Lilly to acquire Loxo Oncology for $8B

Loxo’s shares were up 65 percent on the news. The company won FDA accelerated approval on Nov. 26 for its tissue-agnostic cancer drug, Vitrakvi.

Attendees of the J.P. Morgan Healthcare Conference in San Francisco awoke Monday to the news that Eli Lilly & Co. will purchase a company that scored one of the first Food and Drug Administration approvals for a tissue-agnostic cancer drug.

Indianapolis-based Lilly said it would acquire Stamford, Connecticut-based Loxo Oncology for $8 billion. Loxo and its partner, Germany-based Bayer, received accelerated FDA approval for the drug, Vitrakvi (larotrectinib), on Nov. 26.

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Loxo shares opened up 65 percent on the Nasdaq following the news. Lilly’s shares were down 2 percent.

Vitrakvi is the second drug the FDA has approved for cancers based not only which tissue they affect, but on whether they display a certain biomarker, in this case a gene fusion known as NTRK. The first drug to win a biomarker-based label was Merck & Co.’s Keytruda (pembrolizumab), for miscrosatellite instability-high and mismatch repair-deficiency – respectively MSI-H and dMMR – cancers, in 2017. However, Vitrakvi was the first drug to win a biomarker-driven label as its sole indication, whereas Keytruda is labeled for multiple tissue-specific indications. While groundbreaking, Vitrakvi’s label creates the challenge of finding patients who harbor NTRK fusions. Loxo has a partnership with Illumina to develop a companion diagnostic.

Because they are oncogenic drivers, NTRK fusions result in a high probability of Vitrakvi producing partial or even complete remissions, but they are also exceedingly rare and expressed across a wide range of solid tumors. Indeed, targeted therapies with a high probability of efficacy are seen as a linchpin of value-based care and precision medicine in oncology.

Lilly said the acquisition would be the largest in a series of transactions it has made to broaden its cancer portfolio. Loxo is also developing a successor NTRK inhibitor, LOXO-195, designed to tackle resistance mechanisms to Vitrakvi that patients are likely to develop after taking the drug for a time. In addition, it is developing another tissue-agnostic drug, LOXO-292, which targets RET fusions. An additional drug, LOXO-305, is a BTK inhibitor designed to address resistance mechanisms to existing BTK inhibitors, which are used in B-cell lymphomas and leukemias. Approved BTK inhibitors include AbbVie and Johnson & Johnson subsidiary Janssen’s Imbruvica (ibrutinib) and AstraZeneca’s Calquence (acalabrutinib).

“Using tailored medicines to target key tumor dependencies offers an increasingly robust approach to cancer treatment,” said Daniel Skovronsky, Lilly’s chief scientific officer, in a statement. “Loxo Oncology’s portfolio of RET, BTK and TRK inhibitors targeted specifically to patients with mutations or fusions in these genes, in combination with advanced diagnostics that allow us to know exactly which patients may benefit, creates new opportunities to improve the lives of people with advanced cancer.”

While the size of the deal is much smaller, it closely follows the first major acquisition of the year, Bristol-Myers Squibb’s $74 billion buyout of Celgene, announced on Thursday.

Photo: Natali_Mis, Getty Images