Good day, everyone, and welcome to the Pfizer analyst and investor call to discuss proposed acquisitions of Array BioPharma. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Charles Triano, the Vice President of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, thanks for joining us today on short notice to review our proposed acquisition of Array BioPharma, which we announced this morning. Today, I'm joined by Mikael Dolsten, our head of R&D, Frank D'Amelio, our CFO, Andy Schmeltz, Global President and General Manager of Pfizer Oncology, and Chris Boshoff, our Oncology Chief Development Officer. The slides that will be presented on the call can be viewed on our website at pfizer.com/investors. As typical, before we start, I'd like to remind you that our discussions during the call will include forward-looking statements that are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward-looking statements.
Additional information regarding these factors is discussed under the Disclosure Notice section in the press release we issued this morning, as well as in Pfizer's 2018 annual report on Form 10-K and Pfizer's quarterly report on Form 10-Q for the quarter ended March 31st, 2019. Discussions during the call will also include certain financial measures that were not prepared in accordance with U.S. Generally Accepted Accounting Principles. Any non-GAAP measures presented are not and should not be viewed as substitutes for U.S. GAAP financial measures, have no standardized meaning prescribed by U.S. GAAP, and may not be comparable to the calculations of similar measures at other companies. For more information on non-GAAP financial measures, see Pfizer's 2018 financial report, which was filed as Exhibit 13 to Pfizer's 2018 annual report and Pfizer's quarterly report, 10-Q, for the most recent quarter ended March 31st.
We also urge you to read both the tender offer statement that will be filed by Pfizer with the SEC and the solicitation recommendation statement that will be filed by Array BioPharma with the SEC when they become available, because they will contain important information, including terms and conditions of the tender offer, which has not yet commenced. We'll now have prepared remarks from Andy, Frank, and Mikael, then we'll move to the Q&A session with the group. With that, I'll now turn the call over to Andy Schmeltz.
Thanks, Chuck. Good morning, and thank you for joining us. We wanted to share with you some additional context regarding our planned acquisition of Array BioPharma, which we announced this morning. I'll begin with a few words concerning how Array aligns with our strategy and how it provides a unique value proposition for advancing Pfizer leadership in oncology. The proposed acquisition of Array is well-aligned with the strategic priorities by which we evaluate business development opportunities. Specifically, we look for opportunities to deploy capital in a disciplined way to efficiently create meaningful shareholder value. We look for opportunities to execute bolt-on deals with the potential for mid to long-term value creation as well as revenue and earnings growth. We look for opportunities to strengthen individual businesses with capabilities and flagship medicines to enhance leadership positions in priority areas. The proposed acquisition of Array meets all of these objectives.
It has the potential to deliver breakthrough medicines that change patients' lives and enhances our long-term growth prospects as we look to strengthen and add durability to our growth profile for the next decade. Now, a few words about the compelling value proposition that Array brings to Pfizer. This proposed acquisition strengthens our innovative biopharmaceutical business and is expected to accelerate its growth trajectory, particularly in the long term. We have the rare opportunity to advance our oncology strategy and to augment our business with 3 value drivers. Value driver number 1, an already approved targeted oncology therapy, a combination of BRAFTOVI and MEKTOVI, with significant long-term potential for growth through expansion into additional areas of unmet medical need. Value driver 2, a large portfolio of out-licensed medicines and molecules that are expected to generate significant royalties over the long term.
Value driver 3, a track record of a highly productive research platform with a promising preclinical portfolio. Let me talk about each of these value drivers in a bit more detail. First, the BRAFTOVI and MEKTOVI combination. One of the most recent testaments of Array's highly productive R&D engine is the breakthrough combination of the BRAF inhibitor, BRAFTOVI, and the MEK inhibitor, MEKTOVI. This combination of two targeted therapies is already approved for the treatment of advanced BRAF mutant metastatic melanoma and has very attractive potential future life cycle opportunities. BRAFTOVI and MEKTOVI are being investigated as a potential first-in-class combination for certain patients with metastatic colorectal cancer and have the opportunity to treat earlier stages of the disease. Through the proposed acquisition of Array, Pfizer will set the stage to establish an industry-leading colorectal franchise with a potentially first and best-in-class combination that could have blockbuster revenue potential.
