Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

_______________________________________________

Commission File Number: 001-16633

_______________________________________________

Array BioPharma Inc.

(Exact Name of Registrant as Specified in Its Charter)



Delaware	84-1460811
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

3200 Walnut Street, Boulder, CO	80301
(Address of Principal Executive Offices)	(Zip Code)

(303) 381-6600
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer ¨	Accelerated Filer x
Non-Accelerated Filer ¨	Smaller Reporting Company ¨
(do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of April 30, 2015, the registrant had 141,062,042 shares of common stock outstanding.

ARRAY BIOPHARMA INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015

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		Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Balance Sheets as of March 31, 2015 and June 30, 2014	3
	Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended March 31, 2015 and 2014	4
	Statement of Stockholders' Equity for the nine months ended March 31, 2015	5
	Statements of Cash Flows for the nine months ended March 31, 2015 and 2014	6
	Notes to the Unaudited Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

PART II	OTHER INFORMATION
Item 1A.	Risk Factors	41
Item 6.	Exhibits	41

SIGNATURES		42

EXHIBIT INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARRAY BIOPHARMA INC.

Balance Sheets

(In thousands, except share and per share data)

(Unaudited)



	March 31,			June 30,
	2015			2014
Assets
Current assets
Cash and cash equivalents	$	141,470		$	68,591
Marketable securities	48,600			42,407
Accounts receivable	2,116			5,429
Prepaid expenses and other current assets	4,409			5,249
Total current assets	196,595			121,676

Long-term assets
Marketable securities	546			640
Property and equipment, net	7,455			8,157
Other long-term assets	3,849			8,580
Total long-term assets	11,850			17,377
Total assets	$	208,445		$	139,053

Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable	$	7,616		$	6,953
Accrued outsourcing costs	14,936			10,040
Accrued compensation and benefits	6,677			8,209
Other accrued expenses	2,034			1,444
Co-development liability	—			16,155
Deferred rent	3,856			3,739
Deferred revenue	9,798			6,193
Total current liabilities	44,917			52,733

Long-term liabilities
Deferred rent	1,184			4,096
Deferred revenue	3,662			3,353
Long-term debt, net	107,985			103,952
Other long-term liabilities	546			640
Total long-term liabilities	113,377			112,041
Total liabilities	158,294			164,774

Commitments and contingencies

Stockholders' equity (deficit)
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $0.001 par value; 220,000,000 shares authorized; 140,427,434 and 131,817,422 shares issued and outstanding as of March 31, 2015 and June 30, 2014, respectively	140			132
Additional paid-in capital	696,661			652,696
Warrants	39,385			39,385
Accumulated other comprehensive income	9,798			2
Accumulated deficit	(695,833		)	(717,936		)
Total stockholders' equity (deficit)	50,151			(25,721		)
Total liabilities and stockholders' equity (deficit)	$	208,445		$	139,053

The accompanying notes are an integral part of these unaudited financial statements.

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ARRAY BIOPHARMA INC.

Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share data)

(Unaudited)



	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2015			2014			2015			2014
Revenue
License and milestone revenue	$	99		$	4,287		$	20,367		$	23,639
Collaboration and other revenue	6,502			3,486			19,222			12,428
Total revenue	6,601			7,773			39,589			36,067

Operating expenses
Cost of partnered programs	12,140			10,756			37,415			34,524
Research and development for proprietary programs	11,817			14,131			35,824			35,322
General and administrative	8,187			5,405			23,064			16,056
Total operating expenses	32,144			30,292			96,303			85,902
Net gain on the Binimetinib and Encorafenib Agreements	80,010			—			80,010			—
Income (loss) from operations	54,467			(22,519		)	23,296			(49,835		)

Other income (expense)
Realized gain from marketable securities, net	6,402			—			6,402			—
Interest income	15			22			36			61
Interest expense	(2,577		)	(2,435		)	(7,631		)	(7,246		)
Total other income (expense), net	3,840			(2,413		)	(1,193		)	(7,185		)

Net income (loss)	$	58,307		$	(24,932	)	$	22,103		$	(57,020	)

Change in unrealized gains (losses) on marketable securities	(3,665		)	7			9,796			9

Comprehensive income (loss)	$	54,642		$	(24,925	)	$	31,899		$	(57,011	)

Net earnings (loss) per share – basic	$	0.42		$	(0.20	)	$	0.16		$	(0.47	)
Net earnings (loss) per share – diluted	$	0.37		$	(0.20	)	$	0.16		$	(0.47	)

Weighted average shares outstanding – basic	139,769			125,471			135,113			122,277
Weighted average shares outstanding – diluted	166,265			125,471			138,573			122,277

The accompanying notes are an integral part of these unaudited financial statements.

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ARRAY BIOPHARMA INC.

Statement of Stockholders' Equity

(In thousands)

(Unaudited)



				Additional Paid-in Capital		Warrants		Accumulated Other Comprehensive Income		Accumulated Deficit			Total
	Common Stock
	Shares	Amounts
Balance as of June 30, 2014	131,817	$	132	$	652,696	$	39,385	$	2	$	(717,936	)	$	(25,721	)
Shares issued under employee share plans, net	1,149	1		3,516		—		—		—			3,517
Share-based compensation expense	—	—		5,126		—		—		—			5,126
Issuance of common stock, net of offering costs	7,461	7		35,323		—		—		—			35,330
Change in unrealized gain on marketable securities	—	—		—		—		9,796		—			9,796
Net income	—	—		—		—		—		22,103			22,103
Balance as of March 31, 2015	140,427	$	140	$	696,661	$	39,385	$	9,798	$	(695,833	)	$	50,151

The accompanying notes are an integral part of these unaudited financial statements.

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ARRAY BIOPHARMA INC.

Statements of Cash Flows

(In thousands)

(Unaudited)



	Nine Months Ended March 31,
	2015			2014
Cash flows from operating activities
Net income (loss)	$	22,103		$	(57,020	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense	2,776			3,576
Non-cash interest expense	4,295			3,899
Share-based compensation expense	5,126			3,080
Extinguishment of co-development liability, net	(21,610		)	—
Realized gain from marketable securities, net	(6,402		)	—
Non-cash license revenue	—			(4,500		)
Changes in operating assets and liabilities:
Accounts receivable	(3,401		)	5,162
Prepaid expenses and other assets	809			(449		)
Accounts payable and other accrued expenses	1,253			2,659
Accrued outsourcing costs	4,896			2,460
Accrued compensation and benefits	(1,532		)	(2,260		)
Co-development liability	12,169			977
Deferred rent	(2,795		)	(2,731		)
Deferred revenue	3,914			(4,291		)
Other long-term liabilities	(129		)	(6		)
Net cash provided by (used in) operating activities	21,472			(49,444		)

Cash flows from investing activities
Purchases of property and equipment	(2,074		)	(1,365		)
Purchases of marketable securities	(94,420		)	(80,457		)
Proceeds from sales and maturities of marketable securities	109,054			70,262
Net cash provided by (used) in investing activities	12,560			(11,560		)

Cash flows from financing activities
Proceeds from the issuance of common stock	36,057			50,155
Proceeds from employee stock purchases and options exercised	3,517			3,417
Payment of debt issuance costs	—			(86		)
Payment of stock offering costs	(727		)	(1,040		)
Net cash provided by financing activities	38,847			52,446

Net increase (decrease) in cash and cash equivalents	72,879			(8,558		)
Cash and cash equivalents at beginning of period	68,591			60,736
Cash and cash equivalents at end of period	$	141,470		$	52,178

Supplemental disclosure of cash flow information
Cash paid for interest	$	2,342		$	2,246
Unrealized gain on marketable securities available-for-sale	$	9,796		$	9

The accompanying notes are an integral part of these unaudited financial statements.

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ARRAY BIOPHARMA INC.

Notes to the Unaudited Financial Statements

NOTE 1 – OVERVIEW, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Array BioPharma Inc. (also referred to as "Array," "we," "us," or "our"), incorporated in Delaware on February 6, 1998, is a biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule drugs to treat patients afflicted with cancer.

Basis of Presentation

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim reporting and, as permitted under those rules, do not include all of the disclosures required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. The unaudited financial statements reflect all normal and recurring adjustments that, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. Operating results for an interim period are not necessarily indicative of the results that may be expected for a full year.

These unaudited financial statements should be read in conjunction with our audited financial statements and the notes thereto for the fiscal year ended June 30, 2014, included in our Annual Report on Form 10-K filed with the SEC, from which we derived our balance sheet data as of June 30, 2014.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on our historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates are the basis for our judgments about the carrying values of assets and liabilities, which in turn may impact our reported revenue and expenses. Our actual results could differ significantly from these estimates under different assumptions or conditions.

We believe our financial statements are most significantly impacted by the following accounting estimates and judgments: (i) identifying deliverables under collaboration and license agreements involving multiple elements and determining whether such deliverables are separable from other aspects of the contractual relationship; (ii) estimating the selling price of deliverables for the purpose of allocating arrangement consideration for revenue recognition; (iii) estimating the periods over which the allocated consideration for deliverables is recognized; (iv) estimating accrued outsourcing costs for clinical trials and preclinical testing; and (v) estimating the fair value of non-marketable equity received from licensing or other transactions.

Liquidity

We have incurred operating losses and an accumulated deficit as a result of ongoing research and development spending since inception. As of March 31, 2015, we had an accumulated deficit of $695.8 million. We had net income of $58.3 million and $22.1 million for the three and nine months ended March 31, 2015, respectively, and net losses of $85.3 million, $61.9 million and $23.6 million for the fiscal years ended June 30, 2014, 2013 and 2012, respectively. In connection with the closing of the asset transfer agreements with Novartis relating to binimetinib and encorafenib, referred to as the Binimetinib and Encorafenib Agreements and discussed below under Note 3 - Binimetinib and Encorafenib Agreements, we received an $85 million cash payment, received $5 million for the reimbursement of certain transaction costs, extinguished net co-development liabilities of $21.6 million and recorded deferred revenue of $6.6 million. Also during the quarter, we entered into a third party agreement to complete the Novartis transactions for a net consideration payment of $25 million.

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We have historically funded our operations from up-front fees and license and milestone payments received under our drug collaborations and license agreements, the sale of equity securities, and debt provided by convertible debt and other credit facilities. We believe that our cash, cash equivalents and marketable securities as of March 31, 2015 will enable us to continue to fund operations in the normal course of business for at least the next 12 months. Until we can generate sufficient levels of cash from operations, which we do not expect to achieve in the next two years, and because sufficient funds may not be available to us when needed from existing collaborations, we expect that we will be required to continue to fund our operations in part through the sale of debt or equity securities, through licensing select programs or partial economic rights that include up-front, royalty and/or milestone payments.

Our ability to successfully raise sufficient funds through the sale of debt or equity securities or from debt financing from lenders when needed is subject to many risks and uncertainties and, even if we are successful, future equity issuances would result in dilution to our existing stockholders. We also may not successfully consummate new collaboration and license agreements that provide for up-front fees or milestone payments, or we may not earn milestone payments under such agreements when anticipated, or at all. Our ability to realize milestone or royalty payments under existing agreements and to enter into new arrangements that generate additional revenue through up-front fees and milestone or royalty payments is subject to a number of risks, many of which are beyond our control.

In addition, our assessment of our future need for funding and our ability to continue to fund our operations is a forward-looking statement that is based on assumptions that may prove to be wrong and that involve substantial risks and uncertainties.

If we are unable to generate enough revenue from our existing or new collaboration and license agreements when needed or to secure additional sources of funding, it may be necessary to significantly reduce the current rate of spending through further reductions in staff and delaying, scaling back, or stopping certain research and development programs, including more costly Phase 2 and Phase 3 clinical trials on our wholly-owned programs as these programs progress into later stage development. Insufficient liquidity may also require us to relinquish greater rights to product candidates at an earlier stage of development or on less favorable terms to us and our stockholders than we would otherwise choose in order to obtain up-front license fees needed to fund operations. These events could prevent us from successfully executing our operating plan and, in the future, could raise substantial doubt about our ability to continue as a going concern. Further, as discussed in Note 5 – Long-term Debt, if at any time our balance of total cash, cash equivalents and marketable securities at Comerica Bank and approved outside accounts falls below $22 million, we must maintain a balance of cash, cash equivalents and marketable securities at Comerica at least equivalent to the entire outstanding debt balance with Comerica, which is currently $14.6 million. We must also maintain a monthly liquidity ratio if we draw down on the revolving line of credit with Comerica.

Summary of Significant Accounting Policies

Fair Value Measurements

We follow accounting guidance on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value our financial instruments:


•	Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.


•	Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.


•	Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair

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value measurement in its entirety requires us to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed or initial amounts recorded may not be indicative of the amount that we or holders of the instruments could realize in a current market exchange.

The carrying amounts of cash equivalents and marketable securities approximate their fair value based upon quoted market prices. Certain of our financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash, accounts receivable and payable, and other financial instruments in current assets or current liabilities.

Marketable Securities

We have designated our marketable securities as of each balance sheet date as available-for-sale securities and account for them at their respective fair values. Marketable securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Marketable securities that are readily available for use in current operations are classified as short-term available-for-sale securities and are reported as a component of current assets in the accompanying balance sheets. Marketable securities that are not considered available for use in current operations are classified as long-term available-for-sale securities and are reported as a component of long-term assets in the accompanying balance sheets.

Securities that are classified as available-for-sale are carried at fair value, including accrued interest, with temporary unrealized gains and losses reported as a component of stockholders' equity (deficit) until their disposition. We review all available-for-sale securities at each period end to determine if they remain available-for-sale based on our then current intent and ability to sell the security if it is required to do so. The cost of securities sold is based on the specific identification method.

All of our marketable securities are subject to a periodic impairment review. We recognize an impairment charge when a decline in the fair value of our investments below the cost basis is judged to be other-than-temporary.

Equity Investments

From time to time, we may enter into collaboration and license agreements or other arrangements under which we receive an equity interest as consideration for all or a portion of up-front, license or other fees or consideration under the terms of the agreement or arrangement. We report equity securities received from non-publicly traded companies in which we do not exercise a significant or controlling interest at cost in other long-term assets in the accompanying balance sheets. We monitor our investments for impairment at least annually, and consider events or changes in circumstances we know of that may have a significant adverse effect on the fair value. We make appropriate reductions in the carrying value if it is determined that an impairment has occurred, based primarily on the financial condition and near and long-term prospects of the issuer. We do not report the fair value of our equity investments in non-publicly traded companies because it is not practical to do so.

Array received shares of Loxo Oncology Inc.'s non-voting preferred stock as consideration for licensing rights we granted to Loxo under our July 2013 Drug Discovery Collaboration Agreement. Based on a valuation analysis prepared with the assistance of a third-party valuation firm, we recorded the $4.5 million estimated fair value of the preferred shares as a long-term investment utilizing the cost method of accounting. In August 2014, Loxo completed an initial public offering ("IPO") of its common stock, which then began to trade on the NASDAQ Global Market. At the closing of the IPO, the preferred shares we held were converted into approximately 1.6 million shares of common stock and, based on the readily determinable fair value of the Loxo common stock following the IPO, we began to account for our investment in Loxo as available-for-sale securities.

As of both March 31, 2015 and June 30, 2014, we held shares of preferred stock of VentiRx Pharmaceuticals, Inc. valued at $1.5 million that we received under a February 2007 Collaboration and License Agreement with VentiRx.

Accrued Outsourcing Costs

Substantial portions of our preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively "CROs"). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies,

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we accrue expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. We monitor patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to us by the CROs, correspondence with the CROs and clinical site visits. Our estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. We periodically evaluate the estimates to determine if adjustments are necessary or appropriate based on information we receive.

Convertible Senior Notes

Our 3.00% convertible senior notes due 2020 are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) 470-20, Debt - Debt with Conversion and Other Options. ASC 470-20 requires the issuer of convertible debt that may be settled in shares or cash upon conversion at the issuer's option, such as our notes, to account for the liability (debt) and equity (conversion option) components separately. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion option. The amount of the equity component (and resulting debt discount) is calculated by deducting the fair value of the liability component from the principal amount of the convertible debt instrument. The resulting debt discount is amortized as additional non-cash interest expense over the expected life of the notes utilizing the effective interest method. Although ASC 470-20 has no impact on our actual past or future cash flows, it requires us to record non-cash interest expense as the debt discount is amortized. For additional information, see Note 5 – Long-term Debt.

Binimetinib and Encorafenib Agreements

In connection with the closing of the transactions contemplated by the Binimetinib and Encorafenib Agreements, as discussed in Note 3 - Binimetinib and Encorafenib Agreements, we received an $85 million cash payment, received $5 million for the reimbursement of certain transaction costs, extinguished net co-development liabilities of $21.6 million and recorded deferred revenue of $6.6 million. Also during the quarter, we entered into a third party agreement to complete the Novartis transactions for a net consideration payment of $25 million.

The Binimetinib and Encorafenib Agreements executed with Novartis Pharma and Novartis involved multiple elements. We therefore identified each item given and received and determined how each item should be recognized and classified. The sum of the above transactions was accounted for in a manner consistent with a settlement of a material liability or gain contingency.

We deferred $6.6 million of the consideration received from Novartis Pharma to reflect the estimated fair value of certain future obligations we are to perform under the Binimetinib and Encorafenib Agreements, including completion of certain trials that are partially funded by Novartis Pharma as described in Note 3 - Binimetinib and Encorafenib Agreements. The amount deferred was determined using the estimated fair value of the services to be provided by our full-time employees that we do not anticipate will be covered in the reimbursement amounts from Novartis Pharma. The estimated fair value was based on amounts we have billed to other third parties in other transactions for similar services. We anticipate recording revenue over the deferral period based upon our estimated time to complete our performance with respect to the applicable clinical trials. The balance of deferred revenue was $6.3 million at March 31, 2015.

As of March 2, 2015, we had an accounts receivable balance from Novartis of $6.7 million and a $28.3 million co-development liability balance that we owed to Novartis. On March 2, 2015, the termination of the License Agreement with Novartis relating to binimetinib and the effectiveness of the Binimetinib and Encorafenib Agreements resulted in the right to offset the accounts receivable and co-development liability balances. Because we and Novartis owed each other determinable amounts and we have the right to set off the amount payable with the amount receivable from Novartis, we set off these amounts resulting in a net co-development liability of $21.6 million that was extinguished in full upon termination of the License Agreement, which in turn increased our net gain.

Revenue Recognition

We recognize revenue for the performance of services or the shipment of products when each of the following four criteria is met: (i) persuasive evidence of an arrangement exists; (ii) products are delivered or as services are rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured.

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We follow ASC 605-25, Revenue Recognition – Multiple-Element Arrangements and ASC 808, Collaborative Arrangements, if applicable, to determine the recognition of revenue under our collaborative research, development and commercialization agreements. The terms of these agreements generally contain multiple elements, or deliverables, which may include (i) grants of licenses, or options to obtain licenses, to our intellectual property, (ii) research and development services, (iii) drug product manufacturing, and/or (iv) participation on joint research and/or joint development committees. The payments we may receive under these arrangements typically include one or more of the following: non-refundable, up-front license fees; option exercise fees; funding of research and/or development efforts; amounts due upon the achievement of specified objectives; and/or royalties on future product sales.

ASC 605-25 provides guidance relating to the separability of deliverables included in an arrangement into different units of accounting and the allocation of arrangement consideration to the units of accounting. The evaluation of multiple-element arrangements requires management to make judgments about (i) the identification of deliverables, (ii) whether such deliverables are separable from the other aspects of the contractual relationship, (iii) the estimated selling price of each deliverable, and (iv) the expected period of performance for each deliverable.

To determine the units of accounting under a multiple-element arrangement, management evaluates certain separation criteria, including whether the deliverables have stand-alone value, based on the relevant facts and circumstances for each arrangement. Management then estimates the selling price for each unit of accounting and allocates the arrangement consideration to each unit utilizing the relative selling price method. The allocated consideration for each unit of accounting is recognized over the related obligation period in accordance with the applicable revenue recognition criteria.

If there are deliverables in an arrangement that are not separable from other aspects of the contractual relationship, they are treated as a combined unit of accounting, with the allocated revenue for the combined unit recognized in a manner consistent with the revenue recognition applicable to the final deliverable in the combined unit. Payments received prior to satisfying the relevant revenue recognition criteria are recorded as deferred revenue in the accompanying balance sheets and recognized as revenue when the related revenue recognition criteria are met.

We typically receive non-refundable, up-front payments when licensing our intellectual property, which often occurs in conjunction with a research and development agreement. When management believes that the license to our intellectual property has stand-alone value, we generally recognize revenue attributed to the license upon delivery provided that there are no future performance requirements for use of the license. When management believes that the license to our intellectual property does not have stand-alone value, we typically recognize revenue attributed to the license on a straight-line basis over the contractual or estimated performance period. When the performance period is not specifically identifiable from the agreement, we estimate the performance period based upon provisions contained within the agreement, such as the duration of the research or development term.

Most of our agreements provide for non-refundable milestone payments. We recognize revenue that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is considered substantive when the consideration payable to us for such milestone (i) is consistent with our performance necessary to achieve the milestone or the increase in value to the collaboration resulting from our performance, (ii) relates solely to our past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. In making this assessment, we consider all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the milestone, the level of effort and investment required to achieve the milestone and whether any portion of the milestone consideration is related to future performance or deliverables.

For payments payable on achievement of milestones that do not meet all of the conditions to be considered substantive, we recognize a portion of the payment as revenue when the specific milestone is achieved, and the contingency is removed, based on the applicable percentage earned of the estimated research or development effort, or other performance obligations that have elapsed, to the total estimated research and/or development effort attributable to the milestone. In other cases, when a non-substantive milestone payment is attributed to our future research or development obligations, we recognize the revenue on a straight-line basis, or other

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appropriate method, over the estimated remaining research or development effort. Other contingent event-based payments for which payment is either contingent solely upon the passage of time or the result of collaborator's performance are recognized when earned.

We periodically review the estimated performance periods under each of our agreements that provide for non-refundable up-front payments, license fees or milestone payments. We adjust the periods over which revenue should be recognized when appropriate to reflect changes in assumptions relating to the estimated performance periods. We could accelerate revenue recognition in the event of early termination of programs or if our expectations change. Alternatively, we could decelerate revenue recognition if programs are extended or delayed. While changes to our estimates have no impact on our reported cash flows, the amount of revenue recorded in future periods could be materially impacted.

See Note 4 – Collaboration and License Agreements for further information.

Income Taxes

As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. Although we recognized net income of $22.1 million for the nine months ended March 31, 2015, we do not believe that this limited amount of income changes our view with regard to future realization of deferred tax assets. We continue to believe that it is more likely than not that the benefit for deferred tax assets will not be realized. In recognition of this uncertainty, we continue to provide a full valuation allowance on our deferred tax assets. We did not record a tax provision for the three and nine-month periods ended March 31, 2015, due to our estimate that the effective tax rate for the fiscal year ending June 30, 2015 will be 0%.

Segments

We operate in one reportable segment and, accordingly, no segment disclosures have been presented herein. All of our equipment, leasehold improvements and other fixed assets are physically located within the U.S., and all agreements with our partners are denominated in U.S. dollars.

Concentration of Business Risks

Significant Partnerships

The following significant partners contributed greater than 10% of our total revenue during at least one of the periods set forth below. The revenue from these partners as a percentage of total revenue was as follows:



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2015		2014		2015		2014

Oncothyreon Inc.	4.1	%	10.8	%	55.2	%	7.4	%
Loxo Oncology, Inc.	31.9		16.4		16.2		22.2
Biogen Idec	17.5		—		8.8		—
Celgene	10.9		12.6		8.6		7.7
Novartis	24.8		48.2		4.1		31.2
AstraZeneca, PLC	0.4		0.2		0.2		14.1
	89.6	%	88.2	%	93.1	%	82.6	%

The loss of one or more of our significant partners could have a material adverse effect on our business, operating results or financial condition. We do not require collateral from our partners, though most pay in advance. Although we are impacted by economic conditions in the biotechnology and pharmaceutical sectors, management does not believe significant credit risk exists as of March 31, 2015.

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Geographic Information

The following table details revenue by geographic area based on the country in which our partners are located (in thousands):



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2015		2014		2015		2014

North America	$	4,937	$	4,007	$	37,810	$	19,713
Europe	1,664		3,765		1,710		16,318
Asia Pacific	—		1		69		36
Total revenue	$	6,601	$	7,773	$	39,589	$	36,067

Accounts Receivable

Novartis, Loxo and Oncothyreon accounted for 63%, 14% and 14%, respectively, of our total accounts receivable balances as of March 31, 2015, compared with 75%, 0% and 15%, respectively, of our total accounts receivable balances as of June 30, 2014.

Recent Accounting Pronouncements

In April 2014, FASB issued Accounting Standards Update ("ASU") No. 2014-08 - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the definition of a discontinued operation, and requires additional disclosures about discontinued operations, as well as disposal transactions that do not meet the discontinued operations criteria. Under the new guidance, only disposals of a component representing a strategic shift in operations, that has or will have a major impact on our operations or financial results, should be classified as discontinued operations. Additionally, the ASU requires expanded disclosures regarding the assets, liabilities, cash flows, income and expenses of discontinued operations. ASU No. 2014-08 is effective for us prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on July 1, 2015. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. We are currently evaluating the impact of ASU No. 2014-08 on our financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on July 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method, nor have we determined the effect of the standard on our ongoing financial reporting. We are also evaluating the effect that ASU No. 2014-09 will have on our financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern, which defines management's responsibility to assess an entity's ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. ASU No. 2014-15 is effective for annual reporting periods ending after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of adopting ASU No. 2014-15 and its related disclosures.

In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. ASU No. 2015-03 is effective for the interim and annual periods ending after December 15, 2015. We do not expect any material impact from adoption of this guidance on our financial statements.

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NOTE 2 – MARKETABLE SECURITIES

Marketable securities consisted of the following as of March 31, 2015 and June 30, 2014 (in thousands):



	March 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term available-for-sale securities:
U.S. treasury securities	$	35,604	$	2	$	(2	)	$	35,604
Equity securities	2,837		9,798		—			12,635
Mutual fund securities	361		—		—			361
	38,802		9,800		(2		)	48,600
Long-term available-for-sale securities:
Mutual fund securities	546		—		—			546
	546		—		—			546
Total	$	39,348	$	9,800	$	(2	)	$	49,146



	June 30, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Short-term available-for-sale securities:
U.S. treasury securities	$	42,184	$	2	$	(1	)	$	42,185
Mutual fund securities	222		—		—			222
	42,406		2		(1		)	42,407
Long-term available-for-sale securities:
Mutual fund securities	640		—		—			640
	640		—		—			640
Total	$	43,046	$	2	$	(1	)	$	43,047

The majority of the mutual fund securities shown in the above tables are securities held under the Array BioPharma Inc. Deferred Compensation Plan.

The estimated fair value of our marketable securities was classified into fair value measurement categories as follows (in thousands):



	March 31,		June 30,
	2015		2014

Quoted prices in active markets for identical assets (Level 1)	$	49,146	$	43,047
Quoted prices for similar assets observable in the marketplace (Level 2)	—		—
Significant unobservable inputs (Level 3)	—		—
Total	$	49,146	$	43,047

The following table is a roll forward of the fair value of our investment in Level 3 equity securities (in thousands):



	Three Months Ended			Nine Months Ended
	March 31, 2015			March 31, 2015
Balance, beginning of period	$	17,967		$	—
Transfer into Level 3 due to restriction period on trading	—			4,500
Change in unrealized gains and losses included in comprehensive income (loss)	(262		)	13,205
Transfer out of Level 3 due to elimination of trading restrictions	(17,705		)	(17,705		)
Balance, end of period	$	—		$	—

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During the three months ended March 31, 2015, the trading restrictions on our equity securities expired. As a result, these equity securities are now classified as Level 1 securities and reflect our entire investment in equity securities.

As of March 31, 2015, the amortized cost and estimated fair value of available-for-sale securities by contractual maturity were as follows (in thousands):



	Amortized		Fair
	Cost		Value

Due in one year or less	$	35,604	$	35,604
Total	$	35,604	$	35,604

NOTE 3 - BINIMETINIB AND ENCORAFENIB AGREEMENTS

On March 2, 2015, Array announced the completion and closing of the transactions contemplated by the Termination and Asset Transfer Agreement with Novartis Pharma AG ("Novartis Pharma") and Novartis International Pharmaceutical Ltd. ("Novartis"), as amended on January 19, 2015 (collectively the “Binimetinib Agreement”), pursuant to which Array regained all development and commercialization rights to binimetinib, and by the Asset Transfer Agreement with Novartis Pharma dated January 19, 2015 (the “Encorafenib Agreement”), pursuant to which Array obtained all development and commercialization rights to encorafenib (LGX-818). Both the Binimetinib Agreement and the Encorafenib Agreement were contingent upon and automatically became effective on March 2, 2015 (the “Effective Date”) upon the closing of the transactions announced on April 22, 2014 between Novartis AG and GlaxoSmithKline PLC. As a result of the closing of the Binimetinib Agreement, we received an $85 million up-front payment from Novartis.

On the Effective Date, Novartis Pharma transferred or exclusively licensed to Array all assets, including intellectual property, regulatory filings, technology, inventory and contract rights, owned by Novartis Pharma or its affiliates that relate to binimetinib and to encorafenib worldwide. Also upon the Effective Date, our existing License Agreement with Novartis dated April 19, 2010, under which we licensed development and commercialization rights to binimetinib and other compounds to Novartis, terminated; as a result, we were not required to pay our portion of accrued co-development costs.

In connection with the closing of the Binimetinib Agreement and the Encorafenib Agreement, Array and Novartis Pharma entered into two Transition Agreements dated March 2, 2015, one associated with the Binimetinib Agreement and the other associated with the Encorafenib Agreement, pursuant to which Novartis Pharma and its affiliates will provide certain regulatory assistance, development technology transfer, companion diagnostic transfer and other transition services to Array in connection with the continued development of binimetinib and encorafenib after the Effective Date.

All ongoing clinical trials involving binimetinib and encorafenib, including the Phase 3 NRAS melanoma clinical trial (NEMO), Phase 3 low-grade serous ovarian cancer trial (MILO) and COLUMBUS trials, will continue to be conducted as currently conducted until specified transition dates. Novartis Pharma will provide substantial financial support to Array under the Transition Agreements for all clinical trials involving binimetinib and all clinical trials involving encorafenib in the form of reimbursement to Array for all associated out-of-pocket costs and for one-half of Array’s fully-burdened full-time equivalent ("FTE") costs based on an annual FTE rate. Novartis Pharma will transition responsibility for Novartis-conducted trials at designated points for each trial and will provide this continuing financial support to Array for completing the trials.

Novartis Pharma will be responsible for continued conduct and funding of the ongoing COLUMBUS trial through completion of last patient first visit, but no later than June 30, 2016. At that time, conduct of the trial will transfer to Array, and Novartis Pharma will continue to reimburse Array for all out-of-pocket costs and one-half of Array’s fully-burdened FTE costs based on an annual FTE rate through the end of the trial.

All other clinical trials involving binimetinib, including the NEMO and MILO trials, will continue to be conducted as currently contemplated, with Novartis Pharma providing substantial financial support in the form of reimbursement to Array for all associated out-of-pocket costs and for one-half of Array’s FTE costs based on an annual FTE rate.

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At designated points for each trial, Novartis Pharma will transition responsibility and provide this continuing financial support to us for completing the trials.


•	NEMO trial: Novartis Pharma will conduct and solely fund the Phase 3 NEMO trial through June 30, 2016. For all NEMO activities required following that date, we are responsible for conducting the trial and Novartis Pharma will provide the financial support to us described above.


•	MILO trial: We will continue conduct and complete the Phase 3 MILO trial and Novartis Pharma will provide financial support to us as described above.


•	Novartis Pharma will conduct and fund, and transfer at designated times all other Novartis sponsored trials, including a series of planned clinical pharmacology and pediatric trials, through December 31, 2015. For all activities required following that date, we will be responsible for conducting those trials and Novartis Pharma would provide financial support to us as described above.


•	On the Effective Date, Novartis Pharma will transfer at designated times, and we will oversee the conduct and completion of, all ongoing and planned investigator sponsored clinical trials. Novartis Pharma will provide financial support to us as described above.

Novartis Pharma will remain responsible for conducting and funding development of the NRAS melanoma companion diagnostic until Premarket Approval is received from the U.S. Food and Drug Administration. Following approval, Novartis Pharma will transfer the product and Premarket Approval to a diagnostic vendor of our designation.

Novartis Pharma also retains binimetinib and encorafenib supply obligations for all clinical and commercial needs for up to 30 months after the Effective Date and will also assist us in the technology and manufacturing transfer of binimetinib and encorafenib. Novartis Pharma will also provide Array continued clinical supply of several Novartis Pharma pipeline compounds including, but not limited to, LEE011 (CDK 4/6 inhibitor) and BYL719 (α-PI3K inhibitor), for use in currently ongoing combination studies, and possible future studies, including Phase 3 trials, with binimetinib and encorafenib.

In order to address competition concerns raised by the European Commission, as part of the agreements, we have committed to obtain an experienced partner for worldwide development and European commercialization of both binimetinib and encorafenib acceptable to the European Commission. If we are unable, in the prescribed time period, to negotiate a collaboration and license agreement with a partner and on terms acceptable to the European Commission, a trustee approved by the European Commission will be empowered to license these rights to a suitable third party for no minimum price.

Each party has also agreed to indemnify and hold the other party and its affiliates harmless from and against certain liabilities identified in the Binimetinib Agreement, the Encorafenib Agreement and the Transition Agreements and to a general release of claims relating to the existing License Agreement. The Binimetinib Agreement and the Encorafenib Agreement as well as the Transition Agreements may be terminated only upon the mutual agreement of Novartis Pharma and Array and will remain in effect until the respective obligations of the parties under them have been completed.

Net gain on the Binimetinib and Encorafenib Agreements with Novartis consists of the following (in thousands):



Cash received from the termination of the binimetinib License Agreement with Novartis	$	85,000
Net cost of third party agreement to complete the Novartis transactions	(25,000		)
Extinguishment of co-development obligation due to Novartis (net of a $6.7 million accounts receivable balance)	21,610
Reimbursement of certain transaction costs	5,000
Subtotal	86,610
Less: Deferred revenue related to ongoing obligations	(6,600		)
Net gain on the Binimetinib and Encorafenib Agreements	$	80,010

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NOTE 4 – COLLABORATION AND LICENSE AGREEMENTS

The following table summarizes our total revenues for the periods indicated (in thousands):



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2015		2014		2015		2014

Oncothyreon Inc. (1)	$	273	$	839	$	21,840	$	2,698
Loxo Oncology, Inc.	2,105		1,275		6,408		8,000
Biogen Idec	1,153		—		3,468		—
Celgene	721		976		3,411		2,766
Novartis (2)	1,640		3,750		1,640		11,250
Genentech, Inc.	99		537		367		2,764
AstraZeneca, PLC	24		15		70		5,073
Other partners	586		381		2,385		3,516
Total revenue	$	6,601	$	7,773	$	39,589	$	36,067

(1) Includes $25 thousand and $618 thousand for reimbursable expenses during the three months ended March 31, 2015 and 2014, respectively, and $1.2 million and $2.0 million for reimbursable expenses during the nine months ended March 31, 2015 and 2014, respectively.

