In a deal worth up to $1.5 billion, Bayer and Loxo Oncology will jointly develop two Loxo drug candidates, larotrectinib and LOXO-195, for treating cancers caused by a rare genetic mutation. Loxo gets $400 million upfront; the remainder of the money is tied to the approval and sale of the two compounds.
Larotrectinib and the follow-on compound LOXO-195 both block TRK gene fusions, a chromosomal mismatch found in less than 1% of cancers. Larotrectinib was a breakout star of the American Society for Clinical Oncology conference in June, where researchers revealed that it shrank tumors in 76% of the kids and adults in a small study. LOXO-195, currently in Phase I/II trials, is designed to treat people who develop resistance to first-generation TRK inhibitors like larotrectinib.
Loxo plans to file for U.S. Food & Drug Administration approval of larotrectinib by the end of the year. Whereas oncology drugs have historically been approved based on where tumors are located—such as the lung or breast—Loxo is asking FDA to allow its molecule to be used by anyone harboring TRK gene fusions. Earlier this year the agency granted its first such “tissue agnostic” green light, for an immuno-oncology drug from Merck & Co.
Although the deal is lucrative for Loxo, news of it pushed the company’s share price down by more than 11% today. The biotech firm previously said it would market its TRK inhibitors itself and earlier this month reiterated its progress in setting up an internal team to prepare for the launch of larotrectinib.
Now, Bayer, which some investors view as a second-tier player in oncology, will split U.S. marketing responsibilities with Loxo.