Bayer pays $400 million upfront under deal to develop Loxo Oncology's TRK inhibitors

Bayer entered a global deal with Loxo Oncology potentially worth more than $1.5 billion to develop the latter's experimental TRK inhibitors larotrectinib and LOXO-195 for patients with TRK fusion cancers, the companies reported Tuesday. Under the agreement, Bayer will make an upfront payment of $400 million, with Loxo eligible to receive $450 million in milestone payments linked to larotrectinib and an additional $200 million in milestone payments related to LOXO-195.

"We see great potential in larotrectinib and moreover the follow-on compound LOXO-195 which may provide additional benefit for patients who might progress on an initial TRK inhibition therapy," remarked Robert LaCaze, head of Bayer's Oncology Strategic Business unit. "These agents have the potential to fulfil the promise of precision medicine, where tumour genetics rather than tumour site of origin define the treatment approach for patients," LaCaze added.

Under the deal, Loxo will lead global development and US regulatory activities, while Bayer will lead ex-US regulatory activities, and worldwide commercial activities. The companies noted that the two parties will equally share development costs. In addition, Bayer will pay Loxo a $25 million milestone upon achieving certain US sales, while outside of the country, Bayer will pay Loxo tiered, double-digit royalties on net sales, and sales milestones totalling $475 million.

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Interim results presented at the ASCO annual meeting in June showed that larotrectinib was associated with a 76 percent confirmed objective response rate in patients with various tumours harbouring TRK fusions. Bayer said that larotrectinib could be initially filed for approval in the US this year or early next year, with a European submission planned for 2018. Meanwhile, a Phase I/II trial of LOXO-195 in patients with TRK fusion cancers who have progressed while receiving another TRK inhibitor or are intolerant to another TRK inhibitor was initiated in July.

Commenting on the deal, Jacob Van Naarden, Loxo's chief business officer, said that Bayer's presence in other rare cancers helped lead to the agreement, adding that Bayer will market larotrectinib to oncologists, while Loxo will focus on laboratory medicine and pathology specialists.

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