Array shares spike on $467M Novartis cancer pact

Shares of Boulder, CO-based Array BioPharma (NASDAQ: ARRY) spiked 33 percent overnight after the developer announced that it had inked a $467 million oncology pact with Novartis. The deal includes a $45 million upfront and milestone payment for ARRY-162, a back-up small molecule, as well as additional MEK inhibitors.

The terms of the deal include $422 million in milestones along with the potential to earn double-digit royalties on sales outside the U.S. and "significantly higher" royalties in the U.S., where it is hanging on to co-marketing rights. ARRY-162 is currently in Phase I.

"This agreement with Novartis is a major advance in our strategic objective to become a fully integrated, commercial-stage biopharmaceutical company," said Array CEO Robert Conway. "We believe ARRY-162 will benefit from the additional resources of a major pharmaceutical company to rapidly maximize its promise as a cancer treatment, both as a single agent and in combination therapy."

MEK is a key protein kinase in the RAS/RAF/MEK/ERK pathway, which signals cancer cell proliferation and survival.

Array has been on a roll recently. The developer pocketed a $60 million upfront from Amgen at the end of last year when it forged a deal covering an early-stage therapy for type 2 diabetes. But the biotech started 2009 on a sour note when it announced plans to trim its workforce by 10 percent in order to conserve money. That news came at a time when a host of analysts were projecting hard times for the industry as the worldwide economy was roiled by recession.

- check out Array's press release