Loxo Oncology (LOXO) 10-Q 8 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document and Entity Information
Entity Registrant Name	Loxo Oncology, Inc.
Entity Central Index Key	1,581,720
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		30,075,162
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 103,780	$ 142,025
Short-term investments	606,449	484,175
Receivable from collaboration partner	4,529	150,000
Other prepaid expenses and current assets	5,891	5,607
Total current assets	720,649	781,807
Long term investments	25,355
Property and equipment, net	1,578	912
Other assets	1,027	723
Total assets	748,609	783,442
Current liabilities:
Accounts payable	5,796	3,996
Accrued expenses and other current liabilities	22,546	22,537
Current portion of deferred revenue	176,157	195,037
Total current liabilities	204,499	221,570
Non-current portion of deferred revenue	159,689	183,662
Total liabilities	364,188	405,232
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
Common stock, $0.0001 par value; 125,000,000 shares authorized; 30,055,380 and 29,991,884 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	3	3
Additional paid-in capital	676,771	666,891
Accumulated deficit	(291,670)	(288,112)
Accumulated other comprehensive loss	(683)	(572)
Total stockholders' equity	384,421	378,210
Total liabilities and stockholders' equity	$ 748,609	$ 783,442

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	30,055,380	29,991,884
Common stock, shares outstanding	30,055,380	29,991,884

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidated Statements of Operations
Revenue from collaboration agreement	$ 38,429
Operating expenses:
Research and development	31,990	$ 20,169
General and administrative	12,194	4,773
Total operating expenses	44,184	24,942
Loss from operations	(5,755)	(24,942)
Interest income, net	2,197	414
Net loss	$ (3,558)	$ (24,528)
Per share information:
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (0.12)	$ (0.96)
Weighted average shares outstanding, basic and diluted diluted (in shares)	30,025,461	25,668,052

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidated Statements of Comprehensive Loss
Net loss	$ (3,558)	$ (24,528)
Other comprehensive loss:
Unrealized loss on available for sale securities	(111)	(144)
Comprehensive loss	$ (3,669)	$ (24,672)

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands	Common stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2017	$ 3	$ 666,891	$ (288,112)	$ (572)	$ 378,210
Balance (in shares) at Dec. 31, 2017	29,991,884
Changes in Stockholders' Equity
Stock-based compensation expense		9,651			9,651
Stock option exercises		229			229
Stock option exercises (in shares)	63,496
Other comprehensive loss				(111)	(111)
Net loss			(3,558)		(3,558)
Balance at Mar. 31, 2018	$ 3	$ 676,771	$ (291,670)	$ (683)	$ 384,421
Balance (in shares) at Mar. 31, 2018	30,055,380

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities:
Net loss	$ (3,558)	$ (24,528)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of premium and discounts on investments	(245)	76
Depreciation of property and equipment	80	21
Stock-based compensation	9,651	3,974
Changes in operating assets and liabilities:
Receivable from collaboration partner	145,471
Prepaid expenses and other assets	(588)	(1,483)
Accounts payable	1,800	192
Accrued expenses and other current liabilities	9	(4,928)
Deferred revenue	(42,853)
Net cash provided by (used in) operating activities	109,767	(26,676)
Investing activities:
Purchases of available-for-sale securities	(214,383)	(120,272)
Proceeds from maturing available-for-sale securities	66,888	35,683
Purchase of property and equipment	(746)	(101)
Net cash used in investing activities	(148,241)	(84,690)
Financing activities:
Proceeds from issuance of common stock, net		129,386
Proceeds from the exercise of stock options	229	100
Net cash provided by financing activities	229	129,486
Net (decrease) increase in cash, cash equivalents and restricted cash	(38,245)	18,120
Cash, cash equivalents and restricted cash, beginning of period	142,341	30,692
Cash, cash equivalents and restricted cash, end of period	$ 104,096	$ 48,812

