Case Study: Partnering for Potential, Array BioPharma’s Ron Squarer

The Challenge

You’ve stepped in as CEO at a biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule drugs used to treat cancer and inflammatory diseases. In taking the helm, you’re charged with finishing the company’s 10-year transition from developing drugs for larger pharma companies to steering some of those molecules through late-stage development and commercialization on its own.

The Context

For Ron Squarer, a 20-year pharma industry veteran who joined Array in April of 2012, the company’s impressive innovation track record was the big draw. “They had invented 18 molecules, which for a small company is quite a lot,” he recounts. “Fifteen of those are still in active development, and 11 of those 15 are in Phase II [trials], which means they’ve gone through the first stage of human studies to make sure they’re safe and show signs of efficacy. It’s a remarkable record.”

The Hurdles

Because of the financial firepower required to see a new drug through FDA approval and introduce it effectively to the marketplace, biopharm companies like Array generally partner with powerhouse pharmaceuticals for the final developmental and commercialization phases—or sell out altogether. Array, however, set its sights on a hybrid model of wholly owned and partnered programs. Before Squarer took the helm, the company opted to team up with large pharma companies like AstraZeneca, Amgen, Novartis, Genentech, Roche, Celgene and ASLAN Pharmaceuticals on 10 of the molecules it had invented and to keep five for itself.

However, Squarer’s extensive background in commercialization—including tenures at Pfizer and Hospira—led him to believe this plan was overly ambitious. “If you try to do too many things, you will run out of money, you will run out of talent and you will run out of time,” he notes.

The Resolution

Instead, Squarer moved swiftly to dial back Array’s proprietary drug plans, homing in on two therapies in one area—blood cancer—out of the five. Currently, the company has two wholly owned programs, ARRY-614 and ARRY-520, and three partnered programs, selumetinib (with AstraZeneca), MEK162 (with Novartis) and danoprevir (with InterMune/Roche), all with the potential to begin Phase III trials by the end of 2013.

The Endgame

The partnerships enable the company to profit from upfront fees and milestone payments—fees of as much as $700 million linked to events like registration for FDA approval and FDA approval itself—and to offload the cost burden of development onto the larger shoulders of big pharma companies, as well as retain significant upside in the form of future royalties. “For example, in our diabetes program partnership with Amgen, we received $60 million upfront, the possibility of $670 million in milestones and double-digit royalties,” reports Squarer. “In fact, we have so many great partnerships that, as we look a few years out, we see ourselves generating enough revenue just from those partnerships, milestones and—eventually—royalties that we will be self-sustaining. We won’t need to raise more money or even partner any more drugs if we don’t want to.”

The Lesson

Set realistic goals. “It’s not practical for us to execute perfectly in all of the [areas in which we have developed molecules],” says Squarer, “so we made a clear decision to focus on blood cancer drugs and to resist the temptation to keep the other programs for ourselves. Then, once we’re commercial, I want to turn that discovery capability back on to keep making drugs for us.”