On November 2, 2017 Loxo Oncology, Inc. (Nasdaq:LOXO), a biopharmaceutical company innovating the development of highly selective medicines for patients with genetically defined cancers, reported financial results for the third quarter ended September 30, 2017 (Press release, Loxo Oncology, NOV 2, 2017, View Source [SID1234521483]).

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“In recent months, we have announced meaningful progress across our TRK and RET programs,” said Josh Bilenker, M.D., chief executive officer of Loxo Oncology. “For larotrectinib, an independent review committee has corroborated the striking response rate reported at ASCO (Free ASCO Whitepaper). These data will anchor global regulatory submissions, including a U.S. submission which is on track for late 2017 or early 2018. For RET, study investigators provided a first look at LOXO-292’s potential at the recent World Lung meeting in Japan. The LOXO-292 Phase 1 trial continues to enroll well, and we look forward to providing a study update in 2018.”

Recent Highlights

Larotrectinib

Independent Review Committee Assessment of Larotrectinib Dataset: On October 18, 2017, Loxo Oncology announced top-line overall response rate (ORR) results from the independent review committee assessment of the larotrectinib dataset. Consistent with global written regulatory correspondence, this dataset includes adult and pediatric tropomyosin receptor kinase (TRK) fusion patients enrolled in Loxo Oncology’s Phase 1 adult trial, Phase 2 trial (NAVIGATE), and Phase 1/2 pediatric trial (SCOUT). The dataset is based on the intent to treat (ITT) principle, using the first 55 TRK fusion patients with RECIST-evaluable disease enrolled to the three clinical trials, regardless of prior therapy or tumor tissue diagnostic method. The primary endpoint for the integrated analysis of efficacy is ORR according to the independent review committee assessment, as measured by RECIST v1.1. A key secondary endpoint is ORR according to local investigator assessment, as measured by RECIST v1.1. As of a July 17, 2017 data cut-off date, the ORR was 75% by independent review and 80% by investigator assessment. An overview of the topline data can be found here.
Updated Pediatric Data to Be Presented: Updated pediatric data have been accepted for presentation at the Connective Tissue Oncology Society (CTOS) Annual Meeting on November 10, 2017, and at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Special Conference on Pediatric Cancer Research on December 4-5, 2017. At CTOS, larotrectinib investigators will present an update on the pediatric patients treated with larotrectinib prior to surgical resection. At the AACR (Free AACR Whitepaper) Special Conference on Pediatric Cancer Research, larotrectinib investigators will present updated data from the pediatric dataset last presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) meeting in June.
Data to be Presented at American Society of Hematology (ASH) (Free ASH Whitepaper). At the 59th Annual ASH (Free ASH Whitepaper) Meeting taking place December 9-12, 2017 in Atlanta, GA, Loxo Oncology and academic collaborators will present an abstract regarding TRK fusions in hematologic malignancies.
LOXO-292

Proof-of-Concept Clinical Data in RET Fusion Lung Cancer: On October 18th, LOXO-292 trial investigators presented initial clinical data from the program at the International Association for the Study of Lung Cancer (IASLC) World Conference on Lung Cancer. This presentation primarily described the first two patients with RET-fusion lung cancer with and without brain metastases treated with LOXO-292. Both patients had disease progression while receiving prior multi-kinase inhibitors. On single agent LOXO-292, both patients achieved RECIST confirmed partial responses and remain on LOXO-292 as of the September 27, 2017 data cut-off of the presentation. In this early, two-patient dataset, LOXO-292 has been well-tolerated, with no adverse events attributed to LOXO-292. Additionally, the presentation included pharmacology evidence that the Phase 1 dose level of 60mg twice daily provides IC90 RET target coverage in patients. The presentation can be viewed here. Loxo Oncology plans to present additional clinical data from this program in the first half of 2018.
Upcoming Milestones

Larotrectinib (TRK)
Medical meeting presentations in the fourth quarter of 2017 include the CTOS Annual Meeting, AACR (Free AACR Whitepaper) Special Conference on Pediatric Cancer Research, and ASH (Free ASH Whitepaper)
Submission of larotrectinib NDA expected by year end 2017 or early 2018
Updated integrated TRK fusion clinical data publication and/or presentation expected in the first half of 2018
LOXO-195 (next-generation TRK)
Clinical data presentation expected in 2018
LOXO-292 (RET)
Clinical data presentation expected in the first half of 2018
LOXO-305 (BTK)
Phase 1 clinical trial initiation expected in 2018
Third Quarter 2017 Financial Results

As of September 30, 2017, Loxo Oncology had aggregate cash, cash equivalents and investments of $405.3 million, compared to $141.8 million as of December 31, 2016.

Research and development expenses were $64.8 million for the third quarter of 2017 compared to $14.2 million for the third quarter of 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 Pharma Plc and Redx Oncology Limited (collectively, “Redx”), expanded larotrectinib development activities including clinical costs and costs related to the companion diagnostics agreement with Roche, as well as additional development expenses related to our other programs. Loxo Oncology also recognized research and development-related stock-based compensation expense of $2.1 million during the third quarter of 2017 compared to $1.6 million for the third quarter of 2016.

Research and development expenses were $109.3 million for the nine months ended September 30, 2017, compared to $34.9 million for the nine months ended September 30, 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 including clinical costs and costs related to the companion diagnostics agreement with Roche, as well as additional development expenses related 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 $8.0 million during the nine months ended September 30, 2017, compared to $2.1 million for the nine months ended September 30, 2016.

General and administrative expenses were $9.7 million for the third quarter of 2017 compared to $3.7 million for the third quarter of 2016. The increase was primarily due to increases in preparation activities for the potential commercialization of larotrectinib, headcount and employment costs and general and administrative professional fees. Loxo Oncology also recognized general and administrative-related stock-based compensation expense of $3.1 million during the third quarter 2017 compared to $1.2 million for the third quarter of 2016.

General and administrative expenses were $21.0 million for the nine months ended September 30, 2017, compared to $10.9 million for the nine months ended September 30, 2016. The increase was primarily due to increases in preparation activities for the potential commercialization of larotrectinib, headcount and employment costs and general and administrative professional fees. Loxo Oncology also recognized general and administrative-related stock-based compensation expense of $6.7 million during the nine months ended September 30, 2017, compared to $3.3 million for the nine months ended September 30, 2016.

Net loss was $73.3 million and $128.2 million for the three and nine months ended September 30, 2017, respectively, compared to $17.7 million and $45.2 million for the three and nine months ended September 30, 2016, respectively.

Non-GAAP net loss was $28.1 million and $73.6 million for the three and nine months ended September 30, 2017, respectively, compared to $14.9 million and $39.8 million for the three and nine months ended September 30, 2016, respectively. This non-GAAP net loss measure, more fully described below under “Non-GAAP Financial Measures,” excludes the 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 third quarter 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 78661148. 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.