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U.S. SECURITIES
    AND EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    June 30, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For 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 of Incorporation)

(I.R.S. Employer Identification No.)  3200 Walnut Street
 Boulder, Colorado
    80301
 (Address of Principal Executive
    Offices)
 (303) 381-6600
 (Registrants Telephone
    Number, Including Area Code)
 Common Stock, Par Value $.001
    per Share
 (Securities Registered Pursuant to
    Section 12(b) of the Act)
 The NASDAQ Stock Market LLC
    (NASDAQ Global Market)
 (Name of Exchange on Which
    Registered)
 None
 (Securities Registered Pursuant to
    Section 12(g) of the Act)
   Yes
    o
    No
    þ
   Yes
    o
    No
    þ
   Yes
    þ
    No
    o
  Regulation S-T
 Yes
    o
    No
    o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    þNon-accelerated filer (do not check if a smaller reporting
    company)
    o

Smaller reporting company
    o
   Rule 12b-2
 Yes
    o
    No þ
      DOCUMENTS INCORPORATED BY
    REFERENCE
  Form 10-K




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##### 





TABLE OF
    CONTENTS
    Page No.PART I



1Item 1.

Business

1Item 1A.

Risk Factors

23Item 1B.

Unresolved Staff Comments

42Item 2.

Properties

42Item 3.

Legal Proceedings

42Item 4.

Removed and Reserved

42PART II



43Item 5.

Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities

43Item 6.

Selected Financial Data

45Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations

46Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk

60Item 8.

Financial Statements and Supplementary Data

62Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosures

62Item 9A.

Controls and Procedures

62Item 9B.

Other Information

62PART III



63Item 10.

Directors, Executive Officers and Corporate
    Governance

63Item 11.

Executive Compensation

63Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters

63Item 13.

Certain Relationships and Related Transactions

63Item 14.

Principal Accountant Fees and Services

63PART IV



64Item 15.

Exhibits and Financial Statement Schedules

64SIGNATURES

65EX-10.37EX-10.38EX-10.51EX-23.1EX-31.1EX-31.2EX-32.0




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PART I    FORWARD-LOOKING
    STATEMENTS
  Form 10-K
    ITEM 1 -
    BUSINESS  Our
    Business
   1




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Program

Indication

Partner

Clinical Status1.

AMG 151/ARRY-403

Glucokinase activator for Type 2 diabetes

Amgen Inc.

Phase 12.

MEK162/ARRY-162

MEK inhibitor for cancer

Novartis International Pharmaceutical Ltd.

Phase 13.

ARRY-380

HER2 inhibitor for breast cancer

None; Array owned

Phase 14.

ARRY-520

Kinesin spindle protein, or KSP, inhibitor for multiple myeloma,
    or MM

None; Array owned

Phase 1/25.

ARRY-543

HER2/EGFR inhibitor for solid tumors

None; Array owned

Phase 26.

ARRY-614

p38/Tie2 dual inhibitor for
    myelodysplastic syndrome, or MDS

None; Array owned

Phase 1     Program

Indication

Partner

Clinical Status1.

AZD6244/ARRY-886

MEK inhibitor for cancer

AstraZeneca, PLC

Phase 22.

AZD8330

MEK inhibitor for cancer

AstraZeneca, PLC

Phase 13.

Danoprevir/
    RG7227/ITMN-191

Hepatitis C virus
    (HCV) protease inhibitor

InterMune, Inc. (in partnership with Roche Holding AG)

Phase 24.

GDC-0068

AKT kinase inhibitor for cancer

Genentech Inc.

Phase 15.

LY2603618/IC83

Checkpoint kinase, or Chk-1, inhibitor for cancer

Eli Lilly and Company

Phase 26.

VTX-2337

Toll-like receptor for cancer

VentiRx Pharmaceuticals, Inc.

Phase 17.

VTX-1463

Toll-like receptor for allergy

VentiRx Pharmaceuticals, Inc.

Phase 1     first-in-class,
  Business
    History
   2




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
    Amgen, which entered into a worldwide strategic collaboration
    with us to develop and commercialize our glucokinase activator,
    AMG 151.
    AstraZeneca, which licensed three of our MEK inhibitors for
    cancer, including AZD6244, which is currently in multiple Phase
    2 clinical trials.
    Celgene Corporation, which entered into a worldwide strategic
    collaboration agreement with us focused on the discovery,
    development and commercialization of novel therapeutics in
    cancer and inflammation.
    Genentech, which entered into a worldwide strategic
    collaboration agreement with us focused on the discovery,
    development and commercialization of novel therapeutics. One
    drug, GDC-0068, an AKT inhibitor for cancer, entered a Phase 1
    trial during the first half of 2010. The other programs are in
    preclinical development.
    InterMune, which collaborated with us on the discovery of
    danoprevir, a novel small molecule inhibitor of the Hepatitis C
    Virus NS3/4A protease, which is currently in Phase 2b clinical
    trials and which InterMune is developing in partnership with
    Roche Holding AG.
    Novartis, which entered into a worldwide strategic collaboration
    with us to develop and commercialize our MEK inhibitor, MEK162
    and other MEK inhibitors identified in the agreement.  Our
    Strategy
    
    Invent targeted small molecule drugs that are either
    first-in-class
    or second generation drugs that demonstrate a competitive
    advantage over drugs currently on the market or in clinical
    development;
    Partner drugs for co-development and commercialization,
    selectively retaining U.S. commercial
    and/or
    co-promotion rights for drugs that can be distributed through a
    therapeutically specialized sales force;
    Partner select early-stage programs for continued research and
    development under which we would receive research funding, plus
    significant milestones and royalties; and
    Build a commercial capability to position our drugs to maximize
    their overall value. As our first drug nears approval, we plan
    to build a
    U.S.-based
    therapeutically-focused sales force to commercialize or
    co-promote our drugs.  proof-of-concept and/or
 3




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Discovery and
    Development Programs
  and/or
  and/or
  Note 2  Segments, Geographical Information
    and Significant Collaborators
  Development
    Programs
    Drug Candidates

Current Development Status

Future Development PlanAMG 151

GKA

Phase 1 multiple ascending dose trial in Type 2 diabetic
    patients; partnered with Amgen.

Complete Phase 1 trial after which Amgen will be responsible for
    all future development.MEK162

MEK

Phase 1 expansion trial in patients with biliary tract cancer;
    partnered with Novartis.

Complete expansion trial in patients with biliary tract cancer,
    initiate an expansion trial in patients with coloretal cancer
    and initiate a Phase 2 trial in patients with KRAS mutant
    colorectal cancer.  In addition, Novartis currently plans to
    initiate clinical trials in the coming year.ARRY-380

HER2

Phase 1 dose escalation trial in cancer patients.

Expand Phase 1 trial in HER2 positive cancer patients.ARRY-520

KSP

Phase 1 trial in patients with solid tumors and two Phase 1/2
    trials in patients with acute myelogenous leukemia and multiple
    myeloma.

Initiate a Phase 2 single-agent and a Phase 1b/2 combination
    trial in patients with MM.ARRY-543

HER2/EGFR

Achieved the maximum tolerated dose of ARRY-543 in three Phase
    1b trials of ARRY-543 in combination with
    Xeloda®

    (capecitabine),
    Taxotere®

    (docetaxel) and
    Gemzar®

    (gemcitabine).

We are currently evaluating future study designs for this
    program.ARRY-614

P38/Tie2

Phase 1 trial in MDS patients.

Expand MDS trial at the maximum tolerated dose.  4




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1.
    AMG 151 -
    Glucokinase Activator for Type 2 Diabetes Program Partnered with
    Amgen      product-by-product country-by-country
  in vivo standard-of-care
  Development Status
  10-day
 5




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2.
    MEK162 -
    MEK Inhibitor for Cancer Program Allied with
    Novartis      product-by-product county-by-country product-by-product
    Development Status
  3.
    ARRY-380 -
    HER2 Program Wholly-owned by Array  ®
 6




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®
  Development Status
  4.
    ARRY-520 -
    KSP Program Wholly-owned by Array    ® ®
    Development Status
  
    Completed enrollment in a Phase 1 trial in patients with solid
    tumors;
    Completed enrollment in a Phase 1 trial in patients with
    AML; and
    Continued a Phase 1/2 trial in patients with MM.    5.
    ARRY-543 -
    HER2 / EGFR Program Wholly-owned by Array     7




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Development Status
  6.
    ARRY
    614 - p38 / Tie2 for Cancer Program Wholly-owned by
    Array    in vivo standard-of-care ®
  Development Status
  Other Partnered
    Development Programs
    1.
    AstraZeneca -
    AZD6244 - MEK Program   8




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®
    
    AZD6244 compared to
    Alimta®

    (pemetrexed) in 84 non-small cell lung cancer, or NSCLC,
    patients, neither of these drugs demonstrated superior efficacy. 
    AZD6244 compared to Temodar in patients with advanced melanoma;
    results showed no difference between the two treatment arms in
    the overall population comparing the safety and tolerability
    profile for AZD6244 and were consistent with the results
    reported from the Phase 1 trial. 
    AZD6244 compared to Xeloda in patients with metastatic
    colorectal cancer; results showed that AZD6244 was generally
    well tolerated, with neither of these drugs demonstrating
    superior efficacy.
    In patients suffering from melanomas with RAF mutations in
    clinical trials, AZD6244 provided partial responses in two out
    of 14 patients using the Phase 2 mix and drink formulation
    and a complete response in one out of eight patients using the
    Phase 1 new capsule formulation.    ® 2 2 time-to-progression time-to-progression
 9




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
    AZD6244 in combination with DTIC versus DTIC alone in patients
    with BRAF mutation positive melanoma. This trial has completed
    enrollment of 80 patients.
    AZD6244 in combination with Taxotere and versus Taxotere alone
    in patients with KRAS mutation positive NSCLC. This trial has
    completed enrollment of 80 patients.
    AZD6244 or temozolomide in patients with metastatic melanoma of
    the eye. One hundred fifty nine patients are anticipated to
    enroll in this trial.
    AZD6244 in combination with irinotecan in 2nd line patients
    with KRAS or BRAF mutation positive advanced or metastatic
    colorectal cancer. Fifty seven patients are anticipated to
    enroll in this trial.    2.
    Celgene -
    Oncology and Inflammation Programs     10




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3.
    Eli
    Lilly - LY2603618/IC83/CHK-1 Program  Chk-1
  4.
    Genentech -
    GDC-0068 and other Oncology Programs        5.
    InterMune -
    Danoprevir Hepatitis C Virus NS3/4 Protease
    Program     11




