Deal First, then $33M Series A: Loxo ‘Upends’ The Traditional Way
By Randy Osborne
Series A funding of $33 million will let Loxo Oncology Inc. move its lead compound through proof-of-concept research and push another into the clinic over the next three years or so, but the Delaware-incorporated firm still is not disclosing more about them.
Backers of the round – which include founding investor Aisling Capital and new investors Orbimed Advisors LLC plus an undisclosed entity – “want to stay under the radar a little bit” until more progress is made, said CEO Josh Bilenker, adding that it would be “strategically dangerous” to do otherwise.
“I’m distilling a lot of accumulated wisdom from my scientific advisory board and from Array [Biopharma Inc.], and to teach the world what that is, point by point, doesn’t suit me,” he told BioWorld Today. “Our reveal is in store. We’ll be ready to do it, but it’s going to be when we know we have a foothold over the competition with greater certainty.”
Loxo’s recent, potential $434 million deal with Boulder, Colo.-based Array to advance a preclinical candidate developed by the latter, as well as to find more small-molecule drugs for oncology targets, set Loxo on its way and helped spur interest in the Series A financing. (See BioWorld Today, July 11, 2013.)
Array’s capabilities are “up to them to advertise,” Bilenker said. “I do think of them as world-class, small-molecule drug developers. Their platform is very strong with regard to crystallography, a very advanced chemical library, great medicinal chemistry, pharmacology, even early toxicology and CNC for that matter. They really are a full-service partner, as a small-molecule drug developer.”
Tying up with Array before the Series A “in a way, upends the traditional, venture-backed model – the idea that you have to build the capability from scratch to create a company at critical mass,” he said. “When you have a partner like Array, you tend to be pretty confident that at the end of the project, you’re going to get a drug that behaves like a drug in a human being. That’s not trivial. Putting chemists in a lab that you’re building from the ground up entails some additional risk that I didn’t have to ask my investors to take. It’s good to have the resources to be able to pursue the thesis as it was designed.”
Research and development work has been taking place over the summer at Loxo, albeit quietly. Bilenker said the company has not grown “as measured by bodies, but that wasn’t the intent.”
The Array collaboration “provides a lot of the R&D engine that we need, and the bodies that are going to be full-time at Loxo are more strategic advisors. As we get into the clinic, certainly, there will be a scale-up moment,” he said.
Array boasts experience with a wide range of cancer targets, having invented 16 drugs that have reached the clinical stage, including 11 in Phase II or Phase III trials.
Along with wholly owned hematology and oncology programs, Array has partnered a handful of other compounds with big pharma firms and biotech, though the firm lost one in August when Thousand Oaks, Calif.-based Amgen Inc. quit its partnership for development of glucokinase activators (GKAs), returning the program, including lead candidate ARRY-403, to Array. In 2009, Amgen paid $60 million up front plus research funding for worldwide rights to Array’s small-molecule GKA effort. (See BioWorld Today, Aug. 9, 2013.)
“The idea [with Array] is to use professional chemistry against these validated targets” as they become known, Bilenker said. “Emerging signals in the clinic or in labs really teach us what targets are worthy of a purpose-built, small-molecule solution.”
Much cancer research to date has been caught up in a “Catch-22, where the drug enables the biology, and the biology justifies the drug,” he said. “The beauty of working with Array, given how mature their library is and their sophistication, is that we don’t have to get paralyzed by that Catch-22. We can test hypotheses very quickly with very mature chemical matter in the relevant models. We can play with target product profiles; we can play with hitting a signaling node that no one has hit yet in a validated pathway; and we can play with isoform selectivity in a way that no other programs have.”
Loxo also disclosed the forming of its board, which includes Steven Elms and Dov Goldstein, managing partner and partner at Aisling, respectively; David Bonita, private equity partner at Orbimed; and Keith Flaherty, director of the Henri and Belinda Termeer Center for Targeted Therapies at Massachusetts General Hospital.
The undisclosed new backer gives Loxo “two pretty deep-pocketed investors on top of Aisling,” Bilenker said. “In 2013, it’s a good thing to have the runway to let the thesis play out.”
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