Loxo Oncology Reports Second Quarter 2018 Financial Results

On August 9, 2018 Loxo Oncology, Inc. (Nasdaq:LOXO), a biopharmaceutical company developing highly selective medicines for patients with genomically defined cancers, reported second quarter 2018 financial results (Press release, , AUG 9, 2018, View Source [SID1234528569]).

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"We made significant progress across our pipeline in the second quarter," said Josh Bilenker, M.D., chief executive officer of Loxo Oncology. "In May, our NDA for larotrectinib was accepted by FDA and granted Priority Review. In June, initial clinical data from the ongoing LIBRETTO-001 Phase 1/2 study of LOXO-292 were presented at ASCO (Free ASCO Whitepaper). These data enabled a subsequent FDA meeting, which established a path forward for the program. And lastly, we completed important enabling studies and manufacturing activities for the LOXO-305 IND. In the second half of the year, we are focused on continuing to advance our pipeline, as well as aiding and advising our partners at Bayer in anticipation of a possible larotrectinib regulatory approval. Operationally, we aim to lay the groundwork for the long-term adoption of tumor genomic testing capable of detecting TRK fusions alongside other clinically actionable alterations."

LOXO-292 Regulatory Update

Loxo Oncology recently conducted a meeting with the U.S. Food and Drug Administration (FDA) for LOXO-292. Based on written minutes from FDA, Loxo Oncology expects to submit a new drug application (NDA) for LOXO-292 in late 2019, utilizing data generated from the ongoing LIBRETTO-001 clinical trial. This timeline integrates standard NDA activities which are ongoing and planned, including clinical pharmacology studies, non-clinical studies, and manufacturing. Loxo Oncology expects to file for separate potential indications for two populations of patients: those with RET fusion-positive solid tumors such as lung and thyroid cancer, and those with RET-mutant medullary thyroid cancer (MTC). In both cases, Loxo Oncology expects that patients will be required to have received systemic therapy, progressed following prior treatment and have no satisfactory alternative treatment options.

Recent Highlights

Larotrectinib

Abstract Accepted for Oral Presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) 2018 Congress: Clinical data for larotrectinib will be presented at the ESMO (Free ESMO Whitepaper) 2018 Congress to be held October 19-23, 2018, in Munich, Germany. The presentation will provide updated clinical follow-up for the 55 patients who comprise the primary efficacy analysis population that has supported global regulatory filings. The presentation will also include new data for TRK fusion patients subsequently enrolled.
Abstract Accepted for Poster Presentation at the Molecular Analysis for Personalised Therapy 2018 Congress: On September 15, 2018, Ventana Medical Systems, Inc., a member of the Roche Group, and Loxo Oncology, will present a co-authored poster on the analytical validation of Ventana’s pan-TRK IHC assay at the Molecular Analysis for Personalised Therapy 2018 Congress, to be held September 14-15, 2018 in Paris, France.
Acceptance of NDA by FDA: On May 29, 2018, Loxo Oncology announced FDA acceptance of the larotrectinib NDA and granting of Priority Review for the treatment of adult and pediatric patients with locally advanced or metastatic solid tumors harboring an NTRK gene fusion. The FDA has set a target action date of November 26, 2018, under the Prescription Drug User Fee Act (PDUFA). More information can be found here.
International Symposium on Pediatric Neuro-Oncology (ISPNO) Poster Presentation: On July 1, 2018, a poster presentation at ISPNO 2018 detailed a case report of a pediatric patient with TRK fusion high-grade glioma treated with larotrectinib on a single patient protocol. The poster can be found here.
World Congress on Gastrointestinal Cancer Oral Presentation: On June 22, 2018, an oral presentation at the ESMO (Free ESMO Whitepaper) World Congress on Gastrointestinal Cancer detailed larotrectinib data in patients with TRK fusion gastrointestinal (GI) cancers enrolled to the pivotal larotrectinib program. The presentation can be found here.
Journal of Clinical Investigation Publication: On June 19, 2018, an article was published online in the peer-reviewed Journal of Clinical Investigation detailing the occurrence of TRK fusions in hematologic malignancies, including a case report of a patient with TRK fusion acute myeloid leukemia (AML) treated with larotrectinib on a single patient protocol. The publication can be found here.
Pediatric Blood & Cancer Publication: On June 12, 2018, a case report was published in the online edition of the peer-reviewed journal Pediatric Blood & Cancer detailing a pediatric patient with metastatic TRK fusion congenital mesoblastic nephroma (CMN) treated with larotrectinib on the SCOUT trial. The publication can be found here.
LOXO-292

Interim Clinical Data Presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting: In June, interim clinical data from the LOXO-292 global LIBRETTO-001 trial were presented in an oral presentation at ASCO (Free ASCO Whitepaper). The presentation included 82 patients enrolled across eight dose escalation cohorts and employed an April 2, 2018 data cut-off. The data demonstrated a 77 percent (95% CI: 61-89%) overall response rate (ORR) in RET fusion cancers and a 45 percent (95% CI: 24-68%) ORR in RET mutated MTC as evaluated by RECIST 1.1 criteria. Patients had received a median of three prior treatments with two-thirds having been treated with at least one prior multi-kinase inhibitor. All responding patients across all tumor types remained on therapy as of the data cut-off. LOXO-292 was well tolerated with most treatment-emergent adverse events Grade 1 in severity. The treatment-emergent adverse events observed in ≥10% of patients, regardless of relationship to LOXO-292, were fatigue, diarrhea, constipation, dry mouth, nausea, and dyspnea. Phase 2 cohorts are open and enrolling at the 160mg BID dose. See the presented data here.
LOXO-305

