Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 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 | Sep. 30, 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 | 30,614,536 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 136,109 | $ 142,025 |
Short-term investments | 485,890 | 484,175 |
Receivable from collaboration partner | 150,000 | |
Other prepaid expenses and current assets | 6,309 | 5,607 |
Total current assets | 628,308 | 781,807 |
Long term investments | 25,603 | |
Property and equipment, net | 4,253 | 912 |
Other assets | 1,064 | 723 |
Total assets | 659,228 | 783,442 |
Current liabilities: | ||
Accounts payable | 2,018 | 3,996 |
Payable due to collaboration partner | 2,576 | |
Accrued expenses and other current liabilities | 43,739 | 22,537 |
Current portion of deferred revenue | 125,436 | 195,037 |
Total current liabilities | 173,769 | 221,570 |
Non-current portion of deferred revenue | 106,244 | 183,662 |
Total liabilities | 280,013 | 405,232 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | ||
Common stock, $0.0001 par value; 125,000,000 shares authorized; 30,566,797 and 29,991,884 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 3 | 3 |
Additional paid-in capital | 710,137 | 666,891 |
Accumulated deficit | (330,460) | (288,112) |
Accumulated other comprehensive loss | (465) | (572) |
Total stockholders' equity | 379,215 | 378,210 |
Total liabilities and stockholders' equity | $ 659,228 | $ 783,442 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 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 | 30,566,797 | 29,991,884 |
Common stock, shares outstanding | 30,566,797 | 29,991,884 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statements of Operations | ||||
Revenue from collaboration agreement | $ 42,470 | $ 123,500 | ||
Operating expenses: | ||||
Research and development | 56,928 | $ 64,754 | 130,473 | $ 109,321 |
General and administrative | 15,864 | 9,680 | 43,800 | 20,968 |
Total operating expenses | 72,792 | 74,434 | 174,273 | 130,289 |
Loss from operations | (30,322) | (74,434) | (50,773) | (130,289) |
Interest income, net | 3,258 | 1,115 | 8,425 | 2,041 |
Net loss | $ (27,064) | $ (73,319) | $ (42,348) | $ (128,248) |
Per share information: | ||||
Net loss per share of common stock, basic and diluted (in dollars per share) | $ (0.89) | $ (2.45) | $ (1.40) | $ (4.68) |
Weighted average shares outstanding, basic and diluted diluted (in shares) | 30,502,789 | 29,872,198 | 30,230,160 | 27,391,020 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (27,064) | $ (73,319) | $ (42,348) | $ (128,248) |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on available for sale securities | 14 | 69 | 107 | (75) |
Comprehensive loss | $ (27,050) | $ (73,250) | $ (42,241) | $ (128,323) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity - 9 months ended Sep. 30, 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 | 33,150 | 33,150 | |||
Stock option exercises | 10,096 | 10,096 | |||
Stock option exercises (in shares) | 574,913 | ||||
Other comprehensive income | 107 | 107 | |||
Net loss | (42,348) | (42,348) | |||
Balance at Sep. 30, 2018 | $ 3 | $ 710,137 | $ (330,460) | $ (465) | $ 379,215 |
Balance (in shares) at Sep. 30, 2018 | 30,566,797 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Net loss | $ (42,348) | $ (128,248) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Amortization of premium and discounts on investments | (1,516) | 142 |
Depreciation of property and equipment | 392 | 80 |
Stock-based compensation | 33,150 | 14,677 |
Changes in operating assets and liabilities: | ||
Receivable from collaboration partner | 150,000 | |
Prepaid expenses and other assets | (1,041) | (2,095) |
Accounts payable | (1,978) | 768 |
Payable due to collaboration partner | 2,576 | |
Accrued expenses and other current liabilities | 21,202 | 1,558 |
Deferred revenue | (147,019) | |
Net cash provided by (used in) operating activities | 13,418 | (113,118) |
Investing activities: | ||
Purchases of available-for-sale securities | (436,593) | (359,694) |
Proceeds from maturing available-for-sale securities | 410,898 | 146,055 |
Purchase of property and equipment | (3,733) | (398) |
Net cash used in investing activities | (29,428) | (214,037) |
Financing activities: | ||
Proceeds from issuance of common stock, net | 375,307 | |
Proceeds from the exercise of stock options | 10,096 | 2,207 |
Net cash provided by financing activities | 10,096 | 377,514 |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (5,914) | 50,359 |
Cash, cash equivalents, and restricted cash-beginning of period | 142,341 | 30,376 |
Cash, cash equivalents, and restricted cash-end of period | $ 136,427 | $ 80,735 |
Organization and Description of
Organization and Description of the Business | 9 Months Ended |
Sep. 30, 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 developing highly selective medicines for patients with genomically 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 | 9 Months Ended |