This will further augment our existing leading positions in both breast cancer and prostate cancer. The second value driver is royalties from out-licensed medicines. Array has an impressive track record of successfully discovering and developing small molecules and targeted therapies. Scientists from Array were responsible for the discovery of various breakthrough therapies that are now out-licensed to a number of high-quality biopharmaceutical companies. Royalties from this portfolio are expected to continue to drive additional substantial value over time. Last but definitely not least, we are very excited by Array's strong research platform, which has generated a promising range of early-stage molecules. Array's research team includes approximately 100 scientists at the research center in Boulder, Colorado. We will maintain Array's current structure and locations. Their R&D team in Boulder will be a standalone research unit to complement Pfizer's oncology research hubs.
Now I'm going to turn it over to Frank, who'll take you through the financial details of the transaction.
Thanks, Andy. I'll provide a brief financial overview of the transaction. Under the terms of the agreement, Pfizer will acquire all of the outstanding shares of Array BioPharma's common stock for $48 per share in cash, which represents a total enterprise value of approximately $11.4 billion. As Andy pointed out, between the current commercial opportunity, the royalty stream, and the R&D platform, there are several value drivers that supported our valuation here. In terms of financial impact, this proposed acquisition is primarily targeted to help strengthen our financial growth profile during the midterm, with the potential for meaningful value creation during the mid-2020s. Given that context, we expect the deal to be approximately $0.04-$0.05 dilutive to adjusted diluted EPS in each of 2019 and 2020, neutral in 2021, and accretive beginning in 2022, with increasing accretion anticipated thereafter.
We expect to finance a significant majority of the deal with new debt and the remainder financed with existing balance sheet cash. We don't see this transaction as encumbering potential future dividend increases or share repurchase activity. We will commence a tender offer shortly, the offer must remain open for at least 20 business days. The closing of the tender offer is subject to customary closing conditions, including required antitrust approvals and the tender of a majority of the fully diluted shares of Array BioPharma common stock. We expect to close in the second half of 2019. With that, I'll hand it over to Mikael.
Thank you, Frank. I would like to take the opportunity to provide more detail about Array BioPharma's lead clinical programs, BRAFTOVI and MEKTOVI. We are enthusiastic about BRAFTOVI and MEKTOVI as an approved combination for the treatment of patients with BRAF-mutant metastatic melanoma and potentially a first and best-in-class medicine for BRAF-mutant metastatic colorectal cancers. These are two tumors with a high prevalence and where the BRAF mutation plays an important role. In June 2018, FDA approved BRAFTOVI plus MEKTOVI for the treatment of patients with metastatic melanoma who test positive for BRAF genetic mutation. The combination is also approved and launched in Europe and Japan. Melanoma is the third most common cancer among women and the second most common cancer in men between 20 to 39 years of age. 30,000 people are diagnosed with metastatic melanoma each year, approximately half of them harbor BRAF mutations.
The initial market performance of BRAFTOVI and MEKTOVI has been strong, with the combination generating $35 million of net sales in its third commercial quarter. We estimate that one in three new patients start the treatment on this combination. Now some background on BRAF-mutant metastatic colorectal cancer. Colorectal cancer is the third most common cancer in the world and the second most common cause of cancer deaths in the U.S. About 200,000 people are diagnosed with metastatic colorectal cancer each year. Up to 15% of them harbor BRAF mutations. Metastatic colorectal cancer is a devastating disease and are no approved targeted treatment options to date for people with a BRAF-mutated cancer. In late May, Array announced compelling interim results from the pivotal phase III BEACON trial for second or third-line treatment of BRAF-mutated metastatic colorectal cancer.
They intend to submit this data for regulatory review in the United States in the second half of 2019. This is truly exciting news for patients. We believe there is also a future opportunity to expand into earlier treatment settings. Please note that Array has commercial rights for BRAFTOVI and MEKTOVI products in North America and has out-licensed the rights outside of these regions to Ono for Japan and South Korea, and Pierre Fabre in Europe and the rest of the world. The BEACON trial. Here you can see in more detail on the compelling interim data from the pivotal phase III BEACON clinical trial in patients with BRAF-mutated metastatic colorectal cancer who have been unsuccessfully treated with one or two prior therapies. The study met its primary endpoint and showed statistically significant improvement in the overall response rate and overall survival.