Organization and Description of

Organization and Description of the Business	3 Months Ended
	Mar. 31, 2018
Organization and Description of the Business
Organization and Description of the Business	1. Organization and Description of the Business Loxo Oncology, Inc. (the “Company”) was incorporated on May 9, 2013 in the State of Delaware. The Company is a biopharmaceutical company innovating the development of highly selective medicines for patients with genetically defined cancers. Its pipeline focuses on cancers that are uniquely dependent on single gene abnormalities, such that a single drug has the potential to treat the cancer with dramatic effect. The Company operates in one segment and has its principal office in Stamford, Connecticut.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Unaudited Interim Financial Information The accompanying balance sheet as of December 31, 2017, was derived from the Company’s audited financial statements included in Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 1, 2018. It is suggested that the interim unaudited condensed consolidated financial statements be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K. The accompanying balance sheet as of March 31, 2018, the statements of operations for the three months ended March 31, 2018 and 2017, the statements of comprehensive loss for the three months ended March 31, 2018 and 2017, the statement of stockholders’ equity for the period from January 1, 2018 to March 31, 2018 and the statements of cash flows for the three months ended March 31, 2018 and 2017 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2018, the results of its operations for the three months ended March 31, 2018 and 2017 and its cash flows for the three months ended March 31, 2018 and 2017. Certain amounts from prior periods have been reclassified to conform to the current period presentation. Additionally, operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2018. The interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2017 included in the Company’s Form 10-K filed with the SEC on March 1, 2018. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies, except as it relates to the impact of the adoption of applicable new accounting guidance as described below under Recently Adopted Accounting Pronouncements and policies related to the collaboration agreement with Bayer Consumer Care AG (“Bayer”). Revenue Recognition The Company entered into a License, Development and Commercialization Agreement (the “Bayer Agreement”) in November 2017, which is within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). Under the Bayer Agreement, the Company has licensed certain rights to its larotrectinib and LOXO-195 product candidates to Bayer. The terms of the agreement include payment to the Company of one or more of the following: a non-refundable, up-front license fee, regulatory and commercial milestone payments, and royalties on net sales of licensed products. Licenses of intellectual property: If the license of the Company’s intellectual property is determined to be a separate unit of accounting from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the collaborative partner and the collaborative partner is able to use and benefit from the license. For licenses that are bundled with other promises, such as development activities, the Company recognizes revenue over time, using a proportional performance method as the related development activities are performed. Up-front payments are recorded as deferred revenue upon receipt and require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. Milestone payments: Regulatory or commercial milestone payments will be recognized as revenue in the period the milestone is achieved. To date, the Company has not recognized any milestone payments as revenue resulting from its collaboration arrangement. Co-promote: In the United States, where the Company and Bayer will co-promote the products, the Company will be responsible for 50% of the commercial costs and receive 50% of the profits. Co-promote net cost/profit will be recognized when the related expenses and sales occur as a decrease/increase to Revenue from collaboration agreement. See Note 3 to our unaudited condensed consolidated financial statements for details of the co-promote net cost incurred to date. Royalties: Sales-based royalties, including milestone payments based on the level of sales, will be recognized when the related sales occur. To date, the Company has not recognized any royalty revenue resulting from its collaboration arrangement. Research and Development Expenses Research and development costs are charged to expense as incurred. These costs include, but are not limited to, employee-related expenses, including salaries, benefits, stock-based compensation and travel as well as expenses related to asset acquisitions of IPR&D, third-party collaborations, contract research arrangements, chemistry, manufacturing and controls (“CMC”) related expenses and activities associated with the development of companion diagnostics for our product candidates. Under the Bayer Agreement, the Company receives reimbursement for 50% of its development activity expenses incurred for larotrectinib and LOXO-195 beginning January 1, 2018. This reimbursement of $8.3 million for the three months ended March 31, 2018 is recorded as a reduction to the Company’s research and development costs. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As we advance our product candidates, we expect the amount of external research and development will continue to increase for the foreseeable future. It is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates, or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rate and significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate’s commercial potential. Cash, Cash Equivalents and Restricted Cash The Company considers all highly-liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company’s cash and cash equivalents generally consist of a business checking account, repurchase agreements and a money market account. The Company’s restricted cash balance consists of cash held to collateralize an outstanding letter of credit associated with the lease of its corporate office space in Connecticut. The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows (in thousands): March 31, March 31, Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ $ Restricted cash included in Other assets Total cash, cash equivalents and restricted cash $ $ Recently Adopted Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting under Topic 718 on a prospective basis. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after a modification. ASU 2017-09 was effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s financial statements. In November 2016, the FASB issued ASU No. 2016-18 , Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which amended the existing accounting standards for the statement of cash flows by requiring restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 was effective for the Company in the first quarter of 2018. All prior periods were retrospectively adjusted upon adoption of the ASU. In August 2016, the FASB issued ASU No. 