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
    Danoprevir in combination with standard of care resulted in
    rapid and persistent reductions in HCV RNA in the patients.
    Viral rebound was not observed in any patients receiving the
    treatment and danoprevir in combination with standard of care
    was safe and generally well-tolerated over 14 days.  ® ®
    6.
    VentiRx -
    VTX-2337 and VTX-1463 / Toll-Like Receptor (TLR)
    Program  Note 5  Equity Investment Form 10-K
  Market
    Opportunity
  and/or
   12




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proof-of-concept
  Cancer
    Market
    Cancer Facts and Figures 2010 and/or
    Estimated 2010Type of Cancer

New Cases


DeathsLung


222,520



157,300Breast


209,060



40,230Prostate


217,730



32,050Colorectal


142,570



51,370Myelodysplastic Syndrome


76,000



unknownMelanoma


68,130



8,700Pancreas


43,140



36,800Liver and Intrahepatic Bile Duct


24,120



18,910Multiple Myeloma


20,180



10,650Acute Myelogenous Leukemia


12,330



8,950Gallbladder and Other Biliary


9,760



3,320Bones and Joints


2,650



1,4601,048,190



369,740
  13




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® ® ®
  Breast Cancer
    (ARRY-380 - HER2 inhibitor)
        Colorectal
    Cancer (AZD6244 and MEK162 - MEK inhibitors)
    ® ®
   14




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Lung Cancer
    (AZD6244 - MEK inhibitor)
    Melanoma
    (AZD6244 - MEK inhibitor)
   15




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Multiple
    Myeloma (ARRY-520 - KSP inhibitor)
        1.
    Increased efficacy of current treatments, notably the leading
    targeted therapies of Velcade, Revlimid and
    Thalomid®

    (thalidomide), leading to longer life expectancy and allowing
    for more drug therapy to be administered;2.
    Increased use of existing and new drug combinations,
    particularly combinations with Velcade and Revlimid, leading to
    higher overall regimen costs; and3.
    Introduction and uptake of new, higher cost therapies,
    particularly greater uptake of Revlimid and anticipated launch
    of premium priced next generation proteasome inhibitors and
    immunomodulatory drugs such as carfilzomib and pomalidomide.  and/or
  Myelodysplastic
    Syndromes (ARRY-614 - p38/Tie2 inhibitor)
    ® ®
 16




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Diabetes
    (AMG151 - Glucokinase Activator)
        Inflammation
    and Pain Market (Trk)
  ® ® ® ® and/or
    and/or
   17




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Research and
    Development for Proprietary Drug Discovery
  first-in-class best-in-class,
  Drug Discovery
    and Development Timeline
    Phase

Objective

Estimated DurationDiscovery

Lead identification and target validation

2 to 4 yearsPreclinical

Initial toxicology for preliminary identification of risks for
    humans; gather early pharmacokinetic data

1 to 2 yearsPhase 1

Evaluate safety in humans; study how the drug works, metabolizes
    and interacts with other drugs

1 to 2 yearsPhase 2

Establish effectiveness of the drug and its optimal dosage;
    continue safety evaluation

2 to 4 yearsPhase 3

Confirm efficacy, dosage regime and safety profile of the drug;
    submit New Drug Application

2 to 4 yearsFDA Approval

Approval by the FDA to sell and market the drug under approved
    labeling

6 months to 2 years     Our Research and
    Development Technologies and Expertise
    
    Discovery Research  Biology, Chemistry and
    Translational Medicine
    Process Research, Development, Formulation and Manufacturing 18




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
    Clinical Development
    Information Technology  Discovery
    Research
    Process
    Research, Development, Formulation and
    Manufacturing
    Clinical
    Development
    proof-of-concept proof-of-concept
  Information
    Technology
   19




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Competitors
    Government
    Regulation
     20




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and/or and/or
 21




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and/or
    Intellectual
    Property
           22




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Employees
    Our Corporate
    Information
  (303) 381-6600.
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K http://www.arraybiopharma.com
    ITEM 1A.
    RISK
    FACTORS    Risks Related to
    Our Business
  We expect to
    continue to incur significant research and development expenses,
    which may make it difficult for us to attain
    profitability.
   23




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and/or
  and/or
  We have a
    history of operating losses and may not achieve or sustain
    profitability.
    We may not be
    successful in entering into additional out-license agreements on
    favorable terms, which may adversely affect our liquidity or
    require us to change our spending priorities on our proprietary
    programs.
    
    Our ability to create valuable proprietary drug candidates
    targeting large market opportunities;
    Research and spending priorities of potential licensing partners;
    Willingness of and the resources available to, pharmaceutical
    and biotechnology companies to in-license drug candidates to
    fill their clinical pipelines; and
    Our ability or inability to generate
    proof-of-concept
    data and to agree with a potential partner on the value of
    proprietary drug candidates we are seeking to out-license, or on
    the related terms. 24




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and/or
  We may not
    receive royalty or milestone revenue under our collaboration
    agreements for several years, or at all.
    Our drug
    candidates are at early stages of development and we may not
    successfully develop a drug candidate that becomes a
    commercially viable drug.
    
    Failure to achieve clinical trial results that indicate a
    candidate is effective in treating a specified condition or
    illness in humans;
    Presence of harmful side effects;
    Determination by the FDA that the submitted data do not satisfy
    the criteria for approval;
    Lack of commercial viability of the drug;
    Failure to acquire, on reasonable terms, intellectual property
    rights necessary for commercialization; and
    Existence of therapeutics that are more effective.  We or our
    collaborators may choose not to commercialize a drug candidate
    at any time during development, which would reduce or eliminate
    our potential return on investment for that drug.
   25




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Our capital
    requirements could significantly increase if we choose to
    develop more of our proprietary programs
    internally.
    We may not
    out-license our proprietary programs at the most appropriate
    time to maximize the total value or return of these programs to
    us.
  and/or
  Because we
    rely on a small number of collaborators for a significant
    portion of our revenue, if one or more of our major
    collaborators terminates or reduces the scope of their agreement
    with us, our revenue may significantly decrease.
    If we need,
    but are unable to obtain, additional funding to support our
    operations, we could be unable to successfully execute our
    operating plan or be forced to reduce our
    operations.
   26




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Recent
    disruptions in the financial markets could affect our ability to
    obtain financing for development of our proprietary drug
    programs and other purposes on reasonable terms and have other
    adverse effects on us and the market price of our common
    stock.
      Our
    investments in ARS are not currently liquid and our inability to
    access these funds may adversely affect our liquidity, capital
    resources and results of operations. If the issuers of our ARS
    are unable to successfully close future auctions and credit
    ratings continue to deteriorate, we may be required to further
    adjust the carrying value of our investments through additional
    impairment charges.
   27




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other-than-temporary Note 3 
    Marketable Securities Form 10-K.
  If our drug
    discovery and development programs do not progress as
    anticipated, our revenue and stock price could be negatively
    impacted.
    We may not
    realize anticipated benefits from future acquisitions,
    investments and strategic partnerships.
  and/or
  
    Difficulties and increased costs in connection with integration
    of the personnel, operations, technologies and products of
    acquired companies;
    Diversion of managements attention from other operational
    matters;
    Potential loss of key employees;
    Potential loss of key collaborators;
    Lack of synergy, or the inability to realize expected synergies,
    resulting from the acquisition or partnership; and 28




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
    Impairment of acquired intangible assets as a result of
    technological advancements or
    worse-than-expected
    clinical results or performance of the acquired company or the
    partnered assets.    We may not be
    able to recruit and retain the experienced scientists and
    management we need to compete in the drug research and
    development industry.
      Risks Related to
    Our Clinical Development Activities and Obtaining Regulatory
    Approval for Our Programs
  We have
    limited clinical development and commercialization
    experience.
   29




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If we fail to
    adequately conduct clinical trials, we may not obtain regulatory
    approvals necessary for the sale of drugs when anticipated, or
    at all, which would reduce or eliminate our potential return on
    that program.
        Delays in the
    commencement or completion of clinical testing could result in
    increased costs to us and delay or limit our ability to generate
    revenues.
    
    Obtain regulatory approval to commence a clinical trial;
    Reach agreement on acceptable terms with prospective clinical
    research organizations, or CROs, and trial sites, the terms of
    which can be subject to extensive negotiation and may vary
    significantly among different CROs and trial sites;
    Select CROs, trial sites and, where necessary, contract
    manufacturers that do not encounter any regulatory compliance
    problems;
    Manufacture sufficient quantities of a product candidate for use
    in clinical trials;
    Obtain institutional review board, or IRB, approval to conduct a
    clinical trial at a prospective site; 30




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
    Recruit and enroll patients to participate in clinical trials,
    which can be impacted by many factors outside our control,
    including competition from other clinical trial programs for the
    same or similar indications; and
    Retain patients who have initiated a clinical trial but may be
    prone to withdraw due to side effects from the therapy, lack of
    efficacy or personal issues.    
    Failure to conduct the clinical trial in accordance with
    regulatory requirements (including Good Clinical Practices, or
    GCP) or our clinical protocols;
    Inspection of the clinical trial operations, trial sites or
    manufacturing facility by the FDA or other regulatory
    authorities resulting in findings of non-compliance and the
    imposition of a clinical hold;
    Unforeseen safety issues or results that do not demonstrate
    efficacy; and
    Lack of adequate funding to continue the clinical trial.  and/or
  Drug
    candidates that we develop with our collaborators or on our own
    may not receive regulatory approval.
     31




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®
  Even if our
    drug candidates obtain regulatory approval, we and our
    collaborators will be subject to ongoing government
    regulation.
  follow-up
  direct-to-consumer
  and/or
  If our drug
    candidates do not gain market acceptance, we may be unable to
    generate significant revenue.
    
    Demonstration of clinical effectiveness and safety;
    Potential advantages of our drug candidates over alternative
    treatments; 32




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
    Ability to offer our drug candidates for sale at competitive
    prices;
    Availability of adequate third-party reimbursement; and
    Effectiveness of marketing and distribution methods for the
    products.    Our
    collaborators have substantial control and discretion over the
    timing and the continued development and marketing of drug
    candidates we create for them.
      
