Loxo parlays cancer drug success into $1.5B deal with Bayer
- Lured by the promise of precisely treating cancer based on genetic expression, German drugmaker Bayer AG will pay $400 million upfront — and as much as $1.55 billion in total — to gain access to two oncology drugs developed by Connecticut biotech Loxo Oncology Inc.
- Five months ago, Loxo wowed researchers at the annual American Society for Clinical Oncology (ASCO) conference with data showing its drug larotrectinib shrunk tumors in three quarters of patients whose cancer expressed a rare genetic abnormality known as TRK fusion.
- Bayer clearly shared that enthusiasm, putting down a significant amount of cash upfront to gain ex-U.S. rights to larotrectinib and an earlier candidate called LOXO-195, as well as a 50/50 split of any future profits from the drugs in the U.S.
Loxo's impressive results at ASCO are another piece of evidence underscoring the growing potential to treat patients based on the genetic makeup of their cancer, rather than where those tumors reside in the body.
Already, the Food and Drug Administration has approved Merck & Co.'s Keytruda (pembrolizumab) for treatment of cancers with a specific genetic signature — the first time the agency has OK'd a drug based solely on a biomarker. (Other drugs are approved to treat tumors expressing certain biomarkers, but only in specific organs.)
Larotrectinib could become the next such treatment. Based on the data already presented, Loxo plans to apply for U.S. approval of the drug sometime in late 2017 or early 2018. LOXO-195, which also blocks TRK, is currently in a Phase 1/2 trial.
"These agents have the potential to fulfill the promise of precision medicine, where tumor genetics rather than tumor site of origin define the treatment approach for patients," said Robert LaCaze, executive vice president and head of Bayer's oncology unit, in a Tuesday statement.
In addition to the $400 million upfront, Loxo could earn an additional $450 million in milestone payments if larotrectinib wins regulatory approval and launches commercially in certain major markets — events that look likely in the U.S., at least. Bayer will pay up to another $200 million if LOXO-195 finds similar success.
Per the deal, the two companies will split development costs, although Bayer will commercialize the drugs (if approved) outside the U.S. Any profits in the U.S. will be split equally and Bayer will pay Loxo double-digit royalties plus sales milestones of up to $475 million on any ex-U.S. sales of the drugs.
Shares in Loxo fell by more than 10% Tuesday morning on news of the deal, likely in response to disappointment that a sale of the biotech is probably off the table for now.
Still, $400 million upfront is no small feat for a biotech that hadn't garnered much attention until ASCO put Loxo on the map.
Results from three studies testing larotrectinib showed a 75% objective response rate in 55 pediatric and adult patients diagnosed with 17 different types of cancer.
All trial participants tested positive for TRK fusion, an abnormality that occurs when one of three TRK genes fuses to another gene. The resulting defect spurs cell division and tumor growth.
Some patients have showed signs of resistance to larotrectinib, a challenge that Loxo hopes to address with its second-generation LOXO-195 candidate.
- Loxo Oncology Inc. Press release
- BioPharma Dive ASCO17: Loxo shows promise of biomarker approach to cancer
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