The second or third-line treatment with the BRAFTOVI triplet combination of BRAFTOVI plus MEKTOVI plus Erbitux, the latter also known as cetuximab, reduced the risk of death by 48% compared to the current standard of care chemotherapy. These are truly encouraging results. The triplet combination could be the first chemotherapy-free targeted regimen for patients with BRAF-mutant metastatic colorectal cancer. We believe that BRAFTOVI and MEKTOVI combination offers significant opportunities to expand into additional BRAF mutant solid tumor settings and expand its life cycle. The combination is being investigated in over 30 clinical trials across several solid tumor indications. We expect to continue driving growth through the robust development plan started by Array.
On the heels of the COLUMBUS trial, which led to the melanoma approval and the registrational BEACON trial for the second and third-line BRAF mutant metastatic colorectal cancer that he has mentioned, there is an ongoing single-arm ANCHOR trial for the first-line treatment of BRAF mutant metastatic colorectal cancer, which we expect to read out in the early 2020s. We plan to continue to look at the potential for indication expansion of BRAFTOVI and MEKTOVI in other BRAF mutated solid tumors. We will pursue a tissue-agnostic approach enrolling patients across malignancies where the incidence of the BRAF mutation is more modest, including lung and pancreatic cancer. In addition, we believe the combination has the potential to be effective in the adjuvant setting, for example, to prevent disease recurrence in patients who have undergone surgical removal of their tumors.
Today, we are setting the stage to create a potentially industry-leading franchise for colorectal cancer, alongside Pfizer's existing expertise in breast, prostate, lung, and renal cancers. A key value driver for this proposed acquisition is Array's highly productive research engine. We are excited by their impressive track record of successfully discovering and developing innovative small molecules and targeted cancer therapies. As you can see on the right, Array has a large portfolio of attractive medicines that are licensed to leading biopharma companies. Array's research site in Boulder, Colorado, includes more than 100 scientists. We will maintain their current structure, scientific talent, and locations. We plan to establish Array's R&D team as a standalone research unit to complement Pfizer's leading oncology research hubs in La Jolla and Pearl River. We expect this will minimize disruption and ensure that colleagues remain focused on their groundbreaking work.
We are enthusiastic about their promising range of early-stage programs. Together with Array, we have an even more attractive opportunity to advance the most promising science, and we will be a strong force to deliver the next wave of breakthrough cancer treatments. I'm going to turn it back to Andy for some closing thoughts.
Thank you, Mikael. In closing, this deal is a highly strategic fit for Pfizer. Specifically, it is consistent with our purpose to deliver breakthroughs that change patients' lives. It expands Pfizer's capabilities in oncology and brings a range of opportunities to create value. It sets the stage to establish leadership for the treatment of people with colorectal cancer. It augments Pfizer's R&D efforts in leading the next wave of targeted cancer medicines and combinations, and finally, it enhances our long-term growth prospects. In summary, we're creating compelling shareholder value through disciplined capital deployment, and we believe patients will benefit from this proposed acquisition for many years to come. We'll open it up to your questions.
Thanks, Andy. Operator, could we please poll for questions? Thank you.
At this time, if you would like to ask a question, you may do so by pressing star one. Again, that is star one to ask a question. We'll pause for a moment. Your first question comes from Vamil Divan with Credit Suisse.
Great. Thanks for taking my question. Maybe just first one, you touched on this a little bit on the call, but just around in your prepared remarks on the research engine and some of the steps you're taking, maybe you could just elaborate a little bit more on how you try and maintain that research engine within a much larger company now within Pfizer, and also specifically, is there any sort of retention packages that you've set in place to maintain some of the key talent from Array? Then second question, just around in the slides, you mentioned some potential other combination. Are there anything in the Pfizer pipeline right now that you see as being potentially attractive to combine with what you're acquiring through Array? Thanks.
We will have Mikael answer that question.
