|ARRAY BIOPHARMA INC filed this Form 10-K on 08/11/2017|
Fiscal 2016 compared to Fiscal 2015 – The decrease in the cost of partnered programs from approximately $44.4 million to approximately $23.2 million was primarily attributable to shifting the recording of our costs associated with the development of binimetinib from cost of partnered programs to research and development for proprietary programs upon regaining the rights to binimetinib in March 2015.
Research and Development Expenses for Proprietary Programs
Our research and development expenses for proprietary programs include costs associated with our proprietary drug programs, which primarily consist of personnel related expenses, including salaries, benefits, costs to recruit and relocate new employees, travel, and other related expenses, stock-based compensation, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials and consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with regulatory filings and patents, software and facilities, and laboratory costs and other supply costs. 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.
Below is a summary of our research and development expenses for proprietary programs by categories of costs for the fiscal years presented (dollars in thousands):
Fiscal 2017 compared to Fiscal 2016 – Research and development expenses for proprietary programs increased 11% compared to the prior year primarily due to increased outsourced services and consulting costs required for the advancement of clinical trials for binimetinib and encorafenib. During fiscal 2017, we also incurred costs associated with the preparation of commercial batches of binimetinib and encorafenib as well NDA submission costs in excess of costs incurred during the prior year.
Fiscal 2016 compared to Fiscal 2015 – Research and development expenses for proprietary programs increased during the current fiscal year primarily due to the inclusion of costs related to clinical trials for binimetinib and encorafenib. Additionally, we incurred incremental research and development costs related to transitioning the Novartis-sponsored studies as well as for new clinical trials and the establishment of commercial drug supply since regaining all development and commercialization rights to binimetinib and obtaining all development and commercialization rights to encorafenib in March 2015.
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.