    Collaborators may develop and commercialize, either alone or
    with others, products and services that are similar to, or
    competitive with, the products that are the subject of the
    collaboration with us;
    Collaborators may under-fund or not commit sufficient resources
    to the testing, marketing, distribution or other development of
    our drug candidates;
    Collaborators may not properly maintain or defend our
    intellectual property rights or they may utilize our proprietary
    information in such a way as to invite litigation that could
    jeopardize or potentially invalidate our intellectual property
    or proprietary information or expose us to potential liability;
    Collaborators may encounter conflicts of interest, changes in
    business strategy or other business issues which could adversely
    affect their willingness or ability to fulfill their obligations
    to us (for example, pharmaceutical and biotechnology companies
    historically have re-evaluated their priorities following
    mergers and consolidations, which have been common in recent
    years in these industries); and
    Disputes may arise between us and our collaborators delaying or
    terminating the research, development or commercialization of
    our drug candidates, resulting in significant litigation or
    arbitration that could be time-consuming and expensive, or
    causing collaborators to act in their own self-interest and not
    in the interest of our stockholders.  Our cGMP and
    Pharmacology facilities and practices may fail to comply with
    government regulations.
   33




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and/or and/or
  scale-up
    Our
    development, testing and manufacture of drug candidates may
    expose us to product liability and other lawsuits.
    If our use of
    chemical and hazardous materials violates applicable laws or
    regulations or causes personal injury we may be liable for
    damages.
   34




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Our operations
    could be interrupted by damage to our specialized laboratory
    facilities.
    Due to our
    reliance on contract research organizations and other third
    parties to conduct our clinical trials, we are unable to
    directly control the timing, conduct and expense of our clinical
    trials.
    Controls we or
    our third-party service providers have in place to ensure
    compliance with laws may not be effective to ensure compliance
    with all applicable laws and regulations.
  and/or and/or and/or and/or and/or
 35




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Risks Related to
    Our Drug Discovery Activities
  Revenue from
    collaborations depends on the extent to which the pharmaceutical
    and biotechnology industries collaborate with other companies
    for one or more aspects of their drug discovery
    process.
    
    Develop and implement drug discovery technologies that will
    result in the identification of higher-quality drug candidates;
    Attract and retain experienced, high caliber scientists;
    Achieve timely, high-quality results at an acceptable
    cost; and
    Design, create and manufacture our chemical compounds in
    quantities, at purity levels and at costs that are acceptable to
    our collaborators.    Our research
    and development capabilities may not produce viable drug
    candidates.
    Risks Related To
    Our Industry
  The
    concentration of the pharmaceutical and biotechnology industry
    and any further consolidation could reduce the number of our
    potential collaborators.
   36




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Capital market
    conditions may reduce our biotechnology collaborators
    ability to fund research and development.
    Health care
    reform, including those based on recently enacted legislation
    and cost control initiatives by third-party payors could reduce
    the prices that can be charged for drugs, which could limit the
    commercial success of our drug candidates.
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We, or our
    collaborators, may not obtain favorable reimbursement rates for
    our drug candidates.
     38




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The drug
    research and development industry has a history of patent and
    other intellectual property litigation and we may be involved in
    costly intellectual property lawsuits.
      The
    intellectual property rights we rely on to protect our
    proprietary drug candidates and the technology underlying our
    tools and techniques may be inadequate to prevent third parties
    from using our technology or developing competing capabilities
    or to protect our interests in our proprietary drug
    candidates.
       39




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Agreements we
    have with our employees, consultants and collaborators may not
    afford adequate protection for our trade secrets, confidential
    information and other proprietary information.
    The drug
    research and development industry is highly competitive and we
    compete with some companies that offer a broader range of
    capabilities and have better access to resources than we
    do.
    We face
    potential liability related to the privacy of health information
    we obtain from research institutions.
   40




---



##### Table of Contents



and/or
  Risks Related To
    Our Stock
  Our officers
    and directors have significant control over us and their
    interests may differ from those of our
    stockholders.
    Our quarterly
    operating results could fluctuate significantly, which could
    cause our stock price to decline.
  and/or
  quarter-to-quarter and/or
  Because our
    stock price may be volatile, our stock price could experience
    substantial declines.
   41




---



##### Table of Contents



Because we do
    not intend to pay dividends, stockholders will benefit from an
    investment in our common stock only if it appreciates in
    value.
    The ability of
    our stockholders to control our policies and effect a change of
    control of our company is limited, which may not be in the best
    interests of our stockholders.
    
    Our certificate of incorporation provides for three classes of
    directors with the term of office of one class expiring each
    year, commonly referred to as a staggered board. By
    preventing stockholders from voting on the election of more than
    one class of directors at any annual meeting of stockholders,
    this provision may have the effect of keeping the current
    members of our Board of Directors in control for a longer period
    of time than stockholders may desire; and
    Our certificate of incorporation authorizes our Board of
    Directors to issue shares of preferred stock without stockholder
    approval and to establish the preferences and rights of any
    preferred stock issued, which would allow the board to issue one
    or more classes or series of preferred stock that could
    discourage or delay a tender offer or change in control.   ITEM 1B. UNRESOLVED
    STAFF COMMENTS   ITEM 2. PROPERTIES   ITEM 3. LEGAL
    PROCEEDINGS   ITEM 4. REMOVED
    AND RESERVED 42




---



##### Table of Contents



PART II  ITEM 5.
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES
  Common Stock
    Sales Prices
    Fiscal Year Ended June 30,
    2010

High


LowFirst Quarter

$
4.45


$
2.38Second Quarter

$
2.81


$
1.72Third Quarter

$
2.83


$
2.24Fourth Quarter

$
4.02


$
2.66
   Fiscal Year Ended June 30,
    2009

High


LowFirst Quarter

$
8.79


$
4.90Second Quarter

$
7.41


$
2.93Third Quarter

$
4.57


$
2.51Fourth Quarter

$
3.49


$
2.67
     Dividends
    Stock Performance
    Graph
       43




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##### Table of Contents



COMPARISON OF
    FIVE YEAR CUMULATIVE TOTAL RETURNS Among
    Array BioPharma Inc., the NASDAQ Composite Index,
    the NASDAQ Pharmaceutical Index and the NASDAQ Biotechnology
    Index
  
  NASDAQ

NASDAQ

NASDAQArray

Composite

Pharmaceutical

BiotechnologyDate

BioPharma Inc.

Index

Index

Index6/30/2005

$
100.00


$
100.00


$
100.00


$
100.009/30/2005

$
113.97


$
105.26


$
121.43


$
119.8212/31/2005

$
111.27


$
107.58


$
122.59


$
124.733/31/2006

$
145.08


$
114.17


$
129.55


$
129.576/30/2006

$
136.51


$
107.08


$
116.57


$
115.679/30/2006

$
135.24


$
112.01


$
122.00


$
121.7512/31/2006

$
205.08


$
120.84


$
124.05


$
124.533/31/2007

$
201.59


$
121.32


$
117.82


$
121.536/30/2007

$
185.24


$
130.99


$
121.31


$
127.099/30/2007

$
178.25


$
134.02


$
130.18


$
135.3612/31/2007

$
133.65


$
131.77


$
121.47


$
128.713/31/2008

$
111.27


$
112.92


$
117.30


$
124.886/30/2008

$
74.60


$
114.02


$
120.57


$
126.589/30/2008

$
121.90


$
101.67


$
124.60


$
131.3512/31/2008

$
64.29


$
78.16


$
113.02


$
120.053/31/2009

$
41.90


$
75.62


$
102.49


$
111.276/30/2009

$
49.84


$
90.79


$
110.65


$
119.579/30/2009

$
37.78


$
105.19


$
122.54


$
131.6112/31/2009

$
44.60


$
112.82


$
120.22


$
132.683/31/2010

$
43.49


$
119.35


$
129.51


$
144.436/30/2010

$
48.41


$
105.54


$
111.36


$
122.89  44




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##### Table of Contents



ITEM 6.
    SELECTED FINANCIAL DATA



The following selected financial data items are derived from our
    audited financial statements. These historical results do not
    necessarily indicate future results. When you read this
    information, it is important that you also read our financial
    statements and related notes, as well as the section entitled
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations appearing elsewhere in this Annual
    Report on
    Form 10-K.
    Amounts are in thousands except per share data: Years Ended June 30,2010


2009


2008


2007


2006RevenueCollaboration revenue

$
21,395


$
17,228


$
21,513


$
30,106


$
37,738License and milestone revenue


32,485



7,754



7,295



6,864



7,265Total revenue


53,880



24,982



28,808



36,970



45,003Operating expensesCost of revenue


28,322



19,855



21,364



24,936



39,611Research and development forproprietary drug discovery


72,488



89,560



90,347



57,464



33,382General and administrative


17,121



18,020



15,591



13,644



13,683Total operating expenses


117,931



127,435



127,302



96,044



86,676Loss from operations


(64,051
)


(102,453
)


(98,494
)


(59,074
)


(41,673
)Other income (expense)Gain (loss) on auction rate securities


1,305



(17,742
)


(1,872
)


-



-Interest income


864



2,116



6,064



4,610



2,729Interest expense


(15,749
)


(10,024
)


(1,986
)


(979
)


(670
)Total other income (expense), net


(13,580
)


(25,650
)


2,206



3,631



2,059Loss before income taxes


(77,631
)


(128,103
)


(96,288
)


(55,443
)


(39,614
)Income tax benefit


-



288



-



-



-Net loss

$
(77,631
)

$
(127,815
)

$
(96,288
)

$
(55,443
)

$
(39,614
)Weighted average shares outstanding 
    basic and diluted


50,216



47,839



47,309



40,717



38,759Net loss per share  basic and diluted

$
(1.55
)

$
(2.67
)

$
(2.04
)

$
(1.36
)

$
(1.02
)   June 30,2010


2009


2008


2007


2006Cash and cash equivalents, marketable securities and restricted
    cash

$
128,869


$
57,488


$
125,531


$
141,331


$
70,100Working capital (deficit)

$
39,367


$
(5,378
)

$
66,346


$
120,827


$
56,008Total assets

$
159,179


$
95,055


$
163,077


$
174,974


$
102,173Long-term debt, net of discount

$
112,825


$
68,170


$
35,355


$
15,000


$
14,150Total stockholders equity (deficit)

$
(116,678
)

$
(73,701
)

$
38,027


$
107,701


$
68,640  45




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##### Table of Contents



ITEM 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS  and/or and/or Form 10-K
    Overview
      Program

Indication

Partner

Clinical Status1. AMG 151/ARRY-403

Glucokinase activator for Type 2 diabetes

Amgen Inc.

Phase 12. MEK162/ARRY-162

MEK inhibitor for cancer

Novartis International Pharmaceutical Ltd.

Phase 13. ARRY-380

HER2 inhibitor for breast cancer

None; Array owned

Phase 14. ARRY-520

Kinesin spindle protein, or KSP, inhibitor for multiple myeloma,
    or MM

None; Array owned

Phase 1/25. ARRY-543

HER2/EGFR inhibitor for solid tumors

None; Array owned

Phase 26. ARRY-614

p38/Tie2 dual inhibitor for myelodysplastic syndrome, or MDS

None; Array owned

Phase 1  46




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##### Table of Contents



Program

Indication

Partner

Clinical Status1.