Thank you for the question. We are very impressed with the research engine that Array has. Clearly, what we think in dialogues with Array is to ensure that this productive culture and way of operating can continue in the most successful manner. That's why we stated it will be an independent unit building on its process talents of today. Of course, in a company of the combined Array and Pfizer, there are encouraging deep knowledge in oncology, whether biology, chemistry, clinical, regulatory, that will create a tremendous capability for the new Array to tap into, as well as for Pfizer legacy to tap into Array. We will ensure there will be one oncology enterprise, but with empowered unit that can execute, such as the Array unit in Boulder, Colorado, supplemented with our expertise at other sites.
Clearly, one of the compelling opportunities combining oncology pipeline is to create combinations that can increase response rate and durability. You noted in our introduction that that was part of the Array strategy themselves when combining BRAFTOVI and MEKTOVI. We see numerous opportunities in the Pfizer pipeline. I'll give examples of compounds that may fit for this criteria. Given the advance of targeted therapy and its opportunity to combine with immune oncology agents, we are quite keen to note that our internal PD-1, RN88, has now generated an encouraging profile in phase II studies and is one example of drugs that can be combined with Array molecules. We have, in addition to that, several targeted therapies in Pfizer that will be candidates for that. Such details will be worked out together with Array scientists as this deal continue to advance.
I'll ask Chris Boshoff to share some of his thoughts on the near-term opportunities in the clinical program.
Thank you very much, Mikael. I think Mikael mentioned RN88. This is a differentiated next generation PD-1 and currently administered subcutaneously four weekly, potentially up to six weekly. This could be combined with a number of medicines, not only with BRAFTOVI and MEKTOVI, but also a number of medicines we've identified in Array's preclinical portfolio. Additional, although we haven't declared the preclinical portfolio from Array yet, there's other opportunities that we can see, including combinations with our CDK4/6 franchise, including our next generation CDK4/6 inhibitors, as well as with the next generation HER2 ADC in our portfolio. Thank you.
Thank you very much, Chris. I just wanted to say that the Array pipeline consists preclinically of a number of exciting drugs. I know their management have indicated earlier that they expect that their pipeline can deliver about one IND annually, which we see as a very nice augmentation for the period to come, and to grow our clinical pipeline from now and onwards.
Vamil, you asked about retention. We are taking actions in the area of retention and obviously retaining key talent here is a critical aspect of the deal.
All right. Thanks, folks. Next question, please.
Your next question comes from Chris Schott with JPMorgan.
Great. Thanks very much for the questions. The first question I had was just elaborating a little bit more on where you see the combo positioning in CRC over time. I guess, specifically, do you see the very impressive data you saw, that second and third line data, as de-risking the first line opportunity? When we think about patient sizing and commercial opportunity, can you just talk a little bit more about the opportunity in second and third line? If a drug was to move earlier in development, what would be the incremental kind of patient opportunity on that front? My second quick question was just a little bit more on just priorities for capital deployment post this deal.
I guess specifically as we think about business development, just latest thoughts in terms of should we think about the company taking a little bit of a break from M&A after this, or is there still a financial capacity to continue to look at bolt-on transactions like this going forward? Thanks very much.
Thanks, Chris. I think we'll let Andy answer the first part of the question, and then I'll answer the second part. Andy?
Sure. The BRAFTOVI, MEKTOVI combination already approved in BRAF mutant metastatic melanoma, is off to a great start, just nearing its first year of availability in the U.S. Here, there are competing BRAF MEK agents, but we see the uptake very robust based on the COLUMBUS trial results that demonstrated strong overall survival. That being said, in colorectal cancer, where the second line plus results were just disclosed in the BEACON trial, there are not other registrational trials from the other BRAF MEK agents combinations. Here we see not only the opportunity to replicate a best in class, but certainly a first-in-class opportunity in colorectal cancer. With the ANCHOR trial already underway in first line, certainly strong results in the BEACON trial give us more confidence in the prospects in first line and perhaps earlier in disease. Thank you for the question.
Chris, on biz dev, in the capital allocation, where you asked specifically about biz dev. Let me bump it up a level and say from an overall capital allocation perspective, our priorities don't change. They continue to be dividends, share buybacks, investing in the business, and biz dev. Specific to biz dev, from my perspective, our priorities don't change. We've said, we never say never, but we've said we don't see a need to do a big deal. We continue to believe we don't have a need to do a big deal. You'll see us continuing to do bolt-ons in these kind of early to mid-stage deals, really targeting some of the mid-2020s when our next wave of LOEs come in. No change in strategy on any of this.
