As Lilly deal closes, Bayer secures full rights to Loxo's Vitrakvi
- Bayer on Friday secured full rights to Loxo Oncology's targeted cancer drug Vitrakvi as well as an earlier-stage compound, exercising an option held by the pharma through a 2017 collaboration deal that predated Eli Lilly's $8 billion buyout of the biotech this past January.
- Bayer's partnership with Loxo had provided for joint co-promotion of Vitrakvi in the U.S. But Lilly's acquisition of Loxo triggered a change-in-control clause in that agreement, enabling Bayer to pick up exclusive rights to develop and sell Vitrakvi. Bayer already held full rights to the drug outside of the U.S.
- While Lilly will still earn royalties from Bayer sales of Vitrakvi, the pharma's buyout now becomes more clearly centered on the prospects for Loxo's experimental — and wholly owned — cancer drug LOXO-292. Designed to target cancers driven by abnormalities in a kinase called RET, LOXO-292 is currently in Phase 1/2 testing.
Bayer's decision doesn't necessarily come as a surprise. With Lilly buying Loxo, Bayer had to choose between co-promoting Vitrakvi (larotrectinib) with another large pharma company, or taking the drug fully in-house.
While Lilly had highlighted both Vitrakvi and the earlier compound now fully owned by Bayer in its announcement of the Loxo deal, comments from Lilly CEO Dave Ricks had made clear LOXO-292 was the primary driver of Lilly's interest.
"As we said at the time we announced the acquisition, the majority of the value we see in Loxo comes from the potential of LOXO-292," a Lilly spokesperson said in an emailed statement.
"For Lilly, the value of the acquisition did not hinge on Bayer's decision regarding the co-promotion agreement for the TRK inhibitors. Bayer’s decision to move to an exclusive license in the U.S. and Puerto Rico for Vitrakvi and LOXO-195, and pay a royalty to Lilly, does not change the economic value to Lilly," the spokesperson added, referring to the earlier compound by its internal Loxo name.
Loxo declined to comment to BioPharma Dive. Bayer's exercise of its option for full rights to Vitrakvi and LOXO-195 was triggered by the closing of the Lilly-Loxo deal, which was announced Friday.
Documents filed by Loxo after announcement of its deal with Lilly show that clinical progress from LOXO-292 drove the biotech to cast a wide net for potential pharma partners. After an interim readout, Loxo reached out to 15 biotech and pharma companies in April 2018. Initial discussions failed to turn up an offer Loxo found sufficiently attractive, although negotiations with four companies continued into December.
That's when Lilly approached with an offer to buy Loxo, eventually settling on a deal paying $235 per Loxo share — a 68% premium to the company's share price before announcement of the takeover.
Both Vitrakvi and LOXO-292 are targeted therapies, designed for solid tumors harboring specific genetic rearrangements or abnormalities. As such, the pool of patients expected to be eligible for each drug is small.
Lilly, for example, estimates the incidence of RET-fusion lung cancer at about 3,000 patients in the U.S., with several hundred more affected by RET-drive papillary and medullary thyroid tumors.
"While the incidence rates are not high, the response rates [to LOXO-292] are really remarkable and so we do believe that we'll see strong penetration and also a long durability of response," said Lilly's new head of oncology Anne White on a recent earnings call.
Results presented in October showed treatment with LOXO-292 led to a nearly 60% response rate in 29 patients with RET-mutated medullary thyroid cancer, while earlier data from a broader group last June showed a 77% response rate across several tumor types.
Lilly expects additional data on LOXO-292 in the second half of this year and has said the Phase 1/2 study of the drug, called LIBRETTO, is enrolling quickly. The pharma has pegged 2020 for a potential initial launch of the drug.
- BioPharma Dive Lilly rushed its Loxo deal to have a big reveal at JPM
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