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amended the existing accounting standards for the statement of cash flows by providing guidance on eight classification issues related to the statement of cash flows. ASU 2016-15 was effective for the Company in the first quarter of 2018. The adoption of ASU 2016-15 did not have an impact on the Company’s financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 was effective for the Company in the first quarter of 2018. The adoption of ASU 2016-01 did not have an impact on the Company’s financial statements. In May 2014, the FASB issued ASU No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and creates a new ASC Topic 606, Revenue from Contracts with Customers. Subsequent to May 2014, the FASB issued additional guidance that delayed the effective date and clarified various aspects of the new guidance, including principal versus agent considerations, identifying performance obligations and licensing, and also included other improvements and practical expedients. ASU 2014-09 was effective for the Company in the first quarter of 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s financial statements as the Company did not have any contracts with customers subject to the guidance. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) , which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses , which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The amended standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income (ASU 2018-02), to allow reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 will be effective for annual and interim periods beginning after December 15, 2018, with earlier application permitted. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures.

Collaboration Agreement

Collaboration Agreement	3 Months Ended
	Mar. 31, 2018
Collaboration Agreement
Collaboration Agreement	3. Collaboration Agreement Agreement Terms On November 14, 2017, the Company entered into the Bayer Agreement pursuant to which the Company and Bayer will collaborate to develop and commercialize larotrectinib and LOXO-195, the Company’s franchise of highly selective TRK inhibitors for patients with TRK fusion cancers. Pursuant to the Bayer Agreement, Loxo has granted co-exclusive development and commercialization licenses to Bayer for both larotrectinib and LOXO-195. Upon the effective date, the Company became eligible for a non-refundable, upfront cash payment of $400 million from Bayer. In accordance with the terms of the Bayer Agreement, the Company received $250 million in November 2017 and the remaining $150 million in March 2018. In addition to the upfront cash payment of $400 million, the Company is eligible to receive $450 million in milestone payments upon larotrectinib regulatory approvals and first commercial sale events in certain major markets and an additional $200 million in milestone payments upon LOXO-195 regulatory approvals and first commercial sale events in certain major markets. Bayer will also pay the Company a $25 million milestone upon achieving a certain aggregate U.S. net sales threshold. The Company will lead global development activities and regulatory activities in the United States. Bayer will lead regulatory activities outside the United States and global commercial activities. Globally, the Company will be responsible for 50% of development costs. In the United States, where the Company and Bayer will co-promote the products, the Company will be responsible for 50% of the commercial costs and receive 50% of the profits. The Company will have the right to opt-out of the U.S. co-promotion, in which case the Company would receive a royalty in the low thirties percentage range on U.S. net sales, which is meant to approximate the economics of the 50/50 profit split. Both parties will participate on a Global Steering Committee and a Joint Steering Committee and will participate in working groups established by the Committees. Outside of the United States, where Bayer will commercialize, Bayer will pay the Company tiered, double digit royalties on net sales, and sales milestones totaling $475 million. The Bayer Agreement will terminate as to a product or country upon the expiration of the royalty term applicable to such product in such country. The Bayer Agreement may be terminated by either party for material breach or bankruptcy. In addition, (i) Bayer may terminate the Bayer Agreement after the fourth anniversary of the effective date upon written notice to the Company which termination shall be effective 18 months following the Company’s receipt of such notice, or (ii) Bayer shall have the right, but not the obligation, to terminate the Bayer Agreement with respect to the Co-Promotion Territory or in its entirety by written notice to the Company with immediate effect in the event that the Company receives a “complete response letter” from the U.S. Food and Drug Agency with respect to larotrectinib, or if the Company does not receive marketing approval for larotrectinib by December 31, 2018. The Agreement contains customary representations, warranties and covenants by the Company and Bayer. Each of the Company and Bayer is required to indemnify the other party against all losses and expenses related to breaches of its representations, warranties and covenants under the Agreement. Revenue Recognition To account for the Bayer Agreement, the Company applied the guidance in ASC 808. ASC 808 does not contain prescriptive guidance on recognition of revenues. Therefore, there was significant judgment applied in determining a reasonable, rational method of recognizing revenue under the Bayer Agreement, with the Company considering the guidance in ASC 606, Revenue from Contracts with Customers. The Company identified the following performance obligations under the Bayer Agreement relating to the upfront payment: (1) the grant of licenses related to larotrectinib, (2) the grant of licenses related to LOXO-195, (3) research and development activities for larotrectinib, and (4) research and development activities for LOXO-195. The Company determined that each of the licenses is not a separate unit of accounting from its research and development activities because they significantly increase the utility of the intellectual property transferred. The Company concluded that it will utilize a proportional performance method to recognize revenue for the $400.0 million upfront payment under the Bayer Agreement. In applying the proportional performance method of revenue recognition, revenue will be recognized based on actual development costs incurred as a percentage of the total budgeted development costs over the time period the Company completes its development activities, which the Company believes will be five years for larotrectinib and seven years for LOXO-195. A proportional performance method of revenue recognition requires management to make estimates of costs to complete the development activities. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods. The Company has not yet recognized any revenues for milestone payments as the related regulatory or sales milestones have not yet been achieved. The Company and Bayer make quarterly cost-sharing payments to one another in amounts necessary to ensure that each party bears its contractual share of the overall shared co-promote profits/costs incurred. The following table shows the components of revenue from collaboration agreement for the three months ended March 31, 2018 and March 31, 2017 (in thousands): Three Months Ended Three Months Ended March 31, March 31, 2018 2017 (unaudited) (unaudited) Upfront: Revenue recognized from $400M upfront payment $ $ — Milestones — — Royalties — — Co-promote: Product revenue subject to profit sharing (as recorded by Bayer) — — Combined cost of goods sold, distribution, selling, general and administrative expenses ) — Combined collaboration co-promotion profit/(loss) ) — Loxo Oncology’s 50/50 share of collaboration co-promotion profit/(loss) ) — Total revenue from collaboration agreement $ $ —

