Bay Street News

Loxo Oncology Reports Third Quarter 2018 Financial Results

Larotrectinib New Drug Application (NDA) PDUFA date is November 26, 2018

LOXO-292 Registrational Data Expected in 2019

LOXO-292 NDA Submission Expected in Late 2019

Enrollment of First Patient in LOXO-305 Phase 1/2 Study on Track for Fourth Quarter 2018

STAMFORD, Conn., Nov. 08, 2018 (GLOBE NEWSWIRE) — Loxo Oncology, Inc. (Nasdaq:LOXO), a biopharmaceutical company developing highly selective medicines for patients with genomically defined cancers, today reported third quarter 2018 financial results.

“In the third quarter we made significant progress across our pipeline,” said Josh Bilenker, M.D., chief executive officer of Loxo Oncology. “At ESMO, larotrectinib investigators provided a comprehensive program update that included durability and additional response data in patients with TRK fusion cancers. Medical meeting updates for LOXO-292 in September and October showed encouraging ongoing durability of response for patients with RET-driven cancers. Taken together, these data have increased our conviction around a foundational company thesis—that selective, purpose-built medicines offer the best opportunity for durable efficacy and a manageable safety profile. In the fourth quarter, we look forward to LOXO-305, our fourth program, entering the clinic.”

Recent Highlights

Larotrectinib

LOXO-195

LOXO-292

LOXO-305

Third Quarter 2018 Financial Results

As of September 30, 2018, Loxo Oncology had aggregate cash, cash equivalents and investments of $647.6 million, compared to $626.2 million as of December 31, 2017.

Revenue from the collaboration agreement was $42.5 million for the third quarter of 2018, compared to none for the third quarter of 2017. This represents $52.9 million in revenue recognized from the $400.0 million upfront payment from the Bayer collaboration offset by $10.5 million, Loxo Oncology’s share of the joint larotrectinib co-promotion costs in the same period.

Revenue from the collaboration agreement was $123.5 million for the nine months ended September 30, 2018, compared to none for the nine months ended September 30, 2017. This represents $147.0 million in revenue recognized from the $400.0 million upfront payment from the Bayer collaboration offset by $23.5 million, Loxo Oncology’s share of the joint larotrectinib co-promotion costs in the same period. 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 $56.9 million for the third quarter of 2018 compared to $64.8 million for the third quarter of 2017. This decrease was primarily due to a non-recurring charge related to the $40.0 million asset acquisition of the BTK inhibitor program from Redx in the third quarter of 2017, offset by expanded development expenses across the 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 $4.2 million during the third quarter of 2018 as compared to $2.1 million for the third quarter of 2017.

Research and development expenses were $130.5 million for the nine months ended September 30, 2018 compared to $109.3 million for the nine months ended September 30, 2017. This increase was primarily due to expanded development expenses across the 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 $14.3 million during the nine months ended September 30, 2018 as compared to $8.0 million for the nine months ended September 30, 2017.

General and administrative expenses were $15.9 million for the third quarter of 2018 compared to $9.7 million for the third quarter of 2017. The increase was primarily due to additional headcount, associated employment costs, and general and administrative professional fees. Loxo Oncology recognized general and administrative-related stock-based compensation expense of $6.9 million during the third quarter of 2018 compared to $3.1 million for the third quarter of 2017.

General and administrative expenses were $43.8 million for the nine months ended September 30, 2018 compared to $21.0 million for the nine months ended September 30, 2017. The increase was primarily due to additional headcount, associated employment costs, and general and administrative professional fees. Loxo Oncology recognized general and administrative-related stock-based compensation expense of $18.8 million during the nine months ended September 30, 2018 compared to $6.7 million for the nine months ended September 30, 2017.

Net loss was $27.1 million and $42.3 million for the three and nine months ended September 30, 2018, respectively, compared to $73.3 million and $128.2 million for the three and nine months ended September 30, 2017, respectively. This decrease in net loss was 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 $68.8 million and $156.2 million for the three and nine months ended September 30, 2018, respectively, compared to $28.1 million and $73.6 million for the three and nine months ended September 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 third 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 8379404. The webcast will be archived and made available for replay on the company’s website beginning approximately two hours after the event.

About Loxo Oncology
Loxo Oncology is a biopharmaceutical company developing highly selective medicines for patients with genomically defined cancers. Our pipeline focuses on cancers that are uniquely dependent on single gene abnormalities, such that a single drug has the potential to treat the cancer with dramatic effect. We believe that the most selective, purpose-built medicines have the highest probability of maximally inhibiting the intended target, with the intention of delivering best-in-class disease control and safety. Our management team seeks out experienced industry partners, world-class scientific advisors and innovative clinical-regulatory approaches to deliver new cancer therapies to patients as quickly and efficiently as possible. For more information, please visit the company’s website at www.loxooncology.com.