(2) Includes $1.3 million of reimbursements for the month of March 2015 that are receivable from Novartis under the Binimetinib and Encorafenib Agreements during both the three months and nine months ended March 31, 2015. The prior year amounts represent the amortization of the up-front and milestone payments under the April 2010 License Agreement with Novartis.

Biogen Idec

Array entered into a Drug Discovery Collaboration Agreement with Biogen Idec MA Inc. ("Biogen") in May 2014 for the discovery and development of Array-discovered inhibitors targeting a novel kinase for the treatment of autoimmune disorders. Under the terms of the agreement, Biogen and Array will collaborate on the discovery of the novel kinase inhibitors. Biogen will be responsible for all aspects of clinical development and commercialization. Pursuant to advance quarterly funding from Biogen, Array will provide staffing to support the discovery program during the three-year discovery program term, which may be extended for an additional 12-month period upon consent from both parties. The agreement includes research funding for three years, various milestone payments payable upon achievement of certain development and commercial milestones, and royalties to Array.

Pursuant to the accounting guidance for revenue recognition for multiple-element arrangements, we identified two non-contingent deliverables that met the separation criteria, the first being conduct of discovery and pre-IND manufacturing activities under the discovery program (the “discovery program deliverable”), and participation on the joint research committee ("JRC") as the second. The discovery program deliverable and the JRC deliverable are both expected to be delivered throughout the duration of the discovery program term. Revenue recognized under the Biogen agreement during the periods presented is based upon the level of staffing provided during those periods and our established FTE rate for research services.

The agreement will continue on a product-by-product and country-by-country basis until no further payments of any kind are due to Array. Biogen may terminate the agreement for any reason upon 12 months after the effective date with three months’ notice, upon Array’s material breach or default under the discovery program, in the event of a change of control at Array, or if Array cannot perform any material obligations under the agreement for a specified period. The agreement may be terminated by either party for an uncured material breach of the agreement by the other party, or in the event of the other parties’ bankruptcy. Array and Biogen have also agreed to indemnify the other party for breaches of their respective representations and warranties under the agreement and certain of their respective activities under the agreement.

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Celgene

Array and Celgene Corporation and Celgene Alpine Investment Co., LLC (collectively "Celgene") entered into a Drug Discovery and Development Option and License Agreement in July 2013 to collaborate on development of an Array-invented preclinical development program targeting a novel inflammation pathway. The agreement provides Celgene an option to select multiple clinical development candidates that Celgene may further develop on an exclusive basis under the agreement. Celgene also has the option to obtain exclusive worldwide rights to commercialize one or more of the development compounds it selects upon payment of an option exercise fee to Array. Array will be responsible for funding and conducting preclinical discovery research on compounds directed at the target, and Celgene will be responsible for all clinical development and commercialization of any compounds it selects.

Array received a non-refundable up-front payment of $11 million from Celgene during the first quarter of fiscal 2014. Array is also eligible to receive potential milestone payments of up to $376 million based upon achievement of development, regulatory and sales objectives identified in the agreement, plus royalties on net sales of all drugs. Additionally, Array will retain all rights to the program if Celgene does not exercise its option.

Pursuant to the accounting guidance for revenue recognition for multiple-element arrangements, we determined that Array is obligated to deliver three non-contingent deliverables related to the Celgene agreement. These deliverables are (i) the performance of research services under the discovery program (the "research services deliverable"), (ii) a non-exclusive license granted to Celgene to certain Array and collaboration technology for the sole purpose of being able to perform collaboration activities and (iii) participation on the JRC. The Celgene agreement provides for no general right of return for any non-contingent deliverable. Both the research services deliverable and the JRC deliverable meet the separation criteria; however, the non-exclusive license deliverable has no value outside of the collaboration, therefore, it does not meet the separation criteria and is recognized as a combined unit of accounting with the research services deliverable. The research services deliverable and the JRC deliverable are both expected to be delivered throughout the duration of the option term, which is the period of time between the effective date of the agreement and the earlier of (a) a specified amount of time after the completion of certain preclinical studies to be conducted under the Celgene agreement, or (b) three years after the July 2013 effective date. The option term may be extended by Celgene for an additional one-year period under certain circumstances specified in the agreement.

The exclusive license that Celgene may obtain by exercising its option and paying an exercise fee to Array is a contingent deliverable due to the uncertainty regarding whether Celgene will exercise its option. Therefore, we did not allocate any of the up-front payment received to this contingent deliverable.

Determining a selling price for the research services deliverable required the use of certain estimates, including our estimate for the expected length of the option term, which we believed would be three years, and the number of FTEs required for the conduct of the discovery program. We utilized vendor-specific objective evidence for our FTE costs related to activities to be performed by Array scientists, as well as third-party estimates to determine the costs of the preclinical studies that we plan to outsource. We estimated a selling price for the JRC deliverable by estimating the time required for our scientists to perform their obligations and utilized our established FTE rate for research services as an estimate of what we would bill for this time if we sold this deliverable on a stand-alone basis.

The majority of the up-front payment received is for the performance of research services, which we are recognizing in collaboration revenue over the estimated option term, which originally was estimated to be three years. During the three months ended December 31, 2014, we revised this estimate to just over two years and prospectively adjusted recognition of the unrecognized portion of the up-front payment at the time of the change in estimate over the revised remaining option period. Due to additional information obtained during the three months ended March 31, 2015, we revised our estimate back to the original estimate of three years. Deferred revenue balances were $3.8 million and $7.3 million at March 31, 2015 and June 30, 2014, respectively.

The Celgene agreement will continue on a country-by-country basis until the termination of the royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms. The agreement may be terminated by either party for an uncured material breach by the other party. In addition, Celgene may terminate the agreement in its entirety or as to any collaboration compound by giving Array six months’ prior notice, and in any such event the rights to any terminated programs would revert to Array and Celgene’s obligation to pay

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milestones or royalties with respect to any terminated programs would terminate. If Celgene does not exercise its option to obtain an exclusive license, the period of exclusivity to be observed by Array under the agreement will end upon expiration of the option term. If Celgene does exercise its option, the period of exclusivity will continue as long as Celgene either has an active development program for, or is commercializing, a compound selected under the agreement, and Array continues to be entitled to receive milestones or royalties under the agreement. Array and Celgene have also agreed to indemnify the other party for breaches of their respective representations and warranties under the agreement and certain of their respective activities under the agreement.

Genentech, Inc.

We entered into a Licensing and Collaboration Agreement with Genentech Inc. ("Genentech") in December 2003 for development of small molecule drugs invented by Array directed at multiple therapeutic targets in the field of oncology. In August 2011, we entered into a License Agreement with Genentech for the development of each company’s small-molecule Checkpoint kinase 1 ("Chk-1") program in oncology.

Under the 2003 agreement, Genentech made an up-front payment and provided research funding to Array, and we are entitled to receive additional milestone payments based on achievement of certain development and commercialization milestones and royalties on certain resulting product sales under the agreement. The 2003 agreement was expanded in 2005, 2008, and 2009 to develop clinical candidates directed against additional targets and, in 2010 the term of funded research was extended through January 2013, after which the research term ended. In February 2015, the parties again amended the 2003 agreement to terminate each party’s continuing rights and obligations with respect to one of the molecular targets under the agreement in exchange for a payment by Array to Genentech that was made in March 2015 following the effectiveness of the amendment on March 2, 2015.

We have received up-front and milestone payments totaling $23.5 million under the 2003 agreement, including a $1.0 million milestone earned during the first quarter of fiscal 2014. We are eligible to earn an additional $23.0 million in payments if Genentech continues development and achieves the remaining milestones set forth in the 2003 agreement.

The partnered drugs under the Chk-1 agreement include Genentech’s compound GDC-0425 and Array’s compound GDC-0575 (ARRY-575). In 2014, Genentech selected GDC-0575 over GDC-0425 to advance into further clinical trials. Under the terms of the Chk-1 collaboration agreement, Genentech acquired a license to Array’s compound GDC-0575 and is responsible for all clinical development and commercialization activities. We received an up-front payment of $28 million during the first quarter of fiscal 2012 and are eligible to receive payments of up to $380 million based on the achievement of clinical and commercial milestones under this agreement. We will also receive up to double-digit royalties on sales of any drugs resulting from the Chk-1 agreement.

Pursuant to the accounting guidance for revenue recognition for multiple-element arrangements, we determined that Array was obligated to deliver three non-contingent deliverables related to the Chk-1 agreement that meet the separation criteria and therefore are treated as separate units of accounting. These deliverables were (i) the delivery of specified clinical materials for GDC-0575 for use in future clinical trials, (ii) the transfer of the license and related technology with ongoing regulatory services to assist in filing the Investigational New Drug ("IND") application and to provide supporting data, and (iii) activities related to the achievement of a specified milestone. The Chk-1 agreement provides for no general right of return for any non-contingent deliverable.

The first and second non-contingent deliverables were completed during fiscal 2012 and revenue for both of these deliverables was recognized in full during that period. The initial recognition period for revenue allocated to the third obligation was from inception of the Chk-1 agreement until such time that the specified milestone is estimated to be achieved. During the three months ended March 31, 2015, however, we elected to recognize the remaining license revenue of $99 thousand due to the immaterial amount remaining although the milestone has not been achieved. We will be entitled to an additional milestone payment if and when the specified milestone is achieved.

The Chk-1 agreement also includes a contingent deliverable whereby Genentech could, at its sole option, require us to perform chemistry, manufacturing and control ("CMC") activities for additional drug product or improved processes. The CMC option is a contingent deliverable because the scope, likelihood and timing of the potential services are unclear. Certain critical terms of the services have not yet been negotiated, including the fee that we

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would receive for the service and Genentech could elect to acquire the drug materials without our assistance either by manufacturing them in-house or utilizing a third-party vendor. Therefore, no portion of the up-front payment was allocated to the contingent CMC services.

The determination of the stand-alone value for each non-contingent deliverable under the Chk-1 agreement required the use of significant estimates, including estimates of the time to complete the transfer of related technology and to assist in filing the IND. Further, to determine the stand-alone value of the license and initial milestone, we considered the negotiation discussions that led to the final terms of the agreement, publicly-available data for similar licensing arrangements between other companies and the economic terms of previous collaborations Array has entered into with other partners. We also considered the likelihood of achieving the initial milestone based on our historical experience with early stage development programs and on the ability to achieve the milestone with either of the two partnered drugs, GDC-0425 or GDC-0575. Taking into account these factors, we allocated a portion of the up-front payment to the first milestone. No portion of any revenue recognized is refundable.

We had deferred revenue balances of $0 and $367 thousand for Genentech at March 31, 2015 and June 30, 2014, respectively.

Genentech may terminate the 2003 agreement in its entirety upon four months' written notice to Array, and may terminate the Chk-1 agreement upon 60 days' written notice to Array. Under the Chk-1 agreement, either party may terminate upon a material breach by the other party that is not cured within the specified time period. If Genentech terminates the Chk-1 agreement due to a material breach by Array, the license to Genentech becomes irrevocable and the royalty to Array will be reduced to a specified percentage. If the Chk-1 agreement is terminated by Genentech for convenience or by Array due to a material breach by Genentech, the license granted to Genentech will terminate, Genentech will continue to be required to pay milestone and royalty payments on any programs for which Genentech had initiated clinical development and Array's exclusivity obligations will continue so long as Genentech is developing or commercializing at least one product subject to the Chk-1 agreement. Array and Genentech have also agreed to indemnify the other party for breaches of representations or warranties made under the Chk-1 agreements and for certain of their respective activities under the Chk-1 agreement.

Loxo Oncology, Inc.

In July 2013, Array entered into a Drug Discovery Collaboration Agreement with Loxo and granted Loxo exclusive rights to develop and commercialize certain Array-invented compounds targeted at the tropomyosin kinase ("Trk") family of receptors, including LOXO-101, which is currently in a Phase 1 trial. In April 2014 and again in April 2015, Array and Loxo amended the agreement to expand the research activities under the agreement. Under the terms of the amended agreement, Loxo will fund further preclinical research to be conducted by Array during the remainder of the three-year discovery research phase, which may be extended by Loxo for up to two additional one-year renewal periods. In addition, Loxo will fund further discovery and preclinical research to be conducted by Array directed at other targets during the research phase of the agreement. Loxo will be responsible for all additional preclinical and clinical development and commercialization.

In consideration of the exclusive license and rights granted to Loxo under the agreement, Array received shares of Loxo non-voting preferred stock representing an initial 19.9% interest in the newly-formed entity and following additional financings by Loxo, Array's ownership interest in Loxo as of June 30, 2014 was 15.3%. All of the shares of preferred stock held by Array converted into shares of common stock on the closing date of Loxo's IPO. These shares are now freely tradeable by Array following expiration of a lock-up period in late January 2015 and currently represent less than a 10% ownership interest in Loxo. Array also receives advance payments for preclinical research and other services that Array is providing during the term of the discovery program and is eligible to receive up to $435 million in milestone payments if certain clinical, regulatory and sales milestones are achieved plus royalties on sales of any resulting drugs.

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right of return for any non-contingent deliverable. All of the identified non-contingent deliverables meet the separation criteria; therefore, they are each treated as separate units of accounting. Delivery of the research services and JRC participation obligations will be completed throughout the remainder of the three-year discovery program term. The license deliverable was complete as of September 30, 2013.

To determine the stand-alone value of the license, we considered our negotiation discussions with Loxo that led to the final terms of the agreement, publicly-available data for similar licensing arrangements between other companies and the economic terms of previous collaborations Array has entered into with other partners. We also considered the estimated valuation of the preferred shares performed by an independent third-party and concluded that this value reasonably approximated the estimated selling price of the related license. We determined a selling price for the research services deliverable using our established annual FTE rate, which represents vendor-specific objective evidence for any FTE costs related to activities to be performed by Array scientists. We determined an estimated selling price for the JRC deliverable by estimating the time required for our scientists to perform their obligations and utilized our established FTE rate for research services as an estimate of what we would bill for this time if we sold this deliverable on a stand-alone basis.

The receipt of the preferred shares was in consideration for the license deliverable. We allocated an amount of consideration under the Loxo agreement to the license deliverable equal to the fair value of the shares received after consideration of the other factors above. We chose the fair value of the shares received as this was a more evident and readily determinable measure as compared to the alternative method for determining the consideration to allocate to the license deliverable, which was the fair value for the exclusive license. The valuation of the preferred shares required the use of significant assumptions and estimates, including assumptions about the estimated volatility of the equity, the estimated time to a liquidity event, and the likelihood of Loxo obtaining additional future financing. During the first quarter of fiscal 2014, we recognized the full $4.5 million estimated fair value of the preferred shares received in license revenue as delivery of the shares was not contingent upon either the delivery of additional items or meeting other specified performance conditions.

The remaining consideration under the amended Loxo agreement, which Loxo pays to Array in advance quarterly payments, was allocated between the research services and JRC participation deliverables and will be recognized as the services are rendered throughout the discovery program term. We had deferred revenue balances of $995 thousand and $625 thousand for Loxo at March 31, 2015 and June 30, 2014, respectively.

The April 2014 amendment added several contingent deliverables related to rights to discontinue research activities for fewer targets in exchange for additional payments to be made to Array. All of the obligations added to the arrangement by the amendment were considered contingent because the likelihood and timing of these deliverables is uncertain and therefore the potential consideration associated with these obligations was not included in the total allocable consideration. The April 2015 amendment increased the number of FTEs performing research services through December 31, 2015.

In July 2014, we began performing additional CMC-related services for Loxo that are agreed to between the parties on a project level basis. Each project may consist of a single deliverable or multiple deliverables and each is evaluated for proper revenue recognition as a multiple-element arrangement when appropriate. A small portion of the March 31, 2015 deferred revenue balance relates to these additional CMC services.

The amended Loxo agreement will continue on a country-by-country basis until the termination of the royalty payment obligations, unless terminated earlier by the parties in accordance with its terms. The agreement may be terminated by either party upon the failure of the other party to cure any material breach of its obligations under the agreement, provided that, so long as Loxo is reasonably able to pay its debts as they are due, Array will only be entitled to seek monetary damages, and will not have the right to terminate the amended agreement in the event of Loxo's breach after expiration of the discovery program term. Loxo also has the right to terminate the amended agreement or to terminate discovery research with respect to any targets under development with six months’ notice to Array. If Loxo terminates the amended agreement for convenience, all licenses granted to Loxo will terminate and Array will have all rights to further develop and commercialize the licensed programs. The period of exclusivity to be observed by Array under the amended Loxo agreement will continue as long as Loxo either has an active research and/or development program for a target and the program could result in the receipt of milestones or royalties under the program by Array, or as long as Loxo is commercializing a product for a target under the amended agreement.

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Novartis International Pharmaceutical Ltd.

Array entered into a License Agreement with Novartis in April 2010, which granted Novartis the exclusive worldwide right to co-develop and commercialize binimetinib, as well as other specified MEK inhibitors. Array regained these rights and the existing License Agreement terminated on the Effective Date of the Binimetinib Agreement as discussed in Note 3 - Binimetinib and Encorafenib Agreements. As a result, our co-development liability under the License Agreement described below, and any receivables from Novartis then outstanding under the License Agreement, were eliminated as of the Effective Date.

In consideration for the rights granted to Novartis under the prior License Agreement, we received an aggregate of $60 million in an up-front fee and in milestone payments between the fourth quarter of fiscal 2010 and the first quarter of fiscal 2014. We recognized the up-front fee and milestone payments under the License Agreement on a straight-line basis from April 2010 through April 2014.

Co-Development Arrangement

The License Agreement contained co-development rights whereby we could elect to pay a share of the combined total development costs, subject to a maximum amount with annual caps. During the first two years of the co-development period, Novartis reimbursed us for 100% of our development costs. We began to pay our share of the combined development costs that had accrued since inception of the program, with payments to Novartis of $9.2 million and $11.3 million in the second quarters of fiscal 2013 and fiscal 2014, respectively, in accordance with the terms of the License Agreement. During fiscal 2014, we committed to continue our co-development contribution through fiscal 2015. We continued to record an estimate of our co-development liability under the License Agreement until our liability terminated upon the Effective Date of the Binimetinib Agreement as discussed in Note 3 - Binimetinib and Encorafenib Agreements. Our co-development liability was $28.3 million as of the Effective Date of the Binimetinib Agreement and was $16.2 million as of June 30, 2014.

For periods prior to termination of the License Agreement, we recorded a receivable in accounts receivable on the balance sheet for the amounts due from Novartis for the reimbursement of our development costs in excess of the annual cap. We recorded expense in cost of partnered programs on the statement of operations and comprehensive income (loss) for our share of the combined development costs and accrued these costs on our balance sheet in co-development liability.

Our share of the combined development costs was $3.3 million and $4.7 million during the three months ended March 31, 2015 and 2014, respectively, and $13.1 million and $14.2 million during the nine months ended March 31, 2015 and 2014, respectively. We continued to record an estimate of our receivable from Novartis under the License Agreement until termination of the receivable upon the Effective Date, as discussed above and in Note 3 - Binimetinib and Encorafenib Agreements. Our receivable balance from Novartis was $6.7 million as of the Effective Date of the Binimetinib Agreement and was $4.1 million as of June 30, 2014.

Oncothyreon Inc.

License Agreement

Effective December 11, 2014, Array entered into a License Agreement with Oncothyreon Inc. ("Oncothyreon"). Pursuant to the License Agreement, Array has granted Oncothyreon an exclusive license to develop, manufacture and commercialize ONT-380 (previously known also as ARRY-380), an orally active, reversible and selective small-molecule HER2 inhibitor. The License Agreement replaces and terminates the prior Development and Commercialization Agreement under which Oncothyreon and Array were jointly developing ONT-380, and going forward, Oncothyreon will be solely responsible for all preclinical and clinical development, regulatory and commercialization activities relating to ONT-380.

Under the terms of the License Agreement, Oncothyreon paid Array a non-refundable, up-front fee of $20 million. In addition, if Oncothyreon sublicenses rights to ONT-380 to a third party, Oncothyreon will pay Array a percentage of any sublicense payments it receives, with the percentage varying according to the stage of development of ONT-380 at the time of the sublicense. If Oncothyreon is acquired within three years of the effective date of the License Agreement, and ONT-380 has not been sublicensed to another entity prior to such acquisition, then the acquirer will be required to make certain milestone payments of up to $280 million to Array,

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which are primarily based on potential ONT-380 sales. Array is also entitled to receive up to a double-digit royalty based on net sales of ONT-380.

Pursuant to the accounting guidance for revenue recognition for multiple-element arrangements, we determined that the exclusive license is the only non-contingent deliverable with stand-alone value under the License Agreement. Array must also expend a nominal amount of effort related to technology transfer, which was completed as of December 31, 2014, but because the technology transfer deliverable does not meet the separation criteria, it was recognized as a combined unit of accounting with the license. Potential payments for a percentage of sublicensing rights, milestone payments and royalties cannot be estimated. Also, at its separate expense Oncothyreon may request additional technology transfer and/or transition services from Array. Due to uncertainty of the likelihood and timing of all of the potential payments and additional services, their consideration is not considered fixed and determinable, therefore no portion of the up-front fee has been allocated to them.

The entire $20 million up-front fee was allocated to the combined license/initial technology transfer unit of accounting, which we recognized in full in license revenue during December 2014.

The License Agreement will expire on a country-by-country basis on the later of 10 years following the first commercial sale of the product in each respective country or expiration of the last to expire patent covering the product in such country, but may be terminated earlier by either party upon material breach of the License Agreement by the other party or the other party’s insolvency, or by Oncothyreon on 180 days' notice to Array. Oncothyreon and Array have also agreed to indemnify the other party for certain of their respective warranties and obligations under the License Agreement.

Development and Commercialization Agreement

Our May 2013 Development and Commercialization Agreement with Oncothyreon was a collaboration to develop and commercialize ONT-380 for the treatment of cancer. This agreement was terminated effective December 11, 2014. Oncothyreon paid Array a one-time up-front fee of $10 million and received a license to ONT-380 enabling it to perform its development activities under this terminated agreement. This up-front fee was allocated to the license deliverable and was recorded as revenue during the three months ended June 30, 2013. Oncothyreon was responsible for conducting the clinical development of ONT-380 through a defined set of proof-of-concept trials and was also responsible for all development costs incurred by or on behalf of either party with respect to these proof-of-concept trials.

NOTE 5 – LONG-TERM DEBT

Long-term debt consists of the following (in thousands):



	March 31,			June 30,
	2015			2014

Comerica term loan	$	14,550		$	14,550
Convertible senior notes	132,250			132,250
Long-term debt, gross	146,800			146,800
Less: Unamortized debt discount	(38,815		)	(42,848		)
Long-term debt, net	$	107,985		$	103,952

Comerica Bank

We entered into a Loan and Security Agreement with Comerica Bank dated June 28, 2005, which has been subsequently amended and provides for a $15 million term loan and a revolving line of credit of $6.8 million. The term loan bears interest at a variable rate and we currently have $14.6 million outstanding under the term loan. The revolving line of credit was established to support standby letters of credit in relation to our facilities leases, and has not been drawn upon.

Under the terms of the amended Loan and Security Agreement, the term loan will mature in October 2017 and the revolving line of credit will mature in June 2015. Effective December 31, 2013, the interest rate on the term loan was amended to be equal to the Prime Rate, if the balance of our cash, cash equivalents and marketable

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securities maintained at Comerica is greater than or equal to $10 million, or equal to the Prime Rate plus 2% if this balance is less than $10 million. As of March 31, 2015, the term loan with Comerica had an interest rate of 3.25% per annum.

The Loan and Security Agreement requires us to maintain a balance of cash at Comerica that is at least equivalent to our total outstanding obligation under the term loan if our overall balance of cash, cash equivalents and marketable securities at Comerica and approved outside accounts is less than $22 million. Additionally, we are required to comply with a financial covenant that applies if we draw down on the revolving line of credit. In this event, we must maintain a ratio equal to at least 1.25 to 1.00 as of the last day of each month calculated as follows: (A) total cash, cash equivalents and marketable securities less all outstanding obligations to Comerica under the term loan, plus specified percentages of the respective values of eligible accounts, equipment and eligible inventory, divided by (B) the aggregate amount outstanding under the revolving letter of credit sublimit. No amounts are outstanding under the revolving line of credit and we do not expect to make any draws under this facility.

Our obligations under the amended Loan and Security Agreement are secured by a first priority security interest in all of our assets, other than our intellectual property. The amended Loan and Security Agreement contains representations and warranties and affirmative and negative covenants that are customary for credit agreements of this type. Our ability to, among other things, sell certain assets, engage in a merger or change in control transaction, incur debt, pay cash dividends and make investments, are restricted by the Loan and Security Agreement as amended. The amended Loan and Security Agreement also contains events of default that are customary for credit agreements of this type, including payment defaults, covenant defaults, insolvency type defaults and events of default relating to liens, judgments, material misrepresentations and the occurrence of certain material adverse events.

We use a discounted cash flow model to estimate the fair value of the Comerica term loan. The fair value was estimated at $14.6 million as of both March 31, 2015 and June 30, 2014, and was classified using Level 2, observable inputs other than quoted prices in active markets.

3.00% Convertible Senior Notes Due 2020

On June 10, 2013, through a registered underwritten public offering, we issued and sold $132.3 million aggregate principal amount of 3.00% convertible senior notes due 2020 (the "Notes"), resulting in net proceeds to Array of approximately $128.0 million after deducting the underwriting discount and offering expenses.

The Notes are the general senior unsecured obligations of Array. The Notes will bear interest at a rate of 3.00% per year, payable semi-annually on June 1 and December 1 of each year. The Notes will mature on June 1, 2020, unless earlier converted by the holders or redeemed by us.

Prior to March 1, 2020, holders may convert the Notes only upon the occurrence of certain events described in a supplemental indenture we entered into with Wells Fargo Bank, N.A., as trustee, upon issuance of the Notes. On or after March 1, 2020, until the close of business on the scheduled trading day immediately prior to the maturity date, holders may convert their Notes at any time. Upon conversion, the holders will receive, at our option, shares of our common stock, cash or a combination of shares and cash. The Notes will be convertible at an initial conversion rate of 141.8641 shares per $1,000 in principal amount of Notes, equivalent to a conversion price of approximately $7.05 per share. The conversion rate is subject to adjustment upon the occurrence of certain events described in the supplemental indenture. Holders of the Notes may require us to repurchase all or a portion of their Notes for cash at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if there is a qualifying change in control or termination of trading of our common stock.

On or after June 4, 2017, we may redeem for cash all or part of the outstanding Notes if the last reported sale price of our common stock exceeds 130% of the applicable conversion price for 20 or more trading days in a period of 30 consecutive trading days ending within seven trading days immediately prior to the date we provide the notice of redemption to holders. The redemption price will equal 100% of the principal amount of the Notes to be redeemed, plus all accrued and unpaid interest. If we were to provide a notice of redemption, the holders could convert their Notes up until the business day immediately preceding the redemption date.

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In accordance with ASC Subtopic 470-20, we used an effective interest rate of 10.25% to determine the liability component of the Notes. This resulted in the recognition of $84.2 million as the liability component of the Notes and the recognition of the residual $48.0 million as the debt discount with a corresponding increase to additional paid-in capital for the equity component of the Notes. The underwriting discount and estimated offering expenses of $4.3 million were allocated between the debt and equity issuance costs in proportion to the allocation of the liability and equity components of the Notes. Debt issuance costs of $2.7 million were included in other long-term assets on our balance sheet as of the issuance date. Equity issuance costs of $1.6 million were recorded as an offset to additional paid-in capital. The debt discount and debt issuance costs will be amortized as non-cash interest expense through June 1, 2020. The balance of unamortized debt issuance costs was $2.2 million and $2.4 million as of March 31, 2015 and June 30, 2014, respectively.

The fair value of the Notes was approximately $157.5 million and $132.3 million at March 31, 2015 and June 30, 2014, respectively, and was determined using Level 2 inputs based on their quoted market values.

Summary of Interest Expense

The following table shows the details of our interest expense for all of our debt arrangements outstanding during the periods presented, including contractual interest, and amortization of debt discount, debt issuance costs and loan transaction fees that were charged to interest expense (in thousands):



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2015		2014		2015		2014
Comerica Term Loan
Simple interest	$	117	$	118	$	360	$	360
Amortization of fees paid for letters of credit	11		9		34		38
Total interest expense on the Comerica term loan	128		127		394		398
Convertible Senior Notes
Contractual interest	992		992		2,976		2,987
Amortization of debt discount	1,379		1,245		4,033		3,655
Amortization of debt issuance costs	78		71		228		206
Total interest expense on the convertible senior notes	2,449		2,308		7,237		6,848
Total interest expense	$	2,577	$	2,435	$	7,631	$	7,246

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

Warrants

Associated with our previously outstanding long-term debt arrangements with Deerfield Capital which have been paid in full, we issued warrants to Deerfield to purchase 6,000,000 shares of common stock at an exercise price of $3.65 and warrants to purchase 6,000,000 shares of common stock at an exercise price of $4.19. The warrants contain the same terms, except for the lower per share exercise price. We valued the warrants at issuance based on a Black-Scholes option pricing model and then allocated a portion of the proceeds under the debt to the warrants based upon their relative fair values. The warrants were recorded in stockholders' deficit with the offset to debt discount. The debt discount was amortized using the effective interest method and recorded as interest expense in the accompanying statements of operations and comprehensive loss from the respective draw dates until June 10, 2013, when the Deerfield credit facilities were repaid and the recognition of the remaining debt discount was accelerated. The warrants are currently exercisable and expire on June 30, 2016.

Controlled Equity Offering

On March 27, 2013, we entered into a Sales Agreement with Cantor Fitzgerald & Co. ("Cantor"), pursuant to which we could sell up to $75 million in shares of our common stock from time to time through Cantor, acting as our sales agent, in an at-the-market offering. We completed the sale of all shares available under the Sales Agreement in June 2014. On August 15, 2014, we amended the Sales Agreement with Cantor to allow us to sell up to $47.5 million in additional shares under the Sales Agreement. All sales of shares have been and will continue to be made pursuant to an effective shelf registration statement on Form S-3 filed with the SEC. We pay Cantor a commission of approximately 2% of the aggregate gross proceeds we receive from all sales of our

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common stock under the Sales Agreement. Unless otherwise terminated, the amended Sales Agreement continues until the earlier of selling all shares available under the Sales Agreement, or March 27, 2016.

The following table summarizes our total sales under the Sales Agreement for the periods indicated (in thousands, except per share amounts):



	Nine Months Ended
	March 31,
	2015		2014

Total shares of common stock sold	7,461		8,046
Average price per share	$	4.83	$	6.23
Gross proceeds	$	36,058	$	50,155
Commissions earned by Cantor	$	721	$	1,015

NOTE 7 – SHARE-BASED COMPENSATION

Total share-based compensation expense recorded for equity awards issued pursuant to the Array BioPharma Amended and Restated Stock Option and Incentive Plan (the "Option and Incentive Plan") and for estimated shares to be issued under the Employee Stock Purchase Plan ("ESPP") for the current purchase period was $1.9 million and $5.1 million for the three months and nine months ended March 31, 2015, respectively as compared to $1.1 million and $3.1 million for the three months and nine months ended March 31, 2014, respectively.

We use the Black-Scholes option pricing model to estimate the fair value of our share-based awards. In applying this model, we use the following assumptions:


•	Risk-free interest rate - We determine the risk-free interest rate by using a weighted average assumption equivalent to the expected term based on the U.S. Treasury constant maturity rate.


•	Expected term - We estimate the expected term of our options based upon historical exercises and post-vesting termination behavior.


•	Expected volatility - We estimate expected volatility using daily historical trading data of our common stock.


•	Dividend yield - We have never paid dividends and currently have no plans to do so; therefore, no dividend yield is applied.

Option Awards

The fair value of our option awards was estimated using the assumptions below, which yielded the following weighted average grant date fair values for the periods presented:



	2015

Risk-free interest rate	1.6% - 2.0%
Expected option term in years	6.25
Expected volatility	63.2% - 67.1%
Dividend yield	0.0%
Weighted-average grant date fair value	$4.17

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The following table summarizes our stock option activity under the Option and Incentive Plan for the nine months ended March 31, 2015:



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at June 30, 2014	10,194,817		$	4.84
Granted	801,050		$	4.17
Exercised	(709,069	)	$	4.32
Forfeited	(1,231,244	)	$	4.85
Expired or canceled	(245,331	)	$	7.72
Outstanding balance at March 31, 2015	8,810,223		$	4.73	6.7	$	24,688
Vested and expected to vest at March 31, 2015	7,751,755		$	4.76	6.5	$	21,612
Exercisable at March 31, 2015	4,166,464		$	5.09	4.9	$	10,886

The aggregate intrinsic value in the above table is calculated as the difference between the closing price of our common stock at March 31, 2015, of $7.37 per share and the exercise price of the stock options that had strike prices below the closing price. The total intrinsic value of all options exercised was $1.8 million during the nine months ended March 31, 2015 compared to $2.0 million during the nine months ended March 31, 2014, respectively.

As of March 31, 2015, there was approximately $6.3 million of total unrecognized compensation expense, including estimated forfeitures, related to the unvested stock options shown in the table above, which is expected to be recognized over a weighted average period of 2.5 years.

Restricted Stock Units ("RSUs")

The Option and Incentive Plan provides for the issuance of RSUs that each represent the right to receive one share of Array common stock, cash or a combination of cash and stock, typically following achievement of time- or performance-based vesting conditions. The majority of our currently issued RSU grants are performance-based grants, which vest upon achievement of specified performance conditions. We may also issue RSU grants that vest subject to continued service over a defined period of time, which we expect to be between two to four years, with a percentage vesting on each anniversary date of the grant, or that may vest in full on the date of grant. RSUs will be settled upon the vesting date, upon a predetermined delivery date, upon a change in control of Array, or upon the employee leaving Array. All outstanding RSUs may only be settled through the issuance of common stock to recipients, and we intend to continue to grant RSUs that may only be settled in stock. RSUs are assigned the value of Array common stock at date of grant issuance, and the grant date fair value is amortized over the applicable vesting period.

A summary of the status of our non-vested RSUs as of March 31, 2015 and changes during the nine months ended March 31, 2015, is presented below:



	Number of RSUs		Weighted Average Grant Date Fair Value
Non-vested at June 30, 2014	—		$	—
Granted	722,283		$	3.86
Vested	(261,030	)	$	3.97
Forfeited	(46,271	)	$	3.97
Non-vested at March 31, 2015	414,982		$	3.79

As of March 31, 2015, there was $744 thousand of total unrecognized compensation cost related to non-vested RSUs granted under the Option and Incentive Plan. The cost is expected to be recognized over a weighted-average period of approximately 1.6 years. The fair market value on the grant date for RSUs that vested during

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the nine months ended March 31, 2015 and 2014, was $1.8 million and $0, respectively. RSUs granted during the nine months ended March 31, 2015 had a value of $2.8 million at grant date. We had no RSUs outstanding during the nine months ended March 31, 2014.

All of the vested RSUs in the table above vested as a result of either the signing of, or the closing of, the Binimetinib Agreement. These RSU's were converted into common stock.

