you think that this in combination with the interim read-out could impact or what we're seeing as far as actual commercial impact and physician awareness? And secondly, in the first-line opportunity where you have the ANCHOR trial that's ongoing, how is enrollment progressing, any impact relative to news, for instance the NCCN, et cetera. And then help us with what you think is a reasonable timeline for when we could expect a potential read-out, and is there something in the way of an interim for ANCHOR that could also come to play? Thanks.

Great, Chris. Good morning. Thanks for calling in. So I'll start with CRC. The reason we're pleased with the NCCN guidelines, addition is about essentially endorsement or validation of the concept of using BRAF inhibitors in treatment of BRAF colorectal cancer, also anything that helps to progress awareness about the need for BRAF testing, as far as we're concerned is helpful to patients and ultimately to the franchise. So that's why we mentioned it. There is -- and we've said this in previous quarters, there are -- there is some use of our products in BRAF colorectal. It remains relatively small part of the business. What would happen with a positive supportive read-out from the BEACON CRC Phase 3 interim is yet to be determined. But ultimately, we can't promote and won't promote in CRC until we have a full FDA approval. But still the sort of -- let's call it momentum that NCCN is essentially starting in terms of awareness of this condition and how to treat it over time, I think will be very, very helpful. And so that's why we mentioned NCCN is more of an endorsement of the concept. Regarding ANCHOR, so I do think -- the study is opening, we are using in our exclusive, we are using some of the sites that recruited the BEACON trial. We haven't given at this point any specifics on when we'll have that readout available, but we'll give updates over time. We would like to see the results of the primarily second-line BEACON CRC trial to begin to anticipate what we might see in a first-line setting. So, there'll be more news about that, but ultimately over time we would love to be able to see more line agnostic approach to treating this disease and we will give color as we can. Thanks for those questions, Chris.

Thank you.

Our next question comes from Anupam Rama with JPMorgan. Your line is now open.

Hey, guys. Thanks for taking my question, and congrats on all the progress. You've given some color here on the script trends for melanoma for BRAFTOVI and MEKTOVI. Wondering if you could give us some details on what you're seeing in the marketplace about new prescriber trends, as well as repeat prescriber trends? Thanks so much.

Yeah. So as we've mentioned in the past, the way the products are distributed, we have only partial visibility to who is a new patient or repeat patient, it's only a segment of our channel that would be able to provide that information. And so, unfortunately, our data is not strong regarding that. And so, we haven't really called out trends in prescriptions beyond to describe the TRxs that we're seeing, and of course, the related revenue as well as anecdotal information. So perhaps over time, we'll have more to say about that, but at this point we're focused on what we've said today.

Great. Thanks for taking my question.

Great. Thanks, Anupam.

Our next question comes from Stephen Willey with Stifel. Your line is now open.

Yes. Good morning. Thanks for taking the questions. Ron, I was just maybe wondering if you can provide us with a little bit more color just with respect to kind of where we are with respect to timing. I know that the BEACON trial initiated enrollment, I think it was October of 2016. I know you said that you've completed enrollment in January. I'm just trying to think about enrollment kinetics as a function of having a minimal amount of follow-up in all patients at this point to provide us sufficient evaluation or duration of response. It would seem to me that you're kind of well into the follow-up period for the number of patients that are required to trigger the interim. So maybe you can just help us trying to better understand why -- at least in my opinion, kind of it seems to be taking a bit longer than expected to get to this interim response assessment?

Sure, Steve. Thanks for the question. So, look, so I'll start by saying that the reason for -- that drives the timing is that of course first we had to recruit the patients needed for the interim analysis as we've suggested about half the patients. We do anticipate it takes a couple of cycles to see a response and then we are waiting a pre-defined period of time to allow sufficient time for those responses to be deemed durable, then there is the traditional sort of cleaning process related to any clinical trial. We are certainly, I would say, been very diligent in optimizing the amount of time that's taken. And so, from the first day, I think we announced timing, we said it would be the first half. And we believe it will be the first half. I know we're coming sort of close to the end of the first half. But we are -- we remain -- our mind is on track with that plan. And so there's nothing -- we can't point out anything that has occurred, that is sort of out of scope, so just a matter of following the plan and producing the data in the not too distant future. So I hope that helps, Steve.