Sep. 30, 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 September 30, 2018, the statements of operations for the three and nine months ended September 30, 2018 and 2017, the statements of comprehensive loss for the three and nine months ended September 30, 2018 and 2017, the statement of stockholders’ equity for the period from January 1, 2018 to September 30, 2018 and the statements of cash flows for the nine months ended September 30, 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 September 30, 2018, the results of its operations for the three and nine months ended September 30, 2018 and 2017 and its cash flows for the nine months ended September 30, 2018 and 2017. Certain amounts from prior periods have been reclassified on the statements of cash flows to conform to the current period presentation as a result of the adoption of ASU 2016-18, as described further below. Additionally, operating results for the three and nine months ended September 30, 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”). Collaboration Arrangements The Company evaluates its collaborative arrangements pursuant to ASC 808, Collaborative Arrangements (“ASC 808”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company considers the nature and contractual terms of collaboration arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement, the Company accounts for the arrangement as a collaboration under ASC 808. To date, the Company has only entered into a single collaboration agreement with Bayer which was determined to be within the scope of ASC 808. ASC 808 does not address recognition or measurement matters related to collaborative arrangements. Payments between participants pursuant to a collaborative arrangement that are within the scope of other authoritative accounting literature on income statement classification are accounted for using the relevant provisions of that literature. If the payments are not within the scope of other authoritative accounting literature, the income statement classification for the payments is based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational and consistently applied accounting policy election. Payments received from a collaboration partner to which this policy applies may include upfront payments in respect of a license of intellectual property, regulatory and sales-based milestones, profit share payments, and royalties. Refer to the discussion in Note 3. Collaboration Agreement, for further discussion of the accounting related to the Bayer agreement. 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. 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 the 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 $7.1 million and $22.4 million for the three and nine months ended September 30, 2018, respectively, 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): September 30, September 30, 2018 2017 Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ 136,109 $ 80,419 Restricted cash included in Other assets 318 316 Total cash, cash equivalents and restricted cash $ 136,427 $ 80,735 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 ASU 2016-18. 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). The new standard establishes a right-of-use, or ROU, model that requires a lessee to record a ROU asset and a lease liability on the condensed consolidated balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the condensed consolidated statement of operations. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases: Targeted Improvements, which provides an optional transition method that allows entities to apply the new guidance using a modified retrospective approach at the beginning of the year in which the new lease standard is adopted, rather than to the earliest comparative period presented in their financial statements. The Company will use the new transition option and is also utilizing the package of practical expedients that allows it to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any expired or existing leases. The Company additionally expects to use the practical expedient that allows it to treat the lease and non-lease components of its leases as a single component. The Company is currently evaluating the effect that the updated standards will have on its consolidated financial statements and related disclosures and is in the process of completing an analysis of its existing lease arrangements including the assessment of any embedded leases. The new standard will have an impact on the Company’s consolidated financial statements as it will result in a lease liability and ROU asset on the Company’s consolidated balance sheets and additional lease-related disclosures in the footnotes to the consolidated financial statements. 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. