It is Loxo! "Broad-spectrum anti-cancer drugs" just swept the world, and was acquired by Lilly for $8 billion.

Arterial Network was informed that on January 7, Lilly announced that it would acquire all outstanding shares of Loxo Oncology for $235 per share in cash (approximately $8 billion). The transaction is not subject to any financing conditions and the transaction is expected to be completed by the end of the first quarter of 2019.

Loxo Oncology has a range of heavy-duty drugs in the pipeline, LOXO-292, LOXO-305, and LOXO-195, as well as Vitrakvi (LOXO-101), a broad-spectrum anticancer drug that has been widely discussed in the industry.

Eli Lilly's move is seen as an enhancement of its oncology product line. In addition to Lilly, the “Broad Spectrum Anticancer Drug” Vitrakvi project will go where it has become the focus of the industry.

This article is divided into four parts:

1. A lot of heavy drugs are in hand, Loxo has won the favor of giants;

2. Bayer has paid $400 million and the acquisition does not affect cooperation;

3. Endogenous plus epitaxial growth, Lilly to consolidate the pipeline's performance.

4. M&A is the eternal theme of the industry. Buying, buying and buying are not lacking in goals.

Loxo started its business, why did it win over the giants?

Loxo was founded in May 2013. Like many small biopharmaceutical companies, Loxo is not large. As of the end of 2017, Loxo had a total of 59 full-time employees.

The founder of Loxo is Joshua H. Dr. Bilenker, who graduated from the University of Pennsylvania, studied internal medicine and oncology, and received his Ph.D. from Johns Hopkins University School of Medicine. He has worked in the US FDA for two years, mainly for clinical evaluation and marketing of bio-oncology products. Approval work.

In 2006, Joshua H. Bilenker joined Aisling, a US medical investment company, and is still a partner in the investment company. Of course, Aisling is also an early investor in Loxo. In addition to Aisling, Loxo's investors include OrbiMed, Array BioPharma Inc, and New Enterprise Associates (NEA). The founders have not many shares, only 4.5%.

Loxo's early business was primarily developed in conjunction with Array BioPharma Inc. The collaboration began in July 2013 and expanded in November 2013 and April 2014, mainly on TRK inhibitors (ie LOXO101). Under the agreement, Array will provide Loxo with compound design, development and research and pre-clinical testing services.

Established more than a year ago, in August 2014, Loxo was listed on the NASDAQ and raised $69 million.

In the prospectus, Loxo writes that as genetic testing in cancer becomes more routine, it is known that cancers that occur in different parts of the body may share the same type of genetic change. Tumors can be increasingly identified and treated according to their distinct genetic alterations, and in the past, the organ of origin was the most important.

Both research and clinical data suggest that some tumors, although having many identifiable genetic changes, rely primarily on the proliferation and survival of a single activated kinase. This dependence, often referred to as oncogene addiction, makes this tumor highly sensitive to small molecule inhibitors that are associated with alterations.

Researchers and clinical oncologists now often incorporate genetic evaluation into clinical trials and routine care, hoping to guide patients to get effective treatments for cancer. Loxo believes that increasing attention to oncogene addiction will lead to more effective drug development and a stronger clinical response in gene-defined patient populations. Based on this, Loxo is mainly concerned with genetically defined patient population drug development work.

The Loxo prospectus continues to write that its chief scientific officer led the medicinal chemistry team to discover two FDA-approved oncology drugs, erlotinib (Troquet) and tolfinib (Xeljanz), acting as chief medical officer. Helped to lead the development of carfilzomib (Kyprolis) and Ibrutini (Imbruvica), which are accelerated in the United States. Therefore, Loxo has certain technical advantages.

After several years of development, Loxo's research pipeline has grown continuously. At present, its main pipelines are:

-- LOXO-101 , an oral TRK inhibitor developed and commercialized in collaboration with Bayer, has recently received FDA approval. At the initial approval of the FDA, Vitrakvi is the first genetic abnormality drug that can work in a variety of cancers.