All right. Thank you, Frank. Next question, please.
Your next question comes from the line of Tim Anderson, Wolfe Research.
Thank you. Can you talk about the possibility of a tumor-agnostic filing for BRAF mutation? Is that something that could realistically occur in, let's say, the next couple of years, or is that too aggressive of an assumption? Then, can you talk about loss of exclusivity in the U.S.? When are you modeling U.S. generic entry? Thank you.
Tim, I'll hand that over to Mikael. Mikael, please.
Yeah. We clearly see an opportunity in the tumors that have a low single-digit BRAF mutant genotype to use a tissue-agnostic approach, and we will look together with Array into expanding existing clinical studies into that approach. Hopefully, given the strong data that has been seen in melanoma and colorectal, that you would also envision a fast pace in such a study, and in a few years, opportunities to consider data and pending registrations.
On the LOE date, our assumptions are based on an LOE date of 2031. Answer your question.
Great, thanks. Next question please, operator.
Your next question comes from Louise Chen, Cantor Fitzgerald.
Thanks for taking my questions. Hit a few here. First question I had was, when you said the blockbuster opportunity for this product, is it just for CRC, or does it include additional indications that you talked about? When you did the enterprise value for this deal, how much do you attribute to the earlier stage pipeline? Second question I had was, what kind of share you expect to get in melanoma, given some of the leadership in the PD-1 drugs and the data they've shown? The last question I had here was, do you have any consideration to combine this product with BAVENCIO? Thank you.
Andy?
Sure. I'll start with opportunities in metastatic melanoma. As I mentioned, the combination of BRAFTOVI, MEKTOVI's now been on the market for almost a year and has had robust uptake. Already, we see about 1 in 3 new patient starts for BRAF mutant metastatic melanoma to be with this BRAFTOVI, MEKTOVI combination. You can imagine the new patient starts are a leading indicator for overall prescriptions over time. We're confident that we'll continue to have robust uptake, recognizing that it's third to market combination in this category. In terms of other indications, I think on the slide that was depicted, we do anticipate a robust life cycle here. Possibly additional studies in melanoma, certainly opportunities in colorectal cancer. We absolutely will engage in discussions with Array and contemplate life cycle opportunities.
We talked about tissue-agnostic opportunities, possibly different combinations, depending on those discussions, maybe move into other malignancies as well.
Louise, on the value drivers, it's Frank. The nice thing about this deal from my perspective is there are several value drivers, right? You've got the BRAFTOVI, MEKTOVI in terms of melanoma, in terms of colorectal, there's royalty streams, there's also the clinical platform. All of which contribute in a meaningful way to the value of the deal.
Thanks, Frank. Next question, please.
Your next question comes from Andrew Baum with Citi.
Thank you. Couple of questions, please. First, could you talk to the competitive threat from the ongoing triple combination in melanoma that's in phase III from Novartis, the PD-L1 BRAF MEK, given the promising phase II data that was presented recently? Frank, I understand you may want to pass, but whether you could attribute the value to the various components you outlined in your overview for the sum paid for Array. I'm assuming the bulk of it was for the BRAF MEK. Just anything you could add on that would be interesting. Finally, one way to look at this data is obviously going along the tissue-agnostic approach, leveraging BRAF, but another way is looking at the potential for Pfizer to expand the colorectal cancer indication. You have some experience with CCR5. There is competitive data out there for synergy with PD-1 and that in colorectal cancer.
What's your level of interest in going beyond BRAF patient subpopulation in colorectal cancer? Thank you.
Andrew, we'll have Chris answer the competitive threat and then the indication expansion questions, and then I'll come back to the value question.