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation ("ASU 2018-07") intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation-Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes Subtopic 505-50, Equity-Equity-Based Payments to Nonemployees . The amendments in ASU 2018-07 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact the standard will have on the Company’s financial statements and related disclosures, including early adoption. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Company anticipates its first presentation of changes in stockholders’ equity as required under the new SEC guidance will be included in its Form 10-Q for the quarter ended March 31, 2019. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies certain disclosure requirements on fair value measurements in ASC 820. This ASU is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted. The Company is currently evaluating the effect that ASU 2018-13 will have on its consolidated financial statements disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”), which requires a customer in a hosting arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The new guidance is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact the standard will have on the Company’s consolidated financial statements. |
Collaboration Agreement
Collaboration Agreement | 9 Months Ended |
Sep. 30, 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. 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 incurred after January 1, 2018. 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. In addition to the milestones described above, Bayer will pay the Company a $25 million milestone upon achieving a certain aggregate U.S. net sales threshold. 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. To account for the Bayer Agreement, the Company applied the guidance in ASC 808 as the parties are active participants and are exposed to significant risks and rewards dependent on commercial success of the collaborative activity. The Company also determined that the arrangement does not represent a vendor-customer relationship. ASC 808 does not contain prescriptive guidance on the measurement or recognition of collaborative arrangements. Therefore, there was significant judgment applied in determining a reasonable, rational method of accounting for the Bayer Agreement, with the Company considering the guidance in ASC 606 as well as ASC 730 -- Research and Development (“ASC 730”). Collaboration Revenue The Company concluded that the upfront payment of $400 million related to the transfer of the licenses to Bayer. The Company considered the guidance in ASC 606 to determine whether and, if so, how to separate the licenses and concluded that Bayer is able to obtain the utility of the larotrectinib and LOXO-195 licenses separately. The Company also considered the guidance in ASC 606 to determine the measurement of the arrangement consideration related to the licenses. At contract inception, the Company determined that the upfront payment should be included in the transaction price and constituted the consideration to be allocated to the two licenses. The future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606. Additionally, the Company expects that any consideration related to royalties and sales-based milestones will be recognized when the subsequent sales occur. The Company also considered the guidance in ASC 606 to allocate the arrangement consideration to the two licenses. The Company allocated the estimated consideration to the licenses based on its estimates of the relative estimated standalone selling prices. This resulted in an allocation at contract inception of $280 million to larotrectinib and $120 million to LOXO-195. In the event it is probable that a significant reversal of income will not occur for a regulatory milestone, it will be included in the license consideration and allocated to the specific license to which it relates. In order to determine the period of attribution of the license consideration, the Company considered that Bayer is unable to obtain utility of the licenses without the benefit of the research and development. Therefore, the Company will recognize collaboration revenue for the licenses over time using a proportional performance method. In applying the proportional performance method of recognition, collaboration 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 is the most appropriate measure of the utility provided to Bayer. The Company estimates that the collaboration revenue will be recognized over a remaining weighted average period of 1.1 years for larotrectinib and 1.7 years for LOXO-195. A proportional performance method of 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 increases in the license consideration related to regulatory milestones or 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 collaboration 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. Research and Development Activities The Company is incurring global development