AZD6244/ARRY-886

MEK inhibitor for cancer

AstraZeneca, PLC

Phase 22.

AZD8330

MEK inhibitor for cancer

AstraZeneca, PLC

Phase 13.

Danoprevir/
    RG7227/ITMN-191

Hepatitis C virus (HCV) protease inhibitor

InterMune, Inc. (in partnership with Roche Holding AG)

Phase 24.

GDC-0068

AKT kinase inhibitor for cancer

Genentech Inc.

Phase 15.

LY2603618/IC83

Checkpoint kinase, or Chk-1, inhibitor for cancer

Eli Lilly and Company

Phase 26.

VTX-2337

Toll-like receptor for cancer

VentiRx Pharmaceuticals, Inc.

Phase 17.

VTX-1463

Toll-like receptor for allergy

VentiRx Pharmaceuticals, Inc.

Phase 1     first-in-class,
      
    Amgen, which entered into a worldwide strategic collaboration
    with us to develop and commercialize our glucokinase activator,
    AMG 151.
    AstraZeneca, which licensed three of our MEK inhibitors for
    cancer, including AZD6244, which is currently in multiple Phase
    2 clinical trials.
    Celgene Corporation, which entered into a worldwide strategic
    collaboration agreement with us focused on the discovery,
    development and commercialization of novel therapeutics in
    cancer and inflammation.
    Genentech, which entered into a worldwide strategic
    collaboration agreement with us focused on the discovery,
    development and commercialization of novel therapeutics. One
    drug, GDC-0068, an 47




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##### Table of Contents



AKT inhibitor for cancer, entered a Phase 1 trial during the
    first half of 2010. The other programs are in preclinical
    development. 
    InterMune, which collaborated with us on the discovery of
    danoprevir/RG7227/ITMN-191, a novel small molecule inhibitor of
    the Hepatitis C Virus NS3/4 protease, which is currently in
    Phase 2b clinical trials and which InterMune is developing in
    partnership with Roche Holding AG.
    Novartis, which entered into a worldwide strategic collaboration
    with us to develop and commercialize our MEK inhibitor, MEK162
    and other MEK inhibitors identified in the agreement.    Business
    Development and Collaborator Concentrations
  and/or
    Years Ended June 30,2010


2009


2008Genentech


38.6
%


67.0
%


54.1
%Amgen


28.2
%


-



-Celgene


26.1
%


23.2
%


14.9
%VentiRx


0.2
%


7.2
%


13.7
%Ono


-



-



14.2
%93.1
%


97.4
%


96.9
%
       Years Ended June 30,2010


2009


2008North America

$
53,641


$
24,575


$
24,454Europe


187



366



230Asia Pacific


52



41



4,124$
53,880


$
24,982


$
28,808
     Critical
    Accounting Policies and Estimates
   48




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##### Table of Contents



Revenue
    Recognition
    Revenue Recognition
  and/or
    and/or
   49




---



##### Table of Contents



Cost of
    Revenue and Research and Development Expenses for Proprietary
    Drug Discovery
      Note 6  Deferred Revenue
  Accrued
    Outsourcing Costs
   50




---



##### Table of Contents



Marketable
    Securities
  available-for-sale available-for-sale available-for-sale
  available-for-sale available-for-sale available-for-sale other-than-temporary
    Note 3  Marketable Securities Form 10-K.
  Fair Value
    Measurements
    
    Level I:   Quoted prices in active markets
    for identical assets and liabilities.
    Level II:   Observable inputs other than
    quoted prices in active markets for identical assets and
    liabilities.
    Level III:  Unobservable inputs.   51




---



##### Table of Contents



and/or
  other-than-temporary
  Long-term Debt
    and Embedded Derivatives
  Note 5  Long-term Debt 10-K. and/or
         52




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##### Table of Contents



Results of
    Operations
  Collaboration
    Revenue
      Years Ended June 30,


Change 2010 vs. 2009


Change 2009 vs. 20082010


2009


2008


$


%


$


%Collaboration revenue

$
21,395


$
17,228


$
21,513


$
4,167



24.2
%

$
(4,285
)


(19.9
)%   Fiscal 2010 compared to Fiscal 2009 
  Fiscal 2009 compared to Fiscal 2008 
  License and
    Milestone Revenue
      Years Ended June 30,


Change 2010 vs. 2009


Change 2009 vs. 20082010


2009


2008


$


%


$


%License revenue

$
27,489


$
6,475


$
6,846


$
21,014



324.5
%

$
(371
)


(5.4
)%Milestone revenue


4,996



1,279



449



3,717



290.6
%


830



184.2
%Total license and milestone revenue

$
32,485


$
7,754


$
7,295


$
24,731



318.9
%

$
459



6.3
%   Fiscal 2010 compared to Fiscal 2009  see Note 6  Deferred
    Revenue
 53




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##### Table of Contents



Fiscal 2009 compared to Fiscal 2008 
  Cost of
    Revenue
      Years Ended June 30,


Change 2010 vs. 2009


Change 2009 vs. 20082010


2009


2008


$


%


$


%Cost of revenue

$
28,322


$
19,855


$
21,364


$
8,467



42.6
%

$
(1,509
)


(7.1
)%Cost of revenue as a percentage of total revenue


52.6
%


79.5
%


74.2
%   Fiscal 2010 compared to Fiscal 2009  Note 6  Deferred
    Revenue
  Fiscal 2009 compared to Fiscal 2008 Note 9 
    Restructuring Charges
  Research and
    Development Expenses for Proprietary Drug
    Discovery
   54




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##### Table of Contents



Change 2010


Change 2009Years Ended June 30,


vs. 2009


vs. 20082010


2009


2008


$


%


$


%Salaries, benefits and share-based compensation

$
31,358


$
37,887


$
33,304


$
(6,529
)


(17.2
)%

$
4,583



13.8
%Outsourced services and consulting


19,131



28,761



34,570



(9,630
)


(33.5
)%


(5,809
)


(16.8
)%Laboratory supplies


10,734



10,256



10,521



478



4.7
%


(265
)


(2.5
)%Facilities and depreciation


9,697



10,649



10,148



(952
)


(8.9
)%


501



4.9
%Other


1,568



2,007



1,804



(439
)


(21.9
)%


203



11.3
%Total research and development for proprietary drug discovery

$
72,488


$
89,560


$
90,347


$
(17,072
)


(19.1
)%

$
(787
)


(0.9
)%   Fiscal 2010 compared to Fiscal 2009 
    Fiscal 2009 compared to Fiscal 2008 Note 9  Restructuring Charges
  General and
    Administrative Expenses
   55




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##### Table of Contents



Years Ended June 30,


Change 2010 vs. 2009


Change 2009 vs. 20082010


2009


2008


$


%


$


%General and administrative

$
17,121


$
18,020


$
15,591


$
(899
)


(5.0
)%

$
2,429



15.6
%   Fiscal 2010 compared to Fiscal 2009
  Fiscal 2009 compared to Fiscal 2008
  Other Income
    (Expense)
    Change 2010


Change 2009Years Ended June 30,


vs. 2009


vs. 20082010


2009


2008


$


%


$


%Gains (losses) on auction rate securities

$
1,305


$
(17,742
)

$
(1,872
)

$
19,047



(107.4
)%

$
(15,870
)


847.8
%Interest income


864



2,116



6,064



(1,252
)


(59.2
)%


(3,948
)


(65.1
)%Interest expense


(15,749
)


(10,024
)


(1,986
)


(5,725
)


57.1
%


(8,038
)


404.7
%Total other income (expense), net

$
(13,580
)

$
(25,650
)

$
2,206


$
12,070



(47.1
)%

$
(27,856
)


(1,262.7
)%     Years Ended June 30,2010


2009


2008Unrealized gains

$
3,214


$
3,232


$
-Unrealized losses

$
-


$
-


$
(1,939
)Realized gains

$
1,522


$
-


$
-Losses attributable to the change in unrealized losses

$
-


$
(1,939
)

$
-Other current period losses


(217
)


(15,803
)


(1,872
)Total impairment of marketable securities

$
(217
)

$
(17,742
)

$
(1,872
)      56




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##### Table of Contents



Note 3  Marketable
    Securities Note 7  Long-term Debt
        Years Ended June 30,2010


2009


2008Deerfield Credit Facility:2.0% simple interest

$
124


$
1,600


$
2766.5% compounding interest


476



5,388



8987.5% simple interest


8,250



-



-Amortization of the transaction fees


549



268



5Amortization of the debt discounts


5,948



2,427



46Change in value of the Embedded Derivatives


(237
)


-



-Total interest expense on Deerfield Credit Facility


15,110



9,683



1,225Comerica Loan:Variable interest


639



341



761Total interest expense on Comerica Loan


639



341



761Total interest expense

$
15,749


$
10,024


$
1,986   Income
    Taxes
    Change 2010


Change 2009Years Ended June 30,


vs. 2009


vs. 20082010


2009


2008


$


%


$


%Income tax benefit

$
-


$
288


$
-


$
(288
)


100.0
%

$
288



-     Liquidity and
    Capital Resources
     57




---



##### Table of Contents



Note 6  Deferred Revenue
    proof-of-concept
    
    Our ability to enter into agreements to out-license, co-develop
    or commercialize our proprietary drug candidates and the timing
    of payments under those agreements throughout each
    candidates development stage;
    The number and scope of our research and development programs;
    The progress and success of our preclinical and clinical
    development activities;
    The progress of the development efforts of our collaborators;
    Our ability to maintain current collaboration agreements;
    The costs involved in enforcing patent claims and other
    intellectual property rights;
    The costs and timing of regulatory approvals; and/or
    The expenses associated with unforeseen litigation, regulatory
    changes, competition and technological developments, general
    economic and market conditions and the extent to which we
    acquire or invest in other businesses, products and technologies.  Cash, Cash
    Equivalents and Marketable Securities
    Note 3  Marketable Securities
 58




---



##### Table of Contents



Change 2010


Change 2009Years Ended June 30,


vs. 2009


vs. 20082010


2009


2008


$


%


$


%Cash and cash equivalents

$
32,846


$
33,202


$
56,448


$
(356
)


(1.1
)%

$
(23,246
)


(41.2
)%Marketable securities
     short-term


78,664



7,296



39,243



71,368



978.2
%


(31,947
)


(81.4
)%Marketable securities
     long-term


17,359



16,990



29,840



369



2.2
%


(12,850
)