Net Loss Per Common Share

Net Loss Per Common Share	3 Months Ended
	Mar. 31, 2018
Net Loss Per Common Share
Net Loss Per Common Share	4. Net Loss Per Common Share The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (in thousands, except share and per share data): Three Months Three Months Ended Ended March 31, March 31, Basic and diluted net loss per common share calculation: Net loss $ ) $ ) Weighted average common shares outstanding — basic and diluted Net loss per share of common stock — basic and diluted $ ) $ ) The following outstanding securities at March 31, 2018 and 2017 have been excluded from the computation of diluted weighted average shares outstanding, as they would have been anti-dilutive: March 31, 2018 March 31, 2017 Unvested restricted stock — Stock options

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2018
Fair Value Measurements
Fair Value Measurements	5. Fair Value Measurements Financial Instruments The financial instruments recorded in the Company’s balance sheets include cash and cash equivalents, investments, and accounts payable. Included in cash and cash equivalents are money market funds representing a type of mutual fund required by law to invest in low-risk securities (for example, U.S. government bonds, U.S. treasury bills and commercial paper) and overnight repurchase agreements. Money market funds are structured to maintain the fund’s net asset value at $1.00 per unit, which assists in providing adequate liquidity upon demand by the holder. Money market funds pay dividends that generally reflect short-term interest rates. Thus, only the dividend yield fluctuates. Also included in cash and cash equivalents are U.S. government sponsored enterprise debt securities that have a maturity of 3 months or less from their original acquisition date. Due to their short-term maturity, the carrying amounts of cash and cash equivalents (including money market funds), and accounts payable approximate their fair values. The Company classifies its remaining investments as available-for-sale. Gains or losses on securities sold are based on the specific identification method. For investments classified as available-for-sale, the Company records unrealized gains or losses resulting from changes in fair value between measurement dates as a component of other comprehensive loss. (amounts in thousands) Amortized Gross Gross Fair Value March 31, 2018 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Total included in cash and cash equivalents — — U.S. Government debt securities — ) Government enterprise debt securities — ) Short-term available-for-sale securities — ) Government enterprise debt securities — Long-term available-for-sale securities — Total fair value financial instruments $ $ $ ) $ December 31, 2017 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Government enterprise debt securities — — Total included in cash and cash equivalents — — U.S. Government debt securities ) Government enterprise debt securities — ) Short-term available-for-sale securities ) Total fair value financial instruments $ $ $ ) $ Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: · Level 1—Quoted prices in active markets for identical assets or liabilities. · Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial assets measured at fair value on a recurring basis at March 31, 2018 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Significant Other Significant Unobservable Total as of Assets: Cash and cash equivalents Cash $ $ — $ — $ Overnight repurchase agreements — — Money market funds — — Total cash and cash equivalents — — Short-term investments U.S. Government debt securities — — Government enterprise debt securities — — Total short-term investments — Long-term investments Government enterprise debt securities — — Total long-term investments — — Totals $ $ $ — $ The Company’s financial assets measured at fair value on a recurring basis at December 31, 2017 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Significant Other Significant Unobservable Total as of Assets: Cash and cash equivalents Cash $ $ — $ — $ Overnight repurchase agreements — — Money market funds — — Government enterprise debt securities — — Total cash and cash equivalents — Short-term investments U.S. Government debt securities — — Government enterprise debt securities — — Total short-term investments — Totals $ $ $ — $ There were no items that were accounted for at fair value on a non-recurring basis for the three months ended March 31, 2018 and 2017. The Company’s Level 2 securities are typically valued utilizing third party pricing services or other observable market data. The pricing services utilize industry standard valuation models, including both income and market based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, and other industry and economic events. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. At March 31, 2018 and December 31, 2017, the Company’s cash and cash equivalents were held by two financial institutions and the amounts on deposit were in excess of Federal Deposit Insurance Company insurance limits. The Company mitigates this risk by depositing its uninsured cash in major well capitalized financial institutions, and by investing excess operating cash in overnight repurchase agreements which are 100% collateralized by U.S. government backed securities with the Company’s bank. The Company has not recognized any losses on its cash and cash equivalents.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2018
Stock-Based Compensation
Stock-Based Compensation	6. Stock-Based Compensation Equity Incentive Plan (the “Plan”) Effective July 2013, the Company adopted the 2013 Equity Incentive Plan, which was amended in November 2013 (the “2013 Plan”). The 2013 Plan provided for the granting of incentive stock options, non-statutory stock options and the issuance of restricted stock awards. As of March 31, 2018, the Company reserved 1,544,615 shares of common stock authorized for issuance in connection with the 2013 Plan. In connection with the Company’s initial public offering, no further grants will be made under this plan and all remaining shares available for grant were transferred to the 2014 Equity Incentive Plan. The Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”) that became effective on July 30, 2014 and serves as the successor to the 2013 Plan. The 2014 Plan provides for the grant of awards to employees, directors, consultants, independent contractors and advisors, provided the consultants, independent contractors, directors and advisors are natural persons that render services other than in connection with the offer and sale of securities in a capital-raising transaction. The exercise price of stock options must be at least equal to the fair market value of the Company’s common stock on the date of grant. The Company has reserved 2,828,874 shares of its common stock to be issued under the 2014 Plan of which 216,282 shares were available for future issuance as of March 31, 2018. Shares authorized will increase automatically on January 1 of each of the years between 2015 through 2024 by the number of shares equal to 3.0% of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31. The Company’s Board of Directors (“Board”) may reduce the amount of the increase in any particular year. The 2014 Plan authorizes the award of stock options, restricted stock awards(“RSAs”), stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance awards and stock bonuses. The following table summarizes stock option activity for the period from January 1, 2018 through March 31, 2018: Average Weighted- Remaining Aggregate Number Average Contractual Intrinsic Value of Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2018 $ $ Granted Exercised ) Forfeited and expired ) Outstanding at March 31, 2018 $ $ Vested and expected to vest at March 31, 2018 $ $ Exercisable at March 31, 2018 $ $ Weighted-average grant date fair value of options granted during the three months ended March 31, 2018 $ As of March 31, 2018, there was $99.9 million of total unrecognized compensation expense related to options granted but not yet vested of which $9.4 million was attributable to non-employee awards and subject to re-measurement until vested. The total unrecognized compensation expense of $99.9 million will be recognized as expense over a weighted-average period of 3.34 years. The Company uses the Black-Scholes option pricing model to estimate the fair value of option awards with the following weighted-average assumptions, certain of which are based on industry comparative information, for the period indicated: Three Months Risk-free interest rate % Expected dividend yield % Expected stock price volatility % Expected term of options (in years) Expected forfeiture rate % The weighted-average valuation assumptions were determined as follows: · Risk-free interest rate: The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term. · Expected annual dividends: The estimate for annual dividends is 0%, because the Company has not historically paid, and does not expect for the foreseeable future to pay, a dividend. · Expected stock price volatility: The expected volatility used is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption. · Expected term of options: The expected term of options represents the period of time options are expected to be outstanding. The expected term of the options granted to employees is derived from the “simplified” method as described in Staff Accounting Bulletin 107 relating to stock-based compensation. The expected term for options granted to non-employees is equal to the contractual term of the awards. · Expected forfeiture rate: The Company’s estimated forfeiture rate is based on historical forfeiture experience of its various employee groups. · Estimated fair value of the Company’s stock-based awards: The estimated fair value of the Company’s stock-based awards is amortized on a straight-line basis over the awards’ service period for those awards with graded vesting and which contain only a service condition. For awards with graded vesting and a performance and service condition, when achievement of the performance condition is deemed probable, the Company recognizes compensation cost using the accelerated recognition method over the awards’ service period. Share-based compensation expense recognized was as follows (in thousands): Three Months Three Months Research and development $ $ General and administrative $ $