Thank you, Andrew. Just to start with the data, as you know from the COLUMBUS study, showed the combination with MEKTOVI and BRAFTOVI had a median overall survival of 33.6 months. Although we can't directly compare it against the other two studies that was conducted, the COMBI study and the coBRIM study, numerically that was the highest number ever recorded, the highest overall survival ever recorded for combination with a BRAF and a MEK in metastatic melanoma. We are therefore very confident specifically in this BRAF medicine. We believe it's superior pharmacological properties. It's got a low dissociation from the target, a long half-life. It also inhibits BRAF, so you don't have the downstream signaling pathways as seen with the others. Also you recorded lower incidents of premalignant or malignant skin lesions with this BRAF inhibitor.
What we currently do not know yet is whether the best option for patients will be a combination up front with a combination of BRAF MEK plus PD-1, or the role of immunotherapy sequencing with BRAF MEK. However, having said that, there's already ongoing studies with MEKTOVI and BRAFTOVI, both with ipi/nivo, with nivo, and with pembrolizumab, actually there's also an ongoing study with avelumab. We're also planning some additional studies with RNA 88, our subcutaneous PD-1 I mentioned earlier.
On the value, the way to think about it, Andrew, is the BRAF and then MEKTOVI in terms of melanoma and colorectal, one significant contributor. The potential royalties, another significant contributor. The platform, another significant contributor. I'll call it some other items, less of a contributor from a value perspective.
Right. Thank you, folks. Next question please, operator.
Your next question comes from Jason Gerberry with Bank of America.
Good morning. Thanks for taking my question. Just wanted to follow up on the IP question, the 2031 date. I thought from the Array 10-K it indicated BRAFTOVI would have patent term extension to 2036, then with MEKTOVI having shorter duration IP, would that component of the combination potentially genericize earlier than the 2031 date? That's question one. Question two, just on the first-line colorectal opportunity, how well characterized do you think the step up in treatment duration could be front line versus the second line plus opportunity? I know that Array in the past has communicated that that's a big sort of uncertainty in sort of sizing the first line versus the second line opportunities. Thanks.
Andy will handle the IP question, then Mikael will cover the first line versus second line question. Andy?
In terms of IP, obviously, this was an area that we looked at closely as part of our diligence process. Per the FDA's public Orange Book, the patents for the combination of BRAFTOVI and MEKTOVI don't expire until 2031, and that's the basis for our assumption.
Chris will handle the second part of the question.
Just to remind you, for the triplet, the overall response rate was 26.1% in the BEACON study. However, if we only look at the second-line patients, the response rate was 34.3% with the triplet, and the control, it was actually only 1.6%. 65% of all patients recruited within the BEACON study were second-line, and more or less 35% was third-line. Overall, this gives us confidence that in first-line, the overall response rate should even be higher. We are obviously looking forward to working with Array and with health authorities to understand the options for first-line CRC, and if required, to enhance the current ongoing study as well as use real-world evidence if required, as we did recently with palbociclib approval in male breast cancer and add additional studies again, if required in first-line.
Right. Thank you. Next question please, operator.
Your next question comes from Steve Scala with Cowen.
Thank you. Frank, can you provide specifics on the split between cash and debt to finance the transaction? Secondly, the late-stage opportunities are clear, but what do you see as the one or two most undervalued early-stage programs? Would KRAS G12V be one of them? Why wasn't a CVR used to cover some of the early-stage opportunities? Thank you.
Mikael will answer the early-stage question, then I'll handle the financing of the transaction. Then you also asked about a CVR.
Yeah. As we stated, it's a highly productive research engine, and we gave a list, which was just an example on the many programs that have been partnered. I think they have, in total, 17 programs partnered discovery and clinical stage. One of the partnership involves a technology developed by Array around the RAS oncogene platform, which is one of the most prominent oncogene cross several tumor types. As you can see in the slide I provided, they have partnered G12C, KRAS, and G12D with Mirati. Of course, that and many other of the programs contribute with a potential significant royalty stream that adds as a pillar to the BRAFTOVI, MEKTOVI rights that are with Array, as well as the research engine.
We haven't disclosed, as Array hasn't disclosed, the targets in the research engine that are the substrates for the expected annual $190 per year. Array has mentioned that they have benefited from working on RAS and have a significant knowledge and ambition to further develop a RAS platform beyond what's partnered with Mirati. That RAS oncogene contains many different mutations, it offers amplitude of opportunity and value.