Forward Looking Statements 
This press release contains “forward-looking” statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Examples of forward-looking statements include, among others, the reporting, timing and success of our clinical trials, the success of our efforts to commercialize larotrectinib, and the timing or success of regulatory approvals in the U.S. and in the E.U. Further information on potential risk factors that could affect our business and its financial results are detailed in our most recent Annual Report on Form 10-K, and other reports as filed from time to time with the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures
This press release includes financial results prepared in accordance with accounting principles generally accepted in the United States (GAAP), and also certain historical non-GAAP financial measures. In particular, we have provided non-GAAP net loss, adjusted to exclude recognized collaboration revenue related to an upfront payment, the acquisition of an in process R&D asset and share-based compensation expenses. Non-GAAP financial measures are not an alternative for financial measures prepared in accordance with GAAP. For a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure, see the table below. Non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies, since not all companies may calculate these measures in an identical manner and, therefore, it is not necessarily an accurate measure of comparison between companies. However, we believe the presentation of non-GAAP net loss, when viewed in conjunction with our GAAP results, provides investors and management with a more complete understanding of our ongoing and projected operating performance because this measure excludes the recognition of collaboration revenue from an upfront payment and the acquisition of an in process R&D asset that are non-recurring events and non-cash charges that are substantially dependent on changes in the market price of our common stock. We believe our non-GAAP net loss measure helps indicate underlying trends in our business and is important in comparing current results with prior period results.

Financials

 
 
LOXO ONCOLOGY, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
             
        September 30,   December 31,
        2018    2017
Assets    (Unaudited)   dude 
Cash, cash equivalents and investments   $ 647,602   $ 626,200
Receivable from collaboration partner         150,000
Other prepaid expenses and current assets     6,309     5,607
Property and equipment, net     4,253     912
Other assets     1,064     723
    Total assets     659,228     783,442
                 
Liabilities and stockholders’ equity            
Accounts payable     2,018     3,996
Payable due to collaboration partner     2,576    
Accrued expenses and other current liabilities     43,739     22,537
Deferred revenue     231,680     378,699
    Total liabilities     280,013     405,232
Commitments and contingencies        
Stockholders’ equity        
  Common stock, $0.0001 par value; 125,000,000 shares authorized; 30,566,797 and 29,991,884 shares issued and outstanding at
September 30, 2018 and December 31, 2017, respectively
    3     3
  Additional paid-in capital     710,137     666,891
  Accumulated deficit     (330,460 )   (288,112
  Other comprehensive loss     (465 )   (572
    Total stockholders’ equity     379,215     378,210
    Total liabilities and stockholders’ equity   $ 659,228   $ 783,442
                 
                 

LOXO ONCOLOGY, INC.
Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2018   2017   2018   2017  
                         
Revenue from collaboration agreement $ 42,470   $   $ 123,500   $  
                         
Operating expenses:                        
Research and development   56,928     64,754     130,473     109,321  
General and administrative   15,864     9,680     43,800     20,968  
Total operating expenses   72,792     74,434     174,273     130,289  
Loss from operations   (30,322 )   (74,434 )   (50,773 )   (130,289 )
Interest income, net   3,258     1,115     8,425     2,041  
Net loss $ (27,064 ) $ (73,319 ) $ (42,348 ) $ (128,248 )
                         
Per share information:                        
Net loss per share of common stock, basic and diluted $ (0.89 ) $ (2.45 ) $ (1.40 ) $ (4.68 )
Weighted average shares outstanding, basic and diluted   30,502,789     29,872,198     30,230,160     27,391,020  
                         
                         

LOXO ONCOLOGY, INC.
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(unaudited)
(in thousands, except share and per share amounts)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2018   2017   2018   2017  
                         
GAAP net loss $ (27,064 ) $ (73,319 ) $ (42,348 ) $ (128,248 )
Adjustments:                        
Revenue from collaboration agreement                        
Revenue recognized from $400M upfront payment   (52,938 )       (147,019 )    
                         
Acquisition of in process R&D (IPR&D) asset                        
included in R&D expenses       40,000         40,000  
                         
Share-based compensation expenses                        
included in R&D expenses   4,205     2,148     14,313     8,010  
Share-based compensation expenses                        
included in G&A expenses   6,948     3,120     18,837     6,667  
Total share-based compensation expenses   11,153     5,268     33,150     14,667  
                         
Total adjustments   (41,785 )   45,268     (113,869 )   54,667  
Non-GAAP net loss $ (68,849 ) $ (28,051 ) $ (156,217 ) $ (73,571 )
                         
Per share information:                        
Net loss per share of common stock, basic and diluted $ (2.26 ) $ (0.94 ) $ (5.17 ) $ (2.69 )
Weighted average shares outstanding, basic and diluted   30,502,789     29,872,198     30,230,160     27,391,020  
                         
                         

LOXO ONCOLOGY, INC.
Calculation of Revenue from Collaboration Agreement
(unaudited)
(in thousands)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2018   2017   2018   2017
                       
Upfront payment                      
Revenue recognized from $400M upfront payment $ 52,938   $   $ 147,019   $
                       
Milestones              
                       
Royalties              
                       
Co-promote                      
Product revenue subject to profit sharing (as recorded by Bayer)              
Combined cost of goods sold, distribution, selling, general and                      
administrative expenses   (20,936 )       (47,038 )  
Combined collaboration co-promotion profit/(loss)   (20,936 )       (47,038 )  
                       
Loxo Oncology’s 50/50 share of collaboration                      
co-promotion profit/(loss)   (10,468 )       (23,519 )  
                       
Total revenue from collaboration agreement $ 42,470   $   $ 123,500   $
                       

Contacts for Loxo Oncology, Inc.

Company:
Lauren Cohen
Director, Corporate Communications
lcohen@loxooncology.com

Investors:
Peter Rahmer
Endurance Advisors, LLC
415-515-9763
prahmer@enduranceadvisors.com

Media:
Dan Budwick
1AB Media
973-271-6085
dan@1abmedia.com