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies
Commitments and Contingencies	7. Commitments and Contingencies Array Bio Pharma (“Array”) Collaboration On July 3, 2013, the Company signed a multi-year strategic collaboration agreement with Array, and this agreement was subsequently amended on November 26, 2013, April 10, 2014, October 13, 2014, March 31, 2015 and February 18, 2016. Under the terms of the collaboration agreement, the Company obtained certain rights to Array’s tropomyosin receptor kinase (“TRK”) inhibitor program, as well as additional novel oncology targets, including rearranged during transfection (“RET”) and fibroblast growth factor receptor (“FGFR”). The Company received worldwide commercial rights to each product candidate from the collaboration and Array participates in any potential successes through milestones and royalties. With respect to the discovery and preclinical program, the collaboration agreement, as amended, runs through September 30, 2017, and the Company has the option to extend the term for up to one additional one-year renewal period by providing written notice to Array at least three months before the end of the initial discovery and preclinical development programs term. This option was exercised during the three-month period ended June 30, 2017. Therefore, the current agreement runs through September 30, 2018. Before the February 2016 amendment, in addition to larotrectinib the parties designated 12 discovery targets, of which seven were selected for additional study in January 2015, which was to be reduced to four on or before January 2016. The Company had the option to maintain the total target number at five for an additional payment, and the Company exercised this option to maintain five discovery programs in January 2016. In the February 2016 amendment, the parties designated a total of six discovery targets. An additional payment was due at contract signing, satisfying a prior obligation of the April 2014 amendment. As part of the agreement the Company agreed to pay Array a fixed amount per month, based on Array’s commitment to provide full-time equivalents and other support relating to the conduct of the discovery and preclinical development programs. The Company incurred $2.4 million and $1.9 million of research and development expenses under the Array Agreement for the three months ended March 31, 2018 and 2017. Milestones With respect to product candidates directed to TRK, including larotrectinib and LOXO-195, the Company could be required to pay Array up to $223 million in milestone payments for each compound, the substantial majority of which are due upon the achievement of commercial milestones. The Company has made or accrued $7.0 million and $1.3 million in larotrectinib and LOXO-195 milestone payments, respectively, from inception through March 31, 2018. No expense relating to a milestone payment was recognized in research and development expenses for either larotrectinib or LOXO-195 in the three months ended March 31, 2018 and 2017. With respect to product candidates directed to targets other than TRK, including LOXO-292, the Company could be required to pay Array up to $213 million in milestone payments, the substantial majority of which are due upon the achievement of commercial milestones. The Company has made or accrued $1.3 million in LOXO-292 milestone payments from inception through March 31, 2018. No expense relating to a milestone payment was recognized in research and development expenses for other product candidates, including LOXO-292, in the three months ended March 31, 2018 and 2017. Royalties The Company is required to pay Array mid-single digit royalties on worldwide net sales of products that were discovered under the agreement. With respect to the royalty on products directed to targets other than TRK, the Company has the right to credit certain milestone payments against royalties on sales of products directed to such target. Research and Development Arrangements In the course of normal business operations, the Company enters into agreements with contract research organizations(“CROs”), to assist in the performance of research and development and preclinical activities and contract manufacturers to assist with CMC related expenses. Expenditures to CROs may represent a significant cost in preclinical and clinical development for the Company in future periods. The Company can elect to discontinue the work under these agreements at any time. The Company also enters into agreements with third parties, to develop and commercialize companion diagnostics. The Company could also enter into additional collaborative research, contract research, manufacturing and supplier agreements in the future, which may require upfront payments and long-term commitments of cash. Legal Proceedings The Company is not involved in any legal proceeding that it expects to have a material effect on its business, financial condition, results of operations and cash flows.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2018
Related Party Transactions
Related Party Transactions	8. Related Party Transactions Dr. Lori Kunkel, a board member, had a consulting agreement with the Company to assist in the Company’s drug development process which was modified effective as of October 31, 2015, to provide that she receives only the standard director compensation for her services. Dr. Kunkel also received stock option grants in 2013 and 2014 as compensation for her consulting services which continue to vest. During the three months ended March 31, 2018 and 2017, the Company recognized stock-based compensation expense of $0.4 million and $0.8 million in accordance with the terms of the consulting agreement. Dr. Keith Flaherty, a board member, has an agreement with the Company to serve as its Scientific Advisor Board (“SAB”) Chair for which he receives cash compensation. Dr. Flaherty also received stock option grants in 2013, 2014, and 2018 as compensation for his SAB services which continue to vest. Both cash compensation that was expensed as incurred and stock-based compensation are recorded as a component of research and development expenses. During both the three months ended March 31, 2018 and 2017, the Company recognized cash compensation expense of $15 thousand and during the three months ended March 31, 2018 and 2017, the Company recognized stock-based compensation expense of $0.4 million and $0.6 million in accordance with the terms of the SAB agreement.

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying balance sheet as of December 31, 2017, was derived from the Company’s audited financial statements included in Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 1, 2018. It is suggested that the interim unaudited condensed consolidated financial statements be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K. The accompanying balance sheet as of March 31, 2018, the statements of operations for the three months ended March 31, 2018 and 2017, the statements of comprehensive loss for the three months ended March 31, 2018 and 2017, the statement of stockholders’ equity for the period from January 1, 2018 to March 31, 2018 and the statements of cash flows for the three months ended March 31, 2018 and 2017 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2018, the results of its operations for the three months ended March 31, 2018 and 2017 and its cash flows for the three months ended March 31, 2018 and 2017. Certain amounts from prior periods have been reclassified to conform to the current period presentation. Additionally, operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2018. The interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
Significant Accounting Policies	Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2017 included in the Company’s Form 10-K filed with the SEC on March 1, 2018. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies, except as it relates to the impact of the adoption of applicable new accounting guidance as described below under Recently Adopted Accounting Pronouncements and policies related to the collaboration agreement with Bayer Consumer Care AG (“Bayer”).
Revenue Recognition	Revenue Recognition The Company entered into a License, Development and Commercialization Agreement (the “Bayer Agreement”) in November 2017, which is within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). Under the Bayer Agreement, the Company has licensed certain rights to its larotrectinib and LOXO-195 product candidates to Bayer. The terms of the agreement include payment to the Company of one or more of the following: a non-refundable, up-front license fee, regulatory and commercial milestone payments, and royalties on net sales of licensed products. Licenses of intellectual property: If the license of the Company’s intellectual property is determined to be a separate unit of accounting from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the collaborative partner and the collaborative partner is able to use and benefit from the license. For licenses that are bundled with other promises, such as development activities, the Company recognizes revenue over time, using a proportional performance method as the related development activities are performed. Up-front payments are recorded as deferred revenue upon receipt and require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. Milestone payments: Regulatory or commercial milestone payments will be recognized as revenue in the period the milestone is achieved. To date, the Company has not recognized any milestone payments as revenue resulting from its collaboration arrangement. Co-promote: In the United States, where the Company and Bayer will co-promote the products, the Company will be responsible for 50% of the commercial costs and receive 50% of the profits. Co-promote net cost/profit will be recognized when the related expenses and sales occur as a decrease/increase to Revenue from collaboration agreement. See Note 3 to our unaudited condensed consolidated financial statements for details of the co-promote net cost incurred to date. Royalties: Sales-based royalties, including milestone payments based on the level of sales, will be recognized when the related sales occur. To date, the Company has not recognized any royalty revenue resulting from its collaboration arrangement.
Research and Development Expenses	Research and Development Expenses Research and development costs are charged to expense as incurred. These costs include, but are not limited to, employee-related expenses, including salaries, benefits, stock-based compensation and travel as well as expenses related to asset acquisitions of IPR&D, third-party collaborations, contract research arrangements, chemistry, manufacturing and controls (“CMC”) related expenses and activities associated with the development of companion diagnostics for our product candidates. Under the Bayer Agreement, the Company receives reimbursement for 50% of its development activity expenses incurred for larotrectinib and LOXO-195 beginning January 1, 2018. This reimbursement of $8.3 million for the three months ended March 31, 2018 is recorded as a reduction to the Company’s research and development costs. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. As we advance our product candidates, we expect the amount of external research and development will continue to increase for the foreseeable future. It is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates, or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rate and significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate’s commercial potential.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash The Company considers all highly-liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company’s cash and cash equivalents generally consist of a business checking account, repurchase agreements and a money market account. The Company’s restricted cash balance consists of cash held to collateralize an outstanding letter of credit associated with the lease of its corporate office space in Connecticut. The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows (in thousands): March 31, March 31, Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ $ Restricted cash included in Other assets Total cash, cash equivalents and restricted cash $ $
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In May 2017, the FASB issued ASU 2017-09, Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting under Topic 718 on a prospective basis. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after a modification. ASU 2017-09 was effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The Company adopted this standard effective January 1, 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s financial statements. In November 2016, the FASB issued ASU No. 2016-18 , Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which amended the existing accounting standards for the statement of cash flows by requiring restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 was effective for the Company in the first quarter of 2018. All prior periods were retrospectively adjusted upon adoption of the ASU. In August 2016, the FASB issued ASU No. 2016-15 , Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which amended the existing accounting standards for the statement of cash flows by providing guidance on eight classification issues related to the statement of cash flows. ASU 2016-15 was effective for the Company in the first quarter of 2018. The adoption of ASU 2016-15 did not have an impact on the Company’s financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 was effective for the Company in the first quarter of 2018. The adoption of ASU 2016-01 did not have an impact on the Company’s financial statements. In May 2014, the FASB issued ASU No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and creates a new ASC Topic 606, Revenue from Contracts with Customers. Subsequent to May 2014, the FASB issued additional guidance that delayed the effective date and clarified various aspects of the new guidance, including principal versus agent considerations, identifying performance obligations and licensing, and also included other improvements and practical expedients. ASU 2014-09 was effective for the Company in the first quarter of 2018. The adoption of ASU 2014-09 did not have a material impact on the Company’s financial statements as the Company did not have any contracts with customers subject to the guidance.
Recent Accounting Pronouncements Not Yet Adopted	Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) , which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses , which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more useful information about expected credit losses. The amended standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement — Reporting Comprehensive Income (ASU 2018-02), to allow reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 will be effective for annual and interim periods beginning after December 15, 2018, with earlier application permitted. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures.