Steve Scala, on the financing, the majority of the transaction will be financed with new debt, the remainder will be with existing balance sheet cash, the strong majority will be with that new debt. On the CVR, quite frankly, I like the way we constructed the deal as is. As you know, trying to value CVRs can be an extremely challenging task.
Thank you. Next question, please.
Your next question comes from Jim Birchenough with Wells Fargo Securities.
Hi, guys. Thanks for taking the questions. There was reference earlier to PD-1 combination. There are three ongoing studies with MEKTOVI, BRAFTOVI in various PD-1, PD-L1 combination. Just trying to get a sense of whether we should expect that data this year and how material it is to the acquisition. The second question is, Array had highlighted a new IND this year that we were eagerly anticipating and just wondering if you can comment on the target there and when we might expect an update on what that new IND might be in 2019. Thanks.
Thank you. Chris will handle the first question, then Mikael will handle the second question. Chris, please.
Thank you very much. We haven't disclosed yet the date for the data shown for the combinations. As mentioned earlier, there are combinations ongoing with nivolumab, with pembrolizumab, with nivo, with Opdualag and ipilimumab, as well as with avelumab. We hope to update you on those in the near future.
The preclinical pipeline of Array is deep and very exciting, but it hasn't been disclosed by the company, which will be the target for the first IND. It contains numerous oncology targets and typically kinases is among them. In addition to that, the RAS platform. What is so intriguing is the opportunity to see one IND per year of cancer medicines starting possibly 2019 from Array. Those medicines to be combined or standalone with many Pfizer medicines. We spoke earlier about PD-1 and RNA tech for IO. We also have in relevant indication by functional antibodies from Pfizer now coming into the clinic in the indication of colorectal cancer. We have other IO medicines such as a TGF-beta inhibitor. We have a broad CDK franchise.
Across these pipelines, there will be really added value, and that was part of the attraction from that pillar of the research engine.
Great. Thank you. Next question, please.
Your next question comes from Navin Jacob with UBS.
Hi, this is Prakhar Agrawal on behalf of Navin Jacob. I had two questions. First, Array has previously said that in melanoma they estimate a target market of about $400 million in the U.S. and over $1 billion globally. How does Pfizer view the market opportunity in melanoma? Second, what are the current diagnosis rates for BRAF mutation in colorectal cancer, and where does Pfizer see this reaching at peak? Thank you.
Andy will handle the size question in terms of the $400 million and the greater than $1 billion, and then Chris will handle the current dynamic market. Please, Andy.
BRAFTOVI, MEKTOVI, as I've stated, are off to a great start in metastatic melanoma. Remember here, the BRAF mutation accounts for about 45% of melanomas. We're excited for the opportunity there. We're not in a position to affirm or contradict previous statements that Array has made. We're excited that the medicines are approved in Europe with Array's partner, Pierre Fabre, and we look forward, at the appropriate time, to engaging with them and ensuring that the opportunities are maximized for patients in Europe.
Thank you. The current rate is actually quite high in the U.S. already for BRAF testing with colorectal cancers, over 90%. You're absolutely correct. There's significant opportunity in the rest of the world for BRAF testing colorectal cancer. We obviously have significant experience with this, thinking of ALK and ROS testing, but also more recently for EGFR testing. We're also looking forward to actually introduce potentially testing using plasma for circulating free DNA, which will make it much easier for physicians and for patients to be diagnosed with a BRAF positive malignancy.
Thank you, Chris. Next question, please.
Your next question comes from Umer Raffat with Evercore ISI.
Hi, guys. Thanks so much for taking my question. Perhaps first, what percentage of total deal consideration is for the BRAF plus MEK combo across melanoma and colorectal? I apologize if this was mentioned already. Once we sort of have a sense for that, my question really is, perhaps for Mikael, can you speak to the emerging data for the doublet versus triplet on survival in the BEACON trial, and what's your expectation for whether binimetinib gets used in colorectal setting? Finally, on PF-07307974, this might be my lack of familiarity, but can you explain why it took about two years from phase II to phase III in the cardiomyopathy indication, and whether there could be possible synergy with tafamidis as well? Thank you.
Mikael will handle the double versus triple question. Chris will handle the PF-07307974 question, and I'll answer the value question. Mikael, please. The double versus triple.