Presentation Accepted at the Society of Hematologic Oncology (SOHO) Annual Meeting: In September 2018, Loxo Oncology authors will present LOXO-305 preclinical characterization data in oral and poster presentations at the SOHO Annual Meeting taking place September 12-15 in Houston, Texas.
Upcoming Milestones

Larotrectinib (TRK)
Presentation of updated clinical data at the ESMO (Free ESMO Whitepaper) Congress
Submission of a Marketing Authorisation Application in the European Union, by Bayer, is expected in the second half of 2018
NDA PDUFA date of November 26, 2018
LOXO-195 (next-generation TRK)
Updated clinical data is now expected in the first half of 2019
LOXO-292 (RET)
Updated clinical data is expected in the second half of 2018
LOXO-305 (BTK)
Presentation of preclinical data at the SOHO Annual Meeting
Initiation of a Phase 1 clinical trial is expected in the fourth quarter of 2018
Second Quarter 2018 Financial Results

As of June 30, 2018, Loxo Oncology had aggregate cash, cash equivalents and investments of $706.4 million, compared to $626.2 million as of December 31, 2017.

Revenue from the collaboration agreement was $42.6 million for the second quarter of 2018, compared to none for the second quarter of 2017. This represents $51.2 million in revenue recognized from the $400 million upfront payment from the Bayer collaboration offset by $8.6 million, Loxo Oncology’s share of the joint larotrectinib co-promotion costs.

Revenue from the collaboration agreement was $81.0 million for the six months ended June 30, 2018, compared to none for the six months ended June 30, 2017. This represents $94.1 million in revenue recognized from the $400 million upfront payment from the Bayer collaboration offset by $13.1 million, Loxo Oncology’s share of the joint larotrectinib co-promotion costs. Loxo Oncology recognizes revenue from the upfront payment 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 varies from quarter to quarter. A supporting schedule that shows the different components of revenue from the collaboration agreement is included with the attached financial statements.

Research and development expenses were $41.6 million for the second quarter of 2018 compared to $24.4 million for the second quarter of 2017. This increase was primarily due to expanded development expenses across our LOXO-292 and LOXO-305 programs and higher employment costs primarily due to increased headcount. These numbers are net of 50/50 cost-sharing with Bayer for larotrectinib and LOXO-195 development costs. Loxo Oncology recognized research and development-related stock-based compensation expense of $5.8 million during the second quarter of 2018 as compared to $3.5 million for the second quarter of 2017.

Research and development expenses were $73.5 million for the six months ended June 30, 2018 compared to $44.6 million for the six months ended June 30, 2017. This increase was primarily due to expanded development expenses across our LOXO-292 and LOXO-305 programs and higher employment costs primarily due to increased headcount. These numbers are net of 50/50 cost-sharing with Bayer for larotrectinib and LOXO-195 development costs. Loxo Oncology recognized research and development-related stock-based compensation expense of $10.1 million during the six months ended June 30, 2018 as compared to $5.9 million for the six months ended June 30, 2017.

General and administrative expenses were $15.7 million for the second quarter of 2018 compared to $6.5 million for the second quarter of 2017. The increase was primarily due to additional headcount and associated employment costs and general and administrative professional fees. Loxo Oncology recognized general and administrative-related stock-based compensation expense of $6.5 million during the second quarter of 2018 compared to $2.0 million for the second quarter of 2017.

General and administrative expenses were $27.9 million for the six months ended June 30, 2018 compared to $11.3 million for the six months ended June 30, 2017. The increase was primarily due to additional headcount and associated employment costs and general and administrative professional fees. Loxo Oncology recognized general and administrative-related stock-based compensation expense of $11.9 million during the six months ended June 30, 2018 compared to $3.5 million for the six months ended June 30, 2017.

Net loss was $11.7 million and $15.3 million for the three and six months ended June 30, 2018, respectively, compared to $30.4 million and $54.9 million for the three and six months ended June 30, 2017, respectively. This decrease in net loss is primarily driven by the revenue recognized from the $400.0 million upfront payment from the Bayer collaboration, the larotrectinib and LOXO-195 development reimbursement from the Bayer collaboration, offset by increases in operating expenses.

Non-GAAP net loss was $50.6 million and $87.4 million for the three and six months ended June 30, 2018, respectively, compared to $25.0 million and $45.5 million for the three and six months ended June 30, 2017, respectively. This non-GAAP net loss measure, more fully described below under "Non-GAAP Financial Measures," excludes the recognition of collaboration revenue related to the Bayer upfront payment and share-based compensation expenses. A reconciliation of the GAAP financial results to non-GAAP financial results is included with the attached financial statements.

Earnings Conference Call and Webcast Information
Loxo Oncology will host a conference call today at 8:00 a.m. ET to discuss the second quarter 2018 financial results and company updates. A live webcast can be accessed under "Events & Presentations" in the Investors & Media section of the company’s website at www.loxooncology.com. The conference call can be accessed by dialing (877) 930-8065 (domestic) or (253) 336-8041 (international) and referring to conference ID 7291605. The webcast will be archived and made available for replay on the company’s website beginning approximately two hours after the event.