(RTTNews) - Development stage biopharmaceutical company Array BioPharma Inc. (ARRY) said Monday that it has entered into an oncology collaboration deal with Novartis AG (NVS) to develop ARRY-162, a small-molecule MEK inhibitor. Shares of the company surged over 33% in the extended hours trading on Monday.

Under the terms of the deal, Array would initially get $45 million comprising an upfront and milestone payment for world-wide development of ARRY-162, which is currently in phase I cancer trial, its back-up ARRY-300, and other MEK inhibitors. Also, if certain clinical, regulatory and commercial milestones are attained, Array is eligible to get an additional $422 million.

Boulder, Colorado-based Array said it intends to co-develop ARRY-162 in one or more specific indications and fund a portion of development costs. Array, as per the deal, is also eligible for double-digit royalties on sales of approved drugs outside of the U.S., with a significantly higher royalty rate for the U.S. sales, if Array meets its co-funding obligations. Array also has a co-detailing right in the U.S. for approved drugs.

"This agreement with Novartis is a major advance in our strategic objective to become a fully integrated, commercial-stage biopharmaceutical company. 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. Novartis is the right partner because of its track record in developing and commercializing important new cancer therapies," said Robert Conway, Chief Executive, Array BioPharma.

MEK is a key protein kinase in the RAS/RAF/MEK/ERK pathway, which signals cancer cell proliferation and survival. ARRY-162 is currently in a phase I, open-label, multiple dose trial, to determine the maximum tolerated dose and evaluate safety. The study also evaluates pharmacokinetics and pharmacodynamics of ARRY-162, following daily oral administration in advanced cancer patients with solid tumors. Also, Array has initiated an expansion phase of this trial initially in biliary tract cancer patients.

ARRY finished Monday's regular trade at $3.02 on the Nasdaq. In the after hours session, it picked up 33.44% or $1.01.

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