That’s helpful. Thank you. And then just a couple of questions on the newly posted Phase 2 trials. I know these are open label. How are you guys thinking about communicating data from these? Will we see incremental updates along the way or should we expect to see a final read. And then I guess on the lung cancer trial, I guess kind of curious as to why 40 patients. I know Novartis ran a Phase 2 trial in this setting, I believe around kind of 90 to 100 which proved to be sufficient growth for approval, so maybe you can just kind of help us understand, why you're looking at about half of those patients in the Phase 2 lung study? Thanks.

Sure. Thanks for those questions. I'll start with ANCHOR and I'll simply say that what we've said consistently and continue to believe is that, depending on the results, we may view this as an opportunity to approach regulators and update our label. And so we have to see how that goes. We haven't been specific about when and how we will be presenting that data, but that's the ultimate sort of goal. Regarding lung cancer, the current study design is listed here or in terms it does indicate the number you stated. But I'm sure you're aware that there are opportunities to expand trials based on a number of factors over time and doing so later in the progress of the study can offer more flexibility. We haven't been specific about our plans. It's the same message, which is we're going to look at the data and see we have and then decide how to progress whether it means adjusting study design or publishing or reaching out to regulatory authorities over time. And I would say, same is true for brain metastases, which is really -- a lot of feedback on brain metastases, unfortunately it is often the cause of patients coming to their disease, a lot of interest in this. We're really looking forward to collecting the data and ultimately sharing it, especially looking at that sort of variable doses. So these are -- when you do a list of high impact, reasonable timeframe studies, these -- this is what we're doing. We've mentioned in the past that, adjuvant in general is a topic that interest us. We are considering certainly parts in BRAF colorectal even beyond our second -- primarily second-line current approach, our first-line trials, it's running with ANCHOR. We're thinking about even moving upstream, thinking about is there a reasonable path in melanoma. So, but these are the -- what I call, sort of reasonable timeframe, high impact studies that we've initiated now. I hope that helps, Steve.

Yeah. That's helpful. And then just one quick housekeeping question, if I might or if I may. Gross to net on the quarter, just curious, just given the historical seasonality that tends to inflate this number.

Yeah, you can actually see that we went down a bit in Q1, and you're exactly right. There is some seasonality as we get to the beginning of the year. That portion of the business is relatively small in total, but we expect to stay in that -- the range that we've been in the last few quarters for the upcoming, so no demonstrative change in our gross to net for subsequent quarters.

Great. Thanks for taking my questions.

Thank you.

Our next question comes from Peter Lawson with SunTrust. Your line is now open.

Hi, Ron, just on the quarterly revenues. Just wondering, if you could add some more color, just around where we are for the switching patients and kind of any sense of where we are for the duration of therapy, either if -- even if it's kind of directionality. And then anything around the academic versus community setting, that will be great. Thank you.

