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Lilly adds to pharma M&A run with $8bn Loxo buy-out

Lilly claims company ahead of more dominant oncology players

Lilly

After the excitement caused by the $74bn acquisition of Celgene by BMS last week, Lilly has snapped up immunotherapy pioneers Loxo Therapeutics for $8bn.

Loxo gained its first ever drug approval in late November with Vikrakvi (larotrectinib), now FDA approved to treat any solid tumour that has a neurotrophic receptor tyrosine kinase (NTRK) gene fusion.

This gene fusion which causes the production of TRK, a family of proteins that drives tumour growth.

Analysts believe the drug, which will be co-marketed with Bayer outside the US, could reach $1bn in sales by 2024.

Loxo also has a promising pipeline, which includes LOXO-292, an oral RET inhibitor being studied across multiple tumour types,  and which was recently granted FDA Breakthrough Therapy designation,  and could reach the market as soon as 2020.

Also in the pipeline is LOXO-305, an oral BTK inhibitor in phase 1/2 which is designed to address acquired resistance to currently available BTK inhibitors, such as J&J’s Imbruvica

For Lilly, the $8bn purchase is a break from its recent M&A strategy, which has focused on deals of $1-2bn to acquire early stage R&D companies and their platforms.

Acquiring Loxo will help Lilly become a serious competitor in the immuno-oncology field, where it has had no presence until now.

"Using tailored medicines to target key tumour dependencies offers an increasingly robust approach to cancer treatment," said Daniel Skovronsky, M.D., Ph.D, Lilly's chief scientific officer and president of Lilly Research Laboratories.

"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."

The deal represents a 68% premium to Loxo closing stock price on 4 January 2019, and analysts have expressed surprise that Lilly, and not a more dominant oncology player, has secured Loxo.

LOXO-292 is seen as the firm’s prize asset, as it has potential in the non-small cell lung cancer field.

Lilly does have presence in the lung cancer field with Alimta, and as this drug is nearing patent expiry, Loxo should provide the firm with opportunities to seize a share of the huge market.

After some fluctuations, Lilly’s share price is up on the news, suggesting investors believe the deal is a good one for the Indianopolis-headquartered firm.

As the industry’s annual curtainraiser JP Morgan conference gets underway in San Francisco, the market is braced for more major announcements. Gilead, Amgen and Biogen are among the names being raised in speculation about more potential major M&A deals.

7th January 2019

From: Sales

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