Employee Stock Purchase Plan

Following approval by our shareholders at our 2014 Annual Meeting, an additional 600,000 shares of our common stock were reserved for issuance under the ESPP, bringing the total amount of our common shares reserved for issuance under the ESPP to an aggregate of 5,250,000 shares. The ESPP allows qualified employees (as defined in the ESPP) to purchase shares of our common stock at a price equal to 85% of the lower of (i) the closing price at the beginning of the offering period or (ii) the closing price at the end of the offering period. Effective each January 1, a new 12-month offering period begins that will end on December 31 of that year. However, if the closing stock price on July 1 is lower than the closing stock price on the preceding January 1, then the original 12-month offering period terminates, and the purchase rights under the original offering period roll forward into a new six-month offering period that begins July 1 and ends on December 31. As of March 31, 2015, we had 851,283 shares available for issuance under the ESPP. We issued 240,366 and 309,287 shares under the ESPP during the nine months ended March 31, 2015 and 2014, respectively.

NOTE 8 – RESTRUCTURING CHARGES

Fiscal 2014 Restructuring

On August 5, 2013, we implemented a 20% reduction in our workforce to support our strategy to fund our development organization with strategic collaborations and to focus our resources to progress our hematology and oncology programs to later stage development. The actions associated with the reductions were substantially completed during the first quarter of fiscal 2014 and, as a result of the reductions, we recorded a one-time restructuring charge of $2.8 million for termination benefits in the same period. Of this charge, $2.2 million was recorded in research and development for proprietary programs and $602 thousand was recorded in general and administrative expense. The restructuring charge is associated with cash payments of $2.6 million and $194 thousand made during the first quarter and second quarter, respectively, of fiscal 2014.

NOTE 9 - NET EARNINGS (LOSS) PER SHARE

Basic and diluted earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the determinants of basic net income per share and, in addition, gives effect to the potential dilution that would occur if securities or other contracts to issue common stock were exercised, vested or converted into common stock, unless they are anti-dilutive. Diluted weighted average common shares include common stock potentially issuable under our convertible notes, vested and unvested stock options and unvested RSUs.

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The following table sets forth the computation of earnings per share (amounts in thousands except per share data):



	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2015		2014			2015		2014

Net earnings (loss) - basic	$	58,307	$	(24,932	)	$	22,103	$	(57,020	)
Interest on convertible senior notes	2,449		—			—		—
Net earnings (loss) - diluted	$	60,756	$	(24,932	)	$	22,103	$	(57,020	)

Weighted average shares outstanding - basic	139,769		125,471			135,113		122,277
Convertible senior notes (1)	18,762		—			—		—
Warrants	5,392		—			2,538		—
Stock options	2,030		—			812		—
RSUs	312		—			110		—
Weighted average shares outstanding - diluted	166,265		125,471			138,573		122,277

Per share data:
Basic	$	0.42	$	(0.20	)	$	0.16	$	(0.47	)
Diluted	$	0.37	$	(0.20	)	$	0.16	$	(0.47	)

(1) Relevant accounting guidance requires entities to disclose the dilutive effects of convertible instruments. Given the $58.3 million net earnings and the level of potentially dilutive securities for the three months ended March 31, 2015, we are required to include these convertible notes as dilutive securities during the three months ended March 31, 2015.

For the periods where we reported losses, all common stock equivalents are excluded from the computation of diluted earnings per share, since the result would be anti-dilutive. Common stock equivalents not included in the calculations of diluted earnings per share because to do so would have been anti-dilutive, include the following (amounts in thousands):



	Three Months Ended		Nine Months Ended
	March 31,		March 31,
	2015	2014	2015	2014
Convertible senior notes	—	18,762	18,762	18,762
Warrants	—	12,000	—	12,000
Stock options	1,050	4,654	5,699	4,510
Total anti-dilutive common stock equivalents excluded from diluted earnings per share calculation	1,050	35,416	24,461	35,272

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our expectations related to the progress, continuation, timing and success of drug discovery and development activities conducted by Array and by our partners, our ability to obtain additional capital to fund our operations, changes in our research and development spending, realizing new revenue streams and obtaining future out-licensing or collaboration agreements that include up-front, milestone and/or royalty payments, our ability to realize up-front milestone and royalty payments under our existing or any future agreements, future research and development spending and projections relating to the level of cash we expect to use in operations, our working capital requirements and our future headcount requirements. In some cases, forward-looking statements can be identified by the use of terms such as “may,” “will,” “expects,” “intends,” “plans,” “anticipates,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terms. These statements are based on current expectations, projections and assumptions made by management and are not guarantees of future performance. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition, as well as any forward-looking statements are subject to significant risks and uncertainties including, but not limited to the factors set forth under the heading “Item 1A. Risk Factors” under Part II of this Quarterly Report on Form 10-Q and under Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, and in other reports we file with the SEC. All forward-looking statements are made as of the date of this report and, unless required by law, we undertake no obligation to update any forward-looking statements.

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, our audited financial statements and related notes to those statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, and with the information under the heading "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014. The terms “we,” “us,” “our,” "the Company," or "Array" refer to Array BioPharma Inc.

Our fiscal year ends on June 30. When we refer to a fiscal year or quarter, we are referring to the year in which the fiscal year ends and the quarters during that fiscal year. Therefore, fiscal 2015 refers to the fiscal year ending June 30, 2015, and the third or current quarter refers to the quarter ended March 31, 2015.

Overview

Array is a biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule drugs to treat patients afflicted with cancer. Six Phase 3 studies are currently advancing. These programs include three cancer drugs, binimetinib (MEK162 / wholly-owned), encorafenib (LGX818 / wholly-owned) and selumetinib (partnered with AstraZeneca).

Our most advanced wholly-owned clinical stage drugs include:



	Proprietary Program	Indication	Clinical Status
1.	Binimetinib	MEK inhibitor for cancer	Phase 3
2.	Encorafenib	BRAF inhibitor for cancer	Phase 3
3.	Filanesib	Kinesin spindle protein, or KSP, inhibitor for multiple myeloma, or MM	Phase 2
4.	ARRY-797	p38 inhibitor for Lamin A/C-related dilated cardiomyopathy, or LMNA-DCM	Phase 2

As a result of the closing of the transactions described under Note 3 - Binimetinib and Encorafenib Agreements to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q, Array regained rights to the binimetinib program and acquired rights to the encorafenib program in March 2015. We believe these programs present significant opportunities for Array in the area of oncology. Three pivotal trials of binimetinib and/or encorafenib, COLUMBUS (encorafenib in combination with binimetinib in BRAF-mutant

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melanoma patients), NEMO (binimetinib in NRAS-mutant melanoma patients), and MILO (binimetinib in low-grade serous ovarian cancer patients), continue to advance. In April 2015, the NEMO and COLUMBUS (Part 1) Phase 3 studies completed patient enrollment. With NEMO enrollment complete, Array reaffirms a projected regulatory filing of binimetinib in NRAS melanoma during the first half of 2016. Furthermore, with COLUMBUS (Part 1) enrollment complete, Array reaffirms a projected regulatory filing of binimetinib in combination with encorafenib in BRAF melanoma in 2016. Patient enrollment continues in Part 2 of COLUMBUS. The MILO Phase 3 study design was modified to incorporate a cross-over provision, allowing patients on the trial to have access to binimetinib. Array estimates the availability of top-line data from MILO in 2016 and a projected regulatory filing of binimetinib in low-grade serous ovarian cancer in 2017. Beyond the three Phase 3 trials, there are 32 active binimetinib and/or encorafenib trials. We continue to progress select other wholly-owned programs, and continue to enroll two Phase 2 trials of filanesib in multiple myeloma and a Phase 2 trial of ARRY-797 in a rare cardiovascular disease.

In addition, we have 10 ongoing partner-funded clinical programs, including an Array-invented MEK inhibitor, selumetinib with AstraZeneca. Three Phase 3 trials continue to evaluate selumetinib in patients with advanced cancers: SELECT-1 (second-line KRAS-mutant advanced or metastatic non-small cell lung cancer), ASTRA (differentiated thyroid cancer) and SUMIT (metastatic uveal melanoma). With SUMIT enrollment complete, AstraZeneca has projected a regulatory filing in uveal melanoma in 2015 and plans to present top-line data from the study later this year.

Below are the 10 partner-funded programs:



	Drug Candidate	Target/Indication	Partner	Clinical Status
1.	Selumetinib	MEK inhibitor for cancer	AstraZeneca, PLC	Phase 3
2.	ASLAN001/ARRY-543	HER2 / EGFR inhibitor for cancer	ASLAN Pharmaceuticals Pte Ltd.	Phase 2
3.	Ipatasertib/GDC-0068	AKT inhibitor for cancer	Genentech, Inc.	Phase 2
4.	Motolimod/VTX-2337	Toll-like receptor for cancer	VentiRx Pharmaceuticals, Inc.	Phase 2
5.	Danoprevir	Protease inhibitor for Hepatitis C virus	Roche Holding AG	Phase 2
6.	LY2606368	Chk-1 inhibitor for cancer	Eli Lilly and Company	Phase 2
7.	GDC-0575	Chk-1 inhibitor for cancer	Genentech, Inc.	Phase 1b
8.	ARRY-380/ONT-380	HER2 inhibitor for breast cancer	Oncothyreon Inc.	Phase 1b
9.	GDC-0994	ERK inhibitor for cancer	Genentech, Inc.	Phase 1
10.	LOXO-101	PanTrk inhibitor for cancer	Loxo Oncology, Inc.	Phase 1

We also have a portfolio of proprietary and partnered preclinical drug discovery programs, including inhibitors that target Trk receptors for the treatment of oncology and other indications. Our most significant discovery collaborations are with Loxo Oncology, Inc. (oncology program/LOXO-101) and Biogen Idec (auto-immune disorder program). We may out-license other select promising candidates through research collaborations in the future.

We have received a total of $672.6 million in research funding and in up-front and milestone payments from partners from inception through March 31, 2015, including $174 million in initial payments from strategic agreements with Amgen, Celgene, Genentech, Novartis and Oncothyreon that we entered into over the last five and a half years, and received an up-front cash payment of $85 million upon the Effective Date of the Binimetinib Agreement. Our existing partnered programs entitle Array to receive a total of over $2 billion in additional milestone payments if we or our partners achieve the drug discovery, development and commercialization objectives detailed in those agreements. We also have the potential to earn royalties on any resulting product sales or share in the proceeds from licensing or commercialization from 12 partnered clinical and discovery programs.

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Recent Developments

Binimetinib and Encorafenib Agreements

Business Development and Partner Concentrations

We currently license or partner certain of our compounds and/or programs and enter into collaborations directly with pharmaceutical and biotechnology companies through opportunities identified by our business development group, senior management, scientists and customer referrals. In general, our partners may terminate their agreements with us with 60 to 180 days' prior notice. Specifics regarding termination provisions under our material collaboration or partnering agreements can be found in Note 4 – Collaboration and License Agreements to our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Additional information related to the concentration of revenue among our partners is reported in Note 1 – Overview, Basis of Presentation and Summary of Significant Accounting Policies – Concentration of Business Risks to our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.

All of our collaboration and license agreements are denominated in U.S. dollars.

Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of operations are based upon our accompanying unaudited financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles, or U.S. GAAP, and which requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on our historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates are the basis for our judgments about the carrying values of assets and liabilities, which in turn may impact our reported revenue and expenses. Our actual results could differ significantly from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically, could materially impact the financial statements. There have been no significant changes to our critical accounting policies since the beginning of this fiscal year. Our critical accounting policies are described under the heading "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

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Results of Operations

License and Milestone Revenue

License and milestone revenue consists of up-front license fees and ongoing milestone payments from partners and collaborators.

Below is a summary of our license and milestone revenue (dollars in thousands):



	Three Months Ended				Change					Nine Months Ended				Change
	March 31,				2015 vs. 2014					March 31,				2015 vs. 2014
	2015		2014		$			%		2015		2014		$			%

License revenue	$	99	$	3,037	$	(2,938	)	(97	)%	$	20,367	$	13,764	$	6,603		48	%
Milestone revenue	—		1,250		(1,250		)	(100	)%	—		9,875		(9,875		)	(100	)%
Total license and milestone revenue	$	99	$	4,287	$	(4,188	)	(98	)%	$	20,367	$	23,639	$	(3,272	)	(14	)%

The decline in license and milestone revenue in the current three-month period was primarily due to the amortization of $2.5 million of our deferred up-front payment and $1.3 million of deferred milestone payments recognized under our Novartis collaboration in the prior year period without comparable revenue in the current period. In addition, during the current three months we recognized $99 thousand in license revenue under our collaboration with Genentech compared with $537 thousand in the same period of the prior year. We had expected to amortize the Genentech deferred revenue from inception of the agreement until a specified milestone had been achieved, but due to the immaterial amount remaining, we elected to recognize the remainder although the milestone has not been achieved. We will be entitled to an additional milestone payment if and when the specified milestone is achieved.

License revenue during the current nine-month period increased because we recognized the entire $20 million up-front fee received from Oncothyreon under the new License Agreement in December 2014. License revenue for the prior nine-month period primarily includes $7.5 million recognized under our Novartis collaboration and $4.5 million of non-cash license revenue recognized under our collaboration with Loxo, as discussed under Note 4 – Collaboration and License Agreements – Loxo Oncology, Inc. to our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q. The remaining $1.8 million represents the amortization of deferred revenue recognized under our Genentech collaboration. Milestone revenue during the prior nine-month period primarily consisted of $5 million earned from AstraZeneca, $3.8 million earned from Novartis and $1 million earned from Genentech. We recognized no milestone revenue in the current nine-month period.

Collaboration and Other Revenue

Collaboration and other revenue consists of revenue for our performance of drug discovery and development activities in collaboration with partners, which includes development of proprietary drug candidates we out-license, as well as screening, lead generation, lead optimization research, to a lesser degree, process research, analytical and formulation services, manufacture of drug product for toxicology and clinical studies and, to a small degree, the development and sale of chemical compounds.

Below is a summary of our collaboration and other revenue (dollars in thousands):



	Three Months Ended				Change				Nine Months Ended				Change
	March 31,				2015 vs. 2014				March 31,				2015 vs. 2014
	2015		2014		$		%		2015		2014		$		%

Collaboration and other revenue	$	6,502	$	3,486	$	3,016	87	%	$	19,222	$	12,428	$	6,794	55	%

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Revenue from new collaborations, including Biogen, increased collaboration and other revenue during the three and nine months ended March 31, 2015 by $1.6 million and $4.3 million, respectively, over the same periods of the prior year. Additionally, collaboration and other revenue was positively impacted in the current three- and nine-month periods by an increase in the number of scientists working under our collaboration with Loxo, which was expanded in May 2014, resulting in an additional $830 thousand and $2.9 million in collaboration revenue during the three and nine months ended March 31, 2015, respectively. Additionally, the reimbursements from Novartis Pharma for full-time equivalent ("FTE") costs and out-of-pocket expenses to which we are entitled under the Binimetinib and Encorafenib Agreements also contributed $1.3 million to collaboration and other revenue during each of the current three- and nine-month periods. Partially offsetting the above increases in both current year periods was a reduction in revenue related to reimbursable expenses under the Oncothyreon collaboration.

Cost of Partnered Programs

Cost of partnered programs represents costs attributable to drug discovery, CMC services and development activities, including preclinical and clinical trials, we may conduct for or with our partners. These costs consist mainly of compensation, associated fringe benefits, share-based compensation, preclinical and clinical outsourcing costs and other collaboration-related costs, including supplies, small tools, travel and meals, facilities, depreciation, recruiting and relocation costs and other direct and indirect chemical handling and laboratory support costs.

Below is a summary of our cost of partnered programs (dollars in thousands):



	Three Months Ended				Change				Nine Months Ended				Change
	March 31,				2015 vs. 2014				March 31,				2015 vs. 2014
	2015		2014		$		%		2015		2014		$		%

Cost of partnered programs	$	12,140	$	10,756	$	1,384	13	%	$	37,415	$	34,524	$	2,891	8	%

Cost of partnered programs increased during the three and nine months ended March 31, 2015 primarily due to our new collaboration with Biogen and our expanded collaboration with Loxo. Additionally, we incurred additional costs to further advance binimetinib through clinical trials under our previous License Agreement with Novartis leading up to the effective date of the Binimetinib and Encorafenib Agreements in early March. Beginning in March 2015, costs related to binimetinib and encorafenib are and will continue to be included in research and development expenses for proprietary programs.

Research and Development Expenses for Proprietary Programs

Our research and development expenses for proprietary programs include costs associated with our proprietary drug programs for scientific and clinical personnel, supplies, inventory, equipment, small tools, travel and meals, depreciation, consultants, sponsored research, allocated facility costs, costs related to preclinical and clinical trials and share-based compensation. We manage our proprietary programs based on scientific data and achievement of research plan goals. Our scientists record their time to specific projects when possible; however, many activities simultaneously benefit multiple projects and cannot be readily attributed to a specific project. Accordingly, the accurate assignment of time and costs to a specific project is difficult and may not give a true indication of the actual costs of a particular project. As a result, we do not report costs on a program basis.

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Below is a summary of our research and development expenses for proprietary programs by categories of costs for the periods presented (dollars in thousands):



	Three Months Ended				Change					Nine Months Ended				Change
	March 31,				2015 vs. 2014					March 31,				2015 vs. 2014
	2015		2014		$			%		2015		2014		$			%

Salaries, benefits and share-based compensation	$	3,234	$	5,195	$	(1,961	)	(38	)%	$	9,994	$	14,495	$	(4,501	)	(31	)%
Outsourced services and consulting	6,010		5,484		526			10	%	17,942		10,880		7,062			65	%
Laboratory supplies	1,003		1,310		(307		)	(23	)%	3,147		4,198		(1,051		)	(25	)%
Facilities and depreciation	1,273		1,736		(463		)	(27	)%	3,704		4,716		(1,012		)	(21	)%
Other	297		406		(109		)	(27	)%	1,037		1,033		4			—	%
Total research and development expenses	$	11,817	$	14,131	$	(2,314	)	(16	)%	$	35,824	$	35,322	$	502		1	%

Research and development expenses for proprietary programs decreased during the three months ended March 31, 2015 and was up slightly for the comparable nine-month period. The decrease during the current three-month period was primarily due to an increase of Array personnel working on partnered programs; however, beginning in March 2015, costs related to binimetinib and encorafenib are included in research and development expenses for proprietary programs. Although total research and development expenses are only up by a small amount, our current year-to-date results included a sizable increase in outsourced services primarily due to higher costs to advance filanesib in two ongoing Phase 2 clinical studies. These increased expenses were partially offset by the impact during the current quarter of the increased number of scientists working on partnered programs, as well as a $2.2 million reduction during the current nine-month period for termination benefits related to our workforce reduction in August 2013 that were recorded during the nine months ended March 31, 2014.

General and Administrative Expenses

General and administrative expenses consist mainly of compensation and associated fringe benefits not included in cost of partnered programs or research and development expenses for proprietary programs and include other management, business development, accounting, information technology and administration costs, including patent filing and prosecution, recruiting and relocation, consulting and professional services, travel and meals, sales commissions, facilities, depreciation and other office expenses.

Below is a summary of our general and administrative expenses (dollars in thousands):



	Three Months Ended				Change				Nine Months Ended				Change
	March 31,				2015 vs. 2014				March 31,				2015 vs. 2014
	2015		2014		$		%		2015		2014		$		%

General and administrative expenses	$	8,187	$	5,405	$	2,782	51	%	$	23,064	$	16,056	$	7,008	44	%

General and administrative expenses increased during the three and nine months ended March 31, 2015. The increases in both periods are largely the result of consulting, legal and other expenses, including higher, non-cash share-based compensation costs, related to regaining the rights to binimetinib through the Binimetinib Agreement and acquiring the rights to encorafenib through the Encorafenib Agreement, see Note 3 - Binimetinib and Encorafenib Agreements to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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Other Income (Expense)

Below is a summary of our other income (expense) (dollars in thousands):



	Three Months Ended						Change					Nine Months Ended						Change
	March 31,						2015 vs. 2014					March 31,						2015 vs. 2014
	2015			2014			$			%		2015			2014			$			%

Realized gain from marketable securities, net	$	6,402		$	—		$	6,402		—	%	$	6,402		$	—		$	6,402		—	%
Interest income	15			22			(7		)	(32	)%	36			61			(25		)	(41	)%
Interest expense	(2,577		)	(2,435		)	(142		)	(6	)%	(7,631		)	(7,246		)	(385		)	(5	)%
Total other expense, net	$	3,840		$	(2,413	)	$	6,253		259	%	$	(1,193	)	$	(7,185	)	$	5,992		83	%

We sold a portion of the shares representing our investment in equity securities during the three months ended March 31, 2015, resulting in the above realized gains.

The following table shows the details of our interest expense for all of our debt arrangements outstanding during the periods presented, including actual interest paid and amortization of debt and loan transaction fees (in thousands):



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2015		2014		2015		2014
Comerica Term Loan
Simple interest	$	117	$	118	$	360	$	360
Amortization of fees paid for letters of credit	11		9		34		38
Total interest expense on the Comerica term loan	128		127		394		398
Convertible Senior Notes
Contractual interest	992		992		2,976		2,987
Amortization of debt discount	1,379		1,245		4,033		3,655
Amortization of debt issuance costs	78		71		228		206
Total interest expense on the convertible senior notes	2,449		2,308		7,237		6,848
Total interest expense	$	2,577	$	2,435	$	7,631	$	7,246

Liquidity and Capital Resources

We have incurred operating losses and an accumulated deficit as a result of ongoing research and development spending since inception. As of March 31, 2015, we had an accumulated deficit of $695.8 million. We had net income of $58.3 million and $22.1 million for the three and nine months ended March 31, 2015, respectively, and net losses of $85.3 million, $61.9 million, and $23.6 million for the fiscal years ended June 30, 2014, 2013 and 2012, respectively. In connection with the closing of the Binimetinib and Encorafenib Agreements and discussed in Note 3 - Binimetinib and Encorafenib Agreements to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q, we received an $85 million cash payment, received $5 million for the reimbursement of certain transaction costs, extinguished net co-development liabilities of $21.6 million and recorded deferred revenue of $6.6 million. Also during the quarter, we entered into a third party agreement to complete the Novartis transactions for a net consideration payment of $25 million.

For the nine months ended March 31, 2015, our net cash provided by operations was $21.5 million. We have historically funded our operations from up-front fees and license and milestone payments received under our drug collaborations and license agreements, the sale of equity securities, and debt provided by convertible debt and other credit facilities. During the nine months ended March 31, 2015 and fiscal year ended June 30, 2014, we received net proceeds of approximately $35 million and $73 million, respectively, from sales of our common stock

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under our March 2013 sales agreement with Cantor Fitzgerald, which we amended in August 2014 to allow additional sales of common stock under the agreement. We also received net proceeds of approximately $128 million in June 2013 from an underwritten public offering of convertible debt and approximately $127 million during calendar year 2012 from two underwritten public offerings of our common stock. Additionally, we received an up-front cash payment of $85 million in connection with the Effective Date of the Binimetinib Agreement and have received $230.7 million from up-front fees and license and milestone payments since December 2009, including the following payments:


•	In December 2009, we received a $60 million up-front payment from Amgen under a Collaboration and License Agreement.


•	During May and June 2010, we received a total of $45 million in up-front and milestone payments under a License Agreement with Novartis.


•	In December 2010, we received a $10 million milestone payment under a Drug Discovery and Development Agreement with Celgene.


•	In May 2011, we received a $10 million milestone payment under a License Agreement with Novartis.


•	In September 2011, we received a $28 million up-front payment under a Drug Discovery Collaboration Agreement with Genentech.


•	In June 2012, we received an $8.5 million milestone payment from Amgen under a Collaboration and License Agreement.


•	In June 2013, we received a $10 million up-front payment under a Development and Commercialization Agreement with Oncothyreon.


•	In July 2013, we received an $11 million up-front payment under a Drug Discovery and Development Option and License Agreement with Celgene.


•	In August 2013, we received a $5 million milestone payment under a License Agreement with Novartis.


•	In November 2013, we received a $5 million milestone payment under a Collaboration and License Agreement with AstraZeneca.


•	In December 2014, we received a $20 million up-front payment under a License Agreement with Oncothyreon.

We paid $9.2 million and $11.3 million to Novartis in the second quarters of fiscal 2013 and fiscal 2014, respectively, representing our share of the combined development costs incurred and due since commencement of our co-development agreement with Novartis, as discussed in Note 4 – Collaboration and License Agreements – Novartis International Pharmaceutical Ltd. to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q. During fiscal 2014, we committed to continue our co-development contribution through fiscal 2015. We continued to record an estimate of our co-development liability under the License Agreement until our liability terminated upon the Effective Date of the Binimetinib and Encorafenib Agreements as discussed in Note 3 - Binimetinib and Encorafenib Agreements. Our co-development liability was $16.2 million as of June 30, 2014.

We had a $5.4 million liability accrued at June 30, 2014 for estimated fiscal year 2014 annual employee bonuses. Under our annual performance bonus program, employees may receive a bonus payable in cash or in shares of our common stock if we meet certain financial, discovery, development and partnering goals during a fiscal year. Annual employee bonuses are typically paid in the second quarter of the next fiscal year. In October 2014, we paid cash bonuses to our employees approximating the June 30, 2014 balance.

Management believes that our cash, cash equivalents and marketable securities as of March 31, 2015 will enable us to continue to fund operations in the normal course of business for at least the next 12 months. Until we can generate sufficient levels of cash from operations, which we do not expect to achieve in the next two years, and because sufficient funds may not be available to us when needed from existing collaborations, we expect that we will be required to continue to fund our operations in part through the sale of debt or equity securities, through

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licensing select programs, or partial economic rights to those programs, that include up-front, royalty and/or milestone payments.

Our ability to successfully raise sufficient funds through the sale of debt or equity securities or from debt financing from lenders when needed is subject to many risks and uncertainties and, even if we are successful, future equity issuances would result in dilution to our existing stockholders. We also may not successfully consummate new collaboration or license agreements that provide for up-front fees or milestone payments, or we may not earn milestone payments under such agreements when anticipated, or at all. Our ability to realize milestone or royalty payments under existing agreements and to enter into new arrangements that generate additional revenue through up-front fees and milestone or royalty payments is subject to a number of risks, many of which are beyond our control.

Our risk factors are described under the heading "Item 1A. Risk Factors" under Part II of this Quarterly Report on Form 10-Q and under Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, and in other reports we file with the SEC.

Our assessment of our future need for funding and our ability to continue to fund our operations is a forward-looking statement that is based on assumptions that may prove to be wrong and that involve substantial risks and uncertainties. Our actual future capital requirements could vary as a result of a number of factors. Please refer to our risk factors under the heading "Item 1A. Risk Factors" under Part II of this Quarterly Report on Form 10-Q and under Part I of our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, and in other reports we file with the SEC.

If we are unable to generate enough revenue from our existing or new collaborations or license agreements when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending through further reductions in staff and delaying, scaling back or stopping certain research and development programs, including more costly Phase 2 and Phase 3 clinical trials on our wholly-owned programs as these programs progress into later stage development. Insufficient liquidity may also require us to relinquish greater rights to product candidates at an earlier stage of development or on less favorable terms to us and our stockholders than we would otherwise choose in order to obtain up-front license fees needed to fund operations. These events could prevent us from successfully executing our operating plan and, in the future, could raise substantial doubt about our ability to continue as a going concern. Further, as discussed in Note 5 – Long-term Debt to our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q, if at any time our balance of total cash, cash equivalents and marketable securities at Comerica Bank and approved outside accounts falls below $22 million, we must maintain a balance of cash, cash equivalents and marketable securities at Comerica at least equivalent to the entire outstanding debt balance with Comerica, which is currently $14.6 million. We must also maintain a monthly liquidity ratio if we draw down on the revolving line of credit with Comerica.

Cash, Cash Equivalents and Marketable Securities

Cash equivalents are short-term, highly-liquid financial instruments that are readily convertible to cash and have maturities of 90 days or less from the date of purchase.

Short-term marketable securities consist mainly of U.S. government agency obligations with maturities of greater than 90 days when purchased. The remaining $12.6 million of short-term marketable securities are equity securities. Long-term marketable securities are primarily securities held under our deferred compensation plan.

Below is a summary of our cash, cash equivalents and marketable securities (in thousands):



	March 31, 2015		June 30, 2014		$ Change

Cash and cash equivalents	$	141,470	$	68,591	$	72,879
Marketable securities – short-term	48,600		42,407		6,193
Marketable securities – long-term	546		640		(94		)
Total	$	190,616	$	111,638	$	78,978

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Cash Flow Activities

Below is a summary of our cash flow activities (in thousands):



	Nine Months Ended March 31,
	2015		2014			$ Change
Cash flows provided by (used in):
Operating activities	$	21,472	$	(49,444	)	$	70,916
Investing activities	12,560		(11,560		)	24,120
Financing activities	38,847		52,446			(13,599		)
Total	$	72,879	$	(8,558	)	$	81,437

Net cash from operating activities improved by $70.9 million during the nine months ended March 31, 2015, primarily resulting from the $85 million of cash received, as well as the $5 million for the reimbursement of certain transaction costs and the extinguishment of our net co-development liability balance of $21.6 million in connection with the closing of the Binimetinib Agreement as discussed in Note 3 - Binimetinib and Encorafenib Agreements to the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q. Additionally, we entered into a third party agreement to complete the Novartis transactions for a net consideration payment of $25 million during the current period.

Net cash from investing activities increased $24.1 million between the current and prior year nine-month periods. We received $38.8 million more in proceeds from the maturity and sales of U.S. Government Agency and equity securities during the nine months ended March 31, 2015, and used only $14.0 million more cash for purchases of replacement securities, as compared to the same period of the prior year.

Net cash provided by financing activities decreased $13.6 million related to the sale of fewer shares of our common stock at a lower average price under our sales agreement with Cantor Fitzgerald during the current period, compared with the same period of the prior year.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on July 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method, nor have we determined the effect of the standard on our ongoing financial reporting. We are also evaluating the effect that ASU No. 2014-09 will have on our financial statements and related disclosures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse changes in financial and commodity market prices and fluctuations in interest rates. All of our collaboration and license agreements and nearly all purchase orders are denominated in U.S. dollars. As a

result, historically and as of March 31, 2015, we have had little or no exposure to market risk from changes in foreign currency or exchange rates.

Our investment in equity securities is subject to market price volatility. Fluctuations in the market price of publicly-traded equity securities may result from perceived changes in the underlying economic characteristics of the issuer, the relative price of alternative investments, general market conditions and other factors. A 10% increase or decrease in the fair value of our investment in equity securities at March 31, 2015, would result in an increase or decrease to the fair value of the investment of approximately $1.3 million. Because the market price for this investment is subject to ongoing fluctuation, the amount we may eventually realize from a subsequent sale of the investment may differ significantly from the reported amount. This hypothetical increase or decrease will likely be different from what actually occurs in the future, and the impact may differ from that quantified herein.

The remainder of our investment portfolio is comprised primarily of readily marketable, high-quality securities that are diversified and structured to minimize market risks. We target an average portfolio maturity of one year or less. Our exposure to market risk for changes in interest rates relates primarily to our investments in marketable securities. Marketable securities held in our investment portfolio are subject to changes in market value in response to changes in interest rates and liquidity. A significant change in market interest rates could have a material impact on interest income earned from our investment portfolio. We model interest rate exposure by a sensitivity analysis that assumes a theoretical 100 basis point (1%) change in interest rates. If the yield curve were to change by 100 basis points from the level existing at March 31, 2015, we would expect future interest income to increase or decrease by approximately $356 thousand over the next 12 months based on the current balance of $35.6 million of investments in U.S. treasury securities classified as short-term marketable securities available-for-sale. Changes in interest rates may affect the fair value of our investment portfolio; however, we will not recognize such gains or losses in our statement of operations and comprehensive loss unless the investments are sold.

Our term loan with Comerica of $14.6 million is our only variable rate debt. Assuming constant debt levels, a theoretical change of 100 basis points (1%) on our current interest rate of 3.25% on the Comerica debt as of March 31, 2015, would result in a change in our annual interest expense of $146 thousand.

Historically, and as of March 31, 2015, we have not used foreign currency derivative instruments or engaged in hedging activities.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and other senior management personnel, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures as of March 31, 2015, were effective to provide a reasonable level of assurance that the information we are required to disclose in reports that we submit or file under the Securities Act of 1934: (i) is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms; and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a reasonable level of assurance because an internal control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the internal control system’s objectives will be met.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

Investing in our common stock is subject to a number of risks and uncertainties. You should carefully consider the risk factors described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, and in other reports we file with the SEC. There have been no changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014 that we believe are material, other than as set forth below. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial also may negatively impact our business.

If Array is unable to obtain a suitable partner for global development and European commercialization rights to binimetinib and encorafenib, the European Commission may license such rights to a partner it locates on terms that may be less favorable to Array than those Array might have obtained had it partnered such rights.

In order to address competition concerns raised by the European Commission, Array agreed to obtain a partner for worldwide development and European commercialization rights for both binimetinib and encorafenib acceptable to the European Commission. If we are unable, in the prescribed time period, to negotiate a collaboration and license agreement with a partner and on terms acceptable to the European Commission, a trustee approved by the European Commission, will be empowered to license these rights to a suitable third party for no minimum price. The terms of such license could be less favorable to Array than the terms Array could have obtained had it licensed such rights directly to a third party.

ITEM 6. EXHIBITS

(a) Exhibits

The exhibits listed on the accompanying exhibit index are filed or incorporated by reference (as stated therein) as part of this Quarterly Report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boulder, State of Colorado, on this 6th day of May 2015.

ARRAY BIOPHARMA INC.



By:	/s/ RON SQUARER
	Ron Squarer
	Chief Executive Officer


By:	/s/ DAVID HORIN
	David Horin
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

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EXHIBIT INDEX



		Incorporated by Reference
Exhibit Number	Description of Exhibit	Form	File No.	Date Filed
3.1	Amended and Restated Certificate of Incorporation of Array BioPharma Inc.	S-1/A	333-45922	10/27/2000
3.2	Amendment to Amended and Restated Certificate of Incorporation of Array BioPharma Inc.	8-K	001-16633	11/6/2007
3.3	Amendment to Amended and Restated Certificate of Incorporation of Array BioPharma Inc.	8-K	001-16633	10/29/2012
3.4	Bylaws of Array BioPharma Inc., as amended and restated on October 30, 2008	8-K	001-16633	11/4/2008
4.1	Specimen certificate representing the common stock	S-1/A	333-45922	10/27/2000
4.2	Registration Rights Agreement, dated May 15, 2009, between the registrant and Deerfield Private Design Fund, L.P. and Deerfield Private Design International, L.P.	10-K	001-16633	8/18/2009
4.3	Form of Warrant to purchase shares of the registrant's Common Stock issued to Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Partners, L.P., Deerfield International Limited	8-K/A	001-16633	9/24/2009
4.4	Form of Amendment No. 1 to Warrant to purchase shares of the registrant's Common Stock issued to Deerfield Private Design Fund, L.P., Deerfield Private Design International, L.P., Deerfield Partners, L.P., Deerfield International Limited	8-K	001-16633	5/3/2011
4.5	Indenture dated June 10, 2013 by and between Array BioPharma Inc. and Wells Fargo Bank, National Association, as Trustee	8-K	001-16633	6/10/2013
4.6	First Supplemental Indenture dated June 10, 2013 by and between Array BioPharma Inc. and Wells Fargo Bank, National Association, as Trustee	8-K	001-16633	6/10/2013
4.7	Form of global note for the 3.00% Convertible Senior Notes Due 2020	8-K	001-16633	6/10/2013
10.1	LGX818 Asset Transfer Agreement, dated January 19, 2015, between registrant and Novartis Pharma AG*	Filed herewith
10.2	First Amendment to Termination and Asset Transfer Agreement, dated January 19, 2015, between registrant, Novartis Pharma AG and Novartis Pharmaceutical International Ltd.*	Filed herewith
10.3	Seventh Amendment to Drug Discovery Collaboration Agreement, dated as of February 10, 2015, between the registrant and Genentech, Inc.*	Filed herewith
10.4	Transition Agreement, dated March 2, 2015, between the registrant and Novartis Pharma AG (binimetinib)*	Filed herewith
10.5	Transition Agreement, dated March 2, 2015, between the registrant and Novartis Pharma AG (encorafenib)*	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended	Filed herewith
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended	Filed herewith
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

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		Incorporated by Reference
Exhibit Number	Description of Exhibit	Form	File No.	Date Filed

*	Confidential treatment of redacted portions of this exhibit has been applied for.