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies
Cash, Cash Equivalents and Restricted Cash	The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows (in thousands): March 31, March 31, Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ $ Restricted cash included in Other assets Total cash, cash equivalents and restricted cash $ $

Collaboration Agreement (Tables

Collaboration Agreement (Tables)	3 Months Ended
	Mar. 31, 2018
Collaboration Agreement
Schedule of components of revenue from collaboration agreement	The following table shows the components of revenue from collaboration agreement for the three months ended March 31, 2018 and March 31, 2017 (in thousands): Three Months Ended Three Months Ended March 31, March 31, 2018 2017 (unaudited) (unaudited) Upfront: Revenue recognized from $400M upfront payment $ $ — Milestones — — Royalties — — Co-promote: Product revenue subject to profit sharing (as recorded by Bayer) — — Combined cost of goods sold, distribution, selling, general and administrative expenses ) — Combined collaboration co-promotion profit/(loss) ) — Loxo Oncology’s 50/50 share of collaboration co-promotion profit/(loss) ) — Total revenue from collaboration agreement $ $ —

Net Loss Per Common Share (Tabl

Net Loss Per Common Share (Tables)	3 Months Ended
	Mar. 31, 2018
Net Loss Per Common Share
Schedule of computation of basic and diluted net loss per share	The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (in thousands, except share and per share data): Three Months Three Months Ended Ended March 31, March 31, Basic and diluted net loss per common share calculation: Net loss $ ) $ ) Weighted average common shares outstanding — basic and diluted Net loss per share of common stock — basic and diluted $ ) $ )
Schedule of outstanding securities excluded from the computation of diluted weighted-average shares outstanding, as they would have been anti-dilutive	March 31, 2018 March 31, 2017 Unvested restricted stock — Stock options

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2018
Fair Value Measurements
Schedule of available-for-sale securities unrealized gains or losses from changes in fair value	(amounts in thousands) Amortized Gross Gross Fair Value March 31, 2018 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Total included in cash and cash equivalents — — U.S. Government debt securities — ) Government enterprise debt securities — ) Short-term available-for-sale securities — ) Government enterprise debt securities — Long-term available-for-sale securities — Total fair value financial instruments $ $ $ ) $ December 31, 2017 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Government enterprise debt securities — — Total included in cash and cash equivalents — — U.S. Government debt securities ) Government enterprise debt securities — ) Short-term available-for-sale securities ) Total fair value financial instruments $ $ $ ) $
Schedule of financial assets measured at fair value on a recurring basis	The Company’s financial assets measured at fair value on a recurring basis at March 31, 2018 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Significant Other Significant Unobservable Total as of Assets: Cash and cash equivalents Cash $ $ — $ — $ Overnight repurchase agreements — — Money market funds — — Total cash and cash equivalents — — Short-term investments U.S. Government debt securities — — Government enterprise debt securities — — Total short-term investments — Long-term investments Government enterprise debt securities — — Total long-term investments — — Totals $ $ $ — $ The Company’s financial assets measured at fair value on a recurring basis at December 31, 2017 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Significant Other Significant Unobservable Total as of Assets: Cash and cash equivalents Cash $ $ — $ — $ Overnight repurchase agreements — — Money market funds — — Government enterprise debt securities — — Total cash and cash equivalents — Short-term investments U.S. Government debt securities — — Government enterprise debt securities — — Total short-term investments — Totals $ $ $ — $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Stock-Based Compensation
Summary of stock option activity	Average Weighted- Remaining Aggregate Number Average Contractual Intrinsic Value of Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2018 $ $ Granted Exercised ) Forfeited and expired ) Outstanding at March 31, 2018 $ $ Vested and expected to vest at March 31, 2018 $ $ Exercisable at March 31, 2018 $ $ Weighted-average grant date fair value of options granted during the three months ended March 31, 2018 $
Schedule of weighted-average assumptions under the Black-Scholes option pricing model to estimate the fair value of option awards	Three Months Risk-free interest rate % Expected dividend yield % Expected stock price volatility % Expected term of options (in years) Expected forfeiture rate %
Schedule of share-based compensation expense recognized	Share-based compensation expense recognized was as follows (in thousands): Three Months Three Months Research and development $ $ General and administrative $ $

Organization and Description 22

Organization and Description of the Business (Details)	3 Months Ended
	Mar. 31, 2018segment
Organization and Description of the Business
Number of operating segments	1