(43.1
)%Total

$
128,869


$
57,488


$
125,531


$
71,381



124.2
%

$
(68,043
)


(54.2
)%   Cash Flow
    Activities
    Change 2010


Change 2009Years Ended June 30,


vs. 2009


vs. 20082010


2009


2008


$


%


$


%Cash flows provided by (used in):Operating activities

$
17,558


$
(92,939
)

$
(45,736
)

$
110,497



(118.9
)%

$
(47,203
)


103.2
%Investing activities


(69,063
)


29,005



50,726



(98,068
)


(338.1
)%


(21,721
)


(42.8
)%Financing activities


51,149



40,688



40,788



10,461



25.7
%


(100
)


(0.2
)%Total

$
(356
)

$
(23,246
)

$
45,778


$
22,890



(98.5
)%

$
(69,024
)


(150.8
)%   Fiscal 2010 compared to Fiscal 2009 
      Fiscal 2009 compared to Fiscal 2008
 59




---



##### Table of Contents



Obligations and
    Commitments
    Less Than


1 to 3


4 to 51 Year


Years


Years


Over 5 Years


TotalDebt obligations (1)

$
-


$
-


$
141,762


$
-


$
141,762Interest on debt obligations (3)(4)


9,488



18,976



7,663



-



36,127Operating lease commitments (2)


7,895



16,080



16,453



8,653



49,081Purchase obligations (2)


17,105



1,497



-



-



18,602Total

$
34,488


$
36,553


$
165,878


$
8,653


$
245,572  (1)
    
    Reflected in the accompanying Balance Sheets, net of debt
    discounts of $28.9 million.(2)
    
    These obligations are not reflected in the accompanying Balance
    Sheets.(3)
    
    Interest on the variable debt obligations under the Loan and
    Security Agreement with Comerica Bank is calculated at 3.25%,
    the interest rate in effect as of June 30, 2010.(4)
    
    Interest on the variable debt obligation under the credit
    facilities with Deerfield is calculated at 7.5%, the interest
    rate in effect as of June 30, 2010.     ITEM 7A.
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK   60




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##### Table of Contents



Years Ended June 30,2010


2009


2008Unrealized gains

$
3,214


$
3,232


$
-Unrealized losses

$
-


$
-


$
(1,939
)Realized gains

$
1,522


$
-


$
-Losses attributable to the change in unrealized losses

$
-


$
(1,939
)

$
-Other current period losses


(217
)


(15,803
)


(1,872
)Total impairment of marketable securities

$
(217
)

$
(17,742
)

$
(1,872
)      61




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##### Table of Contents



ITEM 8.
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  page F-1 Form 10-K
 ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURES   ITEM 9A.
    CONTROLS AND PROCEDURES  Evaluation of
    Disclosure Controls and Procedures
  Form 10-K, Rule 13a-15(e) Rule 15d-15(e)
  Evaluation of
    Internal Control over Financial Reporting
  Form 10-K Form 10-K
  Changes in
    Internal Control over Financial Reporting
   ITEM 9B.
    OTHER INFORMATION   62




---



##### Table of Contents



PART III  ITEM 10.
    DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE
    GOVERNANCE
    Code of
    Ethics
    Form 8-K Form 8-K
  ITEM 11.
    EXECUTIVE COMPENSATION
   ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    AND RELATED STOCKHOLDER MATTERS   ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE   ITEM 14.
    PRINCIPAL ACCOUNTANT FEES AND SERVICES   63




---



##### Table of Contents



PART IV ITEM 15.
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  Form 10-K:
  1.


Financial StatementsReference is made to the Index to the Financial Statements as
    set forth on
    page F-1
    of this Annual Report on
    Form 10-K.2.


Financial Statement SchedulesAll schedules have been omitted as the required information is
    either not required, not applicable, or otherwise included in
    the Financial Statements and notes thereto.3.


ExhibitsReference is made to the Exhibit Index that is set forth
    after the Financial Statements referenced above in this Annual
    Report on
    Form 10-K.  64




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##### Table of Contents



SIGNATURES      ROBERT
    E. CONWAY
     KNOW ALL PERSONS BY THESE PRESENTS, Form 10-K,
    SIGNATURE

TITLE/s/  ROBERT
    E. CONWAYRobert
    E. Conway

Chief Executive Officer and Director (Principal Executive
    Officer)

August 12, 2010/s/  KYLE
    A. LEFKOFFKyle
    A. Lefkoff

Chairman of the Board of Directors

August 12, 2010/s/  R.
    MICHAEL CARRUTHERSR.
    Michael Carruthers

Chief Financial Officer
    (Principal Financial And
    Accounting Officer)

August 12, 2010/s/  FRANCIS
    J. BULLOCKFrancis
    J. Bullock, Ph.D.

Director

August 12, 2010/s/  MARVIN
    H. CARUTHERSMarvin
    H. Caruthers, Ph.D.

Director

August 12, 2010/s/  KEVIN
    KOCHKevin
    Koch, Ph.D.

Director

August 12, 2010/s/  DAVID
    L. SNITMANDavid
    L. Snitman, Ph.D.

Director

August 12, 2010 65




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##### Table of Contents



SIGNATURE

TITLE/s/  GIL
    J. VAN LUNSENGil
    J. Van Lunsen

Director

August 12, 2010/s/  DOUGLAS
    E. WILLIAMSDouglas
    E. Williams, Ph.D.

Director

August 12, 2010/s/  JOHN
    L. ZABRISKIEJohn
    L. Zabriskie, Ph.D.

Director

August 12, 2010  66




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##### Table of Contents



INDEX TO THE
    FINANCIAL STATEMENTS
   Description

Page No.Managements Report on Internal Control Over
    Financial Reporting


F-2Report of Independent Registered Public
    Accounting Firm


F-3Report of Independent Registered Public
    Accounting Firm


F-4Balance Sheets as of June 30, 2010 and
    2009


F-5Statements of Operations and Comprehensive Loss
    for the years ended June 30, 2010, 2009 and 2008


F-6Statements of Stockholders Equity (Deficit)
    for the years ended June 30, 2010, 2009 and 2008


F-7Statements of Cash Flows for the years ended
    June 30, 2010, 2009 and 2008


F-8Notes to the Financial Statements


F-9  F-1




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##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING  Rules 13a-15(f) 15d-15(f).
        ROBERT
    E. CONWAY
        R.
    MICHAEL CARRUTHERS
       F-2




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Internal Control 
    Integrated Framework Managements
    Report on Internal Control over Financial Reporting
        Internal Control  Integrated Framework
    KPMG
    LLP
    F-3




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
  KPMG
    LLP
    F-4




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##### Table of Contents



ARRAY BIOPHARMA
    INC.Balance Sheets(Amounts in
    Thousands, Except Share and Per Share Amounts)
  June 30,2010


2009ASSETSCurrent assetsCash and cash equivalents

$
32,846


$
33,202Marketable securities


78,664



7,296Prepaid expenses and other current assets


5,788



4,419Total current assets


117,298



44,917Long-term assetsMarketable securities


17,359



16,990Property and equipment, net


21,413



26,498Other long-term assets


3,109



6,650Total long-term assets


41,881



50,138Total assets

$
159,179


$
95,055LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilitiesAccounts payable

$
5,634


$
6,746Accrued outsourcing costs


4,907



4,759Accrued compensation and benefits


10,013



7,848Other accrued expenses


1,723



1,675Deferred rent


3,180



3,034Deferred revenue


52,474



11,233Current portion of long-term debt


-



15,000Total current liabilities


77,931



50,295Long-term liabilitiesDeferred rent


18,301



21,481Deferred revenue


65,177



28,340Long-term debt, net


112,825



68,170Derivative liabilities


825



-Other long-term liability


798



470Total long-term liabilities


197,926



118,461Total liabilities


275,857



168,756Commitments and contingenciesStockholders deficitPreferred stock, $0.001 par value; 10,000,000 shares
    authorized, no shares issued or outstanding


-



-Common stock, $0.001 par value; 120,000,000 shares
    authorized; 53,224,248 and 48,125,776 shares issued
    and outstanding, as of June 30, 2010 and 2009, respectively


53



48Additional paid-in capital


332,277



312,349Warrants


36,296



23,869Accumulated other comprehesive gain


5,528



3,234Accumulated deficit


(490,832
)


(413,201
)Total stockholders deficit


(116,678
)


(73,701
)Total liabilities and stockholders deficit

$
159,179


$
95,055   The accompanying notes are an integral part of these
    financial statements.
 F-5




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##### Table of Contents



ARRAY BIOPHARMA
    INC.Statements of Operations and
    Comprehensive Loss(Amounts in
    Thousands, Except Per Share Data)
  Years Ended June 30,2010


2009


2008RevenueCollaboration revenue

$
21,395


$
17,228


$
21,513License and milestone revenue


32,485



7,754



7,295Total revenue


53,880



24,982



28,808Operating expensesCost of revenue


28,322



19,855



21,364Research and development for proprietary drug discovery


72,488



89,560



90,347General and administrative


17,121



18,020



15,591Total operating expenses


117,931



127,435



127,302Loss from operations


(64,051
)


(102,453
)


(98,494
)Other income (expense)Gains (losses) on auction rate securities


1,305



(17,742
)


(1,872
)Interest income


864



2,116



6,064Interest expense


(15,749
)


(10,024
)


(1,986
)Total other income (expense), net


(13,580
)


(25,650
)


2,206Loss before income taxes


(77,631
)


(128,103
)


(96,288
)Income tax benefit


-



288



-Net loss

$
(77,631
)

$
(127,815
)

$
(96,288
)Change in unrealized gains (losses) on marketable securities


2,294



5,171



(1,922
)Comprehensive loss

$
(75,337
)

$
(122,644
)

$
(98,210
)Weighted average shares outstanding  basic and
    diluted


50,216



47,839



47,309Net loss per share  basic and diluted

$
(1.55
)

$
(2.67
)

$
(2.04
)   The accompanying notes are an integral part of these
    financial statements.
 F-6




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##### Table of Contents



ARRAY BIOPHARMA
    INC.Statements of Stockholders
    Equity (Deficit)(Amounts in
    Thousands)
  AccumulatedAdditional





OtherPreferred Stock


Common Stock


Paid-in





Comprehensive


AccumulatedShares


Amounts


Shares


Amounts


Capital


Warrants


Income (Loss)


Deficit


TotalBalance as of June 30, 2007


-


$
-



47,076


$
47


$
296,767


$
-


$
(15
)

$
(189,098
)

$
107,701Issuance of common stock under stock option and employee stock
    purchase plans


