Loxo Oncology, Inc., a biopharmaceutical company involved in the development of medicines for patients with genetically defined cancers, has entered into a collaboration with Bayer to develop and commercialize larotrectinib and LOXO-195, Loxo Oncology’s franchise of highly selective TRK inhibitors for patients with TRK fusion cancers. 

Under the agreement, the companies will share development costs on a 50/50 basis, and Loxo Oncology will receive a $400M upfront payment. They are also eligible for $450M in milestone payments upon larotrectinib regulatory approvals and first commercial sale events in certain markets, and an additional $200M in milestone payments upon LOXO-195 regulatory approvals and first commercial sale events in certain markets. Loxo Oncology will lead global development activities and U.S. regulatory activities, while Bayer will lead ex-U.S. regulatory activities, and worldwide commercial activities.

In addition, Bayer will pay Loxo Oncology a $25M milestone upon achieving a certain U.S. net sales threshold. Outside of the U.S., Bayer will pay Loxo Oncology tiered, double-digit royalties on net sales, and milestones totaling $475M.