Loxo Downplays Cancer Drug's Sales Projections
Published: Apr 03, 2018 By Mark Terry
On March 26, Loxo Oncology completed the rolling submission of its New Drug Application (INDA) to the U.S. Food and Drug Administration (FDA) for larotrectinib for adult and pediatric metastatic solid tumors with an NTRK gene fusion. What has caught many investors, analysts and industry observers off-guard is the way the company has downplayed the drug’s potential sales.
Jacob Van Naarden, the company’s chief business officer, told Reuters, “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. It’s an exquisitely rare patient population.”
Wall Street analysts believe the drug will be approved this year and project annual sales of the drug to reach $500 to $1 billion. Loxo has a collaboration deal with Bayer. Bayer is in the process of submitting a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA).
Larotrectinib is an oral, highly selective tropomyosin receptor kinase (TRK) inhibitor. It specifically is for tumors that harbor a neurotrophic tyrosine receptor kinase (NTRK) gene fusion. In trials, it showed significant and durable anti-tumor activity in TRK fusion cancer regardless of patient age or tumor type.
Which is where some of Loxo’s caution is coming from. Out of the 500,000 cancer patients diagnosed each year in the U.S., it’s not known how many would be eligible for the drug, although an estimate is 1,500 to 5,000 patients. In order to identify those patients, they would need to have a new genomic test that detects the TRK fusion. Getting physicians to order the test, and insurers to pay for it, is a significant obstacle.
Two major insurers, Anthem and Humana, generally only cover very specific cancer tests for particular cancer types. Medicare only recently approved next-generation sequencing (NGS) in the elderly, which screens for hundreds of mutations across solid tumors. But the company would need to convince laboratories, physicians, and payers for the TRK fusion test to be included in those screens.
As a result, Joshua Bilenker, Loxo’s chief executive officer, told Reuters, “We don’t think it’s a billion-dollar drug.”
Although the drug has yet to be approved, Wimal Kapadia, an analyst with Bernstein, believes it would likely run $15,000 per month.
There is precedent for genetic testing for cancer treatments, but it’s typically a way of narrowing down the best treatment for a specific tumor type. Examples include Pfizer’s Xalkori for ALK and ROS1 mutations in lung cancer and Roche’s Zelboraf for an abnormal BRAF gene in melanoma.
But TRK fusions don’t appear limited to any specific tumor type. The test would need to be performed on any and all tumor types, but the number of patients with the gene fusion would be quite small. At the moment, costs for the test—which would likely screen for a number of other tumor markets simultaneously—runs about $1,000 to $1,500 per patient. But private insurers have argued that broad genomic testing like this amounts to research, rather than clinical testing, and they’re not inclined to pay for it.
When the drug is approved, Bayer plans to work on educating oncologists about the drug, with Loxo working to educate clinical pathology laboratories on the need for TRK testing. Bayer and Loxo argue that the cost would be worth it, because physicians would be able to prescribe a specific, targeted and effective drug if the patient is identified with the TRK defect instead of toxic chemotherapy or expensive immuno-oncology treatments that aren’t as likely to be as effective.