-



-



469



1



1,787



-



-



-



1,788Share-based compensation expense


-



-



-



-



6,159



-



-



-



6,159Issuance of common stock warrants


-



-



-



-



-



20,589



-



-



20,589Change in unrealized gain (loss) on marketable securities


-



-



-



-



-



-



(1,922
)


-



(1,922
)Net loss


-



-



-



-



-



-



-



(96,288
)


(96,288
)Balance as of June 30, 2008


-



-



47,545



48



304,713



20,589



(1,937
)


(285,386
)


38,027Issuance of common stock under stock option and employee stock
    purchase plans


-



-



580



-



1,688



-



-



-



1,688Share-based compensation expense


-



-



-



-



5,948



-



-



-



5,948Repricing of common stock warrants






















3,280











3,280Recognition of unrealized loss out of accumulated other
    comprehensive income (loss) to earnings


-



-



-



-



-



-



1,939



-



1,939Change in unrealized gain (loss) on marketable securities


-



-



-



-



-



-



3,232



-



3,232Net loss


-



-



-



-



-



-



-



(127,815
)


(127,815
)Balance as of June 30, 2009


-



-



48,125



48



312,349



23,869



3,234



(413,201
)


(73,701
)Issuance of common stock under stock option and employee stock
    purchase plans


-



-



797



1



1,175



-



-



-



1,176Share-based compensation expense


-



-



-



-



5,372



-



-



-



5,372Issuance of common stock for cash, net of offering costs


-



-



3,302



3



10,970



-



-



-



10,973Issuance of common stock warrants


-



-



-



-



-



12,427



-



-



12,427Payment of employee bonus with stock


-



-



1,000



1



2,411



-



-



-



2,412Recognition of unrealized gain out of accumulated other
    comprehensive income to earnings


-



-



-



-



-



-



(915
)


-



(915
)Change in unrealized gain on marketable securities


-



-



-



-



-



-



3,209



-



3,209Net loss


-



-



-



-



-



-



-



(77,631
)


(77,631
)Balance as of June 30, 2010


-


$
-



53,224


$
53


$
332,277


$
36,296


$
5,528


$
(490,832
)

$
(116,678
)   The accompanying notes are an integral part of these
    financial statements.
 F-7




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##### Table of Contents



ARRAY BIOPHARMA
    INC.Statements of Cash Flows(Amounts in
    Thousands)
  Years Ended June 30,2010


2009


2008Cash flows from operating activitiesNet loss

$
(77,631
)

$
(127,815
)

$
(96,288
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization expense


6,338



6,613



6,103Non-cash interest expense for the Deerfield CreditFacility


6,737



8,083



944Share-based compensation expense


5,372



5,948



6,159(Gains) losses on auction rate securities


(1,305
)


17,742



1,872Changes in operating assets and liabilitiesPrepaid expenses and other current assets


(658
)


818



(818
)Accounts payable and other accrued expenses


(1,064
)


1,274



(2,281
)Accrued outsourcing costs


148



(6,521
)


7,599Accrued compensation and benefits


4,577



80



961Deferred rent


(3,034
)


(2,740
)


(2,619
)Deferred revenue


78,078



3,579



32,632Net cash provided by (used in) operating activities


17,558



(92,939
)


(45,736
)Cash flows from investing activitiesPurchases of property and equiment


(1,253
)


(2,940
)


(8,186
)Purchases of marketable securities


(78,785
)


(19,139
)


(71,593
)Proceeds from sales and maturities of marketable securities


10,975



51,084



130,505Net cash provided by (used in) investing activities


(69,063
)


29,005



50,726Cash flows from financing activitiesProceeds from exercise of stock options and shares issued under
    the employee stock purchase plan


1,176



1,688



1,788Proceeds from the issuance of common stock for cash


11,596



-



-Payment of offering costs


(623
)


-



-Proceeds from the issuance of long-term debt


40,000



40,000



40,000Payment of transaction fees


(1,000
)


(1,000
)


(1,000
)Net cash provided by financing activities


51,149



40,688



40,788Net (decrease) increase in cash and cash equivalents


(356
)


(23,246
)


45,778Cash and cash equivalents as of beginning of year


33,202



56,448



10,670Cash and cash equivalents as of end of year

$
32,846


$
33,202


$
56,448Supplemental disclosure of cash flow informationCash paid for interest

$
8,540


$
1,937


$
1,806Supplemental disclosure of non-cash informationWarrants included in Other Long-term Assets

$
-


$
3,280


$
-Transaction fee included in Other Long-term Assets and Other
    Accrued Expenses

$
-


$
500


$
-   The accompanying notes are an integral part of these
    financial statements.
 F-8




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.Notes to the Financial
    Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  NOTE 1 -
    OVERVIEW AND BASIS OF PRESENTATION
  Organization
    Basis of
    Presentation
    Use of
    Estimates
      Liquidity
     F-9




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  Note 6  Deferred Revenue.
    Fair Value
    Measurements
    
    Level I:   Quoted prices in active markets
    for identical assets and liabilities.
    Level II:   Observable inputs other than
    quoted prices in active markets for identical assets and
    liabilities.
    Level III:  Unobservable inputs.  and/or
  other-than-temporary
  Cash and Cash
    Equivalents
    Marketable
    Securities
  available-for-sale
 F-10




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  available-for-sale available-for-sale
  available-for-sale available-for-sale available-for-sale other-than-temporary
    Property and
    Equipment
      Furniture and fixtures


7 yearsEquipment


5 yearsComputer hardware and software


3 years
       Equity
    Investment
   F-11




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Accrued
    Outsourcing Costs
    Deferred
    Revenue
    Long-term Debt
    and Embedded Derivatives
  Note 5  Long-term Debt. and/or
   F-12




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
          Income
    Taxes
    Operating
    Leases
   F-13




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Share-Based
    Compensation
      Revenue
    Recognition
    Revenue Recognition
  and/or
   F-14




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    and/or
    Cost of Revenue
    and Research and Development Expenses for Proprietary Drug
    Discovery
       F-15




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  Note 6 
    Deferred Revenue,
  Net Loss per
    Share
    Comprehensive
    Income (Loss)
  available-for-sale
  Recent Accounting
    Pronouncements
  Collaborative Arrangements Form 10-Q Form 10-K.
  Convertible Debt 
  Fair Value Measurements 
  Revenue Recognition for Multiple Deliverable
    Arrangements 
 F-16




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Subsequent Events
  Milestone Revenue Recognition 
  NOTE 2 -
    SEGMENTS, GEOGRAPHIC INFORMATION AND SIGNIFICANT
    COLLABORATORS
  Segments
    Geographic
    Information
    Years Ended June 30,2010


2009


2008North America

$
53,641


$
24,575


$
24,454Europe


187



366



230Asia Pacific


52



41



4,124$
53,880


$
24,982


$
28,808
   Significant
    Collaborators
    Years EndedJune 30,2010


2009


2008Genentech, Inc.


38.6
%


67.0
%


54.1
%Amgen, Inc.


28.2
%


-



-Celgene Corporation


26.1
%


23.2
%


14.9
%VentiRx Pharmaceuticals, Inc.


0.2
%


7.2
%


13.7
%Ono Pharmaceutical Co., Ltd.


-



-



14.2
%93.1
%


97.4
%


96.9
%
  F-17




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##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    NOTE 3 -
    MARKETABLE SECURITIES
    Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueShort-term
    available-for-sale
    securities:U.S. Government agency securities

$
78,652


$
-


$
(4
)

$
78,648Mutual fund securities


16



-



-



16Sub-total


78,668



-



(4
)


78,664Long-term
    available-for-sale
    securities:Auction rate securities


11,027



5,533



-



16,560Mutual fund securities


799



-



-



799Sub-total


11,826



5,533



-



17,359Total

$
90,494


$
5,533


$
(4
)

$
96,023     Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Gains


Losses


ValueShort-term
    available-for-sale
    securities:U.S. Government agency securities

$
7,059


$
-


$
-


$
7,059Mutual fund securities


237



-



-



237Sub-total


7,296



-



-



7,296Long-term
    available-for-sale
    securities:Auction rate securities


13,525



2,993



-



16,518Mutual fund securities


472



-



-



472Sub-total


13,997



2,993



-



16,990Total

$
21,293


$
2,993


$
-


$
24,286     June 30,2010


2009Quoted prices in active markets for identical assets
    (Level 1)

$
79,463


$
7,768Significant unobservable inputs (Level 3)


16,560



16,518$
96,023


$
24,286
  F-18




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  available-for-sale
  2010


2009Amortized


Fair


Amortized


FairCost


Value


Cost


ValueDue in one year or less

$
78,668


$
78,664


$
7,296


$
7,296Due in one year to three years


799



799



472



472Due after 10 years or more


11,027



16,560



13,525



16,518$
90,494


$
96,023


$
21,293


$
24,286
   Auction Rate
    Securities
         F-19




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Years Ended June 30,2010


2009


2008Unrealized gains

$
3,214


$
3,232


$
-Unrealized losses

$
-


$
-


$
(1,939
)Realized gains

$
1,522


$
-


$
-Losses attributable to the change in unrealized losses

$
-


$
(1,939
)

$
-Other current period losses


(217
)


(15,803
)


(1,872
)Total impairment of marketable securities

$
(217
)

$
(17,742
)

$
(1,872
)       Years Ended June 30,2010


2009


2008Balance as of prior year end

$
16,518


$
29,089


$
118,156Add: Gains during period included in equity


3,214



3,232



-Add: Gains during period included in earnings


1,522



-



-Less: Sale of ARS


(3,562
)


-



(85,256
)Less: Reclassification of unrealized gain fromAccumulated Other Comprehensive Income to earnings


(915
)


1,939



-Less: Losses during period included in equity


-



-



(1,939
)Less: Losses during period included in earnings


(217
)


(17,742
)


(1,872
)Balance as of current year end

$
16,560


$
16,518


$
29,089   NOTE 4 - PROPERTY
    AND EQUIPMENT, NET
    June 30,2010


2009Furniture and fixtures

$
3,330


$
3,326Equipment


39,189



39,382Computer hardware and software


11,443



11,048Leasehold improvements


30,214



29,927Property and equipment


84,176



83,683Less: Accumulated depreciation and amortization


(62,763
)


(57,185
)Property and equipment, net

$
21,413


$
26,498
    F-20




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Leasehold
    Improvements
  Note 10  Commitments and Contingencies
  NOTE 5 -
    EQUITY INVESTMENT
    NOTE 6 -
    DEFERRED REVENUE
    June 30,2010


2009Amgen, Inc.

$
50,595


$
-Novartis International Pharmaceutical Ltd


42,781



-Celgene Corporation


20,492



34,429Genentech, Inc.