Exhibit 10.1

EXECUTION VERSION

STRICTLY CONFIDENTIAL

LGX818 ASSET TRANSFER AGREEMENT

by and between

NOVARTIS PHARMA AG

and

ARRAY BIOPHARMA INC.

Dated as of January 19, 2015

[*] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. Confidential treatment has been requested with respect to this information.

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		Page
ARTICLE I DEFINITIONS		2
Section 1.1	Definitions	2
Section 1.2	Interpretation	11
Section 1.3	Currency	11

ARTICLE II TERMINATION		11
Section 2.1	Termination of the Existing License Agreement	11

ARTICLE III TRANSFER OF TRANSFERRED ASSETS		12
Section 3.1	Transfer	12
Section 3.2	Effective Date	12
Section 3.3	Transferred Assets	12
Section 3.4	Assumption of Certain Liabilities and Obligations	14
Section 3.5	Nonassignability of Assets; Shared Assets	15
Section 3.6	Delivery; Retained Rights	17
Section 3.7	Ancillary Agreements	17
Section 3.8	Transfer Taxes and Fees	18
Section 3.9	Transition Committee	18

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARTIES		19
Section 4.1	Representations and Warranties by Novartis	19
Section 4.2	Representations and Warranties by Array	25
Section 4.3	Disclaimer of Representations and Warranties	26
Section 4.4	Survival	26

ARTICLE V CERTAIN COVENANTS AND AGREEMENTS OF NOVARTIS		26
Section 5.1	Conduct of Business	26
Section 5.2	Access to Key Employees	27
Section 5.3	Payments	27
Section 5.4	Certain Additional Information	27
Section 5.5	Time is of the Essence	27

ARTICLE VI CERTAIN COVENANTS AND AGREEMENTS OF ARRAY		27
Section 6.1	Novartis's Names and Marks	27
Section 6.2	Records	28
Section 6.3	Bulk Transfer Laws	28
Section 6.4	Encorafenib Drug Product	28
Section 6.5	Supply Arrangements	28
Section 6.6	BRAF Competitor	28




ARTICLE VII OTHER COVENANTS AND AGREEMENTS		28
Section 7.1	Efforts to Consummate; Antitrust Matters	28
Section 7.2	Notice of Certain Events	31
Section 7.3	Press Releases; Publicity	31
Section 7.4	Confidential Information	31
Section 7.5	Pharmacovigilance	34
Section 7.6	Change of Product and Service Recipient	34
Section 7.7	Certain Matters Relating to the FTC Decisions and Order and EC Remedy Decisions	34

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER		35
Section 8.1	Termination	35
Section 8.2	Amendments and Waivers	36

ARTICLE IX INDEMNIFICATION		36
Section 9.1	Indemnification by Array	36
Section 9.2	Indemnification by Novartis	36
Section 9.3	Indemnification Procedure	37
Section 9.4	Special, Indirect and Other Losses	38
Section 9.5	No Exclusion	39

ARTICLE X GENERAL PROVISIONS		39
Section 10.1	Expenses	39
Section 10.2	Further Assurances and Actions	39
Section 10.3	Notices	39
Section 10.4	Headings	40
Section 10.5	Severability	40
Section 10.6	Counterparts	40
Section 10.7	Entire Agreement	40
Section 10.8	Governing Law	40
Section 10.9	Dispute Resolution	40
Section 10.10	Specific Performance	41
Section 10.11	Bindining Effect; Assignment	41

EXHIBIT A – LIST OF CLINICAL TRIALS

EXHIBIT B – FINAL FTC DECISION AND ORDER

EXHIBIT C – FORM OF PRESS RELEASE

THIS ASSET TRANSFER AGREEMENT, dated as of January 19, 2015 (together with all Schedules and Exhibits attached hereto, this “Agreement”), is made by and between Novartis Pharma AG, a Swiss corporation (“Novartis”), and Array BioPharma Inc., a Delaware corporation (“Array”).

RECITALS

WHEREAS, pursuant to certain transactions publicly announced on April 22, 2014, Novartis AG has agreed to acquire certain oncology assets of GlaxoSmithKline PLC (the “GSK Transactions”);

WHEREAS, the United States Federal Trade Commission (including any successor agency thereto, the “FTC”), the European Commission (including any successor agency thereto, the “EC”), the Australian Competition and Consumer Commission (including any successor agency thereto) and potentially the antitrust authorities of additional jurisdictions have raised potential competition law concerns regarding the impact of the GSK Transactions;

WHEREAS, in order to resolve such concerns in these alleged product markets in the United States and Europe, Novartis has agreed to enter into an agreement to divest certain assets related to Encorafenib (as defined below) with Array, all upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, the Parties have entered into that certain Termination and Asset Transfer Agreement, dated November 26, 2014 (as amended, the “Binimetinib Termination Agreement”), and certain Ancillary Agreements (as defined in the Binimetinib Termination Agreement), pursuant to which Novartis agrees to assign, transfer, convey, and deliver to Array, and Array agrees to acquire and accept from Novartis, all right, title and interest of Novartis in and to specific assets relating to Binimetinib (as defined below), all upon the terms and subject to the conditions set forth therein;

WHEREAS, the FTC has or is about to issue a Decision and Order governing the scope, nature, extent and requirements of this Agreement and the Binimetinib Termination Agreement;

WHEREAS, Novartis desires to assign, transfer, convey, and deliver to Array, and Array desires to acquire and accept from Novartis, all right, title and interest of Novartis in and to the Transferred Assets (as defined herein), all upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, Novartis desires to assign to Array, and Array desires to assume from Novartis, the Assumed Liabilities (as defined herein), all upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, simultaneously with the execution and delivery of this Agreement, the Parties will enter into the Divestiture Commitment Agreement (as defined below) and will amend the Binimetinib Termination Agreement; and

WHEREAS, simultaneously on the Effective Date (as defined below), the Parties will enter into (1) the Transition Agreement (as defined below), pursuant to which Novartis and its Affiliates will provide certain regulatory assistance, development technology transfer, companion diagnostic assistance and other transition services and expense reimbursement to Array, (2) the Supply Agreement (as defined below), pursuant to which Novartis and its Affiliates will manufacture and supply to Array, Encorafenib for use in clinical trials and provide manufacturing technology transfer services to Array and/or its clinical research organization(s); (3) the Conditional License Agreement (as defined below); (4) the Columbus Trial Agreement (as defined below); (5) the Three-Way Clinical Trial Agreement (as defined below); (6) certain other clinical trial agreements to address the Parties’ rights and obligations with respect to clinical trials involving Encorafenib; and (7) the amended and/or restated agreements constituting Ancillary Agreements (as such term is defined in the Binimetinib Termination Agreement).

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, representations, warranties, and agreements herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

Article I
DEFINITIONS

Section 1.1 Definitions. As used herein, the following terms have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. When used herein, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of a majority of the equity interests or the power to elect a majority of the board of directors (or Persons performing similar functions) of such Person, whether through the ownership of voting securities, status as a general partner, by contract or otherwise. The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence; provided, that such foreign investor has the power to direct the management and policies of such entity.

“Agreement” has the meaning set forth in the preamble.

“Alliance Agreement” has the meaning set forth in Section 2.1.

“Ancillary Agreements” means, collectively, the Bill of Sale, the Assumption Agreement, the Patent Assignment Agreement, the Cross License Agreement, the Transition Agreement, the Supply Agreement, the Standalone Clinical Trial Agreement, the Other Clinical Trial Agreement, the Columbus Trial Agreement, the Three-Way Clinical Trial Agreement and, except for purposes of Section 3.7 and Section 3.9, the Divestiture Commitment Agreement.

“Antitrust Laws” means any Applicable Law designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade or the significant impediment of effective competition.

“Applicable Laws” means any law, judgment, order, decree, statute, ordinance, rule or regulation issued or promulgated by any Governmental Entity.

“Array” has the meaning set forth in the preamble.

“Assumed Liabilities” has the meaning set forth in Section 3.4(a).

“Assumption Agreement” means an assumption agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Bill of Sale” means a bill of sale and assignment to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Binimetinib” means the compound known as MEK162.

“Binimetinib Termination Agreement” has the meaning set forth in the recitals.

“BRAF Inhibitor” means a compound that directly binds to BRAF and inhibits the activity of BRAF (i.e., inhibits the phosphorylation of ERK). For the avoidance of doubt, this shall not include a compound that is [*]

“Business Day” means a day (other than a Saturday, Sunday or a public holiday) on which banks are open for business in Basel, Switzerland, and New York, NY, USA.

[*]

“Clinical Trial Agreements” means the Columbus Trial Agreement, the Standalone Clinical Trial Agreement, the Three-Way Clinical Trial Agreement and the Other Clinical Trial Agreement.

“Columbus Trial” has the meaning set forth in the Columbus Trial Agreement.

“Columbus Trial Agreement” means the Amended and Restated Columbus Trial Agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Commercialization” or “Commercialize” means to pursue Regulatory Approvals, market, promote, distribute, import, export, offer to sell and/or sell a product and/or conduct related commercialization activities, including activities relating to pursuit of Regulatory Approvals, marketing, promoting, distributing, importing, exporting, offering for sale or selling such product.

“Competing Product” means any product (other than any product containing Encorafenib) that includes as an active pharmaceutical ingredient an agent that is a BRAF Inhibitor.

“Conditional License Agreement” means the conditional license agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Confidentiality Agreement” means the Confidentiality Agreement as of January 13, 2015, by and between Novartis International AG and Array.

“Confidential Information” means all confidential or proprietary information of a Party or any of its Affiliates, and any data of a financial, commercial or technical nature which such Party or any of its Affiliates has supplied or otherwise made available to the other Party or its

Affiliates pursuant to this Agreement, whether made available orally, in writing, or in electronic form, and whether or not such information is identified as confidential at the time of disclosure.

“Contemplated Transactions” means the transactions contemplated by this Agreement and the Ancillary Agreements.

“Contracts” means written contracts, agreements, and all other legally binding written arrangements, whether in existence on the date hereof or subsequently entered into, including all amendments thereto.

“Control” or “Controlled” means, with respect to any Know-How, Patent Rights, other intellectual property rights, or any proprietary or trade secret information, the legal authority or right (whether by ownership, license or otherwise) of a Party or its Affiliates to grant an assignment, license or a sublicense of or under such Know-How, Patent Rights, or other intellectual property rights to another Person, or to otherwise disclose such proprietary or trade secret information to another Person, without breaching the terms of any agreement with a Third Party, or misappropriating the proprietary or trade secret information of a Third Party.

“Cross License Agreement” means the license agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

[*]

“Development” or “Develop” means drug development activities, including pre-clinical and clinical activities, test method development and stability testing, assay development and audit development, toxicology, formulation, Manufacturing and distribution of compounds and products for use in clinical trials including placebos and comparators as the case may be, development activities with respect to a diagnostic product, quality assurance/quality control development, statistical analysis, clinical studies, packaging development, and regulatory affairs.

“Documents” means all files, documents, instruments, papers, books, reports, records, tapes, microfilms, photographs, letters, budgets, forecasts, ledgers, journals, supplier lists, operating data and plans, technical documentation (design specifications, functional requirements, operating instructions, logic manuals, flow charts, etc.), and other similar materials, in each case whether or not in tangible or electronic form.

“Divestiture Commitment Agreement” means the Divestiture Commitment Agreement, dated as of the date hereof, by and between Novartis and Array.

“Drug Substance” means an active ingredient that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease or to affect the structure or any function of the human body, but does not include intermediates used in the synthesis of such ingredient.

“EC” has the meaning set forth in the recitals.

“EC Commitments” means the final commitments to the EC pursuant to CASE NO. COMP/M.7275 – NOVARTIS/GLAXOSMITHKLINE ONCOLOGY BUSINESS adopted by the EC as part of its decision declaring the GSK Transactions compatible with the European common market.

“EC Remedy Decisions” means final EC decisions adopted in relation to, among other things, the Contemplated Transactions in the context of the GSK Transactions.

“EEA” means the European Economic Area.

“Effective Date” has the meaning set forth in Section 3.2.

“EMA” means the European Medicines Agency, and any successor agency thereto.

“Encorafenib” means the compound known as LGX818.

“Encorafenib Personnel” has the meaning set forth in Section 5.2(a).

“Encumbrance” means any claim, charge, equitable interest, lien, mortgage, pledge, option, license, assignment, power of sale, retention of title, right of preemption, right of first refusal or security interest of any kind.

“Excluded Assets” has the meaning set forth in Section 3.3(b).

“Excluded Liabilities” has the meaning set forth in Section 3.4(b).

“Exhibits” means, collectively, the Exhibits referred to throughout this Agreement.

“FDA” means the U.S. Food and Drug Administration, and any successor agency thereto.

“FDA Act” has the meaning set forth in Section 4.1(f).

“Final FTC Decision and Order” means the final FTC Decision and Order concerning, among other things, the Contemplated Transactions in the context of the GSK Transactions, a copy of which shall be attached hereto as Exhibit B upon issuance by the FTC.

“FTC” has the meaning set forth in the recitals.

“Governmental Entity” means any government, court, administrative agency or commission or other governmental, judicial, administrative or regulatory authority or instrumentality, whether domestic or foreign.

“GSK Transactions” has the meaning set forth in the recitals.

“Health Laws” means any Applicable Law, the purpose of which is to ensure the safety, efficacy and quality of medicines by regulating the research, development, manufacturing and distribution of pharmaceutical products, including Applicable Laws relating to good laboratory practices, good clinical practices, investigational use, product marketing authorization,

manufacturing compliance and approval, good manufacturing practices, labeling, advertising, promotional practices, safety surveillance, record keeping and filing of required reports such as the FDA Act, the Public Health Service Act, as amended, their associated rules and regulations promulgated thereunder.

“IND” means any investigational new drug application filed with the FDA pursuant to Part 312 of Title 21 of the United States Code of Federal Regulations prior to beginning clinical trials in humans in the United States or any comparable application filed with any Regulatory Authority outside of the United States.

“Indemnified Party” has the meaning set forth in Section 9.3(a).

“Indemnifying Party” has the meaning set forth in Section 9.3(a).

“Intellectual Property” means Patent Rights, Know-How and trademark and trademark applications.

“Inventory” means all Materials (as such term is defined in the Supply Agreement) held for use for the manufacture of Drug Substance, Product and/or Finished Product, all Drug Substance batches (including those used in toxicology studies, clinical studies, process validation, and stability), all Product and Finished Product batches (including those used in clinical studies, process validation, and stability), and all samples of Drug Substance, Product and Finished Product owned by and in the possession, custody or control of Novartis or its Affiliates as of the Effective Date (such terms “Drug Substance,” “Product” and “Finished Product” used in this definition shall have the meanings set forth in the Supply Agreement).

“Key Employees” means the key employees of Novartis on the working teams set forth on Schedule 1.1(a).

“Know-How” means technical information, know-how and data, including research and development data, information, reports, studies, validation methods and procedures, unpatented inventions, discoveries, knowledge, trade secrets, technical or other data or information, specifications, instructions, formulae, materials, methods, procedures, processes, flow diagrams, developments, expertise or other technology, including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, preclinical, clinical, Manufacturing, physical, analytical, safety, quality assurance, quality control and other data, instructions, processes, formulae, expertise, information, reports or studies, including any of the foregoing applicable to compounds, formulations, compositions, or products or to their Manufacture, Development, registration, use, studying, production, formulation, synthesis, assaying, testing or Commercialization, including study data, but excluding any of the foregoing which is the subject of an issued patent.

“Knowledge” means (i) as of the date hereof, the actual knowledge, without independent investigation, of, (A) with respect to Novartis, the following individuals: [*] and (B) with respect to Array, the following individuals: [*], and, with respect to [*], and (ii) as of the

Effective Date, with respect to each Party, the actual knowledge of the individuals listed in the foregoing clause (i) with respect to such Party, [*].

“Liabilities” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, or determined or determinable.

“Licensed IP” means the Licensed IP as defined in the Cross License Agreement.

“Losses” means, collectively, any and all damages, losses, Liabilities, claims, judgments, penalties, costs and expenses (including reasonable attorneys’ fees and litigation expenses); provided, however, that except to the extent (a) expressly provided otherwise in this Agreement or any Ancillary Agreement; or (b) any such damages are required to be paid to a Third Party as part of a claim for which a Party provides indemnification under Article IX, Losses shall not include (x) any punitive or incidental damages, or (y) any consequential, indirect, exemplary or special damages, lost profits, lost revenue or opportunity costs (including where calculated by using or taking into account any multiple of earnings, cash flow, revenue or other similar measure); [*]

[*]

“Manufacturing” or “Manufacture” means activities and operations involved in or relating to the manufacturing, quality control testing, releasing or packaging of a product, for pre-clinical, clinical or commercial purposes.

“Marketing Approval” means all approvals, licenses, registrations, and authorizations of any Regulatory Authority that are necessary for the marketing and sale of a product in a country or group of countries.

“Material Adverse Effect” means any event, occurrence, fact, condition or change, when taken together with any other events, occurrences, facts, conditions or changes, in the aggregate, is (or would be reasonably be expected to be) materially adverse to (i) Novartis’s ability to transfer title to the Transferred Assets, taken as a whole, in accordance with this Agreement, (ii) Array’s rights in or to the Transferred Assets and Licensed IP, taken as a whole, upon consummation of the Contemplated Transactions, or (iii) the Development or Commercialization of Encorafenib.

“[*] Agreement” means the [*] Agreement, dated as of February 28, 2011, between [*] and Novartis International Pharmaceutical, Ltd.

“Novartis” has the meaning set forth in the preamble.

“Novartis Compounds” has the meaning set forth in Section 3.3(b).

“Novartis Names and Marks” has the meaning set forth in Section 6.1.

“Novartis Pipeline Agents” means any of Novartis’s proprietary compounds referred to as [*], in each case, which have demonstrated utility in combination with Encorafenib.

“Ongoing Investigator Sponsored Clinical Trials” means those clinical trials designated with the following ClinicalTrials.gov identifiers: [*]; and any Proposed Investigator Sponsored Clinical Trial deemed an Ongoing Investigator Sponsored Clinical Trial in accordance with Section 5.1(b).

“Other Clinical Trial Agreement” means the clinical trial agreement to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties. The Parties agree that Clinical Plan (as defined in the Other Clinical Trial Agreement) attached as Exhibit A to the Other Clinical Trial Agreement as of the Effective Date shall be the signed clinical trial protocols for the Other Clinical Trials as of the date hereof, as amended by mutual agreement of the Parties prior to the Effective Date.

“Parties” means Novartis and Array, with each being a “Party”.

“Patent Assignment Agreement” means a Patent Rights assignment agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Patent Rights” means all patents and patent applications, including all divisionals, continuations, substitutions, continuations-in-part, re-examinations, reissues, additions, renewals, extensions, registrations, and supplemental protection certificates and the like of any of the foregoing.

“Permitted Encumbrance” means (i) any Encumbrance disclosed on Schedule 1.1(b), (ii) any Encumbrance for Taxes, assessments and other governmental charges that are not yet due and payable or that may thereafter be paid without penalty, or that are being contested in good faith by appropriate proceedings, (iii) with respect to licenses, permits or Contracts, any restrictions, obligations, limitations or other Encumbrances contained in such license, permit or Contract or existing under Applicable Laws, or (iv) any imperfection of title or other Encumbrance that individually or in the aggregate with other such imperfections and Encumbrances, would not have a material adverse effect on the Transferred Assets.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, business association, organization, Governmental Entity or other entity.

“Proposed FTC Decision and Order” means a proposed form of the Final FTC Decision and Order concerning, among other things, the Contemplated Transactions in the context of the GSK Transactions.

“Proposed Investigator Sponsored Clinical Trials” means the following proposed clinical trial: [*].

“Purchase Price” has the meaning set forth in Section 5.3.

“Regulatory Approval” means, with respect to a product containing Encorafenib in any country or jurisdiction, any approval (including when applicable approval for clinical trials and

where required, pricing and reimbursement approvals), registration, license or authorization from a Regulatory Authority in a country or other jurisdiction that is necessary to Develop, Manufacture, and Commercialize such product in such country or jurisdiction.

“Regulatory Authority” means any Governmental Entity responsible for granting Regulatory Approvals, including the FDA, the EMA and any corresponding national or regional regulatory authorities.

“Regulatory Materials” means any submission to a Regulatory Authority of any appropriate regulatory application together with any related correspondence and documentation, and shall include any submission to a regulatory advisory board, marketing authorization application, and any supplement or amendment thereto. For the avoidance of doubt, Regulatory Materials shall include any INDs.

“Representative” has the meaning set forth in Section 7.4(b).

“SEC” has the meaning set forth in Section 7.4(b).

“Solicitation Period” has the meaning set forth in Section 5.2(b).

“Standalone Clinical Trial Agreement” means the clinical trial agreement to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties. The Parties agree that Clinical Plan (as defined in the Standalone Clinical Trial Agreement) attached as Exhibit A to the Standalone Clinical Trial Agreement as of the Effective Date shall be the signed clinical trial protocols for the Standalone Clinical Trials as of the date hereof, as amended by mutual agreement of the Parties prior to the Effective Date.

“Suitable Partner” means the entity approved by the European Commission as counterparty to the Alliance Agreements in accordance with the criteria set out in Section D of the EC Commitments.

“Supply Agreement” means the interim supply agreement to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Tax” means all Federal, state, local and foreign taxes and assessments, including all interest, penalties and additions with respect thereto.

“Third Party” means any Person other than Novartis or Array or their respective Affiliates.

“Third Party Agreements” means those Contracts between Novartis or any of its Affiliates, on the one hand, and Third Parties, on the other hand, related to Encorafenib and (i) existing as of the date hereof or (ii) entered into on or after the date of this Agreement but prior to the Effective Date in the ordinary course of business in connection with on-going clinical trials or other Development activities.

“Third Party Claim” has the meaning set forth in Section 9.3(a).

“Three-Way Clinical Trial Agreement” means the Amended and Restated Three-Way Clinical Trial Agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Transfer” has the meaning set forth in Section 3.5(a).

“Transferred” has the meaning set forth in Section 3.5(a).

“Transferred Assets” has the meaning set forth in Section 3.3(a).

“Transferred IP” means (i) the Transferred Patents and (ii) all Know-How, including Manufacturing technology, to the extent related to Encorafenib and that is in existence and owned or Controlled by Novartis or its Affiliates as of the Effective Date.

“Transferred Patents” means any Patent Rights Controlled by Novartis or any of its Affiliates as of the Effective Date having claims covering Encorafenib and/or any product containing Encorafenib (in all forms, presentations, doses and formulations), its use, composition, formulation, preparation or manufacture, wherein Encorafenib is the only active pharmaceutical ingredient claimed, and wherein there are no other claims, including the Patent Rights identified in Schedule 1.1(c).

“Transferred Regulatory Materials” has the meaning set forth in Section 3.3(a)(iv).

“Transferred Third Party Agreements” means those Third Party Agreements that are primarily related to Encorafenib.

“Transition Agreement” means the transition agreement, to be executed and delivered by Array and Novartis on the Effective Date, substantially in the form mutually agreed upon by the Parties.

“Transition Committee” or “TC” means the transition committee established pursuant to and in accordance with Section 3.9(a) of the Binimetinib Termination Agreement.

Section 1.2 Interpretation.

(a) When used herein the words “include”, “includes” and “including” are deemed to be followed by the words “without limitation.”

(b) Any terms defined in the singular have a comparable meaning when used in the plural, and vice-versa.

(c) All references to the preamble, recitals, Articles, Sections, Exhibits, Schedules and Appendices are deemed references to the preamble, recitals, Articles, Sections, Exhibits, Schedules and Appendices to this Agreement.

(d) The word “or” shall be inclusive and not exclusive.

(e) The Party includes its permitted assignees and/or the respective successors in title to substantially the whole of its undertaking.

(f) The words “hereof”, “hereto”, “hereunder” and similar words refer to this Agreement as a whole and not any particular Section or Article of this Agreement.

(g) References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms thereof.

(h) This Agreement is deemed drafted jointly by the Parties and shall not be specifically construed against any Party based on any claim that such Party or its counsel drafted this Agreement.

Section 1.3 Currency. All currency amounts referred to herein are in U.S. Dollars unless otherwise specified.

ARTICLE II
KNOWLEDGE ACCESS.

Section 2.1 Knowledge Access. As soon as practicable following the date hereof, subject to the confidentiality obligations set forth in Section 7.4, Novartis shall (and shall cause its Affiliates to) provide Array with copies of or reasonable access to all information, personnel, documentation, materials and other resources regarding Encorafenib and the Transferred Assets reasonably necessary or otherwise reasonably requested by Array, to (a) enable Array to effectively engage, negotiate with, and execute a collaboration and license agreement(s) (collectively, the “Alliance Agreement”) with a Suitable Partner governing the research, development, manufacture, sale, marketing, distribution and commercialization of Encorafenib and products containing Encorafenib in the EEA and in any additional jurisdictions where the applicable antitrust authorities have required that Array enter into such collaboration or license agreement; and (b) subject to customary and reasonable confidentiality and non-use arrangements, provide any potential Suitable Partner with reasonable diligence regarding the research, development, manufacture, sale, marketing, distribution and commercialization of Encorafenib and products containing Encorafenib in the EEA and such additional jurisdictions; provided, however that Array shall not be permitted to so execute an Alliance Agreement or so provide any potential Suitable Partner with any such diligence information that constitutes the Confidential Information of Novartis prior to the adoption of the EC Remedy Decisions.

ARTICLE III
TRANSFER OF TRANSFERRED ASSETS

Section 3.1 Transfer. Upon the terms and subject to the conditions of this Agreement, as of the Effective Date, Novartis (at its sole cost and expense) will, or will cause its Affiliates, as applicable, to, assign, transfer, and convey to Array, and Array will acquire from Novartis and its

Affiliates, all right, title and interest of Novartis or any such Affiliates in, to and under the Transferred Assets in each case free and clear of all Encumbrances, other than (i) Permitted Encumbrances or (ii) Encumbrances created or imposed by Array.

Section 3.2 Effective Date.

(a) The transfer of the Transferred Assets is contingent upon, and shall automatically become effective as of, the consummation of the GSK Transactions, or at such other earlier date or event as Novartis and Array may agree (the “Effective Date”). For the avoidance of doubt, the knowledge access rights and obligations set forth in Section 2.1 shall become effective immediately upon the date hereof (and prior to the Effective Date) notwithstanding that some of the information and documents provided pursuant to Section 2.1 may also constitute Transferred Assets.

(b) Notwithstanding the foregoing, the transfer of the Transferred Assets is further contingent upon the representations and warranties of the Parties set forth in Article IV below being true and correct as of the Effective Date, except as would not have a Material Adverse Effect, and other than representations and warranties qualified by Material Adverse Effect, in which case such representations and warranties must be true and correct in all respects as of the Effective Date.

Section 3.3 Transferred Assets.

(a) The term “Transferred Assets” means any and all properties, assets, claims and rights owned by Novartis and its Affiliates wherever situated and of whatever kind and nature, real or personal, tangible or intangible, existing on the Effective Date to the extent related to Encorafenib including each of the following to the extent related to Encorafenib (but in any event, excluding the Excluded Assets):


(i)	the Transferred IP;


(ii)	all product market research, product marketing materials, product branding reports and analyses and product marketing plans to the extent specifically related to Encorafenib;


(iii)	all product development reports to the extent related to Encorafenib;


(iv)	all Regulatory Materials to the extent related to Encorafenib, in each case, that are in the possession and control of Novartis or its Affiliates (“Transferred Regulatory Materials”), except to the extent set forth in Section 3.3(b)(iii);


(v)	the Transferred Third Party Agreements, including the clinical trial agreements with respect to the Ongoing Investigator Sponsored Clinical Trials;


(vi)	all clinical trial and safety data, databases and analyses to the extent related to Encorafenib;


(vii)	the domain names listed on Schedule 3.3(a)(vii);

(viii) the [*];


(ix)	all Inventory; and


(x)	all Documents to the extent related to Encorafenib.

(b) Novartis and Array expressly agree and acknowledge that, except for rights granted pursuant to Section 2 and Section 9 of each Clinical Trial Agreement and Section 2 of the Cross License Agreement, Array is not, and nothing herein shall be deemed to mean that Array is, acquiring any right, title or interest in or to any of the assets of Novartis or its Affiliates other than the Transferred Assets (the “Excluded Assets”). For the avoidance of doubt, such Excluded Assets include the following:


(i)	the Novartis Names and Marks;


(ii)	any compounds (other than Encorafenib) (“Novartis Compounds”) and related Regulatory Materials, in each case, of Novartis and/or its Affiliates;

(iii)

any Regulatory Materials to the extent related to Encorafenib, in each case, that are in the possession and control of Novartis or its Affiliates, as are necessary for Novartis to perform its obligations under this Agreement and the Ancillary Agreements with respect to the clinical trials set forth on Exhibit A sponsored by Novartis as of the Effective Date, but solely to the extent necessary and until completion of such obligations by Novartis (upon which such Regulatory Materials shall (automatically and without any further action of the Parties) be deemed to constitute Transferred Assets transferred hereunder);


(iv)	Novartis’s rights under the Columbus Trial Agreement and the Three-Way Clinical Trial Agreement;


(v)	accounts receivable, pre-paid expenses and any cash or cash equivalents of Novartis or any of its Affiliates;


(vi)	any plant, tangible property, equipment or employees, subject to Section 5.2, of Novartis or any of its Affiliates; and


(vii)	the property, assets and rights listed on Section 3.3(b)(vi).

(c) Array acknowledges and agrees that, subject to the terms and conditions set forth herein, Novartis and its Affiliates may retain copies of all or any part of the Documents or other materials that they deliver to Array hereunder, provided, however, that Novartis acknowledges and agrees that any use by Novartis or its Affiliates of such materials that relate specifically to Encorafenib shall be solely in accordance with this Agreement or

any Ancillary Agreement and such materials shall not be used in connection with a Competing Product.

Section 3.4 Assumption of Certain Liabilities and Obligations.

(a) Array will assume, be responsible for and pay, perform and discharge when due the following (collectively, the “Assumed Liabilities”): (i) any Liabilities arising from any product liability or Patent Right infringement claim or lawsuit first brought by any Third Party or any Governmental Entity on or after the Effective Date related to Encorafenib based on events or occurrences after the Effective Date that do not directly result or arise from actions or omissions by or on behalf of Novartis prior to the Effective Date; (ii) any Liabilities arising from any FDA, EMA or any other Governmental Entity action or notification first filed or submitted on or after the Effective Date related to Encorafenib based on events or occurrences after the Effective Date that do not directly result or arise from actions or omissions by or on behalf of Novartis prior to the Effective Date; (iii) any Liabilities that Array expressly assumes or agrees to assume under this Agreement or the Ancillary Agreements; (iv) all Liabilities in respect of the Transferred Third Party Agreements but only to the extent that such Liabilities thereunder arise or are required to be performed on or after the Effective Date and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Novartis or its Affiliates of the Transferred Third Party Agreements prior to the Effective Date; and (v) except as otherwise provided herein or in the Ancillary Agreements, all other Liabilities that arise out of the Development, Manufacture, Commercialization or use of Encorafenib or otherwise relate to Encorafenib or the Transferred Assets following the Effective Date based on events or occurrences on or after the Effective Date that do not directly result or arise from actions or omissions by or on of behalf Novartis prior to the Effective Date.

(b) Except for the Assumed Liabilities, Array will not assume or be liable for any Liabilities of Novartis or its Affiliates (the “Excluded Liabilities”) including, for the sake of clarity, the following: (i) any Liabilities of Novartis or its Affiliates arising from any product liability or Patent Right infringement claim or lawsuit first brought by any Third Party or any Governmental Entity prior to the Effective Date related to Encorafenib; (ii) any Liabilities of Novartis or its Affiliates arising from any FDA, EMA or any other Governmental Entity action or notification first filed or submitted prior to the Effective Date related to Encorafenib; (iii) any Liabilities that Novartis or its Affiliates expressly assumes or agrees to assume under this Agreement or the Ancillary Agreements; (iv) all Liabilities of Novartis or its Affiliates in respect of the Transferred Third Party Agreements but only to the extent that such Liabilities thereunder were required to be performed prior to the Effective Date; (v) all Liabilities of Novartis or its Affiliates in respect to the manufacture or use of Encorafenib by or on behalf of Novartis or any of its Affiliates or subcontractors prior to the Effective Date; and (vi) except as otherwise provided herein or in the Ancillary Agreements, all other Liabilities of Novartis or its Affiliates that arise out of the Development, Manufacture, Commercialization or use of Encorafenib or otherwise relate to Encorafenib or the Transferred Assets prior to the Effective Date.

Section 3.5 Nonassignability of Assets; Shared Assets.

(a) Notwithstanding anything to the contrary contained in this Agreement or in the Ancillary Agreements, to the extent that the assignment, transfer, conveyance or delivery (the “Transfer”, and the term “Transferred” has meaning correlative to the foregoing), or attempted Transfer, to Array of any asset that would be a Transferred Asset (including Transferred Third Party Agreements) is prohibited by any Applicable Law or would require any third-party authorizations, approvals, consents or waivers and such authorizations, approvals, consents or waivers shall not have been obtained prior to the Effective Date, the transactions contemplated by this Agreement and the Ancillary Agreements to occur on the Effective Date shall proceed without such Transfer.

(b) As soon as reasonably practicable after the Effective Date, Novartis shall obtain, at its own cost and expense, all such authorizations, approvals, consents or waivers from Third Parties reasonably necessary to transfer the Transferred Assets to Array and provide the services in respect of the Development, Manufacture, and Commercialization of Encorafenib as provided in this Agreement and in the Ancillary Agreements. Pending such authorization, approval, consent or waiver, the Parties shall cooperate with each other in any mutually agreeable, commercially reasonable and lawful arrangements designed to (i) provide to Array the benefits of use of the applicable assets and services and to Novartis or its Affiliates the benefits, including indemnities, that they would have obtained had the applicable assets and services been Transferred to Array as of the Effective Date or otherwise provided in accordance with this Agreement and the Ancillary Agreements and/or (ii) enable Array to obtain alternative assets and services independently. Once authorization, approval, consent or waiver for the Transfer of any such Transferred Asset not Transferred as of the Effective Date is obtained, Novartis shall, or shall cause its relevant Affiliate to, as promptly as practicable, Transfer such Transferred Asset to Array.