Yeah. We think the overall data of the triple was very impressive, and it had higher response rate than the doublet, and overall tolerability was comparable. We think that's the main combination going forward, both for the BEACON trial and also for first-line trials. It offers for the largest number of patients the most positive benefit. Clearly, the combination of BRAFTOVI, MEKTOVI is underpinned by the COLUMBUS trial in another indication, melanoma, where it's performed superior to any other known agents. We're very thrilled about that opportunity. When it comes to also other agents like the rare disease that you asked about, we cannot comment about the previous history of Array, but we think where it is now, it can also be taking benefit of our deep experience in development of rare disease drugs.
We look forward to combine what Array has been doing and add on our development and regulatory expertise and see if we jointly can accelerate things.
Chris, on the PF-07307974?
Just add both for the triplet versus doublet. Just a reminder, the current data was an early interim analysis, less than 50% of events. In fact, the data cut was two weeks after the last patient was actually dosed. We have to look at the totality of the data, not only the OS, but overall response rate, AE profile, again, reminding us that previously when BRAF is used without a MEK inhibitor, there can be additional toxicities, especially skin toxicities. Then also looking at the progressive disease rate, which we'll soon see when full data are disclosed. Progressive disease between the control, the doublet, and the triple. Looking at the totality of the data, as Mikael has pointed out, we are confident that the triplet specifically provides a breakthrough for patients.
On the other preclinical molecule, as mentioned, this is very highly complementary to our cardiomyopathy franchise, specifically the lamin cardiomyopathy, and we're looking forward with our rare disease franchise to interact with the ranolazine medicine.
Umer, on the value, I tried to answer this before when Andrew asked me, the way I think about it is, there's the BRAF and then MEKTOVI, one meaningful contributed evaluation. There's the royalties, which is another meaningful contributor, and by the way, related obviously to the BRAF and MEKTOVI. There's the platform. All three of which meaningfully contribute to the overall valuation that we assigned to the transaction.
Great. Thank you, Frank. Next question please, operator.
Your next question comes from Salveen Richter with Goldman Sachs.
Hi. Thanks for taking the question. Just was wondering if there's any possibility that the ongoing frontline phase II ANCHOR trial could support registration, or if you think a phase III trial is going to be needed there. Can you just remind us of your economics on the ex-U.S. rights to BRAFTOVI and MEKTOVI? Thank you.
Chris will handle the phase II, and then I'll handle the ex-U.S.
Thank you for the question. We are looking forward to working with Array BioPharma and with health authorities to understand the option for first-line metastatic colorectal cancer. Patients, as you know, with metastatic BRAF mutated colorectal cancer have a particularly poor prognosis, and BRAFTOVI, MEKTOVI with cetuximab offers a potential chemotherapy-free regimen that could have a significant impact on this disease. We will work with health authorities. We're looking forward to working with health authorities and with Array BioPharma to see if we need to enhance any studies, as I mentioned earlier, use real-world evidence as needed and add additional studies again, if required.
On the royalty arrangement. Think about Pierre Fabre has Europe and the rest of the world, excluding Japan and Korea, where Ono Pharmaceutical has it. In Pierre Fabre, our royalty rates range from 20%-35%, and with Ono Pharmaceutical, they range from 22%-25%. We have fairly healthy royalty rates there.
Thanks, Frank. If we could take our last question, please, operator.
Your last question comes from [Hima Inguva] with Bank of America.
Great. Thank you very much. Congrats on the deal. Frank, thanks for all the color. Maybe if you could talk about the reason behind financing the majority of the deal with debt, given the strong balance sheet position and access to cash, and how we should think about future financing on potential deals in the future. Thank you.
Sure. From my perspective, the capital markets are very favorable right now. It's a good time to go out and borrow money at what I'll call very, very favorable interest rates, very, very low, almost historically low. From my perspective, we're just being opportunistic in terms of how we are trying to finance the deal. In terms of future financing, the way I think about that is market conditions will very much determine what we do or don't do in the future. That said, we continue to have a strong balance sheet and expect to continue to have strong balance sheet going forward. Thank you.
Great. Thank you everybody for joining us this morning on short notice.
Thank you all. This does conclude today's conference call. You may all disconnect.