3,783



5,060Other


-



84Total deferred revenue


117,651



39,573Less: Current portion


(52,474
)


(11,233
)Deferred revenue, long term

$
65,177


$
28,340
   Amgen Inc.
     F-21




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
            Novartis International Pharmaceutical Ltd.
         F-22




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  product-by-product county-by-country product-by-product
  Celgene
    Corporation
       F-23




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  NOTE 7 -
    LONG-TERM DEBT
    June 30,2010


2009Credit facility

$
126,762


$
86,286Refinance term loan


15,000



-Term loan


-



10,000Equipment line of credit


-



5,000Long-term debt, gross


141,762



101,286Less: Unamortized discount on credit facility


(28,937
)


(18,116
)Long-term debt, net


112,825



83,170Less: Current portion


-



(15,000
)Long-term debt

$
112,825


$
68,170
   Deerfield Credit
    Facilities
         F-24




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    AppliedTotal Cash, Cash Equivalents
    and Marketable Securities

Interest Rate$60 million or greater


7.5
%Between $50 million and $60 million


8.5
%Between $40 million and $50 million


9.5
%Between $30 million and $40 million


12.0
%Less than $30 million


14.5
%
   Note 1  Overview and Basis of
    Presentation Long-term Debt and
    Embedded Derivatives,
  and/or and/or
         F-25




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
            Warrants Issued
    to Deerfield
     F-26




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
      
    Risk-free interest rate of 3.3%;
    Volatility of 63.9%;
    Expected life of six years; and
    Dividend yield of zero.      
    Risk-free interest rate of 2.46%;
    Volatility of 63.59%;
    Expected life of five years; and
    Dividend yield of zero.      
    Risk-free interest rate of 1.86%;
    Volatility of 61.94%;
    Expected life of five years; and
    Dividend yield of zero.   F-27




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Years Ended June 30,2010


2009


20082.0% simple interest

$
124


$
1,600


$
2766.5% compounding interest


476



5,388



8987.5% simple interest


8,250



-



-Amortization of the transaction fees


549



268



5Amortization of the debt discounts


5,948



2,427



46Change in value of the Embedded Derivatives


(237
)


-



-Total interest expense on the Deerfield Credit Facility

$
15,110


$
9,683


$
1,225   Term Loan and
    Equipment Line of Credit
             F-28




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Total Cash, CashEquivalents and Marketable

Cash on Hand atSecurities

ComericaGreater than $40 million

$
-Between $25 million and $40 million

$
10,000,000Less than $25 million

$
22,000,000
       Commitment
    Schedule
    For the Twelve Months Ended
    June 30,2011

$
-2012


-2013


-2014


141,7622015


-$
141,762
  F-29




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  NOTE 8 -
    INCOME TAXES
        Years Ended June 30,2010


2009


2008U.S. federal income tax expense at the statutory rate


34.0
%


34.0
%


34.0
%Available research and experimentation tax credits


5.5
%


3.1
%


4.4
%Stock-based compensation


(1.6
)%


(1.0
)%


(1.3
)%Effect of other permanent differences


(8.3
)%


(3.2
)%


0.0
%State income taxes, net of federal taxes


2.5
%


3.0
%


2.9
%Valuation allowance


(32.1
)%


(35.7
)%


(40.0
)%Total


0.0
%


0.2
%


0.0
%    F-30




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    June 30,2010


2009Current deferred tax assets, grossAccrued benefits

$
2,942


$
2,074Inventory reserve


1,379



1,487Other


60



139Total current deferred tax assets


4,381



3,700Non-current deferred tax assets, grossNet operating loss carryforwards


128,427



102,997Research and experimentation credit carryforwards


18,253



14,516Deferred revenue


7,803



11,217Deferred rent


7,991



9,166Depreciation of property and equipment


3,359



2,662Impairment on marketable securities


5,682



7,334Other


3,461



2,849Total non-current deferred tax assets


174,976



150,741Total deferred tax assets


179,357



154,441Long-term deferred tax liabilityUnrealized gain on marketable securities


(2,057
)


(1,209
)Total long-term deferred tax liability


(2,057
)


(1,209
)Deferred tax assets, net of deferred tax liability


177,300



153,232Valuation allowance


(177,300
)


(153,232
)Deferred tax assets, net of valuation allowance

$
-


$
-        F-31




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
          Years Ended June 30,2010


2009Balance as of beginning of year

$
1,997


$
997Additions based on tax positions related to the current year


992



993Additions for tax positions of prior years


-



7Balance as of end of year

$
2,989


$
1,997
     NOTE 9 -
    RESTRUCTURING
    CHARGES     F-32




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    NOTE 10 -
    COMMITMENTS AND
    CONTINGENCIES  Operating
    Leases
      2011

$
7,8952012


7,9692013


8,1112014


8,2512015


8,202Thereafter


8,653$
49,081
     Colorado
    Facility Lease Agreements
         F-33




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Legal
    Proceedings
    NOTE 11 -
    COMMON STOCK AND
    STOCKHOLDER RIGHTS PLAN  Preferred Stock
    and the Stockholder Rights Plan
      Common
    Stock
   F-34




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
  Reserved
    Shares
    Common stock reserved for the Exchange Warrants


12,000,000Outstanding common stock options under the Stock Option and
    Incentive Plan


9,839,910Common stock reserved and available for grant under the Stock
    Option and Incentive Plan


5,095,655Common stock reserved and available for grant under the Employee
    Stock Purchase Plan


498,190Total


27,433,755
   NOTE 12 -
    EMPLOYEE
    COMPENSATION PLANS  Employee Savings
    Plan
    Employee Stock
    Purchase Plan
        Stock Option and
    Incentive Plan
  Overview
   F-35




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    (i)
    25% of the Companys issued and outstanding shares of
    common stock, on a fully diluted and as-converted basis; and(ii)
    The number of outstanding shares relating to awards under the
    Option Plan plus the number of shares available for future
    grants of awards under the Option Plan on that date.          Accounting for
    Stock Options
  Fair Value
    Assumptions
    Years Ended June 30,2010

2009

2008Risk-free interest rate

2.7% - 3.0%

1.8% - 2.2%

2.8% - 4.5%Expected option term in years

6.25

6.25

6.25Expected volatility

64.3% - 65.1%

64.7% - 65.7%

64.9% - 65.1%Dividend yield

0.0%

0.0%

0.0%
    F-36




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
        Summary of
    Activity
    WeightedAverageNumber of


ExerciseShares


PriceOutstanding balance as of June 30, 2007


7,815,951


$
7.54Grants


1,076,900


$
8.53Exercises


(328,781
)

$
2.42Cancellations/expirations


(177,487
)

$
10.37Outstanding balance as of June 30, 2008


8,386,583


$
7.81Grants


2,081,110


$
4.94Exercises


(196,000
)

$
1.85Cancellations/expirations


(1,008,428
)

$
9.91Outstanding balance as of June 30, 2009


9,263,265


$
7.06Grants


1,217,300


$
2.56Exercises


(397,623
)

$
0.62Cancellations/expirations


(243,032
)

$
7.71Outstanding balance as of June 30, 2010


9,839,910


$
6.75Vested and exercisable as of June 30, 2010


6,757,965


$
7.78    F-37




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
    Stock Options Outstanding


Stock Options ExercisableWeightedAverageRemaining

Weighted








WeightedNumber


Contract

Average


Aggregate


Number


Average


Aggregateof Options


Term in

Exercise


Intrinsic


of Options


Exercise


IntrinsicExercise Price

Outstanding


Years

Price


Value


Exercisable


Price


Value$0.60 - $2.43


258,890


9.3

$
1.83


$
2,671



1,090


$
0.60


$
2,671$2.44 - $4.08


2,251,747


7.9

$
2.98



645,721



610,970


$
3.25



16,984$4.46 - $5.69


221,259


6.4

$
5.20



-



133,859


$
5.19



-$5.75 - $7.10


3,055,293


6.2

$
6.42



-



2,281,753


$
6.48



-$7.18 - $8.48


1,338,301


4.0

$
8.13



-



1,224,923


$
8.14



-$8.60 - $9.84


1,498,420


2.0

$
9.05



-



1,497,620


$
9.05



-$10.07 - $11.29


811,100


4.1

$
10.76



-



681,800


$
10.78



-$11.67 - $12.82


221,500


6.4

$
12.45



-



154,350


$
12.48



-$12.92 - $14.28


183,400


2.8

$
13.69



-



171,600


$
13.70



-9,839,910


5.5

$
6.75


$
648,392



6,757,965


$
7.78


$
19,655   in-the-money in-the-money
  Share-Based
    Compensation Expense
          NOTE 13 -
    EQUITY
    DISTRIBUTION AGREEMENT  Form S-3 No. 333-15801).
 F-38




---



##### Table of Contents



ARRAY BIOPHARMA
    INC.
    Notes to the Financial Statements
    For the Fiscal Years Ended June 30, 2010, 2009 and
    2008
      NOTE 14 -
    EMPLOYEE
    BONUS      NOTE 15 -
    SELECTED
    QUARTERLY FINANCIAL DATA (UNAUDITED)    First


Second


Third


FourthFiscal Year Ended June 30,
    2010

Quarter


Quarter


Quarter


QuarterRevenue

$
7,890


$
9,644


$
18,376


$
17,970Research and development for proprietary drug discovery

$
19,201


$
19,104


$
17,692


$
16,491Total operating expenses

$
29,337


$
28,799


$
29,903


$
29,892Net loss

$
(24,802
)

$
(21,825
)

$
(15,158
)

$
(15,846
)Weighted average shares outstanding - basic and diluted


48,137



49,405



50,697



52,680Net loss per share - basic and diluted

$
(0.52
)

$
(0.44
)

$
(0.30
)

$
(0.30
)   First


Second


Third


FourthFiscal Year Ended June 30,
    2009

Quarter


Quarter


Quarter


QuarterRevenue

$
5,748


$
7,689


$
6,038


$
5,507Research and development for proprietary drug discovery

$
24,509


$
23,709


$
20,029


$
21,313Total operating expenses

$
34,121


$
33,252


$
30,005


$
30,057Net loss

$
(33,685
)

$
(37,818
)

$
(29,610
)

$
(26,702
)Weighted average shares outstanding - basic and diluted


47,573



47,605



48,068



48,119Net loss per share - basic and diluted

$
(0.71
)

$
(0.79
)

$
(0.62
)

$
(0.55
)    F-39




---



##### Table of Contents



EXHIBIT INDEX
   Exhibit

FootnoteNo.

Ref.