(c) Array shall promptly take reasonable actions to assist Novartis to be able to meet its obligations under Section 3.5(b) on a timely basis.

(d) With respect to any Transferred Assets other than Transferred IP, the Parties shall cooperate with each other to ensure that Array has the use of such Transferred Assets in connection with Encorafenib and Novartis or its Affiliates have the use of such Transferred Assets solely for use other than in connection with Encorafenib; provided, however, that Novartis acknowledges and agrees that any use by Novartis or its Affiliates of such Transferred Assets that relate specifically to Encorafenib shall be solely in accordance with this Agreement or any Ancillary Agreement and shall not be used in connection with a Competing Product. Without limiting the foregoing:

(i)

to the extent Novartis or its Affiliates uses prior to the Effective Date any Transferred Third Party Agreement for purposes unrelated to Encorafenib and unrelated to Binimetinib, after the Effective Date, Array shall cooperate with Novartis to (i) provide to Novartis or its Affiliates the benefits of use of such Transferred Third Party Agreement, (ii) partially assign to Novartis or an Affiliate thereof or

otherwise divide such Transferred Third Party Agreement into one agreement for Array and one agreement for Novartis, and/or (iii) enable Novartis or its Affiliates to obtain alternative benefits independently. For the avoidance of doubt, with respect to any Transferred Third Party Agreement for an Ongoing Investigator Sponsored Clinical Trial that, as of the Effective Date, involves a Novartis Compound, Novartis’s benefits of use of such Transferred Third Party Agreement include access to all study data generated under such Transferred Third Party Agreement relating to the applicable Novartis Compound, rights to review and approve publications and rights to approve any modification to the applicable clinical trial or related protocol related to the applicable Novartis Compound, and

(ii)

to the extent any Third Party Agreement that is not a Transferred Third Party Agreement relates to Encorafenib, Novartis shall cooperate with Array to (i) provide to Array the benefits of use of such Third Party Agreement, (ii) partially assign to Array or otherwise divide such Third Party Agreement into one agreement for Array and one agreement for Novartis, and/or (iii) enable Array to obtain alternative benefits independently.

(e) Novartis agrees that, from and after the date of this Agreement, Novartis shall use its best efforts to obtain the consent of [*] to assign the [*] Agreement to Array. Upon such assignment, (i) the Parties agree that (and shall amend the Cross License Agreement to reflect that) the Licensed IP (as defined in the Cross License Agreement) licensed from [*] under the [*] Agreement shall no longer be sublicensed from Novartis to Array under the Cross License Agreement; and (ii) the patent identified on Schedule 2.3(e) to the Cross License Agreement shall automatically and without any further action of the Parties be deemed to constitute a Transferred Patent (and the Parties shall execute a patent assignment agreement in the form of the Patent Assignment Agreement pursuant to which such assignment is memorialized).

Section 3.6 Delivery; Retained Rights.

(a) Novartis and its Affiliates shall deliver to Array the tangible Transferred Assets as soon as possible after the Effective Date, except to the extent any such Transferred Assets must be retained by Novartis in order to perform its obligations under this Agreement or the Ancillary Agreements, in which case, [*].

(b) Except (i) as otherwise expressly set forth in this Agreement or in the Ancillary Agreements or (ii) to the extent necessary for Novartis to perform its obligations under this Agreement or the Ancillary Agreements, neither Novartis nor any of its Affiliates shall retain or use, directly or indirectly, any of the Transferred Assets.

(c) With respect to Transferred Assets that are Documents or other materials, Novartis and its Affiliates may deliver to Array redacted copies of such materials

solely to the extent that such materials contain confidential information not related to Binimetinib or Encorafenib; [*].

Section 3.7 Ancillary Agreements.

On the Effective Date:

(a) Novartis or its Affiliates shall deliver to Array the Ancillary Agreements (other than the Divestiture Commitment Agreement) to which Novartis or its Affiliates are party and the Conditional License Agreement, in each case duly executed by Novartis or its Affiliates, as applicable.

(b) Array shall deliver to Novartis the Ancillary Agreements (other than the Divestiture Commitment Agreement) to which Array is party and the Conditional License Agreement, in each case duly executed by Array.

(c) Novartis and Array shall each deliver to the other Party a certificate duly executed by an authorized officer certifying that the representations and warranties of such Party in Article IV herein are true and correct in all material respects on the Effective Date, except, in the case of representations and warranties in Section 4.1(c)-(m), as would not have a Material Adverse Effect, other than representations and warranties qualified by Material Adverse Effect, in which case such representations and warranties must be true and correct in all respects as of the Effective Date.

(d) Novartis shall deliver to Array a complete and accurate list of all of the Transferred Third Party Agreements in existence as of the Effective Date.

Section 3.8 Transfer Taxes and Fees. All transfer, sales, value added, stamp duty and similar Taxes and all transfer or similar fees payable in connection with the transfer of the Transferred Assets or otherwise in connection with the Contemplated Transactions will be borne by Novartis.

Section 3.9 Transition Committee.

(a) The Parties agree that the Transition Committee established pursuant to and in accordance with the Binimetinib Termination Agreement shall also oversee, review, and coordinate the Parties’ activities under this Agreement and the Ancillary Agreements. The provisions of Section 3.9(a) of the Binimetinib Termination Agreement regarding the composition of the Transition Committee shall survive any termination of the Binimetinib Termination Agreement if this Agreement remains in effect.

(b) The Transition Committee will, generally, be responsible for the overall coordination and oversight of the Parties’ and their Affiliates’ activities under this Agreement and the Ancillary Agreements, including resolution of any disputes hereunder or thereunder, and, specifically, for the obligations of the Transition Committee expressly set forth in such agreements. The Transition Committee shall meet once per quarter (concurrently with any meeting of the Transition Committee called pursuant to and in accordance with the

Binimetinib Termination Agreement) unless otherwise agreed to by the Parties, provided either Party may call a meeting of the Transition Committee upon reasonable notice to the other Party where such meeting is reasonably necessary to fulfill the Transition Committee’s responsibilities under this Agreement. The Transition Committee may meet in person, or by means of a telephone or video conference call, and may take action by vote at a meeting or telephone or video conference call, or pursuant to a written vote. Each Party shall bear its own costs and expenses related to participation in and attendance at such meetings by its representatives.

(c) All decisions of the Transition Committee with respect to matters over which it has decision-making authority in accordance with this Section 3.9 shall be made by unanimous vote of the Transition Committee’s representatives, with each Party’s TC representatives collectively having one (1) vote. Any deadlock vote at the Transition Committee shall be resolved in accordance with Section 10.9.

(d) The Transition Committee shall not have the authority to (i) amend or modify the terms of this Agreement or any Ancillary Agreement; (ii) waive a Party’s compliance with the terms and conditions of this Agreement or any Ancillary Agreement; (iii) expand its scope of authority; (iv) determine any issue before the Transition Committee in a manner that would conflict with the terms and conditions of this Agreement or any Ancillary Agreement; or (v) render any interpretation of this Agreement or any Ancillary Agreement that is binding upon the Parties.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTIES

Section 4.1 Representations and Warranties by Novartis. Novartis hereby represents and warrants to Array as follows:

(a) Novartis Organization; Good Standing. Novartis is a company existing under the laws of the jurisdiction of its organization. Novartis has the requisite power and authority to own the Transferred Assets and to carry on its business as currently conducted. Novartis is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction where the nature of the business conducted by it makes such qualification necessary, except where the failure to so qualify or be in good standing would not have a Material Adverse Effect.

(b) Authority; Execution and Delivery. Novartis has the requisite power and authority to enter into this Agreement and the Ancillary Agreements and to consummate the Contemplated Transactions. The execution and delivery of this Agreement and the Ancillary Agreements by Novartis and the consummation of the Contemplated Transactions have been duly and validly authorized. This Agreement and the Ancillary Agreements have been, or as of the Effective Date will be, duly executed and delivered by Novartis and, assuming the due authorization, execution and delivery of this Agreement and the Ancillary Agreements by Array, will constitute the legal, valid and binding obligation of Novartis, each enforceable against Novartis in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect and to general principles of equity

(including concepts of materiality, reasonableness, good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law.

(c) Consents; No Violation, Etc. Except for the requirements of applicable Antitrust Laws and for any filings with Governmental Entities or other approvals, authorizations, consents, licenses, filings or registrations with any court, arbitrator or Governmental Entity necessary to transfer the Transferred IP and Regulatory Materials, the execution and delivery of this Agreement do not, and the consummation of the Contemplated Transactions and the compliance with the terms hereof will not (i) result in any violation of or default (or an event that, with notice or lapse of time or both, would constitute a default) under, (A) any Applicable Laws applicable to Novartis or the Transferred Assets, (B) any provision of the certificate of incorporation or by-laws or similar organizational documents of Novartis or (C) any material Contract of Novartis that would result in an Encumbrance on any of the Transferred Assets or (ii) give rise to any approval, authorization, consent, license, filing or registration with any court, arbitrator or Governmental Entity; provided, however, that no representation or warranty is made in the foregoing clauses (i)(A), (i)(C) or (ii) with respect to matters that, individually or in the aggregate, would not result in a Material Adverse Effect.

(d) Title to Transferred Assets. Novartis and its Affiliates have good and valid title to all of the Transferred Assets free and clear of all Encumbrances other than Permitted Encumbrances.

(e) Litigation. There is no suit, action, or proceeding pending or, to the Knowledge of Novartis, threatened against Novartis or its Affiliates, that relates to the Transferred Assets or that would adversely affect Novartis or the ability of Novartis timely to perform its obligations hereunder.

(f) Regulatory Matters.


(i)	To the Knowledge of Novartis, Encorafenib is being, and at all

times has been, researched, Developed, tested, manufactured, supplied and stored by or on behalf of Novartis and its Affiliates, as applicable, in compliance in all material respects with the Federal Food, Drug and Cosmetic Act (the “FDA Act”) and applicable regulations issued by the FDA, the EMA and other Regulatory Authorities, including, as applicable, those requirements relating to good manufacturing practices, good laboratory practices (except with respect to those studies which are not intended to support a research or marketing permit) and good clinical practices, and in all material respects all other Health Laws, rules and regulations.


(ii)	To the Knowledge of Novartis, the clinical trials conducted by

Novartis and its Affiliates related to Encorafenib were, and if still pending, are, being conducted in all material respects in accordance with all applicable clinical trial protocols, informed consents and applicable requirements of all applicable Regulatory Authorities.


(iii)	Novartis is not subject to any investigation related to Encorafenib

that is pending and of which Novartis has been notified in writing or, to the Knowledge of Novartis, which has been threatened, in each case by (x) the FDA or (y) the Department of Health and Human Services Office of Inspector General or Department of Justice pursuant to the

Federal Healthcare Program Anti-Kickback Statute (42 U.S.C. §1320a-7b(b)) or the Federal False Claims Act (31 U.S.C. §3729).


(iv)	To the Knowledge of Novartis, Novartis has not submitted any claim

for payment to any government healthcare program related to Encorafenib in material violation of any Applicable Law relating to false claim or fraud, including the Federal False Claim Act (31 U.S.C. §3729), or any applicable state false claim or fraud law.


(v)	To the Knowledge of Novartis, Novartis has complied in all material

respects with all applicable security and privacy standards regarding protected health information under (x) the Health Insurance Portability and Accountability Act of 1996, including the regulations promulgated thereunder, and (y) other Applicable Laws relating to privacy, in each case as related to Encorafenib.


(vi)	To the Knowledge of Novartis, there have not been and are not now

any investigations, adverse Third Party actions, or claims against Novartis or any of its Affiliates, including any pending or threatened action against Novartis or its Affiliates, in any court or by or before any Governmental Entity, with respect to Encorafenib, or Novartis’s or any of its Affiliate’s obligations set forth herein, including any which may adversely affect Novartis’s ability to perform its obligations under this Agreement.


(vii)	To the Knowledge of Novartis, neither Novartis nor any of its

Affiliates nor any officer, employee or agent of Novartis or any of its Affiliates has made an untrue statement of material fact or fraudulent statement to any Regulatory Authority, failed to disclose a material fact required to be disclosed to any Regulatory Authority or any other Governmental Entity, or committed an act, made a statement, or failed to make a statement, including with respect to any scientific data or information, that, at the time such disclosure was made or failure to disclose occurred, would reasonably be expected to provide a basis for the Regulatory Authority or any other Governmental Entity to invoke the FDA policy respecting “Fraud, Untrue Statements of Material Facts, Bribery and Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy, in each case as related to Encorafenib. Neither Novartis nor any of its Affiliates nor, to the Knowledge of Novartis, any officer, employee or agent of Novartis or its Affiliates acting on behalf of Novartis or any such Affiliate, in each case, in connection with the research or Development of Encorafenib, has been debarred or has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. §335a(a) or any similar Applicable Laws or authorized by 21 U.S.C. §335a(b) or any similar Applicable Laws. Neither Novartis nor any of its Affiliates, nor, to the Knowledge of Novartis, any officer, employee or agent of Novartis or its Affiliates acting on behalf of Novartis or any such Affiliate, in each case, in connection with the research or Development of Encorafenib, has been convicted of any crime or engaged in any conduct for which such Person could be excluded from participating in the Federal health care programs under Section 1128 of the Social Security Act of 1935, as amended, or any similar Applicable Laws.

(viii) Neither Novartis nor any of its Affiliates nor, to Novartis’s

Knowledge, any of its manufacturers of Encorafenib have received any Form 483 observations, warning letters or other communications from a Governmental Entity related to Encorafenib that would reasonably be expected to adversely impact the Development or manufacture of Encorafenib.

(g) Third Party Agreements; [*] Agreement.


(i)	[]Each of (i) the material Third Party Agreements and (ii) the []

Agreement constitutes a legal, valid and binding obligation of Novartis or its Affiliates, as the case may be, in each case in accordance with its terms and, to the Knowledge of Novartis, constitutes a legal, valid and binding obligation of the other parties thereto in accordance with its terms, and is enforceable against Novartis or its Affiliates, as the case may be, and to the Knowledge of Novartis, the other parties thereto, in accordance with its terms, in each case, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law. Neither Novartis nor any of its Affiliates is in default and, to the Knowledge of Novartis (x) no other party is in material default in complying with any provisions of any material Third Party Agreement or the [*] Agreement and (y) no condition or event or fact exists which, with notice, lapse of time or both, would reasonably be expected to constitute a default thereunder on the part of Novartis or any of its Affiliates. Neither Novartis nor any of its Affiliates has received any written notice alleging any violation, breach or default by Novartis or any of its Affiliates under any material Third Party Agreement or the [*] Agreement. All up-front and milestone payments owed by Novartis or its Affiliates under the [*] Agreement have been paid in full.


(ii)	Schedule 4.1(g)(ii) contains a complete and accurate list of all

Transferred Third Party Agreements in existence as of December 1, 2014.

(h) Compliance with Laws. In conjunction with the Development, manufacture and use of Encorafenib by Novartis or its Affiliates, Novartis and its Affiliates are in compliance in all material respects with all Applicable Laws. Novartis has not received any written notice within the past year of any asserted material violation of any Applicable Laws in connection with Development, manufacture or use of Encorafenib by Novartis and its Affiliates.

(i) Product Liability. No product liability claims have been received in writing by Novartis or its Affiliates and, to the Knowledge of Novartis, no such claims have been threatened against the Novartis or its Affiliates, in each case relating to Encorafenib. There is no judgment, order or decree outstanding against Novartis or its Affiliates relating to product liability claims with respect to Encorafenib.

(j) Clinical Trials.


(i)	The definition of “Novartis Compounds” set forth in Section 1.1 of

the Three-Way Clinical Trial Agreement contains a complete and accurate list of all of the Novartis proprietary compounds used in the Three-Way Clinical Trials (as defined in the Three-Way Clinical Trial Agreement) as of the Effective Date.


(ii)	The definition of “Sponsor Compounds” set forth in Section 1.1 of the

Other Clinical Trial Agreement contains a complete and accurate list of all of the Novartis proprietary compounds used in the Other Clinical Trials (as defined in the Other Clinical Trial Agreement) as of the Effective Date.


(iii)	The definition of “Other Clinical Trial(s)” set forth in Section 1.1 of

the Other Clinical Trial Agreement contains a complete and accurate list of all of the ongoing clinical trials sponsored by Novartis involving a Novartis proprietary compound and Encorafenib as of the Effective Date (for the avoidance of doubt, other than the Columbus Trial).


(iv)	The definition of “Other Novartis Sponsored Trials” set forth in

Section 1.1 of the Transition Agreement contains a complete and accurate list of all of the ongoing clinical trials sponsored by Novartis involving a Novartis proprietary compound and Encorafenib as of the Effective Date (for the avoidance of doubt, other than the Columbus Trial).


(v)	The definition of “Standalone Clinical Trial(s)” set forth in Section

1.1 of the Standalone Clinical Trial Agreement contains a complete and accurate list of all of the ongoing clinical trials sponsored by Novartis involving Encorafenib and not involving any other Novartis compound as of the Effective Date.

(k) Intellectual Property.


(i)	Schedule 1.1(c) lists all Transferred Patents, in each case

enumerating the applicable filing or registration number, jurisdiction in which filing was made or from which registration issued, date of filing or issuance, and names of all current applicant(s) and registered owners(s), as applicable. To the Knowledge of Novartis, the issued Transferred Patents are valid and enforceable.


(ii)	Novartis and its Affiliates do not own any right, title or interest in or

to any trademarks, service marks, domain names, trade names, trade dress, corporate names, logos or other identifiers of source (or registrations or applications for registration of any of the foregoing) specifically relating to or associated with Encorafenib and/or products containing Encorafenib, other than the [*] listed on Schedule 3.3(a)(vii).


(iii)	Novartis and its Affiliates have taken reasonable actions to protect the

secrecy of the Know-How, including by entering into agreements with employees, consultants and contractors of Novartis or such Affiliate reasonably intended to maintain the confidentiality of the Know-How whose value to Novartis and its Affiliates is dependent upon the maintenance of the confidentiality thereof. To the Knowledge of Novartis, no breach or violation by any other party to any such agreement has occurred.


(iv)	Novartis or one of its Affiliates owns all right, title and interest in and

to the Transferred IP, free and clear of Encumbrances except for Permitted Encumbrances.


(v)	(A) To the Knowledge of Novartis, the Development, manufacture

and use by Novartis and its Affiliates of Encorafenib and the Product has not infringed or misappropriated any Intellectual Property of any other Person; (B) no written claim of infringement or other unauthorized use of any Intellectual Property right of any other Person has been made or asserted against Novartis or any of its Affiliates in respect of the Development, manufacture and use by Novartis and its Affiliates of Encorafenib or the Product; (C) neither Novartis nor any of its Affiliates has received any written claim of invalidity of any Transferred IP or Licensed IP; (D) to the Knowledge of Novartis, no proceedings are pending or threatened which challenge the validity, ownership or use of any Transferred IP or Licensed IP; and (E) to the Knowledge of Novartis, no Person infringes, misappropriates, dilutes any Transferred IP or Licensed IP or Novartis’s or any of its Affiliate’s rights in any Transferred IP or Licensed IP.


(vi)	To the Knowledge of Novartis, except as provided by Third Party

Agreements entered into with academic or research institutions, no Transferred IP or Licensed IP has been developed or otherwise obtained by Novartis or any of its Affiliates using any funding or other resources provided by any Governmental Entity or institution of higher education.

(vii) For each of the Transferred Patents, each of Novartis, its Affiliates,

and, to the Knowledge of Novartis, their respective attorneys, agents and relevant employees and representatives has met its duty of candor as required under 37 C.F.R. 1.56 and complied with analogous requirements of Applicable Law outside the United States requiring disclosure of references. To the Knowledge of Novartis, each of the Transferred Patents properly identifies each inventor of the claims thereof as determined in accordance with the Applicable Laws of the jurisdiction in which such Transferred Patent is issued or pending.

(viii) Each inventor named on each Transferred Patent has executed an

agreement (either as an assignment of patent rights, as a condition of employment to assign all inventions and works for hire to Novartis or its Affiliates, or an equivalent agreement thereof), assigning his or her entire right, title and interest in and to such Transferred Patent, and the inventions embodied and claimed therein, to Novartis or its Affiliates. To the Knowledge of Novartis, no such inventor has any contractual or other obligation that would preclude or render void or voidable any such assignment or otherwise conflict with the obligations of such inventor to Novartis or its Affiliates under such agreement with Novartis or its Affiliates, as the case may be.


(ix)	To the Knowledge of Novartis, no Transferred IP or any agreement

under which Licensed IP is granted to Novartis is subject to any transfer or assignment limitations, whether pursuant to Contract or any order, judgment, writ, injunction or decree of any court or other Governmental Entity.


(x)	Neither Novartis nor any of its Affiliates has granted any Third Party

rights that would otherwise interfere or be inconsistent with Array’ rights hereunder, and there are no agreements or arrangements to which Novartis or any of its Affiliates is a party relating to Encorafenib, or the Transferred IP that would limit, in any material respect, the rights granted to Array under this Agreement or that materially restrict or will result in any material restriction on Array’s ability to Develop, Manufacture, register, use or Commercialize Encorafenib worldwide.


(xi)	The Transferred IP and the Licensed IP constitute all Intellectual

Property used by Novartis in connection with the Development of Encorafenib, other than Intellectual Property generally used in the operation of Novartis’s and its Affiliates’ business and not specifically in connection with the Development of Encorafenib.

(l) No Brokers. Other than [*], Novartis has not entered into

any agreement, arrangement or understanding with any Person or firm that will result in the obligation to pay any finder’s fee, brokerage commission or similar payment in connection with the Contemplated Transactions.

(m) Exclusive Representations and Warranties. Other than the representations and warranties set forth in this Article IV, Novartis is not making any other representations or warranties, express or implied, with respect to the Product, Encorafenib or the Transferred Assets. Novartis hereby disclaims any other express or implied representations or warranties, including regarding any financial projections or other forward-looking statements provided by or on behalf of Novartis or its Affiliates.

Section 4.2 Representations and Warranties by Array. Array hereby represents and warrants to Novartis as follows:

(a) Array is a company existing under the laws of the jurisdiction of its

organization. Array has the requisite power and authority to carry on its business as currently conducted. Array is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction where the nature of the business conducted by it makes such qualification necessary, except where the failure to so qualify or be in good standing would not have material adverse effect on the business or assets of Array.

(b) Array has the requisite power and authority to enter into this

Agreement and the Ancillary Agreements and to consummate the Contemplated Transactions. The execution and delivery of this Agreement and the Ancillary Agreements by Array and the consummation of the Contemplated Transactions have been duly and validly authorized. This Agreement and the Ancillary Agreements have been, or as the Effective Date will be, duly executed and delivered by Array and, assuming the due authorization, execution and delivery of this Agreement and the Ancillary Agreements by Novartis, will constitute the legal, valid and binding obligation of Array, each enforceable against Array in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect and to general

principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law.

filings with Governmental Entities or other approvals, authorizations, consents, licenses, filings or registrations with any court, arbitrator or Governmental Entity necessary to transfer the Transferred IP and the Transferred Regulatory Materials, the execution and delivery of this Agreement and the Ancillary Agreements do not, and the consummation of the Contemplated Transactions and the compliance with the terms hereof will not (i) result in any violation of or default (or an event that, with notice or lapse of time or both, would constitute a default) under, (A) any Applicable Laws applicable to Array, or (B) any provision of the organizational documents of Array, or (ii) give rise to any approval, authorization, consent, license, filing or registration with any court, arbitrator or Governmental Entity; provided, however, that no representation or warranty is made in the foregoing clauses (i)(A) or (ii) with respect to matters that, individually or in the aggregate, would not result in a material adverse effect on the business or assets of Array.

(d) To the Knowledge of Array, the facts and allegations made by Array in the matter set forth on Schedule 4.2(d) are true and correct.

Section 4.3 Disclaimer of Representations and Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 4.1 OR SECTION 4.2 AND EXCEPT AS SET FORTH IN ANY ANCILLARY AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.

Section 4.4 Survival. No representation or warranty of the Parties contained herein or made pursuant hereto: (a) with respect to representations and warranties not relating to Transferred Assets, shall survive the [*], or (b) with respect to representations and warranties relating to Transferred Assets, shall, with respect to each Transferred Asset, survive [*]; provided, however, that in no event shall any representation or warranty of the Parties contained herein or made pursuant hereto survive beyond [*].

ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS OF NOVARTIS

Section 5.1 Conduct of Business.

(a) Until the completion of the divestiture and transfer of Encorafenib and the Transferred Assets to Array pursuant to this Agreement and the Ancillary Agreements, Novartis will continue the Development and Commercialization of Encorafenib in the normal course of business and use its best efforts to maintain the viability and marketability of Encorafenib, the Transferred Assets, and the Novartis Pipeline Agents, and to prevent the

destruction, deterioration, or impairment of Encorafenib, the Transferred Assets, and the Novartis Pipeline Agents. For the avoidance of doubt, this Section 5.1 shall in all respects be subject to oversight of the Trustee (as such term is defined in the Divestiture Commitment Agreement) including research activities and clinical trial activities and enrollment.

(b) Until the Effective Date, Novartis shall evaluate, and make determinations to proceed with respect to, the Proposed Investigator Sponsored Clinical Trials in the ordinary course of business and in consultation with Array. If Novartis determines to proceed with any Proposed Investigator Sponsored Clinical Trial, and enters into a clinical trial agreement with respect to such Proposed Investigator Sponsored Clinical Trial, such Proposed Investigator Sponsored Clinical Trial shall be deemed an Ongoing Investigator Sponsored Clinical Trial.

(c) Novartis shall not take, or fail to take, any action if such act or failure would reasonably be likely to cause any of Novartis’s representations and warranties contained herein to become untrue or inaccurate, except as would not have a Material Adverse Effect.

(d) As promptly as reasonably possible after the date hereof, Novartis shall provide Array with a list and copies of those Third Party Agreements that are expected to be Transferred Third Party Agreements.

Section 5.2 Access to Key Employees.

(a) Upon the Effective Date, Novartis will identify and provide to Array a list of all of Novartis’s Key Employees that have participated in any material respect in Novartis’s activities regarding Encorafenib (including companion diagnostics, clinical, regulatory and operations) (“Encorafenib Personnel”).

(b) [*]

Section 5.3 Payments. On the Effective Date, Array will pay to Novartis [*] (the “Purchase Price”) by wire transfer of immediately available funds.

Section 5.4 Certain Additional Information. Novartis shall make available to Array, as soon as reasonably practicable following the date hereof, complete and correct copies of (i) each IND submitted to the FDA with respect to Encorafenib, including all material supplements and amendments thereto, and (ii) all material scientific, preclinical and clinical data of Novartis and its Affiliates and all material written correspondence with all Regulatory Authorities to the extent related to Encorafenib.

Section 5.5 Time is of the Essence. Novartis will perform its obligations under this Agreement and the Ancillary Agreements (including its delivery of any notices, approvals or other communications thereunder) promptly and in a manner not intended to impede, delay or otherwise prejudice any regulatory filing for and/or Commercialization of Encorafenib.

ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS OF ARRAY

Section 6.1 Novartis’s Names and Marks. Array hereby acknowledges that all right, title and interest in and to the name “Novartis”, together with all variations thereof and all trademarks, service marks, domain names, trade names, trade dress, corporate names, logos and other identifiers of source containing, incorporating or associated with any of the foregoing (the “Novartis Names and Marks”), are owned exclusively by Novartis or its Affiliates. Array further acknowledges that it has no rights, and is not acquiring any rights, to use the Novartis Names and Marks.

Section 6.2 Records. Array will preserve copies of all books and records, including all Regulatory Materials and clinical and other data, in each case, included within the Transferred Assets that have been transferred to Array by Novartis or its Affiliates for a period of at least [*] from the Effective Date and make such books and records available for inspection and copying by Novartis or its agents upon reasonable request and upon reasonable notice solely in connection with requests by Governmental Entities, compliance with Applicable Laws, financial or regulatory reporting, and/or litigation purposes.

Section 6.3 Bulk Transfer Laws. Array hereby waives compliance by Novartis with the provisions of any so-called “bulk transfer law” of any jurisdiction in connection with the transfer of the Transferred Assets to Array.

Section 6.4 Encorafenib Drug Product. The Parties shall negotiate and agree, as soon as possible after the date hereof, and in no event later than [*] after such date, to minimum order quantities and minimum and maximum volumes of Drug Substance, Product and Finished Product (as such terms are defined in the Supply Agreement) to be purchased by and supplied to Array following commercial launch for purposes of the Supply Agreement.

Section 6.5 Supply Arrangements. The Parties shall negotiate and enter into the supply agreements expressly referenced in Section 4.4 of each of the Standalone Clinical Trial Agreement, the Columbus Trial Agreement, the Three-Way Clinical Trial Agreement and the Other Clinical Trial Agreement, in each case, no later than [*].

Section 6.6 BRAF Competitor. Notwithstanding any other provision of this Agreement or any Ancillary Agreement, Array covenants that it shall not grant any license, sublicense, right to exploit or other right under Encorafenib and/or any Transferred Assets to any Third Party that, as of the date hereof, either (a) sells or offers for sale a Commercialized BRAF Inhibitor or (b) has an Affiliate that sells or offers for sale a Commercialized BRAF Inhibitor.

ARTICLE VII
OTHER COVENANTS AND AGREEMENTS

Section 7.1 Efforts to Consummate; Antitrust Matters.

(a) Upon the terms and subject to the conditions hereof, each of Novartis and Array will use its reasonable best efforts (except with respect to Applicable Laws or

Governmental Entities in [*] for which Array will use its best efforts and Novartis will use its reasonable best efforts) to (i) take, or cause to be taken, all actions necessary, proper or advisable under any Applicable Laws or otherwise to consummate and make effective the Contemplated Transactions, (ii) obtain from the requisite Governmental Entities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made in connection with the authorization, execution and delivery hereof and the consummation of the Contemplated Transactions and (iii) make all necessary filings, and make any other advisable submissions, with respect to this Agreement and the Contemplated Transactions required under any Applicable Laws. Prior to the Effective Date, the Parties will cooperate with each other in connection with the making of all such filings, including by providing copies of all such non-confidential documents to the other Party and its advisors prior to filing and, if requested, by accepting all reasonable additions, deletions or changes suggested in connection therewith. Novartis and Array will furnish all information required for any application or other filing to be made pursuant to the rules and regulations of any Applicable Laws in connection with the Contemplated Transactions.

(b) Without limiting paragraph (a) above, Novartis and Array agree to respond promptly to any inquiries by any Governmental Entity regarding antitrust or other matters with respect to the Contemplated Transactions and to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable in order to consummate or implement expeditiously the Contemplated Transactions. In furtherance of the foregoing, Array agrees to provide such assurances as to financial capability, resources and creditworthiness, commercial capabilities with respect to the Development, Manufacture, and Commercialization of Encorafenib as may be reasonably requested by any Governmental Entity, whose consent or approval is sought hereunder, including as may be required in connection with any consent or divestiture order of the FTC, the EC or any other Governmental Entity that may be entered into by Novartis or any of its Affiliates in connection with the GSK Transactions. Array further agrees to use reasonable best efforts (except with respect to Applicable Laws or Governmental Entities in [*], for which Array will use its best efforts) to cooperate and join in any action initiated by Novartis to contest and resist any action, including legislative, administrative or judicial action or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that is in effect and that restricts, prevents or prohibits the consummation of the Contemplated Transactions, including by using reasonable best efforts (except with respect to Applicable Laws or Governmental Entities in [*], for which Array will use its best efforts) to cooperate and join Novartis in pursuing all available avenues of administrative and judicial appeal and all available legislative action. Notwithstanding any other provision hereof to the contrary, Array also agrees to take any and all actions as are or may be required by any Governmental Entity as a condition to the granting of any approvals required in order to permit the consummation of the Contemplated Transactions or as may be required to avoid, lift, vacate or reverse any legislative, administrative or judicial action that would otherwise impede the consummation of the Contemplated Transactions. Novartis will use its reasonable best efforts to limit any Governmental Entity from taking) any action that would reasonably be expected to cause any reduction in any rights or benefits that Array expects to receive as a result of the consummation of the Contemplated Transactions.

(c) The Parties shall request that the FTC appoint a monitor (which monitor shall be the same monitor as any such monitor appointed under the Binimetinib Termination Agreement) to assure the Parties expeditiously comply with all of their respective

obligations and perform all of their respective responsibilities as required by any applicable order of the FTC and this Agreement and the Ancillary Agreements.

(d) The Parties shall use commercially reasonable efforts to persuade the FTC staff to forward its recommendation to the commissioners of the FTC to approve the divestiture to Buyer of the assets being transferred pursuant to this Agreement as soon as reasonably practicable.

(e) Array shall use reasonable best efforts to assist Novartis in persuading the commissioners of the FTC to accept for public comment the Proposed FTC Decision and Order by [*], or as soon as reasonably practicable thereafter.

(f) Notwithstanding any other provision of this Agreement or any Ancillary Agreement, in no event will Novartis or any Affiliate thereof be required to divest any right, title or interest in or to the products Mekinist^TM or Tafinlar^®.

(g)

(i)

Array shall use its best efforts to [*] on terms such that the consummation of the Contemplated Transactions and compliance with the terms hereof and the Ancillary Agreements will not result in any breach, violation of or default (or an event that, with notice or lapse of time or both, would constitute a default) of the Relevant Third Party Agreement (as amended or waived in connection with such settlement). [*]


(ii)	[*]


(iii)	[*]

Section 7.2 Notice of Certain Events.

(a) Each Party shall promptly notify the other of:


(i)	any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Contemplated Transactions;


(ii)	any material notice or other material communication from any Governmental Entity related primarily to the Contemplated Transactions; and


(iii)	any event, fact, occurrence or development resulting in a material breach of any of the representations and warranties in Article IV above.

(b) To the extent permitted by Applicable Laws and applicable stock exchange rules, from time to time, prior to the Effective Date, Novartis shall keep Array reasonably updated as to the anticipated Effective Date.

Section 7.3 Press Releases; Publicity. No earlier than the fourth Business Day after the date hereof, Array may issue a press release substantially in the form mutually agreed by the Parties prior to such issuance, a copy of which shall be attached as Exhibit C hereto upon such agreement. Except pursuant to the foregoing, neither Array nor Novartis shall issue a press release or trade announcement or issue or make any other written or oral public announcement or statement with regard to the Contemplated Transactions without the other Party’s prior written consent, provided, however, that once a statement has been made public in accordance herewith, each Party may repeat and redistribute such a statement without the prior written consent of the other Party. This restriction shall not apply to announcements or disclosures required by any Applicable Laws, the rules and regulations of any stock exchange or listing authority or any Governmental Entity, however, in such event, the Parties shall, to the extent reasonably practicable, coordinate and work in good faith to create mutually acceptable announcements. Array acknowledges that Novartis shall have the right to disclose a brief summary of the Contemplated Transactions in its official financial reports and in any notices, disclosures, submissions or filings made in connection with the GSK Transactions, provided, that Novartis shall, to the extent reasonably practicable, coordinate and work in good faith with Array on such summaries.

Section 7.4 Confidential Information.