Thanks Peter for the question. So, just as a reminder, you may recall we saw unexpectedly high demand and -- in revenue right out of the gate and that -- it did continue for some time, which we -- although we don't have great data, meaning, even if we -- in some parts of our channel can see if a patient is new or repeat, we don't get to know what they had prior. And so switching dynamics are mostly anecdotal, but we do feel confident they occurred. And the reason we talk too much about that is twofold; one, we saw -- we were able to tap into a large pool of existing MEK-RAF treated patients and we suggested this dynamic was not necessarily sustainable over time. So, we wanted folks to understand that over time it would wane and we believe that it has come down as a percentage of total treated patients. Now, the other dynamic might be and we don't have this information, is that the duration on a patient who is switched could be different from -- let's call it, the treatment-naive or MEK-RAF naive patient. Unfortunately, we don't have that data yet and we don't expect to have it until there has been sufficient time for a reasonable pool of patients to have received the medications both on a naive basis and a switch basis over a longer period of time. So, we are not able to comment about that now and probably won't for some time and even then we're going to have to work with organizations that are treating patients to try and get a good look at what's actually happening. But all of that said, we do still believe that the promise of this offering, Peter is that given our tolerability profile, there is the potential the patients may be able to stay on longer and even relative to other treatment option at higher doses, which could in fact grow the market. It's just that we don't have the evidence to determine if that's occurring or not. And so we sort of stick to I mention our benchmarks to what the market look like when we launched because we can say if -- at this point, we don't know if the profile that we presented is actually contributing to growth in metastatic melanoma --- BRAF melanoma, just by virtue of patients being able to take more drug for longer. So, I hope that helps, Peter.

Thank you. And then just on the -- I apologize if I missed this, but on the next IND, any color around what you'll be targeting, whether its mutations, oncogenes, et cetera?

It will definitely be cancer, I can say that. We haven't been more specific. We were building not just our first IND, which we expect to announce this year, but really a portfolio, and we know that folks are very interested in learning more about it, especially given our very recent, I think, remarkable achievements with the RAF inhibitor and TRACK inhibitors that are now at Lily and Bayer, the KRAS inhibitor at Mirati, a great recency to those achievements. And so I'm sure folks believe that the Array team can build exquisite molecules to important targets and they want to know more about it. But, of course, we want to be sure that we know exactly what we're going to have and when we going to have it before we announce it, so there will be more information over time. We have said that we're looking at sort of emerging, let's call it, in a colloquial way, hot new targets, but we're also looking to see if our know-how and technology can actually improve existing approaches, if we believe we can address the mechanisms of resistance and escape through what we do well. So, there'll be a combination of those approaches over time and we look forward to talking about them, but we haven't provided any more details at this time. So, thanks Peter.

Great. Thanks so much.

Our next question comes from Michael Schmidt with Guggenheim. Your line is now open.

Good morning and thanks for taking my questions. And Ron, appreciate your comments around BEACON CRC. Just curious if you could provide us with a little bit more color on how the actual disclosure of the results may happen? We noticed you do have an ASCO presentation slide and just curious if we should look for press release at some point or actually wait till the ASCO disclosure at that point?

Right. So, typically given how important this result is to our company, we would share topline results as soon as practical after receiving them. We've had a practice of working to ensure that any material information that emerged from the analysis is also disclosed, or at least, characterized in that announcement. So, that's typically how we approach that. And then of course, our goal would be to present the full dataset or whatever we have at that point at a major scientific conference. There's certainly a couple of coming up, there is certainly a couple coming up. But as I said, as of today we don't have the results. So, we'll see how the timing works out. But I think that's what you can expect and it's more than just the primary analysis or the primary focus of the analysis. If -- when we look at it and we haven't seen it yet, but when we look at it, we think -- see things which we think are important to evaluating how the study went, we'll share those in a press release. Beyond that, we haven't decided what other interactions we would have, but often we do at least engage analysts to answer any follow-up questions they may have. So, I hope that helps, Michael.

Yeah. Perfect, thanks. And then a question on BRAF melanoma. There are a couple of Phase III trials, looking at combinations of MEK, BRAF and PD-1 inhibitors, expected a read-out later this year from competitors. Just wondering how you're thinking about the potential impact of that on market dynamics in melanoma?

