Amgen Inc. quietly backed out of its partnership with Array Biopharma Inc. for development of glucokinase activators (GKA), returning the program, including lead candidate ARRY-403, back to Array. The collaboration dates to 2009, when Amgen paid $60 million up front plus research funding for worldwide rights to Array's small-molecule GKA program.

ARRY-403 was in Phase I testing in patients with Type II diabetes at the time. Array recently completed a Phase IIa trial of the compound.

"We received notification this week that Amgen elected to end its glucokinase partnership with Array and return AMG151 to us," said Array CEO Ron Squarer in an investor conference Thursday morning, adding that the company does not currently have plans for the compound, but will provide future updates.

Under the original agreement, Amgen gained exclusive worldwide rights to the program, and responsibility for clinical development and commercialization after Phase I. Array retained an option to co-promote in the U.S. (See BioWorld Today, Dec. 16, 2009.)

In the Phase I single-ascending-dose study in 41 patients with Type II diabetes, ARRY-403 met its primary and secondary endpoints for safety, pharmacokinetics and glucose control.

It showed dose-dependent reductions in glucose excursions in response to a standardized meal as well as reduction in 24-hour fasting blood glucose.

Amgen was attracted to the compound by its effect on glucose reduction through targeting the liver and pancreas.

In addition to up-front payments, Boulder, Colo.-based Array also was eligible for contingent payments for certain clinical and commercial milestones, and double-digit royalties on sales of ARRY-403.

Thousand Oaks, Calif.-based Amgen agreed to fund a number of full-time Array employees as part of a two-year research collaboration intended to identify and advance second-generation GKAs.

Squarer said a staff reduction announced this week by Array was not related to Amgen's discontinuation of the collaboration around ARRY-403.

Array said it would undergo a company-wide 20 percent reduction in staff, focused on its discovery organization. The downsizing will leave Array with about 200 employees.

Squarer noted that Array has 14 clinical-stage products in its pipeline, with 10 in Phase II or Phase III, and partnered programs that collectively could provide $2.7 billion in milestones.

Array is carrying out a Phase II trial of ARRY-520 with dexamethasone and two Phase Ib combination trials with Kyprolis (carfilzomib, Onyx Pharmaceuticals Inc.) and Velcade (bortezomib, Millennium: The Takeda Oncology Co.), with data anticipated in time for the American Society of Hematology meeting in December.

It also has begun a Phase III (MILO) trial of its MEK inhibitor, MEK162, in 300 patients with recurrent or persistent low-grade serous ovarian cancer. That compound is partnered with Novartis AG, and Novartis has begun a Phase III trial of MEK162 in Nras-mutant melanoma.

Piper Jaffray analyst Edward Tenthoff wrote, "Appropriately, the Street is shrugging off Amgen's discontinuation of the glucokinase partnership." He reitereated his "overweight" rating, "although removing value for diabetes drug ARRY-403 trims our price target to $9 from $10."

Array reported $25.4 million in revenue for the fourth quarter of fiscal 2013, compared to $20.7 million for the same period in 2012. The revenue was boosted by an up-front license payment for ARRY-380 from Oncothyreon Inc. and a Phase III milestone from Novartis. Its net loss was $6.5 million, or 6 cents per share, compared to a net loss of $8 million, or 9 cents per share, for the same period in 2012.

The company ended the quarter with $109 million in cash, cash equivalents and marketable securities. Array's stock (NASDAQ:ARRY) fell 27 cents, to close at $6.28 Thursday.