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 But in an unusual move for biotech - where hype is often the norm -
its founders are tempering expectations.
They are quick to point out that their task ahead is no small one:
Getting doctors and insurers to agree to testing several hundred
thousand cancer patients to find the one percent, or less, whose
tumor has the mutation its drug targets.
"We're very cautious about this because we understand that for all
of these patients to be identified, broad testing across the
spectrum of human cancer has to happen," Jacob Van Naarden, Loxo's
chief business officer, told Reuters. "It's an exquisitely rare
patient population."
Because of its small size and narrow focus, Loxo is among the most
dependent on adoption of widespread genomic testing. But they aren't
alone. Bigger drugmakers, such as Roche Holding <ROG.S>, are also
working on treatments that depend on finding a mutation driving many
different cancers.
Loxo, founded in 2013, leapt from obscurity last year. The turning
point came at a major cancer conference in June, when it released
data showing its pill, larotrectinib, shrank tumors significantly in
75 percent of patients with cancer in the lung, pancreas, colon or
more than a dozen other locations.
Its stock skyrocketed and the company now has a market valuation
more than $3 billion. (For a graphic, see https://tmsnrt.rs/2Id3kCD)
Loxo's trial tested 55 advanced cancer patients, all of whose tumors
had the mutation, TRK fusion. Many had run out of treatment options,
while some were children facing limb amputations.
Wall Street analysts expect U.S. approval this year and forecast
annual larotrectinib sales reaching $500 million to $1 billion.
Bayer, which expects to file for European approval this year, will
help bring larotrectinib and a potential successor drug to market in
a partnership worth up to $1.6 billion.
With Bayer in charge of pricing, the drug could cost $15,000 a
month, said Bernstein analyst Wimal Kapadia.
In interviews at company headquarters in Stamford, Connecticut, Loxo
executives addressed the hurdles ahead. For starters, "we don't
actually know how many patients there are," Van Naarden said. An
estimated 1,500 to 5,000 people may be candidates out of 500,000
U.S. cancer patients diagnosed each year.
To find them, new genomic tests will need to include the TRK fusion
defect.
"These drugs will do well as people adopt this testing," said Dr.
David Hyman of Memorial Sloan Kettering Cancer Center in New York,
who led larotrectinib clinical trials.
But getting doctors and pathologists across the country to order
that testing is a significant hurdle.
The U.S. government last month said the Medicare program for the
elderly will cover so-called next generation sequencing (NGS) which
looks for hundreds of mutations across all solid tumors for advanced
cancer patients. Loxo will need TRK fusion to be included in those
tests once its drug is approved.
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For the moment, private insurers such as Anthem Inc <ANTM.N> and
Humana Inc <HUM.N> typically only pay for narrow diagnostic tests
for a particular type of cancer.
Given uncertainties around finding the right patients, "we don't
think it's a billion-dollar drug," said Loxo Chief Executive Joshua
Bilenker. Bayer said it was too soon to predict eventual sales.
GETTING TESTED Until now, cancer drugs that target mutations have
been primarily limited to the tumor type against which it was
tested. Pfizer Inc's <PFE.N> Xalkori works against ALK and ROS1
mutations in lung cancer. Roche's <ROG.S> Zelboraf treats melanoma
with an abnormal BRAF gene.
Merck & Co's <MRK.N> Keytruda was the first cancer drug approved for
many tumor types based on a single mutation and will benefit from
large scale testing, though that remains a relatively small market
for its treatment.
Newer players, such as Loxo, Blueprint Medicines Co <BPMC.O> and
Ignyta, recently bought by Roche, target tumor mutations regardless
of their organ of origin. This requires far more people to be
tested, since such a small number of patients will have the
mutations in any one tumor type.
These advanced tests, provided by Foundation Medicine <FMI.O>,
Thermo Fisher Scientific <TMO.N>, Caris Life Sciences, and others,
can detect hundreds of mutations from a tiny tissue sample. Testing
positive for one of about of dozen of these mutations could directly
influence treatment.
While the cost has dropped dramatically, to about $1,000-$1,500 per
patient, private insurers argue such comprehensive testing amounts
to funding research, not medical care.
Foundation and Thermo said they are talking to private insurers
about coverage. Humana and Anthem said they are evaluating their
policies following the Medicare decision.
"Reimbursement is a continuous and ongoing battle," said Foundation
Chief Medical Officer Vince Miller.
Major cancer centers, which conduct extensive research, use tests
that detect hundreds of mutations. But to justify such testing,
community hospitals will need know it will identify the patients
likely to benefit.
Bayer will reach out to cancer doctors about larotrectinib once it
is approved, while Loxo will educate pathology laboratories on the
need to test for TRK, Loxo said.
The companies say the cost is worth it since doctors could prescribe
a highly effective drug if their patient has the TRK defect instead
of more toxic chemotherapy or expensive immunotherapy with a lower
probability of working.
"That's an amazing return on investment for the healthcare system,"
Bilenker said.
GRAPHIC: Loxo Oncology's quick rise https://tmsnrt.rs/2Id3kCD
(Reporting by Bill Berkrot; Editing by Michele Gershberg and Paul
Thomasch)
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