-- LOXO-195 , Loxo Oncology and Bayer are also investigating the resistance of the subsequent TRK inhibitor LOXO-195 to TRK inhibition. The product is expected to be available in 2022.

-- LOXO-292 , an oral RET inhibitor, is currently approved by the FDA for breakthrough treatment of three indications and is expected to be available by 2020. LOXO-292 targets cancers that are recombined during transfection (RET) kinase. RET fusions and mutations occur in a variety of tumor types, including certain lung and thyroid cancers, as well as other cancers.

-- LOXO-305 , an oral BTK inhibitor, is currently in stage I/II. LOXO-305 affects cancer progression by altering the form of bruton tyrosine kinase, aiming to address the resistance acquired by currently available BTK inhibitors. BTK is an effective molecular target found in numerous B-cell leukemias and lymphomas.

Loxo is researching pipeline

In terms of R&D expenses, Loxo's total R&D expenses for the first three quarters of 2015, 2016, 2017 and 2018 were US$25.57 million, US$58.28 million, US$140 million and US$56.9 million, respectively.

The decline in R&D expenses in 2018 was mainly due to the fact that the project LOXO-101, Vitrakvi, which has a large investment in research and development expenses, has been approved for listing and will be distributed to Bayer in the form of 50/50.

Bayer has paid $400 million, and the acquisition may not affect cooperation

On November 14, 2017, Loxo and Bayer signed an agreement under which Loxo and Bayer will jointly develop and commercialize Larotrectinib and LOXO-195, the company's license to provide highly selective TRK inhibitors for TRK fusion cancer patients. Franchise.

Under the agreement, Loxo has granted Bayer a joint development and commercial license for Laotrectinib and LOXO-195. From the effective date, the company is eligible for Bayer's non-refundable $400 million in cash payments.

Under the terms of the Bayer Agreement, Loxo received $250 million in November 2017 and the remaining $150 million in March 2018.

In addition to the $400 million upfront cash payment, Loxo is also eligible for a $450 million milestone payment, which was approved by the regulatory authorities in Laotrectinib and paid for the first commercial sale in certain major markets; at LOXO-195 After obtaining regulatory approvals and initial commercial sales activities in certain major markets, Loxo will also receive $200 million in milestone payments.

Loxo will lead the development and declaration of the above products in the United States, and Bayer is responsible for markets outside the United States.

Globally, Loxo will be responsible for 50% of development costs. In the US, Loxo will promote products with Bayer. Loxo will be responsible for 50% of the business cost and 50% of the profit. After reaching a certain US net sales threshold, Bayer A $25 million milestone payment will be paid to it. Loxo will have the option to opt out of joint promotions in the United States, in which case it will receive 30% of US net sales.

Outside of the United States, where Bayer is responsible for commercialization, Bayer will make payments to Loxo, including double-digit net sales and sales milestone payments totaling $475 million.

The agreement also includes a stagnation clause that prevents Bayer from acquiring five or more percent of Loxo's voting rights.

With respect to the termination of the agreement between the parties, the terms are: the agreement will terminate the product or country at the expiration of the term of the royalties applicable to such products in that country. Either party may terminate the agreement due to material breach of contract or bankruptcy. In addition, Bayer may terminate the agreement four weeks after the written notice of Loxo's entry into force, or if Loxo receives a “complete response letter” from the US FDA regarding larotrectinib, or if Loxo does not obtain a marketing license for larotrectinib by December 31, 2018.

Therefore, the overall terms and conditions, Loxo and Bayer's cooperation will continue without changing the original agreement. However, it is not excluded that Loxo will sign a new agreement with Bayer after the change of ownership. The decision is already in the hands of Eli Lilly. Early change will pay huge sums of money.

ZHOUSHAN SINOMEGA BIOTECH ENGINEERING CO.,LTD , https://www.sinomegabiotech.com