Yeah, we've been pretty consistent about this. We have to see how that emerges over time. Our view is that MEK-RAF is a powerful intervention of BRAF melanoma, as is IO separately. There's a lot of activity in each, so the question is when you put them together, are you going to see a noticeable improvement that justifies using essentially all available therapy upfront. And that's where things get a little bit more complicated. There may be and will be physicians around the world, typically academic physicians, that might engage in that but I think the average treating physician might not, unless again, there is some blow it out of the water kind of result. Now where we are seeing this topic ourselves and we are conducting a trial now to answer that question for us. There has been a lot of news, I think out of Novartis, they talked a lot about their triple that they're very enthusiastic and excited about it. I don't know, but I suspect that it's partly because it is their path to getting their checkpoint inhibitor approved. And so the relative importance of that study to them is of course, greater than whether a triple will be commonly used in BRAF melanoma. But the important message is, if it becomes an important paradigm, we will -- we expect to have data at some point to support use of our drugs. We still are very proud of the profile we present with the MEK and the RAF, and so, we've seen that would carry through to a triple going forward. So that's our current view, probably not going to be a new standard, but could be important and we're generating data.

Makes sense, thanks. And then one last question just regarding ANCHOR CRC. I know you didn't want to provide guidance just yet on enrollment and data disclosure. But could you just help us maybe contextualize what, sort of, benchmarks are in frontline BRAF CRC? And how you're thinking about next steps there, should you be able to exceed that in that study?

Yes. So unfortunately there's not great sort of historic source data. We kind of look at the tribe and I think it's called the Fire-3 trial as relative benchmarks. I think the best way to characterize it is, you do see higher response rates in the first-line setting with existing therapies than you see in second and third-line setting with existing therapies. And so the, I think, that in many ways we have to wait and see the predominantly second-line BEACON CRC result to understand what we might be able to see in the first-line setting and then will that be good enough. But I think there is number splitting out there for response rates, sort of, north of 40% for that setting. But they're not great studies to call upon. Of course, we prefer when there's many sources of data over time and to call upon. So I think, we just have to say, it will be a higher hurdle then in second line and after we see the BEACON results we'll -- we could all sort of guess whether we think we'll be able to make those standards. All right?

Great. Thanks, Ron. I appreciate the added information.

Great. Thanks, Mike.

Our next question comes from Jim Birchenough with Wells Fargo. Your line is now open.

Hi guys. Congrats on the strong results. A few questions from me. I guess first one just in terms of setting expectations for BEACON. You mentioned -- potential for regression. Could you remind us what the lower bound confidence interval was around the central reviewing response rate? And other than regression within the confidence intervals, any other reason you'd expect different results from what we saw in the lead-in?

Yeah, Jim. Thanks for the question. I think what we're trying to do here, because we don't have the results, is simply remind folks that when you move into a larger study population, numbers can shift. We're trying to avoid -- we don't know the results, so we're trying to avoid sort of, let's call it, disappointment with the good results. What I mean is that the benchmark control and even historic results with experimental regimens, we think this benchmarks is so low that even if there is movement in the results from BEACON CRC versus safety lead-in, that there's a lot of, let's call it, daylight between the two. And that's really what our messaging is. When we talk to KOLs, not necessarily investigators, they expect numbers to change, but they've told us that even a substantial move in results would still be very meaningful as a new treatment option for these patients. So we're just -- and most investors and analysts are aware the numbers can change. We're just trying to remind folks that the benchmarks are low and there's a lot of room there. And in terms of specific confidence intervals, we will publish them, we can get them to you, but what we're talking about is more of a general concept. I hope that helps, Jim.

That's helpful. And then, Ron, do you have a sense of what the diagnosis rates are for BRAFV600E in colorectal cancer. And have you seen any movement either from your education programs or from the NCCN guideline recommendation in increasing those diagnosis rates?

Yeah. I'm going to ask Andy to answer it. Remember, though, that there is not a really useful treatment intervention today. And so we do think that the introduction of a useful treatment intervention is going to really help with that. Go ahead, Andy.

