On March 1, 2018 Loxo Oncology, Inc. (Nasdaq:LOXO), a biopharmaceutical company innovating the development of highly selective medicines for patients with genetically defined cancers, reported that fourth quarter and year-end 2017 financial results(Press release, Loxo Oncology, MAR 1, 2018, View Source [SID1234524306]).
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"2017 was a remarkable year for the company," said Josh Bilenker, M.D., chief executive officer of Loxo Oncology. "Our TRK franchise partnership with Bayer brings capital and commercial expertise to an NDA-stage opportunity in larotrectinib and an acquired resistance solution in LOXO-195. Continued progress in the Phase 1 trial for LOXO-292, our highly selective RET inhibitor, has positioned the program for a clinical update in the first half of 2018. Finally, our acquisition of LOXO-305, a selective and reversible BTK inhibitor intended for patients with acquired resistance or intolerance to covalent BTK inhibitors, brings a fourth program to our pipeline, with a clinical start planned for the second half of 2018."
Recent Highlights
TRK Inhibitor Franchise
Global Development and Commercialization Partnership with Bayer: On November 14, 2017, Loxo Oncology announced a global collaboration with Bayer to develop and commercialize larotrectinib and LOXO-195. The company received a $400.0 million upfront payment and is eligible for an additional $1.15 billion in milestones, of which Loxo Oncology believes $425.0 million are achievable in 2018 and 2019. In the U.S., where Loxo Oncology and Bayer will co-promote the products, the parties will share commercial costs and profits on a 50/50 basis. More information on the collaboration can be found here.
Larotrectinib
New England Journal of Medicine (NEJM) Publication: On February 22, 2018, the NEJM published results for larotrectinib in the treatment of pediatric and adult patients with TRK fusion cancers. The publication included central radiology results and additional patient follow-up from the 2017 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting presentation, employing a July 17, 2017 data cutoff. As previously reported, the overall response rate (ORR) was 75% by central assessment and 80% by investigator assessment. As of the July 17, 2017 data cutoff, 86% of responding patients remained on treatment or had undergone surgery with curative intent. The publication can be found here.
New Drug Application (NDA) Rolling Submission: On December 20, 2017, Loxo Oncology announced that the company initiated a rolling NDA submission to the U.S. Food and Drug Administration (FDA) for larotrectinib for the treatment of unresectable or metastatic solid tumors with NTRK-fusion proteins in adult and pediatric patients who require systemic therapy and who have either progressed following prior treatment or who have no acceptable alternative treatments. The company expects to complete the submission by the end of March. More information can be found here.
Clinical Data in Thyroid (TC) and Salivary Gland Cancers (SGC): On February 15, 2018, a poster presentation at the 2018 Multidisciplinary Head and Neck Cancers Symposium outlined data in 19 patients (age 15-75 years) with TRK fusion TC or SGC who were treated in the ongoing larotrectinib clinical trials. In 17 patients with measurable disease (5 TC and 12 SGC), treatment with larotrectinib led to an ORR of 88%, by both central and investigator assessment. Adverse events were consistent with data previously reported from these trials. The presented poster can be found here.
Clinical Data from the Phase 1 SCOUT Clinical Trial: On December 4, 2017, an oral presentation at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Special Conference on Pediatric Cancer Research outlined data in 17 pediatric patients with TRK fusion cancers who were treated in the larotrectinib pediatric Phase 1 SCOUT clinical trial. Treatment with larotrectinib led to an ORR of 93%, by both central and investigator assessment. An overview of the data can be found here.
Upcoming Milestones
Larotrectinib (TRK)
Completion of the rolling NDA submission is expected in March
Marketing Authorisation Application submission by Bayer in the European Union is expected in 2018
Presentation of updated TRK fusion clinical data is expected in the second half of 2018
LOXO-195 (next-generation TRK)
Presentation of updated clinical data is expected in the second half of 2018
LOXO-292 (RET)
Presentation of updated clinical data is expected in the first half of 2018
LOXO-305 (BTK)
Initiation of a Phase 1 clinical trial is expected in the second half of 2018
Fourth Quarter and Full Year 2017 Financial Results
As of December 31, 2017, Loxo Oncology had aggregate cash, cash equivalents and investments of $626.2 million, compared to $141.8 million as of December 31, 2016. Loxo Oncology received $250 million of the $400 million upfront payment related to the Bayer collaboration in the fourth quarter of 2017 and the remaining $150 million is payable in first quarter of 2018.