costs, with Bayer responsible for 50% of such costs. The Company will record all costs associated with the development activities as research and development expenses in the consolidated statements of operations consistent with ASC 730. The reimbursement of a portion of the development costs by Bayer is representative of the joint risk sharing nature of the arrangement. The Company considered the guidance in ASC 808 and will recognize the payments received from Bayer as a reduction to research and development expense when the related costs are incurred. For the three and nine months ended September 30, 2018, the Company recognized the reimbursement from Bayer of $7.1 million and $22.4 million, respectively. Commercialization Activities Bayer is the principal as it relates to the commercialization of larotrectinib and LOXO-195. Therefore, profits and losses related to commercialization activities, including sales-based milestones, royalties and the Company’s 50% share of U.S. profits or losses incurred by Bayer, will be recognized as collaboration revenue. Commercialization costs incurred by the Company will be recognized as a reduction to the collaboration revenue. The following table shows the components of revenue from the collaboration agreement for the three and nine months ended September 30, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 (unaudited) (unaudited) Upfront: Revenue recognized from $400M upfront payment $ 52,938 $ — $ 147,019 $ — 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 (20,936) — (47,038) — Combined collaboration co-promotion profit/(loss) (20,936) — (47,038) — Loxo Oncology’s 50/50 share of collaboration co-promotion profit/(loss) (10,468) — (23,519) — Total revenue from collaboration agreement $ 42,470 $ — $ 123,500 $ — |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 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 Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Basic and diluted net loss per common share calculation: Net loss $ (27,064) $ (73,319) $ (42,348) $ (128,248) Weighted average common shares outstanding – basic and diluted 30,502,789 29,872,198 30,230,160 27,391,020 Net loss per share of common stock – basic and diluted $ (0.89) $ (2.45) $ (1.40) $ (4.68) The following outstanding securities at September 30, 2018 and 2017 have been excluded from the computation of diluted weighted average shares outstanding, as they would have been anti-dilutive: September 30, 2018 September 30, 2017 Stock options 4,176,718 3,246,018 Total 4,176,718 3,246,018 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 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, receivable owed from collaboration partner, payable due to collaboration partner, 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), receivable owed from collaboration partner, payable due to collaboration partner 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. Gross Gross Amortized Unrealized Unrealized (amounts in thousands) Cost Gains Losses Fair Value September 30, 2018 Overnight repurchase agreements $ 44,250 $ — $ — $ 44,250 Money market funds 52,482 — — 52,482 Government enterprise debt securities 29,500 — — 29,500 Total included in cash and cash equivalents 126,232 — — 126,232 U.S. Government debt securities 143,810 — (139) 143,671 Government enterprise debt securities 342,525 — (306) 342,219 Short-term available-for-sale securities 486,335 — (445) 485,890 U.S. Government debt securities 11,854 — (6) 11,848 Government enterprise debt securities 13,769 — (14) 13,755 Long-term available-for-sale securities 25,623 — (20) 25,603 Total fair value financial instruments $ 638,190 $ — $ (465) $ 637,725 December 31, 2017 Overnight repurchase agreements $ 51,750 $ — $ — $ 51,750 Money market funds 50,744 — — 50,744 Government enterprise debt securities 23,444 — — 23,444 Total included in cash and cash equivalents 125,938 — — 125,938 U.S. Government debt securities 192,473 1 (129) 192,345 Government enterprise debt securities 292,274 — (444) 291,830 Short-term available-for-sale securities 484,747 1 (573) 484,175 Total fair value financial instruments $ 610,685 $ 1 $ (573) $ 610,113 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 September 30, 2018 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Significant Other Significant Unobservable Markets for Identical Assets Observable Inputs Inputs Total as of (Level 1) (Level 2) (Level 3) September 30, 2018 Assets: Cash and cash equivalents Overnight repurchase agreements $ 44,250 $ — $ — $ 44,250 Money market funds 52,482 — — 52,482 Government enterprise debt securities — 29,500 — 29,500 Total cash and cash equivalents 96,732 29,500 — 126,232 Short-term investments U.S. Government debt securities 143,671 — — 143,671 Government enterprise debt securities — 342,219 — 342,219 Total short-term investments 143,671 342,219 — 485,890 Long-term investments U.S. Government debt securities 11,848 — — 11,848 Government