Hi, Jim. It's Andy. So there's certainly two ways to answer that question. One is what is the rate of testing and then second, what is the rate of a positive test in the patients who received the diagnostic tests. So we think today in the U.S., the rate of testing for the BRAF-mutation within the CRC population is probably on the order of about 60% to maybe 70% depending on the setting, definitely skewing much higher in the academic setting and a little bit lower in the community setting. As far as for patients in a population who are tested, we remain confident that the underlying prevalence of the BRAF-mutation in the colorectal cancer population is in that range of between 8% and 15%. We believe that as testing becomes more prevalent, it is possible that that hit rate, so to speak, goes up and you actually find more patients in the population than you've seen historically in clinical trials. So we continue to maintain in that 10% to 12% range, if you're going to try to mid-point it, is a good estimate.

And then maybe just one final question, just on market dynamics. You're on a run rate right now of about $140 million so on $1 sales basis, about one-third of the category sales in the U.S. What are the major barriers to getting to the other two-thirds, is that more community versus academic or docs treating patients with brain mets holding off waiting to see more direct evidence on brain mets? What are some of the things you can do to get into that, the rest of the market?

Yeah. You can hear that we are letting folks know that we've had really -- I would say, tremendous penetration in a relatively short period of time. And so the quarter-on-quarter growth that you've seen for the last -- well, for the first two quarters where we could do that analysis, it's something that you would expect with any launch to begin to come down over time. And so we are reminding people of that natural dynamic. And now in terms of why launches tend to have this dynamic, it's not that profound. We, obviously, target the largest, earliest adopting institutions first and to get where we are, we've always done a good job there. Let's call that the low hanging fruit, and then over time, you have to expand sometimes into less concentrated areas of the market and to treaters that are, let's call it, have more inertia in the way they think and in which they approach treatment. And so that's how we see the dynamic emerging over time, but we are very pleased with how far we've come quickly. We’re simply asking the analyst community to be thoughtful about how the growth looks going forward.

Great. Thanks for taking the questions.

Our next question comes from Eun Yang with Array. Your line is now open.

Thank you very much. So I have a question on interim BEACON trial data coming up. Is there any efficacy level where data is a positive, but you may not be supportive for accelerated approval process?

It's very difficult to judge, Eun, by the way good morning and thanks for the question. You know, as -- I think our message is that the differences we've seen with the safety lead-in and historic benchmarks is, there's a lot of difference there and so we think there's a lot of room for, let's call it, error to use one term, if there is the kind of progression you typically see when you move into large populations. Speculating beyond that is a real challenge, other than to say and I believe you've done some work on this yourself, you think you've had some primary interactions with treaters. The population is so desperate, meaning if you're diagnosed with BRAF mutation in your colorectal cancer, your treatment options are limited, disease is very aggressive, we often hear that after progression on the first-line with that -- with available therapies, patient’s prognosis is quite poor. So they have said that that almost any treatment option would be exciting to them, they reacted with enthusiasm to the SWOG trial results where those results were quite low and quite toxic. And so we think that there is a lot of demand, but going beyond that, it's really hard to speculate. We’ll have the results in the not too distant future and then we can judge.

Okay. And then, although you have not guided at all, is there a possibility that you may hit the overall survival primary endpoint at interim?

Yeah. Look, we've said that the analysis is focused on response rates that have been given sufficient time to deem durable. We have stated that other endpoints will be analyzed, but we have not commented beyond that. So we're going to have to just wait for the analysis and see what comes up.

Okay. And the last question is on melanoma and I understand that the $400 million target is -- therapy market in the U.S., there could potentially expand with a longer duration of the therapy with the profitability in MEKTOVI. But at the same time, aside from taking market share from other BRAF inhibitors, have you seen you are taking market share away from immune checkpoint inhibitor, meaning that patients who would like to try targeted therapies, profitable MEKTOVI prior to anti- PD-1, anti-PD-L1 treatment?