(a) Confidentiality Obligation. Except as expressly provided herein, the Parties agree that, for a period beginning on the date hereof and ending [*] after the Effective Date (but with respect to any trade secrets, for such period of time as long as such information is protected as a trade secret), each Party shall keep strictly confidential and shall not publish or otherwise disclose and shall not use for any purpose except for the purposes contemplated by this Agreement, any Confidential Information of the other Party. Each Party shall use reasonable measures to protect the Confidential Information of the other Party from any other use or disclosure, using at a minimum, the same measures used to protect its own confidential and proprietary information. The confidentiality and non-use obligations set forth above shall not apply with respect to any portion of the other Party’s Confidential Information that the receiving Party can demonstrate with written evidence (i) is or becomes public or available to the general public otherwise than through the act or default of the receiving Party in breach of this Agreement; (ii) is obtained by the receiving Party from a Third Party who is lawfully in possession of such Confidential Information and is not subject to an obligation of confidentiality or non-use owed to the disclosing Party or others; (iii) was already known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the disclosing Party under this Agreement; or (iv) is independently developed by the receiving Party without the use of or reliance on any Confidential Information provided by the disclosing Party hereunder. For the avoidance of doubt, specific information disclosed as part of Confidential Information shall not be deemed to be in the public domain or in the prior possession of the receiving Party merely because it is embraced by more general information in the public domain or by more general information in the prior possession of the receiving Party. For the sake of clarity, the terms and conditions of this Agreement and the Ancillary Agreements shall constitute the Confidential Information of both Parties.

(b) Permitted Disclosures. Each Party may disclose Confidential Information of the other Party as follows: (i) to its Affiliates, subcontractors, Third Party licensors under an upstream license, and their respective officers, directors, members, employees, agents and outside advisors (each, a “Representative”) who reasonably need to know such information for exercising such Party’s rights or performing such Party’s obligations under this Agreement and the Ancillary Agreements; (ii) the European Commission or any other Regulatory Authorities and/or their agents or trustees in connection with any review or other measures taken with respect to the GSK Transactions; (iii) to Regulatory Authorities to facilitate obtaining and maintaining the Regulatory Approvals for the conduct of clinical trials; (iv) to antitrust and competition law regulatory agencies and authorities in connection with the approval process for the Contemplated Transactions; (v) subject to any obligation set out in Section 2.1, to any Third Party in connection with the potential sale or license of rights related to a compound (i.e., whether Encorafenib or a Novartis Compound) owned or controlled by such Party and (vi) to any Third Parties if required by Applicable Law, subject to Section 7.4(d). Prior to disclosing any Confidential Information of the other Party to any Representative or Third Party, the receiving Party will inform such Person of the proprietary nature of the Confidential Information and will require such Person to agree to be bound by obligations of confidentiality and non-use no less restrictive than the requirements of this Section 7.4. Each Party agrees to be responsible for any breach of these confidentiality obligations by its Representatives and any Third Parties to whom it discloses Confidential Information of the other Party. Either Party may disclose the existence of this Agreement and the terms and conditions hereof, without the prior written consent of the other Party, as may be required by Applicable Law (including the disclosure requirements of the United States Securities and Exchange Commission (“SEC”), NYSE or any other stock exchange or NASDAQ), in which case the Party seeking to disclose the information shall give the other Party reasonable advance notice and the right to review and comment on any such disclosure (including any proposed filing of this Agreement with the SEC or equivalent governing body outside of the United States) and shall seek confidential treatment of such Confidential Information to the extent possible under Applicable Law.

(c) Use. Confidential Information of the other Party shall not be used by a receiving Party except to the extent necessary to exercise the receiving Party’s rights or perform its obligations under this Agreement and the Ancillary Agreements, without first obtaining the other Party’s prior written consent to such use.

(d) Required Disclosures. In the event that either Party is required by Applicable Law or by judicial or administrative process to disclose any part of the other Party’s Confidential Information, such Party shall (i) promptly notify the other Party of each such requirement and identify the documents so required thereby, with a view to permitting the other Party to seek an appropriate protective order or other remedy and/or waive compliance by the first Party with the provisions of this Section 7.4, (ii) consult with the other Party on the advisability of taking legally available steps to resist or narrow the scope of such requirement, (iii) assist the other Party in seeking a protective order or equivalent and (iv) comply with any applicable protective order or equivalent. If, in the absence of such a protective order or such a waiver by the other Party of the provisions of this Section 7.4, the

first Party is nonetheless required by Applicable Law to disclose any part of the other Party’s Confidential Information, the first Party may disclose such of the other Party’s Confidential Information without liability under this Agreement, except that the first Party shall (x) furnish only that portion of the other Party’s Confidential Information which is legally required and (y) use its best efforts to obtain an order or other reliable assurances that confidential treatment will be accorded to the portion of such Confidential Information so required to be disclosed.

(e) Encorafenib Information. Notwithstanding anything herein to the contrary, (i) prior to the Effective Date, all Confidential Information to the extent related to Encorafenib (“Encorafenib Information”) shall constitute the Confidential Information of Novartis, and (ii) after the Effective Date, such Encorafenib Information shall constitute Confidential Information of Array, provided, that to the extent such Encorafenib Information relates to a Novartis Compound studied in combination with Encorafenib, then Novartis may use those portions of such information in connection with the Development, Manufacture and Commercialization of any such Novartis Compound.

(f) Firewall. Promptly after the Effective Date, Novartis shall establish effective firewalls or enter into individual confidentiality agreements with employees so that [*].

Section 7.5 Pharmacovigilance. Within [*], the Parties shall negotiate in good faith, and enter into, a pharmacovigilance agreement effective as of the Effective Date.

Section 7.6 Change of Product and Service Recipient. From and after the Effective Date, upon reasonable advance written notice from Array to Novartis, Novartis shall provide to Array’s designee (including the Suitable Partner) in lieu of to Array any or all of the access, information, documents, rights, deliverables, products and/or services to be provided from Novartis to Array under any of the Ancillary Agreements.

Section 7.7 Certain Matters Relating to the FTC Decision and Order and EC Remedy Decisions.

(a) The Parties hereby agree and acknowledge that the terms and provisions of the Final FTC Decision and Order and any final commitments adopted by the EC in the context of EC Remedy Decisions shall govern this Agreement and the terms and provisions thereof that pertain to this Agreement are hereby deemed incorporated by reference into this Agreement. Notwithstanding the application of the foregoing, the Parties hereby agree that to the extent that any terms or provisions of this Agreement do not conflict with the Final FTC Decision and Order or EC Remedy Decisions, as applicable, but confer greater rights or benefits to Array, or more greatly obligate Novartis, than the corresponding terms or provisions of the Final FTC Decision and Order, EC Remedy Decisions, as applicable, then the terms or provisions of this Agreement shall control the rights and obligations of the Parties.

(b) To the extent that any term or provision of this Agreement conflicts with any directly corresponding term or provision of the Final FTC Decision and Order, the final commitments adopted by the EC in the context of the EC Remedy Decisions, the Parties hereby

agree that the terms or provisions of the Final FTC Decision and Order or the final commitments adopted by the EC in the context of the EC Remedy Decisions, shall control the rights and obligations of the Parties.

(c) If at any time prior to the Final FTC Decision and Order becoming effective, the FTC Director of the Bureau of Competition, or the person acting in that capacity, notifies Novartis and Array that Array is not an acceptable acquirer of the assets being transferred to Array pursuant to this Agreement, then each of Novartis and Array shall have the right immediately to rescind this Agreement and the Ancillary Agreements, and the termination provisions of this Agreement shall be applicable as if a termination of this Agreement has occurred, provided, however, that the right to rescind shall not be available to any party that has failed to fulfill its obligations under Section 7.1 of this Agreement.

(d) If the EC does not adopt the EC Remedy Decisions by the expiration of its phase 1 review, then Novartis shall have the right immediately to rescind this Agreement and the Ancillary Agreements, and the termination provisions of this Agreement shall be applicable as if a termination of this Agreement has occurred, provided, however, that the right to rescind shall not be available to Novartis if Novartis has failed to fulfill its obligations under Section 7.1 of this Agreement.

(e) If at any time prior to or following adoption of the EC Remedies Decisions, the head of the case team of the European Commission assigned to review the GSK Transactions notifies Novartis and Array that Array is not an suitable acquirer of the assets being transferred to Array pursuant to this Agreement, then each of Novartis and Array shall have the right immediately to rescind this Agreement and the Ancillary Agreements, and the termination provisions of this Agreement shall be applicable as if a termination of this Agreement has occurred; provided, however, that the right to rescind this Agreement shall not be available to any party that has failed to fulfill its obligations under Section 7.1 of this Agreement.

(f) If at any time prior to the Final FTC Decisions and Order becoming effective, the FTC notifies Novartis that this Agreement is not an acceptable manner of divestiture, Novartis and Array shall reasonably seek to modify this Agreement as may be necessary to satisfy the FTC.

(g) If at any time prior to the adoption of the EC Remedy Decisions, the EC notifies Novartis that this Agreement is not an acceptable manner of divestiture, Novartis and Array shall reasonably seek to modify this Agreement as may be necessary to satisfy the EC.

(h) If at any time prior to the adoption of a final decision any other Governmental Entity in [*] notifies Novartis that this Agreement is not an acceptable manner of divestiture, Novartis and Array shall reasonably seek to modify this Agreement as may be necessary to satisfy the relevant Governmental Entity.

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER

Section 8.1 Termination.

(a) Notwithstanding anything to the contrary herein, this Agreement may be terminated and the Contemplated Transactions abandoned at any time prior to the Effective Date:


(i)	by mutual written consent of Novartis and Array; or


(ii)	by either Novartis or Array, if the GSK Transactions are terminated without the consummation thereof.

(b) In the event of termination by Novartis or Array pursuant to this Section 8.1, written notice thereof will forthwith be given to the other Party and the Contemplated Transactions will be terminated, without further action by any Party. Upon termination:


(i)	Array will return all documents and other material received from Novartis, its Affiliates or representatives relating to Encorafenib and the Transferred Assets and to the Contemplated Transactions, whether so obtained before or after the execution of this Agreement, to Novartis;


(ii)	all confidential information received by Array with respect to Novartis, its Affiliates, Encorafenib or the Transferred Assets will be treated in accordance with the Confidentiality Agreement, which subject to Section 10.7, which will remain in full force and effect notwithstanding the termination of this Agreement; and


(iii)	this Agreement shall terminate and there shall be no liability of any Party to any other Party; provided, that, (x) nothing herein will relieve or release either Party from liability arising from any breach by such Party of this Agreement prior to the date of termination and (y) Section 6.1, Section 7.3, Article VIII and Article X shall survive such termination.

Section 8.2 Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties. By an instrument in writing, Array or Novartis may waive compliance by the other Party with any term or provision hereof that such other Party was or is obligated to comply with or perform.

ARTICLE IX
INDEMNIFICATION

Section 9.1 Indemnification by Array.

(a) From and after the Effective Date, Array shall indemnify and hold Novartis and its Affiliates, and their respective officers, directors, employees, contractors,

agents and assigns, harmless from and against any Losses incurred by Novartis or any of the foregoing persons arising or resulting from:


(i)	the negligence or willful misconduct of Array or any of its Affiliates, contractors or agents;


(ii)	the Assumed Liabilities;


(iii)	the breach of any of the covenants or agreements made by Array to Novartis under this Agreement or the Ancillary Agreements; or


(iv)	the breach of any of the representations or warranties made by Array to Novartis under this Agreement or the Ancillary Agreements.

(b) Array shall only be obliged to so indemnify and hold Novartis harmless to the extent that such Losses do not arise from Novartis’s or its Affiliates’ breach of this Agreement, or the negligence or willful misconduct of Novartis or its Affiliates or relate to Excluded Liabilities.

Section 9.2 Indemnification by Novartis.

(a) From and after the Effective Date, Novartis shall indemnify and hold Array and its Affiliates, and their respective officers, directors, employees, contractors, agents and assigns, harmless from and against any Losses incurred by Array or any of the foregoing persons arising or resulting from:


(i)	the negligence or willful misconduct of Novartis or any of its Affiliates, contractors or agents;


(ii)	the Excluded Liabilities;


(iii)	the breach of any of the covenants or agreements made by Novartis to Array under this Agreement or the Ancillary Agreements; or


(iv)	the breach of any of the representations or warranties made by Novartis to Array under this Agreement or the Ancillary Agreements.

(b) Novartis shall only be obliged to so indemnify and hold Array harmless to the extent that such Losses do not arise from Array’ or its Affiliates’ breach of this Agreement, or the negligence or willful misconduct of Array or its Affiliates or relate to Assumed Liabilities.

(c) Notwithstanding the foregoing, the obligation by Novartis to indemnify and hold harmless Array and its Affiliates, and their respective officers, directors, employees, contractors, agents and assigns, contained in this Section 9.2 shall be subject to the following limitations: (i) [*]; and (ii) [*]

Section 9.3 Indemnification Procedure.

(a) A Party or any of its Affiliates seeking indemnification hereunder (“Indemnified Party”) shall notify the other Party (“Indemnifying Party”) in writing reasonably promptly after the assertion against the Indemnified Party of any claim or allegation, including by a Third Party (“Third Party Claim”) in respect of which the Indemnified Party intends to base a claim for indemnification hereunder, but the failure or delay so to notify the Indemnifying Party shall not relieve the Indemnifying Party of any obligation or liability that it may have to the Indemnified Party except to the extent that the Indemnifying Party demonstrates that its ability to defend or resolve such claim is adversely affected thereby.

(b) Subject to the provisions of Section 9.3(d) below, the Indemnifying Party shall have the right, upon written notice given to the Indemnified Party within thirty (30) days after receipt of the notice from the Indemnified Party of any Third Party Claim to assume the defense and handling of such Third Party Claim, at the Indemnifying Party’s sole expense, in which case the provisions of Section 9.3(c) below shall govern.

(c) The Indemnifying Party shall select counsel reasonably acceptable to the Indemnified Party in connection with conducting the defense and handling of such Third Party Claim, and the Indemnifying Party shall defend or handle the same in consultation with the Indemnified Party, and shall keep the Indemnified Party timely apprised of the status of such Third Party Claim. The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, agree to a settlement of any Third Party Claim which could lead to liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder, or would involve any admission of wrongdoing on the part of the Indemnified Party. The Indemnified Party shall cooperate with the Indemnifying Party, at the request and expense of the Indemnifying Party, and shall be entitled to participate in the defense and handling of such Third Party Claim with its own counsel and at its own expense.

(d) Notwithstanding the provisions of Section 9.3(c), in the event (i) the Indemnifying Party fails to conduct the defense and handling of any Third Party Claim in good faith after having assumed such, or (ii) the Indemnifying Party does not give written notice to the Indemnified Party, within thirty (30) days after receipt of the notice from the Indemnified Party of any Third Party Claim, of the Indemnifying Party’s election to assume the defense and handling of such Third Party Claim, then the Indemnified Party may, at the Indemnifying Party’s expense, select counsel reasonably acceptable to the Indemnifying Party in connection with conducting the defense and handling of such Third Party Claim and defend or handle such Third Party Claim in such manner as it may deem appropriate, provided, however, that the Indemnified Party shall keep the Indemnifying Party timely apprised of the status of such Third Party Claim and shall not settle such Third Party Claim without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. If the Indemnified Party defends or handles such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party, at the Indemnified Party’s request but at no

expense to the Indemnified Party, and shall be entitled to participate in the defense and handling of such Third Party Claim with its own counsel and at its own expense.

(e) No Party shall seek or be entitled to indemnification pursuant to this Article IX for any Losses arising from a breach of a representation, warranty, covenant or agreement that as of the date hereof such Party had Knowledge was inaccurate or incapable of being fulfilled at the Effective Date.

Section 9.4 Special, Indirect and Other Losses. EXCEPT TO THE EXTENT (A) EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT; OR (B) ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER ARTICLE IX, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY (X) FOR ANY PUNITIVE OR INCIDENTAL DAMAGES, OR (Y) FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY OR SPECIAL DAMAGES, LOST PROFITS, LOST REVENUE OR OPPORTUNITY COSTS (INCLUDING WHERE CALCULATED BY USING OR TAKING INTO ACCOUNT ANY MULTIPLE OF EARNINGS, CASH FLOW, REVENUE OR OTHER SIMILAR MEASURE); [*]

Section 9.5 No Exclusion. Neither Party excludes any liability for death or personal injury caused by its negligence or that of its employees, agents or sub-contractors.

ARTICLE X
GENERAL PROVISIONS

Section 10.1 Expenses. Except as otherwise specified herein or in the Ancillary Agreements, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with the drafting, negotiation, execution, review or performance of this Agreement, the Ancillary Agreements and the Contemplated Transactions will be paid by the Party incurring such costs and expenses, whether or not the Contemplated Transactions will have occurred.

Section 10.2 Further Assurances and Actions. Each of the Parties, upon the request of the other Party, whether before, on or after the Effective Date and without further consideration, will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably necessary to effect the Contemplated Transactions. Novartis and Array agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the Contemplated Transactions.

Section 10.3 Notices. In addition to any other specific procedures for notification required herein, all notices, demands, requests and other communications made hereunder shall be in writing and shall be given by personal delivery, by nationally recognized overnight courier (with charges prepaid), and shall be deemed to have been given or made (a) if personally delivered, on the day of such delivery; or (b) if sent by overnight courier, three (3) days

following the date deposited with such overnight courier service, in each case, pending the designation of another address, addressed as follows:

If to Array:

Array BioPharma Inc.
3200 Walnut Street
Boulder, CO 80301
USA

Attention: General Counsel

If to Novartis:

Novartis Pharma AG
Lichtstrasse 35
CH - 4056 Basel
Switzerland
Attention: General Counsel

Section 10.4 Headings. The headings of the Sections and Articles of this Agreement are for reference purposes only, are not part of this Agreement, and shall not in any way affect the meaning or interpretation of this Agreement.

Section 10.5 Severability. If and to the extent that any court of competent jurisdiction holds any provision (or any part thereof) of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity or enforceability of the remainder of this Agreement, and the invalid or unenforceable provision shall be fully severed from this Agreement and there shall automatically be added in lieu thereof a provision as similar in terms and intent to such severed provision as may be legal, valid and enforceable.

Section 10.6 Counterparts. This Agreement may be executed in one or more counterparts, and delivered by electronic or other means, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

Section 10.7 Entire Agreement. This Agreement, including the Exhibits, which are incorporated by reference herein, and the Ancillary Agreements, including the exhibits attached thereto, represent the entire understanding and agreement between the Parties with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings between the Parties with respect to such subject matter. All provisions contained in any Exhibit delivered by or on behalf of the Parties, or in connection with the Contemplated Transactions, are an integral part of this Agreement. In the event of any conflict between the terms of this Agreement and the terms of any Exhibit, the terms of this Agreement shall control and prevail. For the avoidance of doubt and except as set forth in Section 8.1(b), the Confidentiality Agreement shall be replaced and superseded in its entirety by the terms and conditions set forth in Section 7.4 and this Agreement shall govern with regard to any Confidential Information disclosed by the Parties.

Section 10.8 Governing Law. This Agreement (including any claim or controversy arising out of or relating to this Agreement) shall be governed by the law of the State of New York without regard to conflict of law principles that would result in the application of any Applicable Law other than the laws of the State of New York.

Section 10.9 Dispute Resolution.

(a) Subject to Section 10.10, in the event of a dispute with regard to the interpretation, breach or alleged breach of this Agreement or any Ancillary Agreement, the Parties shall refer such dispute to the Transition Committee for discussion and resolution. If the Transition Committee is unable to resolve such a dispute within thirty (30) days of the dispute being referred to them, then either Party may require that the Parties forward the matter to the chief executive officer of Array and the President of the Novartis Oncology Business Unit, who shall attempt in good faith to resolve such dispute. If such officers cannot resolve such dispute within thirty (30) days of the matter being referred to them, either Party shall be free to initiate the arbitration proceedings outlined in Section 10.9(b).

(b) Any unresolved disputes between the Parties shall be resolved by final and binding arbitration. Whenever a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. Arbitration shall be held in New York, New York, according to the commercial rules of the International Chamber of Commerce (“ICC”). The arbitration shall be conducted by a panel of three (3) arbitrators. Each Party shall, within thirty (30) days after the institution of the arbitration proceedings, appoint an arbitrator, and such arbitrator shall together, within thirty (30) days, select a third (3^rd) arbitrator as the chairman of the arbitration panel. Each arbitrator shall be conflict-free and have significant experience in the pharmaceutical research and development business. If the two (2) initial arbitrators are unable to select a third (3^rd) arbitrator within such thirty (30) day period, the third (3^rd) arbitrator shall be appointed in accordance with ICC rules. The arbitrators shall render their opinion within thirty (30) days of the final arbitration hearing. No arbitrator (nor the panel of arbitrators) shall have the power to award punitive damages under this Agreement and such award is expressly prohibited. Decisions of the panel of arbitrators shall be based on the application of New York law, without regarding for its conflicts of law principals, and, absent manifest error, shall be final and binding on the Parties. Judgment on the award so rendered may be entered in any court of competent jurisdiction.

(c) Nothing in this Section 10.9 shall preclude a Party from seeking and obtaining in a court of competent jurisdiction injunctive or equitable relief to preserve the status quo or prevent immediate harm to the Party.

(d) Notwithstanding anything herein to the contrary, the Parties shall not seek, directly or indirectly, pursuant to this Section 10.9 or any dispute resolution mechanism contained in an Ancillary Agreement, a decision the result of which would be inconsistent with the terms of the Final FTC Decision and Order or the EC Remedy Decisions or the remedial purposes thereof.

Section 10.10 Specific Performance. The Parties agree that irreparable damage would occur in the event any provision hereof were not performed in accordance with the terms hereof and that the Parties will be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity without the necessity of demonstrating the inadequacy of monetary damages and without the posting of a bond.

Section 10.11 Binding Effect; Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Each Party agrees that its rights and obligations under this Agreement may not be transferred or assigned, directly or indirectly, to any Person without the prior written consent of the other Parties; provided, however, that each Party may transfer or assign this Agreement (a) to an Affiliate (for so long as such Person remains an Affiliate) or (b) to any Third Party that purchases or otherwise receives all or substantially all of the assets owned or controlled by such Party to which this Agreement relates (whether by merger, consolidation, stock sale, asset sale or otherwise); provided, further, that any assignment of this Agreement to any Person may not interfere, delay or undermine the implementation of the EC Commitments.

[signature page follows]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their respective representatives thereunto duly authorized, all as of the date first written above.



NOVARTIS PHARMA AG

By:	/s/ ROY PAPATHEODOROU
	Name: ROY PAPATHEODOROU
	Title: AS ATTORNEY

By:	/s/ J H EMERY
	Name: J H EMERY
	Title: AS ATTORNEY

ARRAY BIOPHARMA INC.

By:	/s/ John Moore
	Name: John Moore
	Title: General Counsel

EXHIBIT A

LIST OF CLINICAL TRIALS


1.	[*]


a.	[*]


b.	[*]


c.	[*]


d.	[*]


e.	[*]


2.	[*]


3.	[*]

EXHIBIT B

FINAL FTC DECISION AND ORDER

[To be appended when final]

EXHIBIT C

PRESS RELEASE

[To be appended when final]

Exhibit 10.2

EXECUTION VERSION

STRICTLY CONFIDENTIAL

FIRST AMENDMENT TO

TERMINATION AND ASSET TRANSFER AGREEMENT

This FIRST AMENDMENT TO THE TERMINATION AND ASSET TRANSFER AGREEMENT (this “Amendment”) is entered into as of January 19, 2015 (the “Amendment Date”) by and between Novartis Pharma AG, a Swiss corporation (“Novartis”); Novartis International Pharmaceutical Ltd., a corporation organized and existing under the laws of Bermuda, for purposes of Article II, Section 4.1, Section 5.1(d) and Article X only of the Agreement (as defined below) (“NIP”); and Array BioPharma Inc., a Delaware corporation (“Array”).

WHEREAS, Array, Novartis and NIP are parties to that certain Termination and Asset Transfer Agreement, dated as of November 26, 2014 (the “Original Agreement” and as amended by this Amendment, the “Agreement”); and

WHEREAS, Array, Novartis and NIP desire to amend the Original Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Defined Terms. All capitalized terms used but not defined herein shall have the meanings specified in the Original Agreement.

2. Amendments to the Original Agreement. The Original Agreement is hereby amended as follows:

(a) Definitions.

(i) Section 1.1 of the Original Agreement is hereby amended by adding the following definitions:

“Encorafenib Asset Transfer Agreement” means that certain Termination and Asset Transfer Agreement, dated as of the Amendment Date, by and between Novartis and Array.

“Encorafenib Ancillary Agreements” means the “Ancillary Agreements” as such term is defined in the Encorafenib Termination and Asset Transfer Agreement.

[*]

(ii) The definition of “Ancillary Agreements” in Section 1.1 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

(iii) The definition of “Commercialization or Commercialize” in Section 1.1 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

(b) Knowledge Access. The Original Agreement is hereby amended by adding a new Section 2.3 which shall read as follows:

“2.3 Knowledge Access. As soon as practicable following the Amendment Date, subject to the confidentiality obligations set forth in Section 7.4, Novartis shall (and shall cause its Affiliates to) provide Array with copies of or reasonable access to all information, personnel, documentation, materials and other resources regarding Binimetinib and the Transferred Assets reasonably necessary or otherwise reasonably requested by Array, to (a) enable Array to effectively engage, negotiate with, and execute a collaboration and license agreement(s) (collectively, the “Alliance Agreement”) with a Third Party (as defined in the EC Commitments, the

“Suitable Partner”) governing the research, development, manufacture, sale, marketing, distribution and commercialization of Binimetinib and products containing Binimetinib in the EEA and in any jurisdictions where the applicable antitrust authorities have required that Array enter into such collaboration or license agreement; and (b) subject to customary and reasonable confidentiality and non-use arrangements, provide any potential Suitable Partner with reasonable diligence regarding the research, development, manufacture, sale, marketing, distribution and commercialization of Binimetinib and products containing Binimetinib in the EEA and such additional jurisdictions; provided, however that Array shall not be permitted to so execute an Alliance Agreement or so provide any potential Suitable Partner with any such diligence information that constitutes the Confidential Information of Novartis prior to the adoption of the EC Remedy Decisions.”

(c) Effective Date. Section 3.2(a) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

“The transfer of the Transferred Assets is contingent upon, and shall automatically become effective as of, the consummation of the GSK Transactions, or at such other earlier date or event as Novartis and Array may agree (the “Effective Date”). For the avoidance of doubt, the knowledge access rights and obligations set forth in Section 2.3 shall become effective immediately upon the Amendment Date (and prior to the Effective Date) notwithstanding that some of the information and documents provided pursuant to Section 2.3 may also constitute Transferred Assets.”

(d) Conduct of Business. Section 5.1 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

“Until the completion of the divestiture and return of Binimetinib and the Transferred Assets to Array pursuant to this Agreement and the Ancillary Agreements, Novartis will continue the Development and Commercialization of Binimetinib in the normal course of business and use its best efforts to maintain the viability and marketability of Binimetinib, the Transferred Assets, and the Novartis Pipeline Agents, and to prevent the destruction, deterioration, or impairment of Binimetinib, the Transferred Assets, and the Novartis Pipeline Agents. For the avoidance of doubt, this Section 5.1 shall in all respects be subject to oversight of the Trustee (as such term is defined in the Divestiture Commitment Agreement), including research activities and clinical trial activities and enrollment.”

(e) Payment.

(i) Section 5.4(a) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

“(a) Within [*] following the Effective Date, Novartis will by wire transfer of immediately available funds pay to Array a payment of [*] (the “Upfront Payment”).”

(ii) Section 5.4(b) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

“(b) Within [*] following the Effective Date, Novartis will wire to Array [*] in immediately available funds as [*].

(f) Efforts to Consummate; Antitrust Matters.

(i) The Original Agreement is hereby amended by adding a new Section 7.1(d) which shall read as follows:

“(d) The Parties shall use commercially reasonable efforts to persuade the FTC staff to forward its recommendation to the commissioners of the FTC to approve the divestiture to Array of the assets being transferred pursuant to this Agreement as soon as reasonably practicable.”

(ii) The Original Agreement is hereby amended by adding a new Section 7.1(e) which shall read as follows:

“(e) Notwithstanding any other provision of this Agreement or any Ancillary Agreement, in no event will Novartis or any Affiliate thereof be required to divest any right, title or interest in or to the products Mekinist^TM or Tafinlar^®.”

(iii) Permitted Disclosures. Section 7.4(b) of the Original Agreement is hereby deleted in its entirety and replaced with the following

“Each Party may disclose Confidential Information of the other Party as follows: (i) to its Affiliates, subcontractors, Third Party licensors under an upstream license, and their respective officers, directors, members, employees, agents and outside advisors (each, a “Representative”) who reasonably need to know such information for exercising such Party’s rights or performing such Party’s obligations under this Agreement and the Ancillary Agreements; (ii) to the European Commission or any other Regulatory Authorities and/or their agents or trustees in connection with any review or other measures taken with respect to the GSK Transaction; (iii) to Regulatory Authorities to facilitate obtaining and maintaining the Regulatory Approvals for the conduct of clinical trials; (iv) to antitrust and competition law regulatory agencies and authorities in connection with the approval process for the Contemplated Transactions; (v) to any Third Party in connection with the potential sale or license of rights related to a compound (i.e., whether an Array Compound or a Novartis Compound) owned or controlled by such Party and (vi) to any Third Parties if required by Applicable

Law, subject to Section 7.4(d). Prior to disclosing any Confidential Information of the other Party to any Representative or Third Party, the receiving Party will inform such Person of the proprietary nature of the Confidential Information and will require such Person to agree to be bound by obligations of confidentiality and non-use no less restrictive than the requirements of this Section 7.4. Each Party agrees to be responsible for any breach of these confidentiality obligations by its Representatives and any Third Parties to whom it discloses Confidential Information of the other Party. Either Party may disclose the existence of this Agreement and the terms and conditions hereof, without the prior written consent of the other Party, as may be required by Applicable Law (including the disclosure requirements of the United States Securities and Exchange Commission (“SEC”), NYSE or any other stock exchange or NASDAQ), in which case the Party seeking to disclose the information shall give the other Party reasonable advance notice and the right to review and comment on any such disclosure (including any proposed filing of this Agreement with the SEC or equivalent governing body outside of the United States) and shall seek confidential treatment of such Confidential Information to the extent possible under Applicable Law.”

(g) Change of Product and Service Recipient. The Original Agreement is hereby amended by adding a new Section 7.9 which shall read as follows:

“Change of Product and Service Recipient. From and after the Effective Date, upon reasonable advance written notice from Array to Novartis, Novartis shall provide to Array’s designee (including the Suitable Partner) in lieu of to Array any or all of the access, information, documents, rights, deliverables, products and/or services to be provided from Novartis to Array under any of the Ancillary Agreements.”

(h) Special, Indirect and Other Losses. Section 9.4 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

“Special, Indirect and Other Losses. EXCEPT TO THE EXTENT (A) EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT; OR (B) ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER ARTICLE IX, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY (X) FOR ANY PUNITIVE OR INCIDENTAL DAMAGES, OR (Y) FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY OR SPECIAL DAMAGES, LOST PROFITS, LOST REVENUE OR OPPORTUNITY COSTS (INCLUDING WHERE CALCULATED BY USING OR TAKING INTO ACCOUNT ANY MULTIPLE OF EARNINGS, CASH FLOW, REVENUE OR OTHER SIMILAR MEASURE) [*].

(i) Binding Effect; Assignment. Section 10.11 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

“This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Each Party agrees that its rights and obligations under this Agreement may not be transferred or assigned, directly or indirectly, to any Person without the prior written consent of the other Parties; provided, however, that each Party may transfer or assign this Agreement (a) to an Affiliate (for so long as such Person remains an Affiliate) or (b) to any Third Party that purchases or otherwise receives all or substantially all of the assets owned or controlled by such Party to which this Agreement relates (whether by merger, consolidation, stock sale, asset sale or otherwise); provided, further, that any assignment of this Agreement to any Person may not interfere, delay or undermine the implementation of the EC Commitments.”

3. Automatic Termination. Notwithstanding any other provision of this Amendment, the Original Agreement or any Ancillary Agreement, upon the termination of the Encorafenib Asset Transfer Agreement pursuant to the terms and conditions set forth in Section 8.1 thereof, this Amendment (except for Sections 1, 2(e), 5, 6 and 7 (the “Surviving Provisions”)) shall automatically (and without any action of the Parties) terminate ab initio and be of no further force or effect. In the event of such termination, the terms and conditions of the Original Agreement shall survive and continue in full force and effect in accordance with the terms of the Original Agreement in all respects, in each case, without any amendment or modification by this Amendment, except that the Surviving Provisions of this Amendment shall remain effective and shall at all times before or after any such termination continue to amend and modify the Original Agreement.

4. No Other Amendments or Waivers. Except as modified by this Amendment, the Original Agreement shall each remain in full force and effect, enforceable in accordance with its terms. Except as expressly set forth herein, this Amendment is not a consent to any waiver or modification of any other terms or conditions of the Original Agreement or any of the instruments or documents referred to in the Original Agreement and shall not prejudice any right or rights which the parties hereto may now or hereafter have under or in connection with the Original Agreement or any of the instruments or documents referred to therein.

5. Governing Law. This Amendment (including any claim or controversy arising out of or relating to this Amendment) shall be governed by the law of the State of New York without regard to conflict of law principles that would result in the application of any Applicable Law other than the laws of the State of New York.

6. Headings. The headings of the Sections of this Amendment are for reference purposes only, are not part of this Amendment, and shall not in any way affect the meaning or interpretation of this Amendment.

7. Counterparts. This Amendment may be executed in one or more counterparts, and delivered by electronic or other means, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

[signature page follows]

IN WITNESS WHEREOF, the undersigned parties have caused this First Amendment to the Termination and Asset Transfer Agreement to be executed by their respective duly authorized officers as of the date first above written.



ARRAY BIOPHARMA INC.		NOVARTIS PHARMA AG

By:	/s/ John R. Moore	By:	/s/Roy Papatheodorou
Name:	John R. Moore	Name:	Roy Papatheodorou
Title:	General Counsel	Title:	As Attorney


		By:	/s/ J H Emery
		Name:	J H Emery
		Title:	As Attorney


		For purposes of Article II, Section 4.1,
		Section 5.1 (d) and Article X only of the
		Agreement:

		NOVARTIS INTERNATIONAL
		PHARMACEUTICAL LTD.

		By:	/s/ H.S. Zivi
		Name:	H.S. Zivi
		Title:	Deputy Chairman


		By:	/s/ Alison Dyer-Fagundo
		Name:	Alison Dyer-Fagundo
		Title:	Director

Exhibit 10.3

SEVENTH AMENDMENT TO DRUG DISCOVERY COLLABORATION AGREEMENT

THIS AMENDMENT NO. 7 (“Seventh Amendment”), effective as of the Settlement Effective Date (defined below) (“Amendment Date”), is entered into by and between Genentech, Inc., a Delaware corporation, having a principal place of business at 1 DNA Way, South San Francisco, California 94080 (“Genentech”) and Array BioPharma Inc., a Delaware corporation, having a principal place of business at 3200 Walnut Street, Boulder, Colorado 80301 (“Array”), (collectively, the “Parties” or individually, a “Party”).