Summary of Significant Accoun23

Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions	Nov. 14, 2017	Mar. 31, 2018
United States | Collaboration Agreement
Revenue Recognition
Percentage of the commercial costs	50.00%	50.00%
Percentage of profits	50.00%	50.00%
Bayer | Collaboration Agreement, larotrectinib and LOXO-195
Revenue Recognition
Percentage of development expense receives reimbursed		50.00%
Reimbursement recorded as reduction to Company's research and development costs		$ 8.3

Summary of Significant Accoun24

Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents	$ 103,780	$ 142,025	$ 48,496
Restricted cash included in other assets	316		316
Total cash, cash equivalents and restricted cash	$ 104,096	$ 142,341	$ 48,812	$ 30,692

Collaboration Agreement - Agree

Collaboration Agreement - Agreement Terms (Details) - USD ($) $ in Millions	Nov. 14, 2017	Nov. 30, 2017	Mar. 31, 2018
Collaboration Agreement
Collaboration Agreement
Percentage of the development costs	50.00%
Profit split ratio	50
Collaboration Agreement | United States
Collaboration Agreement
Percentage of the commercial costs	50.00%		50.00%
Percentage of profits	50.00%		50.00%
Collaboration Agreement | Bayer
Collaboration Agreement
Upfront payment	$ 400	$ 250	$ 150
Collaboration Agreement | Bayer | Aggregate U.S. net sales threshold
Collaboration Agreement
Milestone payments	25
Collaboration Agreement | Bayer | Outside the United States
Collaboration Agreement
Royalties on net sales, and sales milestones	475
Collaboration Agreement, larotrectinib | Bayer | First commercial sale events
Collaboration Agreement
Milestone payments	450
Collaboration Agreement, LOXO-195 | Bayer | First commercial sale events
Collaboration Agreement
Milestone payments	$ 200

Collaboration Agreement - Reven

Collaboration Agreement - Revenue Recognition (Details) $ in Thousands	Nov. 14, 2017USD ($)	Nov. 30, 2017USD ($)	Mar. 31, 2018USD ($)
Collaboration Agreement
Revenue recognized from $400M upfront payment			$ 42,853
Combined cost of goods sold, distribution, selling, general and administrative expenses			(8,848)
Combined collaboration co-promotion profit/(loss)			(8,848)
Loxo Oncology's 50/50 share of collaboration co-promotion profit/(loss)			(4,424)
Total revenue from collaboration agreement			$ 38,429
Collaboration Agreement
Collaboration Agreement
Profit split ratio	50
Collaboration Agreement, LOXO-195
Collaboration Agreement
Performance obligations term			7 years
Collaboration Agreement, larotrectinib
Collaboration Agreement
Performance obligations term			5 years
Bayer | Collaboration Agreement
Collaboration Agreement
Upfront payment	$ 400,000	$ 250,000	$ 150,000

Net Loss Per Common Share (Deta

Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Anti-dilutive securities excluded from computation of diluted weighted-average shares outstanding
Total (in shares)	4,395,060	3,065,541
Basic and diluted net loss per common share calculation:
Net loss	$ (3,558)	$ (24,528)
Weighted average common shares outstanding - basic and diluted (in shares)	30,025,461	25,668,052
Net loss per share of common stock-basic and diluted (in dollars per share)	$ (0.12)	$ (0.96)
Unvested restricted stock
Anti-dilutive securities excluded from computation of diluted weighted-average shares outstanding
Total (in shares)		22,014
Stock options
Anti-dilutive securities excluded from computation of diluted weighted-average shares outstanding
Total (in shares)	4,395,060	3,043,527

Fair Value Measurements - Amort

Fair Value Measurements - Amortized Costs and Fair Values (Details) - USD ($) $ / shares in Units, $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair value measurements
Net asset value for money market funds (in dollars per unit)	$ 1
Overnight repurchase agreements
Fair value measurements
Amortized Cost	$ 54,250	$ 51,750
Fair Value	54,250	51,750
Money market funds
Fair value measurements
Amortized Cost	30,673	50,744
Fair Value	30,673	50,744
Government enterprise debt securities, cash and cash equivalents
Fair value measurements
Amortized Cost		23,444
Fair Value		23,444
Cash and cash equivalents
Fair value measurements
Amortized Cost	84,923	125,938
Fair Value	84,923	125,938
U.S. Government debt securities, short-term
Fair value measurements
Amortized Cost	226,721	192,473
Gross Unrealized Gains		1
Gross Unrealized (Losses)	(212)	(129)
Fair Value	226,509	192,345
Government enterprise debt securities, available-for-sale securities
Fair value measurements
Amortized Cost	380,426	292,274
Gross Unrealized (Losses)	(486)	(444)
Fair Value	379,940	291,830
Short-term available-for-sale securities
Fair value measurements
Amortized Cost	607,147	484,747
Gross Unrealized Gains		1
Gross Unrealized (Losses)	(698)	(573)
Fair Value	606,449	484,175
U.S. Government debt securities, Long-term
Fair value measurements
Amortized Cost	25,340
Gross Unrealized Gains	15
Fair Value	25,355
Long-term available-for-sale securities
Fair value measurements
Amortized Cost	25,340
Gross Unrealized Gains	15
Fair Value	25,355
Available-for-sale securities
Fair value measurements
Amortized Cost	717,410	610,685
Gross Unrealized Gains	15	1
Gross Unrealized (Losses)	(698)	(573)
Fair Value	$ 716,727	$ 610,113