Yeah. So look, it's possible. We are not focused on that right now. What I mean is, our attitude is, if you want to start with IO, start with IO. If you want to start with MEK-RAF, we've got a great offer in our MEK and RAF combination. If you want to use this in second line, that's perfectly fine. So we are not engaging right now in -- and really the debate of whether you should use IO or targeted agents in the first line or second line. We may over time, but now it's not the time for that. We still feel that it's roughly half-half, although we don't have great data for that. But different in the setting, so academic settings, you're going to see more first line, IO use in the community less in the first line. But your question is very relevant that's, let's call it a challenge or an opportunity for the future, once we've established ourselves as a great MEK-RAF choice. So I appreciate the question. But right now that's not our focus.

Thanks very much.

Thank you, Eun.

Our next question comes from Thomas Smith with SVB Leerink. Your line is now open.

Hey guys, good morning. Thanks for taking the questions, and congrats on the strong quarter. I just have two questions on BRAFTOVI, MEKTOVI commercialization in melanoma. First, I apologize if I missed this, but can you give us a sense of -- I guess any inventory trends during the quarter? And then secondly, in the first quarter you've reported royalties for ex-U.S. sales of the combo, and Jason you called out the offset related to the MAA filing. But I was wondering if you can just give us a sense of the early demand trends that your partners are seeing outside the U.S. and how this compares to the uptake you've seen in the early launch?

Yeah. Great. Tom, I'll answer this quickly to see if we can get a couple more questions into today. Look, with regards to inventory, there's nothing sort of special going on in that regard. So it's not been -- I don't think it's in an area to focus on. Second, in terms of the channel, and from what I understand channel's pretty efficient, they don't like to stock much of these drugs unless they have some consideration for that. So that's standard across all oral molecules. Then, with regards to demand ex-U.S., what we'll say is, it's early days in Europe. You know that in Europe pricing -- the challenges in regulatory approval is pricing approval. We've already mentioned that our European partner has been selling in this sort of free price market, Germany that's by far their most important early market. They're selling in other markets as well. The feedback we received is very positive, similar dynamics to what we're seeing in the U.S. interestingly enough in terms of some switch activity there. So we're pleased with what we're seeing except that they're only really able to capture a small percentage of the total European market, which over time, we think is going to be very important. This was exacerbated, as Jason mentioned by the sort of small offset that we had, which is mostly exhausted at this point, which made the early works look even smaller. But it's going to become more relevant in the future. With Japan, we have to be clear; melanoma is quite rare in Asia. It's not going to be about melanoma, we hope it will be about colorectal, assuming that the results are positive. So, thanks for that question. I think we have time for at least one more.

And our next question comes from Varun Kumar with Cantor Fitzgerald. Your line is now open.

Hey. Good morning, everyone, and thanks for taking my questions. Just one quick one on colorectal cancer. Now, given colorectal cancer patients are mostly in community setting and given now MEKTOVI and BRAFTOVI is already in the market, my question is, how the launch dynamic in colorectal cancer, if approved, may differ versus melanoma, just given the impressive ramp we are seeing in melanoma market. Thanks.

Yes. Varun, thanks for the question. And I think we will have time as we pushed up hour just for one last question after this. So you've got it right. Melanoma is a primarily -- or is not primarily, but it is more treated in the academic setting than in the community. And BRAF colorectal is going to be the reverse. And so, you can expect us to have expansion in our customer-facing resources across sales, market access and also separately medical affairs to really have to reach more of a community setting. We think that, at the highest level or strategic level that kind of expansion, that kind of activity will put more of our folks in touch with the community melanoma prescribers when we're approved and can talk about it, assuming that we get there. And so, we see it as a different marketing approach, but one that helps us perhaps to expand our melanoma effort beyond the -- beyond a focus in the academic setting. Not to mention that there's -- I think there will be a halo effect, if our results are positive in BEACON that these products are really special and good. So I hope that helps. And maybe, we'll take one last question today.

I'm showing no further questions at this time.

Okay. Well, thank you so much, everyone. I really appreciate it. We are certainly pleased with our results to-date and we'd like to thank our employees here at Array for their creativity, commitment and strong sense of urgency that continues to fuel our success. I also want to thank our patients, partners and shareholders for their continued confidence and support. We'll now close the call.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.