Description3.1

(1)

Amended and Restated Certificate of Incorporation of Array
    BioPharma Inc.3.2

(16)

Amendment to Amended and Restated Certificate of Incorporation
    of Array BioPharma Inc.3.3

(19)

Bylaws of Array BioPharma Inc., as amended and restated on
    October 30, 20083.4

(3)

Certificate of Designation of the Series A Junior Participating
    Preferred Stock4.1

(1)

Specimen certificate representing the common stock4.2

(20)

Registration Rights Agreement dated May 15, 2009 between
    the Registrant and Deerfield Private Design Fund, L.P. and
    Deerfield Private Design International, L.P.4.3

(27)

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, Limited10.1

(1)

Preferred and Common Stock Purchase Agreement between Registrant
    and the parties whose signatures appear on the signature pages
    thereto dated May 18, 199810.2

(1)

Amendment to Preferred and Common Stock Purchase Agreement dated
    August 7, 199810.3

(1)

Series B Preferred Stock Purchase Agreement between Registrant
    and the parties whose signatures appear on the signature pages
    thereto dated November 16, 199910.4

(1)

Series C Preferred Stock Purchase Agreement between Registrant
    and the parties whose signatures appear on the signature pages
    thereto dated August 31, 200010.5

(1)

Amended and Restated Investor Rights Agreement between
    Registrant and the parties whose signatures appear on the
    signature pages thereto dated November 16, 199910.6

(1)

Amendment No. 1 to Amended and Restated Investor Rights
    Agreement between Registrant and the parties whose signatures
    appear on the signature pages thereto dated August 31, 200010.7

(1)

1998 Stock Option Plan effective July 1, 1998, as amended*10.8

(7)

Amended and Restated Array BioPharma Inc. Stock Option and
    Incentive Plan, as amended*10.9

(15)

Form of Incentive Stock Option Agreement, as amended*10.10

(15)

Form of Nonqualified Stock Option Agreement, as amended*10.11

(12)

Array BioPharma Inc. Amended and Restated Employee Stock
    Purchase Plan*10.14

(13)

Employment Agreement between Registrant and Robert E. Conway
    dated March 1, 2006*10.15

(6)

Form of Employment Agreement dated September 1, 2002 between
    Registrant and each of David L. Snitman, Kevin Koch and R.
    Michael Carruthers.*10.16

(5)

Employment Agreement effective as of March 4, 2002 between
    Registrant and John Moore*10.18

(9)

Amended and Restated Deferred Compensation Plan of Array
    BioPharma Inc. dated December 20, 2004*10.19

(11)

First Amendment to the Amended and Restated Deferred
    Compensation Plan of Array BioPharma Inc.*10.20

(2)

Rights Agreement, dated August 2, 2001, between the Registrant
    and Computershare Trust Company, Inc., as Rights Agent10.21

(1)

Research Services Agreement between Registrant and Eli Lilly and
    Company dated March 22, 2000, as amended**10.22

(4)

Research Agreement between Registrant and Amgen Inc. dated as of
    November 1, 2001**




---



##### Table of Contents



Exhibit

FootnoteNo.

Ref.

Description10.23

(3)

Lead Generation Collaboration Agreement between Registrant and
    Takeda Chemical Industries, Ltd., dated July 18, 2001**10.24

(8)

Collaboration and License Agreement between Registrant and
    AstraZeneca AB, dated December 18, 2003**10.25

(8)

Drug Discovery Collaboration Agreement between Registrant and
    Genentech, Inc., dated December 22, 2003**10.26

(11)

Second Amendment dated October 1, 2005 to the Drug Discovery
    Collaboration Agreement between Registrant and Genentech, Inc.**10.27

(10)

Drug Discovery Collaboration Agreement between Registrant and
    InterMune, Inc., dated September 13, 2002 along with
    Amendment No. 1 dated May 8, 2003, Amendment
    No. 2 dated January 7, 2004, Amendment No. 3
    dated September 10, 2004, Amendment No. 4 dated
    December 7, 2004, Amendment No. 4A dated
    March 10, 2005 and Amendment No. 5 dated June 30,
    2005**10.28

(15)

Amendment No. 6 dated February 3, 2006 to the Drug
    Discovery Collaboration Agreement between Registrant and
    InterMune, Inc., dated September 13, 2002**10.29

(15)

Amendment No. 7 dated June 28, 2006 to the Drug
    Discovery Collaboration Agreement between Registrant and
    InterMune, Inc., dated September 13, 2002**10.30

(14)

Exercise of Option to Extend Funding of Research FTEs dated
    August 31, 2006 to the Drug Discovery Collaboration
    Agreement between Registrant and InterMune, Inc., dated
    September 13, 200210.31

(11)

Drug Discovery Agreement between Registrant and Ono
    Pharmaceutical Co., Ltd., dated November 1, 2005**10.32

(18)

Drug Discovery and Development Agreement by and between
    Registrant and Celgene Corporation dated September 21,
    2007**10.33

(20)

First Amendment to Drug Discovery and Development Agreement
    between Registrant and Celgene Corporation dated June 17,
    2009**10.34

(10)

Loan and Security agreement by and between Registrant and
    Comerica Bank dated June 28, 200510.35

(11)

First Amendment to Loan and Security agreement by and between
    Registrant and Comerica Bank dated December 19, 2005.10.36

(14)

Second Amendment to Loan and Security Agreement between the
    Registrant and Comerica Bank dated July 7, 200610.37

+

Third Amendment to Loan and Security Agreement dated
    June 12, 2008 between the Registrant and Comerica Bank10.38

+

Fourth Amendment to Loan and Security Agreement dated
    March 11, 2009 between the Registrant and Comerica Bank as
    further amended by the Fifth Amendment and the Sixth Amendment
    to the Loan and Security Agreement10.39

(22)

Fifth Amendment to Loan and Security Agreement dated
    September 30, 2009 between the Registrant and Comerica Bank10.40

(25)

Sixth Amendment to Loan and Security Agreement dated
    March 31, 2010 between the Registrant and Comerica Bank10.41

(17)

Facility Agreement dated April 29, 2008 between the Registrant
    and Deerfield Private Design Fund, L.P. and Deerfield Private
    Design International, L.P.**10.42

(17)

Security Agreement dated April 29, 2008 between the
    Registrant and Deerfield Private Design Fund, L.P. and Deerfield
    Private Design International, L.P.**10.43

(20)

Letter Agreement dated May 15, 2009 amending Security Agreement
    dated April 29, 2008 between the Registrant and Deerfield
    Private Design Fund, L.P. and Deerfield Private Design
    International, L.P.10.44

(28)

Facility Agreement dated May 15, 2009 between the
    Registrant and Deerfield Private Design Fund, L.P., and
    Deerfield Private Design International**




---



##### Table of Contents



Exhibit

FootnoteNo.

Ref.

Description10.45

(14)

Facilities Lease and Assignment dated July 7, 2006 between
    the Registrant and BMR-3200 Walnut Street LLC10.46

(14)

Facilities Lease and Assignment dated August 9, 2006
    between the Registrant and BMR-Trade Center Avenue LLC10.47

(21)

Equity Distribution Agreement, dated September 18, 2009
    between the Registrant and Piper Jaffray & Co.10.48

(23)

Letter Agreement dated July 30, 2009 between the Registrant
    and Genentech, Inc.**10.49

(24)

Collaboration and License Agreement dated December 13, 2009
    between the Registrant and Amgen Inc.**10.50

(26)

Description of Performance Bonus Program*10.51

+

License Agreement dated April 19, 2010 between the
    Registrant and Novartis International Pharmaceutical Ltd.***23.1

+

Consent of KPMG LLP, Independent Registered Public Accounting
    Firm31.1

+

Certification of Robert E. Conway pursuant to Section 302
    of the Sarbanes-Oxley Act of 200231.2

+

Certification of R. Michael Carruthers pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232.0

+

Certifications of Robert E. Conway and R. Michael Carruthers
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002     (1)
    
    Incorporated herein by reference to the Registrants
    registration statement on
    Form S-1
    (File
    No. 333-45922)(2)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of August 3, 2001 (File
    No. 000-31979)(3)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2001 (File
    No. 000-31979)(4)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K/A
    as of February 6, 2002 (File
    No. 001-16633)(5)
    
    Incorporated herein by reference to the Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2002 (File
    No. 001-16633)(6)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2002 (File
    No. 001-16633)(7)
    
    Incorporated herein by reference to the Registrants
    definitive proxy statement on Schedule 14A with respect to
    the annual meeting of stockholders held on October 30, 2008(8)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended December 31, 2003 (File
    No. 001-16633)(9)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of December 20, 2004 (File
    No. 001-16633)(10)
    
    Incorporated herein by reference to the Annual Report on
    Form 10-K
    for the fiscal year ended June 30, 2005 (File
    No. 001-16633)(11)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended December 31, 2005 (File
    No. 001-16633)(12)
    
    Incorporated herein by reference to the Registrants
    definitive proxy statement on Schedule 14A with respect to
    the annual meeting of stockholders held on October 28, 2009(13)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of March 1, 2006 (File
    No. 001-16633)(14)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2006 (File
    No. 001-16633)




---



##### Table of Contents



(15)
    
    Incorporated herein by reference to the Registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended June 30, 2006 (File
    No. 001-16633)(16)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of November 1, 2007 (File
    No. 001-16633)(17)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of May 5, 2008 (File
    No. 001-16633)(18)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2007 (File
    No. 001-16633)(19)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of October 30, 2008 (File
    No. 001-16633)(20)
    
    Incorporated herein by reference to the Registrants Annual
    Report on
    Form 10-K
    for the fiscal year ended June 30, 2009 (File
    No. 001-16633)(21)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of September 18, 2009 (File
    No. 001-16633)(22)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    as of September 30, 2009 (File
    No. 001-16633)(23)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended September 30, 2009 (File
    No. 001-16633)(24)
    
    Incorporated herein by reference to the Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended December 31, 2009 (File
    No. 00116633)(25)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    dated March 31, 2010 (File
    No. 001-16633)(26)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K
    dated October 29, 2009 (File
    No. 001-16633)(27)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K/A
    dated May 15, 2009 filed on September 23, 2009 (File
    No. 001-16633)(28)
    
    Incorporated herein by reference to the Current Report on
    Form 8-K/A
    dated May 15, 2009 filed on September 29, 2009 (File
    No. 001-16633)+
    
    Filed herewith.*
    
    Management contract or compensatory plan.**
    
    Confidential treatment of redacted portions of this exhibit has
    been granted.***
    
    Confidential treatment of redacted portions of this exhibit has
    been applied for.