Fair Value Measurements - Recur

Fair Value Measurements - Recurring Basis of Measurement (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018USD ($)Institution	Dec. 31, 2017USD ($)Institution	Mar. 31, 2017USD ($)
Financial assets measured at fair value on a recurring and non-recurring basis
Number of financial institutions that hold cash and cash equivalents | Institution	2	2
Percentage of repurchase agreements collateralized by U.S. Government backed securities (as a percent)	100.00%	100.00%
Recurring
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	$ 735,584	$ 626,200
Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	103,780	142,025
Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	606,449	484,175
Recurring | Long-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	25,355
Non-recurring
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale for non-recurring basis	0		$ 0
Level 1 | Recurring
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	330,289	310,926
Level 1 | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	103,780	118,581
Level 1 | Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	226,509	192,345
Level 2 | Recurring
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	405,295	315,274
Level 2 | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale		23,444
Level 2 | Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	379,940	291,830
Level 2 | Recurring | Long-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	25,355
Cash | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	18,857	16,087
Cash | Level 1 | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	18,857	16,087
Overnight repurchase agreements | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	54,250	51,750
Overnight repurchase agreements | Level 1 | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	54,250	51,750
Money market funds | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	30,673	50,744
Money market funds | Level 1 | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	30,673	50,744
U.S. Government debt securities | Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	226,509	192,345
U.S. Government debt securities | Level 1 | Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	226,509	192,345
Government sponsored enterprise debt securities | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale		23,444
Government sponsored enterprise debt securities | Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	379,940	291,830
Government sponsored enterprise debt securities | Recurring | Long-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	25,355
Government sponsored enterprise debt securities | Level 2 | Recurring | Cash and cash equivalents
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale		23,444
Government sponsored enterprise debt securities | Level 2 | Recurring | Short-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	379,940	$ 291,830
Government sponsored enterprise debt securities | Level 2 | Recurring | Long-term investments
Financial assets measured at fair value on a recurring and non-recurring basis
Available-for-sale	$ 25,355

Stock-Based Compensation - Ince

Stock-Based Compensation - Incentive Plans (Details)	3 Months Ended
	Mar. 31, 2018shares
2013 Plan
2013 and 2014 Equity Incentive Plan
Shares authorized for issuance (in shares)	1,544,615
Shares available for future issuance (in shares)	0
2014 Plan
2013 and 2014 Equity Incentive Plan
Shares authorized for issuance (in shares)	2,828,874
Shares available for future issuance (in shares)	216,282
Increase in common stock reserved for issuance as percentage of the aggregate number of outstanding shares of common stock (as a percent)	3.00%

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Options Activity (Details) - 2013 and 2014 Equity Incentive Plans - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Weighted-average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Unrecognized compensation expense	$ 99,900
Stock option
Number of Shares
Outstanding at the beginning of the period (in shares)	3,225,356
Granted (in shares)	1,261,700
Exercised (in shares)	(63,496)
Forfeited and expired (in shares)	(28,500)
Outstanding at the end of the period (in shares)	4,395,060	3,225,356
Vested and expected to vest at the end of the period (in shares)	4,177,316
Exercisable at the end of the period (in shares)	1,917,182
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 25.82
Granted (in dollars per share)	86.97
Exercised (in dollars per share)	3.61
Forfeited and expired (in dollars per share)	89
Outstanding at the end of the period (in dollars per share)	43.28	$ 25.82
Vested and expected to vest at the end of the period (in dollars per share)	41.89
Exercisable at the end of the period (in dollars per share)	$ 17.38
Average Remaining Contractual Term (in years)
Outstanding Contractual term (in years)	8 years 1 month 21 days	7 years 8 months 19 days
Vested and expected to vest at the end of the period (in years)	8 years 29 days
Exercisable at the end of the period (in years)	6 years 10 months 2 days
Aggregate Intrinsic Value
Outstanding at the end of the period	$ 317,176	$ 188,626
Vested and expected to vest at the end of the period	307,241
Exercisable at the end of the period	$ 187,862
Weighted-average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Risk-free interest rate (as a percent)	2.35%
Expected dividend yield (as a percent)	0.00%
Expected stock price volatility (as a percent)	64.68%
Expected term of options (in years)	6 years 2 months 12 days
Expected forfeiture rate (as a percent)	9.44%
Unrecognized compensation expense	$ 99,900
Weighted-average period for recognition	3 years 4 months 2 days
Weighted-average grant date fair value of options granted (in dollars per share)	$ 52.91
Non-employees | Stock option
Weighted-average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Unrecognized compensation expense	$ 9,400

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Stock based compensation expense
Share-based compensation expense	$ 9,651	$ 3,974
Research and development
Stock based compensation expense
Share-based compensation expense	4,283	2,406
General and administrative
Stock based compensation expense
Share-based compensation expense	$ 5,368	$ 1,568

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Thousands	1 Months Ended			3 Months Ended
	Feb. 29, 2016item	Jan. 31, 2016item	Jan. 31, 2015item	Mar. 31, 2018USD ($)item	Mar. 31, 2017USD ($)
Commitments and Contingencies
Research and development costs under collaboration agreement				$ 31,990	$ 20,169
Array | Larotrectinib
Commitments and Contingencies
Research and development costs under collaboration agreement				0	0
Milestone payments made or accrued from inception through December 31, 2017				7,000
Array | LOXO-195
Commitments and Contingencies
Research and development costs under collaboration agreement				0	0
Milestone payments made or accrued from inception through December 31, 2017				1,300
Array | LOXO- 292
Commitments and Contingencies
Research and development costs under collaboration agreement				0	0
Milestone payments made or accrued from inception through December 31, 2017				$ 1,300
Array | Collaboration Agreement
Commitments and Contingencies
Term of additional renewal periods options available to the entity to extend agreement term (in years)				1 year
Number of discovery targets designated by the parties (in targets) | item	6	5	12
Number of discovery targets which are to be selected for additional study on or before January 2015 (in targets) | item			7
Number of discovery targets which are to be selected for additional study on or before January 2016 | item		4
Maximum number of candidates which can be selected by the entity for modest additional payment (in candidates) | item		5
Research and development costs under collaboration agreement				$ 2,400	$ 1,900
Array | Collaboration Agreement | Maximum
Commitments and Contingencies
Number of additional renewal periods options available to the entity to extend agreement term (in periods) | item				1
Array | Collaboration Agreement | Product candidates directed to TRK
Commitments and Contingencies
Maximum milestone payments which the entity could be required to pay				$ 223,000
Array | Collaboration Agreement | Product candidates directed to targets other than TRK
Commitments and Contingencies
Maximum milestone payments which the entity could be required to pay				$ 213,000

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Related Party Transactions
Stock-based compensation expense	$ 9,651	$ 3,974
Consulting Letter Agreement | Dr. Lori Kunkel | Research and development
Related Party Transactions
Stock-based compensation expense	400	800
SAB Agreement | Dr. Keith Flaherty | Research and development
Related Party Transactions
Cash compensation expense	15	15
Stock-based compensation expense	$ 400	$ 600