Bayer Dishes Out $400M Upfront To Acquire Interest In Loxo Cancer Drugs

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Bayer has dished out $400 million USD and has committed to more than $1B in additional funding to acquire interest in Loxo Oncology’s tropomyosin receptor kinase (TRK) inhibitor franchise. The agreement puts Bayer in control of global commercialization of a treatment that tallied up a 75% response rate in a mid-phase clinical trial.

Loxo will receive a large sum in exchange for surrendering rights and control over TRK inhibitor larotrectinib and pursue compound LOXO-195. Also, on top of the $400 million upfront, Bayer will pay another $450 million in milestones once larotrectinib is approved and has its first sales in specific major markets.

Loxo has anticipated the deal to generate $1B over the next couple of years due to the filings for approval in the U.S. and Europe already underway. That number reflects the industry’s sentiment for cancer drugs and strength of the data produced by larotrectinib. The drug was created to work in the subset of cancer patients with TRK fusions. When given to 55 patients with 17 different types of TRK fusion-positive cancer, the pan-TRK inhibitor achieved an objective response rate of 75%. Loxo is planning to build on that success with LOXO-195, an early-phase asset focused on patients who develop resistance to larotrectinib.

The deal contains a continued $475 in milestones and tiered double-digit royalties, connected to the sales Bayer accumulates outside the U.S. where it leads the commercialization of the drug. Inside of the U.S. Loxo and Bayer will co-promote, splitting the expenses and profits 50/50. When its all said and done, Loxo could get potentially $1.55B, nearly 50% of which is set to hit its bank by the end of 2018.

That decision was partly based on a confidence that the Bayer deal would position Loxo to reach more patients at a faster rate. The co-promotion agreement is one part of this deal. Bayer and Loxo will split up responsibilities for promoting larotrectinib, with the previous taking oncologists and the second talking to the laboratory community.

The next piece of the puzzle is to file for approval of larotrectinib inside the United State, something Loxo is still on pace to do in 2018. Also, they must lay the filing for approval in Europe and first commercial sales, milestones that will increase the amount Loxo gets from the deal near $1 billion.

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