UPDATE 1-Array BioPharma gets additional $40 mln funding

* Gets additional $40 mln funding commitment

* To use funds to develop small molecule drug programs

May 19 (Reuters) - Array BioPharma Inc (ARRY.O) said it received an additional $40 million funding commitment from Deerfield Management and plans to use these funds to develop its small molecule drug programs.

"This funding commitment is in addition to the $80 million Array previously received from Deerfield in 2008," the company said.

Under the terms of the funding commitment, Deerfield will receive a transaction fee of $500,000 and Array has exchanged warrants to purchase six million shares of its common stock previously issued to Deerfield for warrants with a lower exercise price of $3.65 per share.

Array had issued warrants to Deerfield to purchase six million shares at an exercise price of $7.54 per share in connection with the prior facility.

If Array elects to use the additional $40 million, the interest rate on the outstanding $80 million principal will decrease from 8.5 percent to 7.5 percent annually and the new interest rate will also apply to the additional funds, the company said.

Shares of the biopharmaceutical company closed at $3.32 Tuesday on Nasdaq.

For the alerts double-click [ID:nWNAB1577] . (Reporting by Anand Basu in Bangalore; Editing by Aradhana Aravindan)