WHEREAS, Genentech and Array entered into a Drug Discovery Collaboration Agreement, effective as of December 22, 2003, which was subsequently amended or otherwise modified by a Letter Agreement, dated October 11, 2004; a First Amendment, dated May 20, 2005; a Second Amendment, dated October 1, 2005; a Third Amendment, dated April 2, 2007; a Fourth Amendment, dated July 25, 2008; a Fifth Amendment, dated September 1, 2008; a Letter Agreement, dated July 30, 2009; and a Sixth Amendment, dated September 30, 2010 (collectively, the “Agreement”).

WHEREAS, Genentech and Array have entered into that certain Confidential Settlement and Release Agreement (the “Settlement and Release Agreement”).

WHEREAS, the Parties desire to amend the Agreement as set forth below.

NOW, THEREFORE, the Parties agree as follows:


1.	This Seventh Amendment hereby amends and revises the Agreement to incorporate the terms and conditions set forth in this Seventh Amendment. The relationship of the Parties shall continue to be governed by the terms of the Agreement, as amended hereby.


2.	The following capitalized terms shall have the meanings given to them in this paragraph 2. All other capitalized terms used in this Seventh Amendment shall have the meanings defined in the Agreement unless otherwise defined herein.

“[*]” means the compound known as [*].

“[*] Compound” means a compound that inhibits or otherwise modulates [*] (whether conceived, discovered, researched, developed or commercialized prior to or after the Amendment Date) and includes, without limitation, [*].

“Roche” means Roche Holding Ltd and its successors, or any business entity that controls, is controlled by or is under common control with Roche, in each case, that is not controlled by Genentech. For purposes of this definition, “control” shall have the meaning in the definition of Affiliate (as such term is defined in the Agreement).

“Settlement Effective Date” has the meaning set forth in the Settlement and Release Agreement.


3.	Effective as of the Amendment Date, and notwithstanding anything to the contrary in the Agreement prior to the Amendment Date:


(a)	[*] shall not constitute a “Collaboration Target” (as such term is defined in the Agreement) under the Agreement or this Seventh Amendment.


(b)	No [*] Compound shall constitute a “Compound” (as such term is defined in the Agreement) under the Agreement or this Seventh Amendment.


(c)	No product incorporating a [*] Compound shall constitute a “Licensed Product” (as such term is defined in the Agreement) under the Agreement or this Seventh Amendment.


(d)	Nothing in the Agreement shall prohibit or otherwise restrict Array from conducting, participating in or funding, directly or indirectly, either alone or with a Third Party, research or development with respect to, or commercialization of, a [] Compound or a product incorporating a [] Compound.


(e)	Neither Party shall have any obligation under the Agreement to pay any payments, milestones, royalties or other amounts to the other Party with respect to [], any [] Compound and/or products incorporating a [*] Compound including, without limitation, pursuant to Articles 6 or 7 of the Agreement.


4.	Effective as of the Amendment Date, and notwithstanding anything to the contrary in the Agreement or this Seventh Amendment:


(a)	Nothing in the Agreement or this Seventh Amendment shall prohibit or otherwise restrict Genentech from exercising all of its rights to research, develop and/or commercialize [] and any other [] Compound or product incorporating a [] Compound, in either case, other than [].

(b)

Array hereby grants to Genentech a non‑exclusive, sublicensable license under (i) the Array Existing Technology, Array Collaboration Technology and Array’s interest in Joint Collaboration Technology, to make, use, offer for sale, sell and import [*] Compounds and products incorporating [*] Compounds in the Field in the Territory; and (ii) the Array Future Technology existing as of one (1) day prior to the Amendment Date, to make, use, offer for sale, sell and import [*] Compounds and products incorporating [*] Compounds in the Field in the Territory. Genentech shall have the right to grant sublicenses to any Third Parties, and any sublicensee may grant further sublicenses to one or more additional Third Parties.


(c)	For the avoidance of doubt, Array Future Technology does not include any Patents, Know‑How or other technology received by Array under the [] by and between [] and Array, dated as of [*].


(d)	Array hereby grants to Genentech the right to use all data, materials and Array’s Confidential Information, in all cases, transferred by Array to Genentech prior to the

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Amendment Date, for research, development and/or commercialization of [*] and any other [*] Compound or product incorporating a [*] Compound, in either case, other than [*]. Genentech shall have the right to transfer any such data, materials and Array’s Confidential Information to Third Parties that perform such research, development and/or commercialization activities on behalf of Genentech.


(e)	The licenses and rights granted to Genentech under this Amendment may be exercised by a Third Party on Genentech’s behalf including, without limitation, by a Third Party performing contract manufacturing on behalf of Genentech or performing work under a material transfer agreement on behalf of Genentech.

(f)

All of Genentech’s Confidential Information existing as of the Amendment Date that relates to [*] and/or [*] Compounds (including, without limitation, chemical entities known by Array to be [*] Compounds and any information specifically related to [*] and/or [*] Compounds) continues to be the Confidential Information of Genentech, and Array has no rights to use such Confidential Information, including with respect to [*], subject to the confidentiality provisions of Article 9 of the Agreement.

(g)

Array, on behalf of itself and its Affiliates, and on behalf of their respective successors and assigns (of this Agreement or the applicable intellectual property), covenants, during the term of the Agreement and perpetually thereafter, not to enforce directly, or to prompt or cooperate with or impose an obligation on a Third Party to enforce, against Genentech, its Affiliates or Roche, or any of their respective successors, assigns, licensees, sublicensees and agents, any Patent acquired by Array under the [*] by and between [*] and Array, dated as of [*], based on the manufacture, use, offer for sale, sale or import of any [*] Compound, or any product incorporating a [*] Compound, in each case, excluding [*].

(h)

Genentech, on behalf of itself and its Affiliates, and on behalf of their respective successors and assigns (of this Agreement or the applicable intellectual property), covenants, during the term of the Agreement and perpetually thereafter, not to enforce directly, or to prompt or cooperate with or impose an obligation on a Third Party to enforce, against Array, or any of its successors, assigns, licensees, sublicensees and agents, any Genentech Patents existing as of the Amendment Date, based on the manufacture, use, offer for sale, sale or import of [*].


5.	Array hereby represents to Genentech that, prior to the Amendment Date, Array fulfilled its obligations under Section 2.4 of the Agreement. Genentech agrees that a breach of this representation does not entitle Genentech to termination or rescission of the Settlement and Release Agreement or this Seventh Amendment.


6.	Except as otherwise expressly provided, this Seventh Amendment does not grant any right or license to either Party under any of the other Party’s Patents or other intellectual property rights, and no other right or license is to be implied or inferred from any provision of this Seventh Amendment or by the conduct of the Parties. For clarity, but without limitation, no

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right or license is granted to Array under any Patents owned or controlled by Genentech having one or more claims directed [*], its manufacture, formulation, administration, or use.


7.	Within [] days of the Amendment Date, and in partial consideration for the rights and releases granted under this Amendment and the Settlement and Release Agreement, Array shall make a one‑time, non‑refundable settlement payment to Genentech of [] in accordance with the wiring instructions set forth on Attachment A hereto.


8.	This Seventh Amendment, the Agreement and the Settlement and Release Agreement constitute the entire agreement between the Parties in connection with the subject matter of this Seventh Amendment. The Agreement, as herein amended, is and remains in full force and effect.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the Parties have caused this Seventh Amendment to be executed by their respective duly authorized representatives as set forth below.



GENENTECH, INC.	ARRAY BIOPHARMA INC.
By: /s/ Robert Andreatta	By: /s/ John Moore
Name: Robert Andreatta	Name: John Moore
Title: VP, Controller and CAO	Title: General Counsel

- 5 -

ATTACHMENT A

WIRING INSTRUCTIONS

[*]

- 6 -

Exhibit 10.4

EXECUTION VERSION

STRICTLY CONFIDENTIAL

TRANSITION AGREEMENT

THIS TRANSITION AGREEMENT, dated as of March 2, 2015 (together with all Schedules and Exhibits attached hereto, this “Agreement”), is by and between Novartis Pharma AG, a Swiss corporation (“Novartis”), and Array BioPharma Inc., a Delaware corporation (“Array”). Novartis and Array are sometimes collectively referred to herein as the “Parties” and each separately as a “Party.”

WHEREAS, Novartis and Array are parties to the Termination and Asset Transfer Agreement dated as of November 26, 2014 (the “Termination Agreement”); and

WHEREAS, in connection with the Contemplated Transactions, the Parties desire to provide for the transition of certain activities related to the Development of Binimetinib from Novartis to Array (the “Transition”), on the terms and subject to the conditions hereof.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1 Definitions. Capitalized terms used herein but not defined herein have the meanings ascribed to them in the Termination Agreement. As used herein, the following terms have the meanings set forth below:

“Accounting Standards” means, with respect to Array, U.S. GAAP (United States Generally Accepted Accounting Principles) and means, with respect to Novartis, the IFRS (International Financial Reporting Standards), in each case, as generally and consistently applied throughout each Party’s organization.

“Auditor” has the meaning set forth in Section 4.2.

“COLUMBUS Trial” means the clinical trial designated with the following ClinicalTrials.gov identifier: NCT01909453.

“Combination Trial” has the meaning set forth in Schedule 1.

“Complete” or “Completion” means, with respect to a clinical trial, the completion of all of the following: (a) completion of all final monitoring visits for all patients then-enrolled in such clinical trial; (b) receipt of all top-line results (including, without limitation, all patient report forms and case report forms); and (c) resolution of all outstanding data queries; provided, however, that “Complete” or “Completion” also includes if Novartis is responsible for the Completion of a clinical trial, completion and delivery by Novartis to Array of a full statistical analysis, in a form reasonably acceptable to Array, of all Study Data.

“CRO” means a Third Party contract research organization engaged by one of the Parties to perform one or more clinical studies.

“DRC” has the meaning set forth in Schedule 1.

“Drug Product” means a finished dosage form (e.g., tablet, capsule, or solution) that contains a Drug Substance, generally, but not necessarily, in association with one or more other ingredients.

“First Patient First Visit” means the completion, in accordance with applicable study protocol and regulations, of a first study visit by a human subject in a clinical trial.

“FTE” means a full time equivalent person year (consisting of [*] hours per year) of work performing work hereunder. For clarity, indirect personnel who provide general support functions that are not primarily related to the work performed hereunder (including general support functions such as managerial (other than the first level managers directly supervising employees performing work hereunder), financial, legal or business development) shall not constitute FTEs.

“FTE Costs” for a given period means the product of (a) the total FTEs (proportionately, on a per-FTE basis) dedicated by a Party or its Affiliates in the particular period to the direct performance of the applicable activities to be performed, and (b) the FTE Rate.

“FTE Rate” means a rate per FTE equal to [*] (which may be prorated on a daily or hourly basis as necessary) with respect to activities conducted pursuant to this Agreement. “FTE Rate” shall be deemed to include all direct and indirect costs of each Party’s FTEs (including personnel and travel expenses, and the costs of managerial (other than those who otherwise fall within the definition of FTE), financial, legal or business development personnel supporting the activities of such FTEs).

“JDC” shall mean the Joint Development Committee under the Existing License Agreement.

“Marketing Approval” means, with respect to a product containing Binimetinib or with respect to an NRAS Companion Diagnostic, in any country or jurisdiction, any approval, registration, license or authorization from a Regulatory Authority in a country or other jurisdiction that is necessary to Commercialize such product or companion diagnostic in such country or jurisdiction.

“MILO Trial” means the clinical trial designated with the following ClinicalTrials.gov identifier: NCT01849874.

“NRAS Companion Diagnostic” has the meaning set forth in Schedule 1.

“NEMO Trial” means the clinical trial designated with the following ClinicalTrials.gov identifier: NCT01763164.

“Obligations” has the meaning set forth in Section 2.1.

“Other Array Sponsored Trial” means the clinical trial designated with the following ClinicalTrials.gov identifier: NCT01649336.

“Other Novartis Sponsored Trials” means (i) those clinical trials designated with the following ClinicalTrials.gov identifiers: [*] (ii) [*] and (iii) [*] (the trials described in this clause (iii), the “Remaining Trials”).

“Out-of-Pocket Costs” means direct expenses paid or payable to Third Parties which are specifically identifiable and incurred for services or materials provided by them directly in their performance of the Obligations; such expenses to have been recorded as income statement items in accordance with Accounting Standards and for the avoidance of doubt, not including pre-paid amounts (until expensed in accordance with Accounting Standards). For clarity, Out-of-Pocket Costs do not include any costs included in the FTE Rate or capital expenditures, payments for internal salaries or benefits; facilities; utilities; general office or laboratory supplies; information technology; and the like.

“PMA” has the meaning set forth in Schedule 1.

“Reimbursable Costs” has the meaning set forth in Section 4.1(a).

“Study Data” means all records, reports, data and information that are or were created as a result of or in connection with the conduct of a clinical trial, whether generated, derived or prepared by a Party, their respective Affiliates (or a Third Party on behalf of a Party), whether alone or jointly with others, in whole or in part, and whether alone or in conjunction with others.

“Term” has the meaning set forth in Section 3.1.

“Third Party Claim” has the meaning set forth in Section 5.5(b).

ARTICLE II
OBLIGATIONS TO BE PERFORMED

Section 2.1 Obligations. In accordance with the terms and provisions of this Agreement, each Party agrees to perform the obligations assigned to such Party described in and in accordance with Schedule I (collectively, such Party’s “Obligations”) for the time period and to the extent specified in Schedule I. At its option, Array may cause any of its Obligations to be performed by one of its Affiliates or by any Third Party. At its option, Novartis may cause any of its Obligations to be performed (a) by one of its Affiliates or, (b) by any Third Party who, as of the signing date of the Termination Agreement, was performing or had performed such Obligations on behalf of Novartis, and (c) subject to the prior written consent of Array as to the decision to cause such Obligations to be performed by a Third Party and the identity of such Third Party (in each case, not to be unreasonably withheld, delayed or conditioned, provided that notwithstanding the dispute resolution provision in Section 5.3, any dispute over whether the withholding, delay or conditioning of such consent is reasonable shall be submitted for resolution by the Parties to the monitor to be appointed by the FTC pursuant to Section 7.1(c) of the

Termination Agreement). Each Party shall remain responsible, in accordance with the terms of this Agreement, for performance of any of its Obligations it causes to be so performed.

Section 2.2 Standard of Performance.

(a) Without limiting any other provision of this Agreement or either Party’s obligations pursuant to the applicable Clinical Trial Agreement, each Party hereby represents, warrants and covenants that it shall perform its Obligations as set forth herein substantially at [*].

(b) Other than as expressly set forth in this Section 2.2, the Termination Agreement and Ancillary Agreements, neither Party makes any representations or warranties of any kind, express or implied, with respect to its Obligations performed hereunder.

Section 2.3 Cooperation. The Parties shall cooperate with each other in all matters relating to the performance of the Obligations. Such cooperation shall include exchanging necessary information, performing adjustments and obtaining all consents, licenses, sublicenses or approvals, in each case, as necessary to permit each Party to perform its Obligations hereunder.

Section 2.4 Transition Committee. The Transition Committee shall be responsible for overseeing the performance of the Parties’ Obligations hereunder in accordance with Section 3.10 of the Termination Agreement. Each party’s representatives on the Transition Committee shall identify and designate, from time to time, a contact person for such Party’s Obligations.

Section 2.5 Regulatory Matters.

(a) For the sake of clarity, the Parties shall conduct all clinical trials in accordance with the applicable Clinical Trial Agreement.

(b) Except as necessary for Novartis to perform its Obligations under this Agreement or its obligations under any Ancillary Agreement or as otherwise set forth in any Clinical Trial Agreement, Array will file and be the owner of all Regulatory Materials to the extent related to Binimetinib and products containing Binimetinib (alone or in combination), including any filings for Regulatory Approval. Novartis will retain ownership and remain the sponsor of such existing Regulatory Materials as are necessary for Novartis to perform its Obligations under this Agreement and its obligations under any Clinical Trial Agreement, but solely to the extent necessary and until completion of such obligations by Novartis. Thereafter (or earlier for any such Regulatory Materials that are not necessary for Novartis to complete such Obligations), upon the request of Array, Novartis will assign or cause to be assigned to Array or its designee (or to the extent not so assignable, Novartis will to the extent possible make available to Array or its designee the benefits of) all such Regulatory Materials, or, if directed by Array (in its sole discretion) in writing, close or inactivate such Regulatory Materials as soon as reasonably practicable.

ARTICLE III
TERM AND TERMINATION

Section 3.1 Term. The term of this Agreement shall commence on the Effective Date and shall expire with respect to (i) each Obligation as specified in Schedule I with respect to such Obligation and (ii) this Agreement when all Obligations have been completed (the “Term”). In the event of any expiration or termination of this Agreement, this Agreement (other than this Section 3.1, Section 4.1 with respect to accrued but unpaid Reimbursable Costs, Section 4.2, Section 4.3, and Article V) shall be of no further force or effect with no liability on the part of any Party; provided that, subject to the terms of this Agreement, no such termination shall relieve any Party from liability for any breach of this Agreement prior to termination thereof or, subject to the terms of such other agreements, from any liability for any breach under any other agreements between the Parties.

Section 3.2 Termination. Notwithstanding anything to the contrary contained herein, this Agreement may be terminated, in whole or in part, at any time by the mutual consent of the Parties.

ARTICLE IV
PAYMENT

Section 4.1 Reimbursement of Array Costs.

(a) Novartis shall reimburse Array for certain Out-Of-Pocket Costs and FTE Costs as set forth in Schedule I (“Reimbursable Costs”).

(b) For each calendar quarter starting after the second (2nd) calendar quarter after the Effective Date, no later than [*] prior to the beginning of each such calendar quarter, Array shall provide to Novartis, for the limited purpose of assisting Novartis with its budgetary processes, a non-binding, written good faith estimate, in reasonable detail (including a breakout of Out-of-Pocket Costs and FTE Costs), of the amount of Reimbursable Costs expected to be incurred by Array during such calendar quarter. The Parties acknowledge and agree that such estimate is provided by Array for information purposes only (and cannot be used by Novartis for any other purpose) and that any inaccuracy in such estimate shall not constitute a breach of this Agreement.

(c) Within [*] of the end of each calendar month during the Term, Array shall invoice Novartis for Reimbursable Costs incurred by Array in the preceding calendar month. Novartis shall pay the invoiced amount within [*] following receipt thereof. Array shall be responsible for the payment of any sales or other taxes relating to the provision of goods or services received with respect to the Obligations.

(d) To the extent Novartis disputes in good faith any amount payable by Novartis to Array under this Section 4.1, Novartis shall notify Array in writing of the nature and amount of such dispute in reasonable detail prior to the [*] following Novartis’s receipt of the invoice which relates thereto. Such dispute shall be resolved in accordance with the dispute

resolution process provided in Section 10.9 of the Termination Agreement. For the sake of clarity, (a) this Agreement shall continue in full force and effect (and the performance of all Obligations under this Agreement shall continue in accordance herewith) during the pendency of any such dispute and (b) Novartis shall pay any undisputed amounts when due under with Section 4.1(b).

(e) All payments required to be made by Novartis pursuant to this Agreement shall be invoiced in and made in U.S. dollars in the form of cash or by wire transfer of immediately available funds to an account designated by Array.

Section 4.2 Audits. Array shall keep complete, true and accurate books and records in accordance with its Accounting Standards in sufficient detail for Novartis to confirm the [*] due under this Agreement. Array shall keep such books and records for at least [*] following the end of the fiscal year to which they pertain. Novartis shall have the right for a period of [*] after receiving any invoice with respect to payments due and payable hereunder to appoint an independent accounting firm (the “Auditor”) reasonably acceptable to Array to inspect the relevant records of Array or its Affiliates to verify such reports, statements, records or books of accounts, as applicable. Before beginning its audit, the Auditor shall execute an undertaking reasonably acceptable to Array by which the Auditor shall keep confidential all information reviewed during such audit. Array and its Affiliates, as applicable, shall make its records available for inspection by such Auditor during regular business hours at such place or places where such records are customarily kept, upon receipt of reasonable advance notice from Novartis, solely to verify the accuracy of Array’s or its Affiliate’s payment records or books of accounts and compliance in other respects with this Agreement. The Auditor shall have the right to disclose to Novartis the results and its conclusions regarding any Reimbursable Costs owed under this Agreement, and Novartis shall treat such conclusions as Confidential Information pursuant to Article VII of the Termination Agreement. For the avoidance of doubt, notwithstanding the foregoing, the Auditor shall not disclose to Novartis any more detailed information than Novartis would have otherwise been entitled to receive pursuant to this Agreement absent this audit right. The audit report and basis for any determination by the Auditor shall be made available for review and comment by Array, and Array shall have the right, at its expense, to request a further determination by such Auditor as to matters that Array disputes (to be completed no more than [*] days after the applicable audit report is provided to Array and to be limited to the disputed matters). If the Parties disagree as to such further determination, such dispute shall be resolved pursuant to Section 10.9 of the Termination Agreement. Such inspection right shall not be exercised more than once in any calendar year during the Term and once thereafter. Novartis shall pay its own costs of such inspections, as well as its own legal expenses associated with enforcing its right with respect to any payment hereunder, except that in the event there is any downward adjustment in aggregate amounts payable for any calendar year shown by such inspection of more than [*] of the amount paid for such calendar year, Array shall pay for such inspection. Array shall promptly reimburse Novartis the amount of any overpayment by Novartis of Reimbursable Costs. Novartis shall promptly pay Array the amount of any underpayment by Novartis of Reimbursable Costs.

Section 4.3 Expenses. Except as otherwise specified herein, all costs and expenses incurred in connection with this Agreement, including the performance of the Obligations, will be paid by the Party incurring such costs and expenses.

ARTICLE V
MISCELLANEOUS

Section 5.1 Treatment of Employees. Employees of either Party or their respective Affiliates involved in the performance of Obligations shall remain employees of such Party or Affiliate, and such Party shall be solely responsible for the payment and provision of all wages, bonuses, commissions and employee benefit plans, programs or arrangements relating to such employees.

Section 5.2 Confidentiality. Each Party acknowledges that the information being provided to it in connection with this Agreement and the performance of the Obligations is subject to the confidentiality provisions of the Termination Agreement.

Section 5.3 Dispute Resolution. In the event of a dispute with regard to the interpretation, breach or alleged breach of this Agreement, the matter shall be resolved in accordance with the dispute resolution process provided in Section 10.9 of the Termination Agreement.

Section 5.4 Relationship of Parties. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, agency, trust, employer-employee relationship, or other association of any kind, each Party being individually responsible only for its obligations as set forth in this Agreement.

Section 5.5 Indemnification. Each Party acknowledges that this Agreement is subject to the indemnification provisions set forth in the Termination Agreement.

Section 5.6 Limitation of Liability. EXCEPT TO THE EXTENT (A) EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT; OR (B) ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER ARTICLE IX OF THE TERMINATION AGREEMENT, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY (X) FOR ANY PUNITIVE OR INCIDENTAL DAMAGES, OR (Y) FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY OR SPECIAL DAMAGES, LOST PROFITS, LOST REVENUE OR OPPORTUNITY COSTS (INCLUDING WHERE CALCULATED BY USING OR TAKING INTO ACCOUNT ANY MULTIPLE OF EARNINGS, CASH FLOW, REVENUE OR OTHER SIMILAR MEASURE); [*].

Section 5.7 Binding Effect; Assignments. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Each Party agrees that its rights and obligations under this Agreement may not be transferred or assigned, directly or indirectly, to any Person without the prior written consent of the other Parties; provided, however, that each Party may transfer or assign this Agreement (a) to an Affiliate (for so long as such Person remains an Affiliate) or (b) to any Third Party that purchases or otherwise receives all or substantially all of the assets owned or controlled by such Party to

which this Agreement relates (whether by merger, consolidation, stock sale, asset sale or otherwise).

Section 5.8 Headings. The headings of the Sections and Articles of this Agreement are for reference purposes only, are not part of this Agreement, and shall not in any way affect the meaning or interpretation of this Agreement.

Section 5.9 Notices. In addition to any other specific procedures for notification required herein, all notices, demands, requests and other communications made hereunder shall be in writing and shall be given by personal delivery, by nationally recognized overnight courier (with charges prepaid), and shall be deemed to have been given or made (a) if personally delivered, on the day of such delivery, or (b) if sent by overnight courier, three (3) days following the date deposited with such overnight courier service, in each case, pending the designation of another address, addressed as follows:

If to Array:

Array BioPharma Inc.
3200 Walnut Street
Boulder, CO 80301
USA

Attention: General Counsel

If to Novartis:

Novartis Pharma AG
Lichtstrasse 35
CH - 4056 Basel
Switzerland
Attention: General Counsel

Section 5.10 Counterparts. This Agreement may be executed in one or more counterparts, and delivered by electronic or other means, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

Section 5.11 Entire Agreement. This Agreement, including the Schedules hereto, which are incorporated by reference herein, the Termination Agreement, and the other Ancillary Agreements represent the entire understanding and agreement between the Parties with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings between the Parties with respect to such subject matter. All provisions contained in any Schedule delivered by or on behalf of the Parties in connection with this Agreement are an integral part of this Agreement. In the event of any conflict between the terms of this Agreement and the terms of any Schedule, the terms of this Agreement shall control and prevail.

Section 5.12 Governing Law. This Agreement (including any claim or controversy arising out of or relating to this Agreement) shall be governed by the law of the State of New York without regard to conflict of law principles that would result in the application of any Applicable Law other than the laws of the State of New York.

Section 5.13 Amendment and Modification. Any amendment, modification, or supplement of or to any provision of this Agreement, including the Schedules hereto, shall be effective only in writing and signed by a duly authorized officer of all Parties. The Parties waive the right to amend the provisions of this Section 5.13 orally.

Section 5.14 Severability. If and to the extent that any court of competent jurisdiction holds any provision (or any part thereof) of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity or enforceability of the remainder of this Agreement, and the invalid or unenforceable provision shall be fully severed from this Agreement and there shall automatically be added in lieu thereof a provision as similar in terms and intent to such severed provision as may be legal, valid and enforceable.

Section 5.15 Interpretation. When used herein the words “include”, “includes” and “including” are deemed to be followed by the words “without limitation.” Any terms defined in the singular have a comparable meaning when used in the plural, and vice-versa. All references to the Articles, Sections, and Schedules are deemed references to the Articles, Sections, and Schedules to this Agreement. The word “or” shall be inclusive and not exclusive. The Party includes its permitted assignees and/or the respective successors in title to substantially the whole of its undertaking. The words “hereof”, “hereto”, “hereunder” and similar words refer to this Agreement as a whole and not any particular Section or Article of this Agreement. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms thereof. This Agreement is deemed drafted jointly by the Parties and shall not be specifically construed against any Party based on any claim that such Party or its counsel drafted this Agreement.

Section 5.16 Force Majeure. Any delays in performance by any Party under this Agreement, other than with respect to a Party’s obligation to make payments hereunder, shall not be considered a breach of this Agreement if and to the extent caused by occurrences beyond the reasonable control of the Party affected, including acts of God, embargoes, governmental restrictions, terrorism, fire, flood, explosion, earthquake, hurricanes, storms, tornadoes, riots, wars, civil disorder, labor disturbances, acts of terrorism or compliance with any order of any Regulatory Authority. The Party suffering such occurrence shall notify the other Party as soon as practicable of such inability and of the period for which such inability is expected to continue, and any time for performance hereunder shall be extended by the actual time of delay caused by the occurrence; provided, that the Party suffering such occurrence uses commercially reasonable efforts to mitigate any damages incurred by the other Party and shall use commercially reasonable efforts to resume full performance of its obligations under this Agreement as soon as reasonably practicable.

[signature page follows]

IN WITNESS WHEREOF, the Parties have caused this Transition Agreement to be signed by their respective representatives thereunto duly authorized, all as of the date first written above.



NOVARTIS PHARMA AG


By:	/s/ David P. Tolman
	Name: David P. Tolman attorney-in-fact
	Title: Vice President, General Counsel
	Global Head Legal
	Novartis Oncology


By:	/s/ Bruce Shapiro
	Name: Bruce Shapiro attorney-in-fact
	Title: Vice President
	Global Head Legal Transactions
	Novartis Oncology


ARRAY BIOPHARMA INC.

By:	/s/ Ron Squarer
	Name: Ron Squarer
	Title: CEO

SCHEDULE I


1.	Regulatory Assistance and Support. Upon reasonable notice and request from Array to Novartis, Novartis will provide to Array, in a timely manner and [*], the following assistance, cooperation or advice:

•

With respect to the initial regulatory filings for Marketing Approval of Binimetinib (either alone or in combination) for the first indication in the [*] and, until [*] after receipt by Array, its Affiliates or licensees of the first such Marketing Approval, with respect to regulatory filings in any of such countries, Novartis (i) will make its employees available to answer questions with respect to documentation, referencing and generation of tables and statistics necessary for such filings and (ii) provide access to any information, Know-How, data or supporting documentation in Novartis’s possession necessary or useful for such filings (if any). Array will be primarily responsible for, and the applicant of, any such filings.


2.	Tech Transfer. Novartis will reimburse Array [*] incurred by Array pursuant to Section 7.5 of the Supply Agreement.

Certain Manufacturing Items. Novartis will transition to Array, at Novartis’s expense and on a mutually agreed timeline, which in no event will be completed later than [*], such plans and activities, if any, regarding the following projects, in each case, as have been approved by the JDC, and, until such transition is complete will continue these projects in the ordinary course of business as currently contemplated:


•	[*]


•	[*]


•	[*]


•	[*]


•	[*] and


•	[*].


4.	Conduct of Clinical Trials.


a.	Phase 3 Clinical Trials.

Nemo. Novartis will conduct, at its sole expense, the NEMO Trial, provided, however, that Array or its CRO will assume responsibility to conduct and Complete the NEMO Trial upon the applicable transition date set forth on Exhibit A, and, Novartis will reimburse Array the Out-of-Pocket costs and fifty percent (50%) of FTE Costs associated with such conduct and Completion of the NEMO Trial within the parameters of the current study protocol for such trial and such other costs resulting from changes to such protocol in accordance with Section 4(e)(i) of this Schedule I after the transition date. For the NEMO trial, [*].


ii.	Milo. Array will conduct and complete the MILO Trial, and Novartis will reimburse Array the Out-of-Pocket Costs and fifty percent (50%) of FTE Costs associated with such conduct and Completion of the MILO Trial within the parameters of the current study protocol for such trial and such other costs resulting from changes to such protocol in accordance with Section 4(e)(i) of this Schedule I.


iii.	Columbus. Novartis or, to the extent assigned to the LGX818 Buyer, the LGX818 Buyer will conduct and complete, in accordance with the terms of the COLUMBUS Trial Agreement, the COLUMBUS Trial. Responsibility for costs associated with such conduct and Completion of the COLUMBUS Trial are set forth in the Columbus Trial Agreement.

Other Novartis Sponsored Trials. Novartis will conduct, at its sole expense, the Other Novartis Sponsored Trials, provided, however, that Array or its CRO will assume responsibility to conduct and Complete each such Other Novartis Sponsored Trial upon the applicable transition date set forth on Exhibit A, or, with respect to Other Novartis Sponsored Trials being conducted by Clinical Research Organizations, upon the assignment of the applicable agreement by Novartis to Array, and Novartis will reimburse Array the Out-of-Pocket Costs and fifty percent (50%) of FTE Costs associated with such conduct and Completion of the Other Novartis Sponsored Trials within the parameters of the current study protocols for such trials and such other costs resulting from changes to such protocol in accordance with Section 4(e)(i) of this Schedule I after the applicable transition date.

Other Array Sponsored Trial. Array will conduct the Other Array Sponsored Trial, and Novartis will reimburse Array the Out-of-Pocket Costs and fifty percent (50%) of FTE Costs associated with the Completion of the Other Array Sponsored Trial within the parameters of the current study protocol for such trial and such other costs resulting from changes to such protocol in accordance with Section 4(e)(i) of this Schedule I.

Investigator Sponsored Clinical Trials. Pursuant to the Termination Agreement, Novartis will transfer (by assigning applicable clinical trial agreements, as Third Party Agreements, to Array), and Array will oversee the conduct and Completion of, the Ongoing Investigator Sponsored Clinical Trials, and Novartis will evaluate, and make determinations to proceed with respect to, the Proposed Investigator Sponsored Clinical Trials in accordance with Section 5.1(c) of the Termination Agreement. Novartis will reimburse Array the Out-of-Pocket costs and fifty percent (50%) of FTE Costs associated with the conduct and Completion of the Investigator Sponsored Clinical Trials within the parameters of the current study protocols for such trials and such other costs resulting from changes to such protocol in accordance with Section 4(e)(i) of this Schedule.

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e.	General.

Novartis (or a Third Party, as applicable) will use its best efforts to conduct and, with respect to trials with then-current timelines that contemplate Completion prior to the applicable transition date set forth on Exhibit A, Complete all the clinical trials assigned to it in accordance with the then-current protocol and timeline, including taking into account any changes made thereto by the JDC or Transition Committee, as applicable, or in accordance with this Section 4(e)(i). Novartis will not make any changes to any of the protocols therefor that would reasonably be expected to delay or halt any trial, except as approved by the Transition Committee. Without limiting the foregoing:


(1)	each Party agrees that it will consent to and implement any changes to the protocols for the NEMO Trial or the MILO Trial, in each case, that are reasonably necessary in order for such clinical trial to achieve the intended objectives of such clinical trial as set forth in the clinical protocol in place subsequent to such change and [*];

(2)

each Party agrees that it will consent to and implement any changes to the protocols for any clinical trials involving Binimetinib (but not any Novartis Compound) other than the NEMO Trial or the MILO Trial, in each case, that are reasonably necessary in order for the applicable clinical trial to achieve the intended objectives of such clinical trial as set forth in the clinical protocol in place subsequent to such change and [*]; and


(3)	the Parties agree that any proposed changes to the protocols for any clinical trials involving a Novartis Compound shall be mutually agreed upon by the Parties and [*].


ii.	Array (or a Third Party, as applicable) will use its best efforts to conduct and complete all the clinical trials assigned to it that involve a Novartis Compound in accordance with the then-current protocol and timeline, including taking into account any changes made thereto by the Transition Committee.


iii.	Novartis will provide all other information, data, technical assistance, support and other materials as may be requested by Array that is reasonably necessary for carrying out the foregoing clinical trial activities.

iv.

For the avoidance of doubt, and notwithstanding any other provision of the Termination Agreement or the Ancillary Agreements (including this Agreement), Novartis will have the right to suspend any clinical trial involving a Novartis Compound immediately if (a) Novartis concludes in its reasonable judgment, which conclusion shall be subject to confirmation by a dispute resolution committee (“DRC”) in the event that Array in its reasonable judgment disagrees with the conclusion of Novartis, (b) a Regulatory Authority concludes, or (c) if applicable, the data safety monitoring board recommends, that the Study Data show that the continuation of such trial would pose adverse risks to

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the health or safety of the trial subjects. If both Parties are unable to amend the trial protocol in a manner that reasonably addresses such safety concerns within [*] of the suspension date, then the Parties shall submit the matter for dispute resolution pursuant to Section 10.9- of the Termination Agreement and if the Parties are unable to resolve such matter in accordance therewith then either Party may terminate this Agreement with respect to such trial. For purposes of the foregoing, if a DRC is needed for a clinical trial, it shall be formed as a three-person committee that shall act by majority vote and be comprised of the Principal Investigator for such clinical trial, who shall chair such committee, and two additional clinical investigators, with each Party selecting one such clinical investigator.