Revenue from the collaboration agreement was $21.3 million for the fourth quarter and full year of 2017, compared to none for the fourth quarter and full year of 2016. This represents the partial revenue recognition of the $400 million upfront payment from the Bayer collaboration. Loxo Oncology is recognizing revenue on a proportional performance basis utilizing a calculation based on quarterly research and development spending associated with larotrectinib and LOXO-195, relative to cumulative and forecasted research and development spending on larotrectinib and LOXO-195 over the course of the collaboration agreement. As a result, the quarterly revenue recognized for the upfront payment will vary from quarter to quarter.
Research and development expenses were $30.7 million for the fourth quarter of 2017 compared to $23.4 million for the fourth quarter of 2016. This increase was primarily due to expanded larotrectinib development activities including clinical costs, as well as additional development expenses related to our other programs. Loxo Oncology also recognized research and development-related stock-based compensation expense of $1.5 million during the fourth quarter of 2017 compared to $1.4 million for the fourth quarter of 2016.
Research and development expenses were $140.0 million for the year ended December 31, 2017, compared to $58.3 million for the year ended December 31, 2016. This increase was primarily due to a non-recurring charge related to the $40.0 million asset acquisition of the BTK inhibitor program from Redx, expanded larotrectinib development activities, as well as additional development expenses related to our other programs. We also had higher employment costs primarily due to increased headcount. Loxo Oncology also recognized research and development-related stock-based compensation expense of $9.5 million during the year ended December 31, 2017, compared to $3.5 million for the year ended December 31, 2016.
General and administrative expenses were $12.7 million for the fourth quarter of 2017 compared to $4.0 million for the fourth quarter of 2016. The increase was primarily due to preparation activities for the potential commercialization of larotrectinib, additional headcount and associated employment costs and general and administrative professional fees. Loxo Oncology also recognized general and administrative-related stock-based compensation expense of $3.3 million during the fourth quarter 2017 compared to $1.2 million for the fourth quarter of 2016.
General and administrative expenses were $33.7 million for the year ended December 31, 2017, compared to $14.9 million for the year ended December 31, 2016. The increase was primarily due to preparation activities for the potential commercialization of larotrectinib, additional headcount and associated employment costs and general and administrative professional fees. Loxo Oncology also recognized general and administrative-related stock-based compensation expense of $9.9 million during the year ended December 31, 2017, compared to $4.5 million for the year ended December 31, 2016.
Net loss was $20.6 million for the fourth quarter of 2017, compared to $27.2 million for the fourth quarter of 2016. Net loss was $148.9 million for the year ended December 31, 2017, compared to $72.4 million for the year ended December 31, 2016. This increase in net loss is primarily driven by the increases in operating expenses.
Non-GAAP net loss was $37.2 million for the fourth quarter of 2017, compared to $24.6 million for the fourth quarter of 2016. Non-GAAP net loss was $110.8 million for the year ended 2017, compared to $64.4 million for the year ended 2016. This non-GAAP net loss measure, more fully described below under "Non-GAAP Financial Measures," excludes the recognition of collaboration revenue related to an upfront payment, acquisition of an in-process R&D asset and share-based compensation expenses. A reconciliation of the GAAP financial results to non-GAAP financial results is included with the attached financial statements.
Conference Call Information
Loxo Oncology will host a conference call today at 8:00 a.m. ET to discuss the fourth quarter and full-year 2017 financial results and program updates. To participate in the conference call, please dial (877) 930-8065 (domestic) or (253) 336-8041 (international) and refer to conference ID 7395447. A replay will be available shortly after the conclusion of the call and archived on the company’s website for 30 days following the call.