Bayer Enters Into Agreement With Loxo Oncology for Two Cancer Therapies

Bayer AG (BAYN.XE) said Tuesday that it has entered into an exclusive global collaboration with Loxo Oncology Inc. (LOXO) to develop and commercialize two cancer therapies, larotrectinib and LOXO-195.

Under the terms of the agreement, Loxo Oncology could receive up to $1.55 billion in upfront, regulatory, and commercial milestones. The pharmaceutical will receive an upfront payment of $400 million. It is eligible for an additional $450 million in milestone payments for larotrectinib and a further $200 million in milestone payments for LOXO-195. The two companies will jointly develop the two products, equally sharing development costs.

Bayer and Loxo will co-promote the products in the U.S., sharing commercial costs and profits on a 50/50 basis, while Bayer will pay Loxo a $25 million milestone payment when a certain U.S. net sales threshold is crossed.

Outside of the U.S., Bayer will commercialize the products and will pay Loxo Oncology royalties as well as milestone payments totaling $475 million on future net sales outside the U.S.

Bayer will book revenues worldwide.

The therapies are both selective TRK inhibitors, which work by targeting a type of genetic alteration that occurs across a range of tumors.

According to Bayer, the first filing for larotrectinib is planned in the U.S. in late 2017 or early 2018, with the EU filing expected in 2018.

"These agents have the potential to fullfil the promise of precision medicine, where tumor genetics rather than tumor site of origin define the treatment approach for patients," said Robert LaCaze, executive vice president and head of the oncology strategic business unit at Bayer.

Write to Sonia Amaral Rohter at sonia.amaralrohter@dowjones.com

(END) Dow Jones Newswires

November 14, 2017 08:28 ET (13:28 GMT)