NRAS Melanoma Companion Diagnostic Product. Novartis will (i) remain responsible for conducting and completing development of the NRAS Melanoma Companion Diagnostic Product (the “NRAS Companion Diagnostic”) until Post Marketing Approval from the FDA (the “PMA”) and (ii) until such PMA approval by the FDA and [*], support submission and approval in such other countries where approval of the NRAS Companion Diagnostic is required for the approval of Binimetinib or products containing Binimetinib. Novartis will transfer the PMA for the NRAS Companion Diagnostic after approval of the PMA by the FDA, or earlier if agreed by the Parties, to Array or to a Third Party agreed by both Parties to the extent such transfer is permitted under Applicable Laws. Novartis and Array will mutually agree on a GMP manufacturer of the NRAS Companion Diagnostic [*]. With respect to the NRAS Companion Diagnostic, such manufacturer [*].

Novartis Pipeline Agents. Novartis will provide continued clinical supply for and permit continuation of the combination studies of Binimetinib that include a Novartis Pipeline Agent within the parameters of the current study protocols for the clinical trials referenced in Exhibit A. On or before each subsequent clinical trial of Binimetinib in combination with a particular Novartis Pipeline Agent (the “Combination Trial”), the Parties shall enter into a clinical trial agreement governing each such trial on commercially reasonable terms. For each Combination Trial that is a Phase 3 trial, Novartis will notify Array by [*] whether or not it intends to register and Commercialize the Novartis Pipeline Agent for the indication(s) specified in such Combination Trial; provided, that if Novartis notifies Array of its intent to register and Commercialize but thereafter makes a determination not to Commercialize such Novartis Pipeline Agent for such indication, then it will provide at least [*] prior notice to Array of cessation of Development activities for that Novartis Pipeline Agent. Subject to any license agreement obligations that Novartis may have with Third Parties for return to any such Third Party of Novartis Pipeline Agents that are licensed by Novartis from such Third Party, if Novartis determines that it (or any licensee of Novartis) will not Commercialize such Novartis Pipeline Agent (or, if after launch of any Novartis Pipeline Agent, Novartis determines to no longer Commercialize such Novartis Pipeline Agent) for any indication, then it will enter into a license agreement with Array on mutually agreed upon commercially reasonable terms, including with respect to financial terms taking into account a discount to the market value reflecting Novartis’s decision not to commercialize the product, with an exclusive, irrevocable, worldwide license, with the right to sublicense, to the rights to

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Develop and Commercialize such Novartis Pipeline Agents in the field of oncology in combination with Binimetinib. For the avoidance of doubt, Array shall not have any rights hereunder to pursue, and Novartis shall not have any obligations to permit, clinical trials of Binimetinib in combination with any Novartis Compound other than the Novartis Pipeline Agents.

Audits. Novartis shall permit its books and records pertaining to the clinical trials to be conducted by or on its behalf pursuant to this Agreement to be examined no more than [*] per calendar year, upon reasonable notice during normal business hours, provided such examination is requested in writing at least ten (10) business days in advance; provided, further, that any Array representative signs a confidentiality agreement in form and substance reasonably acceptable to Novartis (and its CRO, as applicable). Such examination is to be made at the expense of Array.


8.	Participation in Regulatory Communications.

With respect to any clinical trials conducted by Novartis: Prior to transition of any such clinical trial to Array (as applicable), (i) Novartis shall be primarily responsible for interfacing, corresponding and meeting with Regulatory Authorities with respect to the conduct of any clinical trial involving Binimetinib, and shall keep Array fully informed of all regulatory communications and developments relating to such clinical trial, provided, however, that (A) Array shall have the right, at its option, to participate in any preparation for meetings with Regulatory Authorities and/or to attend and participate in all such meetings and (B) Array shall have primary control over all such interfaces, correspondence and meetings to the extent related solely to Binimetinib; and (ii) Novartis shall provide Array with all draft filings with any Regulatory Authorities related to each clinical trial involving Binimetinib (other than non-substantial, routine correspondence) for review and comment at least [*] in advance of the intended date of submission (or, to the extent necessary, such shorter period to meet such intended date of submission), and shall incorporate all reasonable comments of Array thereto. For the sake of clarity, after transition of any such clinical trial to Array, Array shall be primarily responsible and shall have primary control over all such interfaces, correspondence and meetings.

With respect to any clinical trials conducted by Array: Array shall be primarily responsible for interfacing, corresponding and meeting with Regulatory Authorities with respect to the conduct of such clinical trial, and shall keep Novartis fully informed of all regulatory communications and developments to the extent relating to a Novartis Pipeline Agent, provided, however, that (a) Novartis shall have the right, at its option, to participate in any preparation for meetings with Regulatory Authorities and/or to attend and participate in all such meetings to the extent related solely to any clinical trial involving a Novartis Pipeline Agent and (b) Novartis shall have primary control over all such interfaces, correspondence and meetings to the extent related solely to a Novartis Pipeline Agent. Array shall provide Novartis with all draft filings with any Regulatory Authorities related to each clinical trial involving a Novartis Pipeline Agent (other than

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non-substantial, routine correspondence) for review and comment at least [*] in advance of the intended date of submission (or, to the extent necessary, such shorter period to meet such intended date of submission), and shall incorporate all reasonable comments of Novartis thereto.


c.	Each Party shall provide the other Party with copies of all correspondence with the applicable Regulatory Authorities relating to its compound that affects the conduct of a clinical trial, and respond within a reasonable time frame to all reasonable inquiries by the other Party with respect thereto.

Exhibit A to Schedule I
Clinical Trials

Clinical Trials Sponsored by Novartis as of the Effective Date



Trials	Transition Date*
Phase III Trials:
COLUMBUS Trial	N/A
NEMO Trial	Availability of Conclusions from First Interpretable Results (but in no event later than the end of Q3 2016)
[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]
[*]	[*]
[*]	[*]
[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]	[*]
[*]
[*]	[*]
[*]
[*]	[*]

* As of such transition date, Array will assume responsibility to conduct and complete the trial.

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Exhibit 10.5

EXECUTION VERSION

STRICTLY CONFIDENTIAL

TRANSITION AGREEMENT

WHEREAS, Novartis and Array are parties to the LGX Asset Transfer Agreement dated as of January 19, 2015 (the “Asset Transfer Agreement”); and

WHEREAS, in connection with the Contemplated Transactions, the Parties desire to provide for the transition of certain activities related to the Development of Encorafenib from Novartis to Array (the “Transition”), on the terms and subject to the conditions hereof.

ARTICLE I
DEFINITIONS

Section 1.1 Definitions. Capitalized terms used herein but not defined herein have the meanings ascribed to them in the Asset Transfer Agreement. As used herein, the following terms have the meanings set forth below:

“Agreement” has the meaning set forth in the preamble.

“Array” has the meaning set forth in the preamble.

“Asset Transfer Agreement” has the meaning set forth in the recitals.

“Auditor” has the meaning set forth in Section 4.2.

“COLUMBUS Trial” means the clinical trial designated with the following ClinicalTrials.gov identifier: NCT01909453.

“Combination Trial” has the meaning set forth in Schedule I.

report forms and case report forms); and (c) resolution of all outstanding data queries; provided, however, that “Complete” or “Completion” also includes if Novartis is responsible for the Completion of a clinical trial, completion and delivery by Novartis to Array of a full statistical analysis, in a form reasonably acceptable to Array, of all Study Data.

“CRO” means a Third Party contract research organization engaged by one of the Parties to perform one or more clinical studies.

“DRC” has the meaning set forth in Schedule I.

“Drug Product” has the meaning set forth in the Supply Agreement.

“Drug Substance” has the meaning set forth in the Supply Agreement.

“Facility” has the meaning set forth in the Supply Agreement.

“Finished Product” has the meaning set forth in the Supply Agreement.

“First Patient First Visit” means the completion, in accordance with applicable study protocol and regulations, of a first study visit by a human subject in a clinical trial.

“Manufacturing Technology” means all material data and manufacturing Know-How that is described on Exhibit B to Schedule I and is necessary or materially useful for the Manufacturing of the Product and the Drug Substance.

“Marketing Approval” means, with respect to a product containing Encorafenib, in any country or jurisdiction, any approval, registration, license or authorization from a Regulatory Authority in a country or other jurisdiction that is necessary to Commercialize such product in such country or jurisdiction.

“Materials” has the meaning set forth in the Supply Agreement.

“Novartis” has the meaning set forth in the preamble.

“Obligations” has the meaning set forth in Section 2.1.

“Other Novartis Sponsored Trials” means those clinical trials designated with the following ClinicalTrials.gov identifiers: [*].

“Party” or “Parties” has the meaning set forth in the preamble.

“Product” has the meaning set forth in the Supply Agreement.

“Product Tech Transfer” has the meaning set forth in Schedule I.

“Qualification Support Services” has the meaning set forth in Schedule I.

[*]

“Reimbursable Costs” has the meaning set forth in Section 4.1(a).

“Reimbursement Period” means the period commencing on the date hereof and ending on the [*] anniversary hereof.

“Tech Transfer CMOs” means the Commercial Supply CMO and [*] (as each term is defined in the Supply Agreement).

“Tech Transfer Period” has the meaning set forth in Schedule I.

“Technical Transfer Plan” has the meaning set forth in Schedule I.

“Technical Transfer Services” has the meaning set forth in Schedule I.

“Term” has the meaning set forth in Section 3.1.

“Transition” has the meaning set forth in the recitals.

ARTICLE II
OBLIGATIONS TO BE PERFORMED

Section 2.1 Obligations. In accordance with the terms and provisions of this Agreement, each Party agrees to perform the obligations assigned to such Party described in and in accordance with Schedule I (collectively, such Party’s “Obligations”) for the time period and to the extent specified in Schedule I. At its option, Array may cause any of its Obligations to be performed by one of its Affiliates or by any Third Party. At its option, Novartis may cause any of its Obligations to be performed (a) by one of its Affiliates or (b) by any Third Party who, as of the signing date of the Asset Transfer Agreement, was performing or had performed such Obligations on behalf of Novartis, and (c) subject to the prior written consent of Array as to the decision to cause such Obligations to be performed by a Third Party and the identity of such Third Party (in each case, not to be unreasonably withheld, delayed or conditioned, provided that notwithstanding the dispute resolution provision in Section 5.3, any dispute over whether the withholding, delay or conditioning of such consent is reasonable shall be submitted for resolution by the Parties to the monitor to be appointed by the FTC pursuant to Section 7.1(c) of the Asset Transfer Agreement). Each Party shall remain responsible, in accordance with the terms of this Agreement, for performance of any of its Obligations it causes to be so performed.

Section 2.2 Standard of Performance.

(b) Other than as expressly set forth in this Section 2.2, the Asset Transfer Agreement and Ancillary Agreements, neither Party makes any representations or warranties of any kind, express or implied, with respect to its Obligations performed hereunder.

Section 2.4 Transition Committee. The Transition Committee shall be responsible for overseeing the performance of the Parties’ Obligations hereunder in accordance with Section 3.9 of the Asset Transfer Agreement. Each Party’s representatives on the Transition Committee shall identify and designate, from time to time, a contact person for such Party’s Obligations.

Section 2.5 Regulatory Matters.

(a) For the sake of clarity, the Parties shall conduct all clinical trials in accordance with the applicable Clinical Trial Agreement.

(b) Except as necessary for Novartis to perform its Obligations under this Agreement or its obligations under any Ancillary Agreement or as otherwise set forth in any Clinical Trial Agreement, Array will file and be the owner of all Regulatory Materials to the extent related to Encorafenib and products containing Encorafenib (alone or in combination), including any filings for Regulatory Approval. Novartis will retain ownership and remain the sponsor of such existing Regulatory Materials as are necessary for Novartis to perform its Obligations under this Agreement and its obligations under any Clinical Trial Agreement, but solely to the extent necessary and until completion of such obligations by Novartis. Thereafter (or earlier for any such Regulatory Materials that are not necessary for Novartis to complete such Obligations), upon the request of Array, Novartis will assign or cause to be assigned to Array or its designee (or to the extent not so assignable, Novartis will to the extent possible make available to Array or its designee the benefits of) all such Regulatory Materials, or, if directed by Array (in its sole discretion) in writing, close or inactivate such Regulatory Materials as soon as reasonably practicable.

ARTICLE III
TERM AND TERMINATION

Section 3.2 Termination. Notwithstanding anything to the contrary contained herein, this Agreement may be terminated, in whole or in part, at any time by the mutual consent of the Parties.

ARTICLE IV
PAYMENT

Section 4.1 Reimbursement of Array Costs.

(a) Subject to Section 4.1(b) and Section 4.1(c), Novartis shall reimburse Array for certain Out-Of-Pocket Costs and FTE Costs as set forth in paragraph 4 of Schedule I incurred by Array during the Reimbursement Period (“Reimbursable Costs”).

(b) Notwithstanding any other provision of this Agreement, in no event shall Array be entitled to be reimbursed hereunder for Reimbursable Costs that exceed, [*].

(c) For each calendar quarter starting after the second (2nd) calendar quarter after the Effective Date, no later than [*] days prior to the beginning of each such calendar quarter, Array shall provide to Novartis, for the limited purpose of assisting Novartis with its budgetary processes, a non-binding, written good faith estimate, in reasonable detail (including a breakout of Out-of-Pocket Costs and FTE Costs), of the amount of Reimbursable Costs expected to be incurred by Array during such calendar quarter. The Parties acknowledge and agree that such estimate is provided by Array for information purposes only (and cannot be used by Novartis for any other purpose) and that any inaccuracy in such estimate shall not constitute a breach of this Agreement.

(d) Within [*] of the end of each calendar month during the Term, Array shall invoice Novartis for Reimbursable Costs incurred by Array in the preceding calendar month. Novartis shall pay the invoiced amount within [*] following receipt thereof. Array shall be responsible for the payment of any sales or other taxes relating to the provision of goods or services received with respect to the Obligations.

(e) To the extent Novartis disputes in good faith any amount payable by Novartis to Array under this Section 4.1, Novartis shall notify Array in writing of the nature and amount of such dispute in reasonable detail prior to the [*] following Novartis’s receipt of the invoice which relates thereto. Such dispute shall be resolved in accordance with the dispute resolution process provided in Section 10.9 of the Asset Transfer Agreement. For the sake of clarity, (a) this Agreement shall continue in full force and effect (and the performance of all Obligations under this Agreement shall continue in accordance herewith) during the pendency of any such dispute and (b) Novartis shall pay any undisputed amounts when due under Section 4.1(d).

(f) All payments required to be made by Novartis pursuant to this Agreement shall be invoiced in and made in U.S. dollars in the form of cash or by wire transfer of immediately available funds to an account designated by Array.

Section 4.2 Audits. Array shall keep complete, true and accurate books and records in accordance with its Accounting Standards in sufficient detail for Novartis to confirm [*] due under this Agreement. Array shall keep such books and records for at least [*] following the end of the fiscal year to which they pertain. Novartis shall have the right for a period of [*]

after receiving any invoice with respect to payments due and payable hereunder to appoint an independent accounting firm (the “Auditor”) reasonably acceptable to Array to inspect the relevant records of Array or its Affiliates to verify such reports, statements, records or books of accounts, as applicable. Before beginning its audit, the Auditor shall execute an undertaking reasonably acceptable to Array by which the Auditor shall keep confidential all information reviewed during such audit. Array and its Affiliates, as applicable, shall make its records available for inspection by such Auditor during regular business hours at such place or places where such records are customarily kept, upon receipt of reasonable advance notice from Novartis, solely to verify the accuracy of Array’s or its Affiliate’s payment records or books of accounts and compliance in other respects with this Agreement. The Auditor shall have the right to disclose to Novartis the results and its conclusions regarding any Reimbursable Costs owed under this Agreement, and Novartis shall treat such conclusions as Confidential Information pursuant to Article VII of the Asset Transfer Agreement. For the avoidance of doubt, notwithstanding the foregoing, the Auditor shall not disclose to Novartis any more detailed information than Novartis would have otherwise been entitled to receive pursuant to this Agreement absent this audit right. The audit report and basis for any determination by the Auditor shall be made available for review and comment by Array, and Array shall have the right, at its expense, to request a further determination by such Auditor as to matters that Array disputes (to be completed no more than [*] days after the applicable audit report is provided to Array and to be limited to the disputed matters). If the Parties disagree as to such further determination, such dispute shall be resolved pursuant to Section 10.9 of the Asset Transfer Agreement. Such inspection right shall not be exercised more than once in any calendar year during the Term and once thereafter. Novartis shall pay its own costs of such inspections, as well as its own legal expenses associated with enforcing its right with respect to any payment hereunder, except that in the event there is any downward adjustment in aggregate amounts payable for any calendar year shown by such inspection of more than [*] of the amount paid for such calendar year, Array shall pay for such inspection. Array shall promptly reimburse Novartis the amount of any overpayment by Novartis of Reimbursable Costs. Novartis shall promptly pay Array the amount of any underpayment by Novartis of Reimbursable Costs.

ARTICLE V
MISCELLANEOUS

Section 5.5 Indemnification. Each Party acknowledges that this Agreement is subject to the indemnification provisions set forth in the Asset Transfer Agreement.

Section 5.6 Limitation of Liability. EXCEPT TO THE EXTENT (A) EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT OR IN THE ASSET TRANSFER AGREEMENT; OR (B) ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER ARTICLE IX OF THE ASSET TRANSFER AGREEMENT, NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY (X) FOR ANY PUNITIVE OR INCIDENTAL DAMAGES, OR (Y) FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY OR SPECIAL DAMAGES, LOST PROFITS, LOST REVENUE OR OPPORTUNITY COSTS (INCLUDING WHERE CALCULATED BY USING OR TAKING INTO ACCOUNT ANY MULTIPLE OF EARNINGS, CASH FLOW, REVENUE OR OTHER SIMILAR MEASURE).

Section 5.7 Binding Effect; Assignments. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Each Party agrees that its rights and obligations under this Agreement may not be transferred or assigned, directly or indirectly, to any Person without the prior written consent of the other Parties; provided, however, that each Party may transfer or assign this Agreement (without the other Party’s consent) (A) to an Affiliate (for so long as such Person remains an Affiliate) or (B) to any Third Party that purchases or otherwise receives all or substantially all of the assets owned or controlled by such Party to which this Agreement relates (whether by merger, consolidation, stock sale, asset sale or otherwise).

days following the date deposited with such overnight courier service, in each case, pending the designation of another address, addressed as follows:

If to Array:

Array BioPharma Inc.
3200 Walnut Street
Boulder, CO 80301
USA

Attention: General Counsel

If to Novartis:

Novartis Pharma AG
Lichtstrasse 35
CH - 4056 Basel
Switzerland
Attention: General Counsel

Section 5.11 Entire Agreement. This Agreement, including the Schedules hereto, which are incorporated by reference herein, the Asset Transfer Agreement, and the other Ancillary Agreements represent the entire understanding and agreement between the Parties with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings between the Parties with respect to such subject matter. All provisions contained in any Schedule delivered by or on behalf of the Parties in connection with this Agreement are an integral part of this Agreement. In the event of any conflict between the terms of this Agreement and the terms of any Schedule, the terms of this Agreement shall control and prevail.

of this Agreement, and the invalid or unenforceable provision shall be fully severed from this Agreement and there shall automatically be added in lieu thereof a provision as similar in terms and intent to such severed provision as may be legal, valid and enforceable.

[signature page follows]

IN WITNESS WHEREOF, the Parties have caused this Transition Agreement to be signed by their respective representatives thereunto duly authorized, all as of the date first written above.



NOVARTIS PHARMA AG


By:	/s/ David P. Tolman
	Name: David P. Tolman attorney-in-fact
	Title: Vice President, General Counsel
	Global Head Legal
	Novartis Oncology


By:	/s/ Bruce Shapiro
	Name: Bruce Shapiro attorney-in-fact
	Title: Vice President
	Global Head Legal Transactions
	Novartis Oncology


ARRAY BIOPHARMA INC.

By:	/s/ Ron Squarer
	Name: Ron Squarer
	Title: CEO

SCHEDULE I


1.	Regulatory Assistance and Support. Upon reasonable notice and request from Array to Novartis, Novartis will provide to Array, in a timely manner and [*], the following assistance, cooperation or advice:

•

With respect to the initial regulatory filings for Marketing Approval of Encorafenib (either alone or in combination) for the first indication in the [*] and, until [*] after receipt by Array, its Affiliates or licensees of the first such Marketing Approval, with respect to regulatory filings in any of such countries, Novartis (i) will make its employees available to answer questions with respect to documentation, referencing and generation of tables and statistics necessary for such filings and (ii) provide access to any information, Know-How, data or supporting documentation in Novartis’s possession necessary or useful for such filings (if any). Array will be primarily responsible for, and the applicant of, any such filings.


2.	Manufacturing Technology Transfer.

In connection with the transfer and assignment of the Manufacturing Technology pursuant to the Asset Transfer Agreement, Novartis will provide to Array, in a timely manner and [*], cooperation and support with respect to: (i) transferring the Manufacturing Technology for the Drug Substance and Product, as applicable, to the Tech Transfer CMOs (the “Product Tech Transfer”); and (ii) qualifying and gaining regulatory approval for the Tech Transfer CMOs as a manufacturing site (“Qualification Support Services,” and together with the Product Tech Transfer, the “Technical Transfer Services”). Novartis will reimburse Array for [*] associated with the Technical Transfer Services (including all costs associated with registration stability batch runs, data validation and qualification batch runs and successful pre-approval inspections) [*].

Novartis and Array, in consultation with the Tech Transfer CMOs, shall discuss and agree on a plan that sets out the timelines and respective obligations of each of the Parties in relation to the Technical Transfer Services to be provided hereunder (the “Technical Transfer Plan”), which shall be attached hereto as Exhibit C to this Schedule I. The Parties shall endeavor to agree on a Technical Transfer Plan within [*].


c)	Novartis’s obligations to perform the Technical Transfer Services will continue until (a) [] or (b) [] (the “Tech Transfer Period”).


d)	The Technical Transfer Services provided by Novartis shall be [*].


e)	To the extent any Manufacturing Technology is currently used, or is contemplated to be used, by Novartis for use other than in connection with Encorafenib, the Parties

will cooperate to ensure that Array and/or its designee has the use of Manufacturing Technology solely for Drug Substance and Product and Novartis has the use of such Manufacturing Technology solely for use other than in connection with Encorafenib, and Novartis will be entitled to retain copies of all related documentation (e.g., user manuals, etc.) solely for use other than in connection with Encorafenib, provided, however, that Novartis shall not use any Manufacturing Technology that is specifically related to Encorafenib in connection with (a) Encorafenib and products containing Encorafenib or (b) Competing Products. All Technical Transfer Services provided under this Agreement shall be limited solely for use in relation to Drug Substance, Product or Finished Product. If there is a conflict between Manufacture of Product for Array hereunder and the Manufacture of any other product, the conflict will be resolved in a fair and reasonable manner by Novartis. Without limiting the foregoing, Novartis shall dedicate to the Manufacture of Drug Substance, Product and Finished Product hereunder at least the same level of priority as Novartis dedicated to Product as of the date of the Asset Transfer Agreement and no less than the same level of priority as dedicated to Novartis’s proprietary (i.e., non-generic) compounds and products Manufactured at the Facility at which the Product is being Manufactured.

The supply agreements for Materials used in Drug Substance and other Product presentations and the final formulation of Product and the contracts and purchase orders for laboratories and consultants related thereto included in the Manufacturing Technology may also be used by Novartis for use other than in connection with Encorafenib. To the extent that any such agreements, contracts and purchase orders are not transferred from Novartis to Array as Third Party Agreements pursuant to the Asset Transfer Agreement, either because it is not permitted under the terms of such Third Party Agreement or it is impractical, Novartis will work with Array, [*], to qualify and put in place appropriate supply and consulting agreements with relevant vendors, laboratories and consultants.

During the Tech Transfer Period, Novartis shall make its relevant scientific and technical personnel reasonably available to Array at Novartis’s offices, at reasonable times during Novartis’s normal business hours and upon reasonable prior notice, to answer any questions or provide instruction as reasonably requested by Array concerning the Manufacturing Technology and shall facilitate visits to the Facility by Array personnel during regular business hours at a time and frequency to be determined by Novartis. In addition, Novartis agrees that Array may have a limited number of personnel at the portion of the Facility used in connection with the manufacture of the Product during regular business hours during a manufacturing campaign for the Product and as set forth in the Quality Agreement (as defined in the Supply Agreement). Such personnel may either be technical or quality personnel. Array’s personnel shall comply with Novartis’s procedures concerning cGMP (as defined in the Supply Agreement), training, safety, hygiene, confidentiality and

I-2

controlled access to facilities and documents as set forth under the Quality Agreement.

Certain Manufacturing Items. Novartis will transition to Array, at Novartis’s expense and on a mutually agreed timeline, which in no event will be completed later than [*], such plans and activities, if any, regarding the following projects, in each case, planned and approved by Novartis in the ordinary course, and until such transition is complete will continue these projects in the ordinary course of business as currently contemplated:


•	[*]


•	[*] and


•	[*]


4.	Conduct of Clinical Trials.

COLUMBUS Clinical Trial. Novartis will conduct, at its sole expense (subject to Section 4.1(b) of the Agreement), the COLUMBUS Trial, provided, however, that Array or its CRO will assume responsibility to conduct and Complete the COLUMBUS Trial upon the applicable transition date set forth on Exhibit A, and, Novartis will reimburse Array the Out-of-Pocket costs and fifty percent (50%) of FTE Costs associated with such conduct and Completion of the COLUMBUS Trial, in each case, within the parameters of the current study protocol for such trial and such other costs resulting from changes to such protocol in accordance with paragraph 4(e)(i) of this Schedule I after the transition date.

Other Novartis Sponsored Trials. Novartis will conduct, at its sole expense, the Other Novartis Sponsored Trials, provided, however, that Array or its CRO will assume responsibility to conduct and Complete each such Other Novartis Sponsored Trial upon the applicable transition date set forth on Exhibit A, or, with respect to Other Novartis Sponsored Trials being conducted by Clinical Research Organizations, upon the assignment of the applicable agreement by Novartis to Array, and Novartis will reimburse Array the Out-of-Pocket Costs and fifty percent (50%) of FTE Costs associated with such conduct and Completion of the Other Novartis Sponsored Trials, in each case, within the parameters of the current study protocols for such trials and such other costs resulting from changes to such protocol in accordance with paragraph 4(e)(i) of this Schedule I after the applicable transition date.


c.	Intentionally left blank.

Investigator Sponsored Clinical Trials. Pursuant to the Asset Transfer Agreement, Novartis will transfer (by assigning applicable clinical trial agreements, as Third Party Agreements, to Array), and Array will oversee the conduct and Completion of, the Ongoing Investigator Sponsored Clinical Trials, and Novartis will evaluate, and make determinations to proceed with respect to, the Proposed Investigator Sponsored Clinical

I-3

Trials in accordance with Section 5.1(b) of the Asset Transfer Agreement. Novartis will reimburse Array the Out-of-Pocket costs and fifty percent (50%) of FTE Costs associated with the conduct and Completion of the Investigator Sponsored Clinical Trials, in each case, within the parameters of the current study protocols for such trials and such other costs resulting from changes to such protocol in accordance with paragraph 4(e)(i) of this Schedule I.


e.	General.

Novartis (or a Third Party, as applicable) will use its best efforts to conduct and, with respect to trials with then-current timelines that contemplate Completion prior to the applicable transition date set forth on Exhibit A, Complete all the clinical trials assigned to it in accordance with the then-current protocol and timeline, including taking into account any changes made thereto by the Transition Committee, or in accordance with this paragraph 4(e)(i). Novartis will not make any changes to any of the protocols therefor that would reasonably be expected to delay or halt any trial, except as approved by the Transition Committee. Without limiting the foregoing:


(1)	each Party agrees that it will consent to and implement any changes to the protocols for any clinical trials involving Encorafenib (but not any Novartis Compound), in each case, that are reasonably necessary in order for the applicable clinical trial to achieve the intended objectives of such clinical trial as set forth in the clinical protocol in place subsequent to such change and [*]; and


(2)	the Parties agree that any proposed changes to the protocols for any clinical trials involving a Novartis Compound shall be mutually agreed upon by the Parties and that [*].


ii.	Array (or a Third Party, as applicable) will use its best efforts to conduct and complete all the clinical trials assigned to it that involve a Novartis Compound in accordance with the then-current protocol and timeline, including taking into account any changes made thereto by the Transition Committee.


iii.	Novartis will provide all other information, data, technical assistance, support and other materials as may be requested by Array that is reasonably necessary for carrying out the foregoing clinical trial activities.

iv.

For the avoidance of doubt, and notwithstanding any other provision of the Asset Transfer Agreement or the Ancillary Agreements (including this Agreement), Novartis will have the right to suspend any clinical trial involving a Novartis Compound immediately if (a) Novartis concludes in its reasonable judgment, which conclusion shall be subject to confirmation by a dispute resolution committee (“DRC”) in the event that Array in its reasonable judgment disagrees with the conclusion of Novartis, (b) a Regulatory Authority concludes, or (c) if applicable, the

I-4

data safety monitoring board recommends, that the Study Data show that the continuation of such trial would pose adverse risks to the health or safety of the trial subjects. If both Parties are unable to amend the trial protocol in a manner that reasonably addresses such safety concerns within [*] of the suspension date, then the Parties shall submit the matter for dispute resolution pursuant to Section 10.9 of the Asset Transfer Agreement and if the Parties are unable to resolve such matter in accordance therewith then either Party may terminate this Agreement with respect to such trial. For purposes of the foregoing, if a DRC is needed for a clinical trial, it shall be formed as a three-person committee that shall act by majority vote and be comprised of the Principal Investigator for such clinical trial, who shall chair such committee, and two additional clinical investigators, with each Party selecting one such clinical investigator.


5.	Intentionally left blank.

Novartis Pipeline Agents. Novartis will provide continued clinical supply for and permit continuation of the combination studies of Encorafenib that include a Novartis Pipeline Agent within the parameters of the current study protocols for the clinical trials referenced in Exhibit A. On or before each subsequent clinical trial of Encorafenib in combination with a particular Novartis Pipeline Agent (the “Combination Trial”), the Parties shall enter into a clinical trial agreement governing each such trial on commercially reasonable terms. For each Combination Trial that is a Phase 3 trial, Novartis will notify Array by [*] whether or not it intends to register and Commercialize the Novartis Pipeline Agent for the indication(s) specified in such Combination Trial; provided, that if Novartis notifies Array of its intent to register and Commercialize but thereafter makes a determination not to Commercialize such Novartis Pipeline Agent for such indication, then it will provide at least [*] prior notice to Array of cessation of Development activities for that Novartis Pipeline Agent. Subject to any license agreement obligations that Novartis may have with Third Parties for return to any such Third Party of Novartis Pipeline Agents that are licensed by Novartis from such Third Party, if Novartis determines that it (or any licensee of Novartis) will not Commercialize such Novartis Pipeline Agent (or, if after launch of any Novartis Pipeline Agent, Novartis determines to no longer Commercialize such Novartis Pipeline Agent) for any indication, then it will enter into a license agreement with Array on mutually agreed upon commercially reasonable terms, including with respect to financial terms taking into account a discount to the market value reflecting Novartis’s decision not to commercialize the product, with an exclusive, irrevocable, worldwide license, with the right to sublicense, to the rights to Develop and Commercialize such Novartis Pipeline Agents in the field of oncology in combination with Encorafenib. For the avoidance of doubt, Array shall not have any rights hereunder to pursue, and Novartis shall not have any obligations to permit, clinical trials of Encorafenib in combination with any Novartis compound other than the Novartis Pipeline Agents.


7.	Audits. Novartis shall permit its books and records pertaining to the clinical trials to be conducted by or on its behalf pursuant to this Agreement to be examined no more than [*]

I-5

per calendar year, upon reasonable notice during normal business hours, provided such examination is requested in writing at least ten (10) business days in advance; provided, further, that any Array representative signs a confidentiality agreement in form and substance reasonably acceptable to Novartis (and its CRO, as applicable). Such examination is to be made at the expense of Array.


8.	Participation in Regulatory Communications.

With respect to any clinical trials conducted by Novartis: Prior to transition of any such clinical trial to Array (as applicable), (i) Novartis shall be primarily responsible for interfacing, corresponding and meeting with Regulatory Authorities with respect to the conduct of any clinical trial involving Encorafenib, and shall keep Array fully informed of all regulatory communications and developments relating to such clinical trial, provided, however, that (A) Array shall have the right, at its option, to participate in any preparation for meetings with Regulatory Authorities and/or to attend and participate in all such meetings and (B) Array shall have primary control over all such interfaces, correspondence and meetings to the extent related solely to Encorafenib; and (ii) Novartis shall provide Array with all draft filings with any Regulatory Authorities related to each clinical trial involving Encorafenib (other than non-substantial, routine correspondence) for review and comment at least [*] days in advance of the intended date of submission (or, to the extent necessary, such shorter period to meet such intended date of submission), and shall incorporate all reasonable comments of Array thereto. For the sake of clarity, after transition of any such clinical trial to Array, Array shall be primarily responsible and shall have primary control over all such interfaces, correspondence and meetings.


c.	Each Party shall provide the other Party with copies of all correspondence with the applicable Regulatory Authorities relating to its compound that affects the conduct of a

I-6

clinical trial, and respond within a reasonable time frame to all reasonable inquiries by the other Party with respect thereto.

I-7

Exhibit A to Schedule I
Clinical Trials

Clinical Trials Sponsored by Novartis as of the Effective Date



Trials	Transition Date*
Encorafenib Phase III Trials:
COLUMBUS Trial	The date upon which the last patient first visit occurs (but in no event later than end of Q2 2016)
[*]
[*]	[*]
[*]
[*]	[*]
[*]	[*]
[*]	[*]

* As of such transition date, Array will assume responsibility to conduct and complete the trial.

Exhibit B to Schedule I
Manufacturing Technology


1	Key Contacts


•	[*]


•	[*]


•	[*]


2	Drug Substance


A.	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


B.	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


C.	[*]


•	[*]


•	[*]


•	[*]


3	Drug Product


A.	[*]


•	[*]


•	[*]


•	[*]


B.	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


•	[*]


4	Reference Standard(s)


•	[*]


5	Regulatory


•	[*]


•	[*]


6	Environmental Health and Safety


•	[*]

Exhibit C to Schedule I
Technical Transfer Plan

[To be attached in accordance with paragraph 2.6 of Schedule I]

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ron Squarer, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Array BioPharma Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within this entity, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 6, 2015	By:	/s/ RON SQUARER
			Ron Squarer
			Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David Horin, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Array BioPharma Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within this entity, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	May 6, 2015	By:	/s/ DAVID HORIN
			David Horin
			Chief Financial Officer

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report of Array BioPharma Inc. (the “Registrant”) on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:


(a)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.



Date:	May 6, 2015	/s/ RON SQUARER
		Ron Squarer
		Chief Executive Officer


		/s/ DAVID HORIN
		David Horin
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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