enterprise debt securities — 13,755 — 13,755 Total long-term investments 11,848 13,755 — 25,603 Totals $ 252,251 $ 385,474 $ — $ 637,725 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: Significant Quoted Prices in Active Significant Other Unobservable Markets for Identical Assets Observable Inputs Inputs Total as of (Level 1) (Level 2) (Level 3) December 31, 2017 Assets: Cash and cash equivalents Overnight repurchase agreements $ 51,750 $ — $ — $ 51,750 Money market funds 50,744 — — 50,744 Government enterprise debt securities — 23,444 — 23,444 Total cash and cash equivalents 102,494 23,444 — 125,938 Short-term investments U.S. Government debt securities 192,345 — — 192,345 Government enterprise debt securities — 291,830 — 291,830 Total short-term investments 192,345 291,830 — 484,175 Totals $ 294,839 $ 315,274 $ — $ 610,113 There were no items that were accounted for at fair value on a non-recurring basis for the nine months ended September 30, 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 September 30, 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 | 9 Months Ended |
Sep. 30, 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. 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. In 2018, our Board of Directors approved the grant of non-plan inducement stock options (“non-plan inducement option grants”) to prospective employees pursuant to non-plan stock option agreements as a material inducement for entering into employment with the Company. The non-plan inducement option grants must be made in connection with the commencement of employment, are subject to the Company’s standard vesting schedule and will expire no more than ten years from their respective dates of grant. Additionally, recipients of non-plan inducement option grants must meet certain other pre-employment criteria. During the nine months ended September 30, 2018, the Company granted 98,525 inducement stock options to employees. The Company adopted the Amended and Restated 2014 Equity Incentive Plan (the “A&R 2014 Plan”) on April 23, 2018. The A&R 2014 Plan reserved an additional 1,500,000 shares of the Company’s common stock for issuance under the A&R 2014 Plan, subject to certain additions and adjustments, and approved certain amendments to the A&R 2014 Plan to (i) change the automatic "evergreen" increase in shares reserved for issuance under the A&R 2014 Plan from 3% to 4% of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31 for each calendar year January 1, 2019 through January 1, 2023, (ii) impose a limit of 30,000 shares as the maximum number of shares that may be granted under the A&R 2014 Plan to each of the Company’s non-employee directors each year, (iii) prohibit shares that are withheld from exercised shares for taxes, payment of exercise price in connection with the exercise of options or stock appreciation rights from returning to the total number of shares reserved for awards, (iv) provide for a prohibition on payment of dividends on unvested awards, (v) prohibit repricing without stockholder approval, (vi) prohibit transfer of awards to third-party institutions for value and (vii) make certain modifications to reflect changes to the tax law by 2017 tax legislation. As of September 30, 2018, the Company has reserved 5,228,625 shares of its common stock to be issued under the A&R 2014 Plan, including those shares transferred from the 2013 Plan to be issued under the A&R 2014 Plan, of which 1,521,732 shares were available for future issuance. The A&R 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 September 30, 2018: Average Weighted- Remaining Aggregate Number Average Contractual Intrinsic Value of Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2018 3,225,356 $ 25.82 $ 188,626 Granted 1,554,775 98.36 Exercised (574,913) 17.56 Expired — — Forfeited (28,500) 89.00 Outstanding at September 30, 2018 4,176,718 $ 53.52 $ 490,720 Vested and expected to vest at September 30, 2018 4,035,232 $ 52.53 $ 478,110 Exercisable at September 30, 2018 1,931,667 $ 27.14 $ 277,712 Weighted-average grant date fair value of options granted during the nine months ended September 30, 2018 $ 59.72 As of September 30, 2018, there was $108.8 million of total unrecognized compensation expense related to options granted but not yet vested of which $10.9 million is attributable to non-employee awards and subject to re-measurement until vested. The total unrecognized compensation expense of $108.8 million will be recognized as expense over a weighted-average period of 2.94 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: Nine Months Ended September 30, 2018 Risk-free interest rate 2.45 % Expected dividend yield 0 % Expected stock price volatility 68.84 % Expected term of options (in years) 6.1 Expected forfeiture rate 9.08 % 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 Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 4,205 $ 2,148 $ 14,313 $ 8,010 General and administrative 6,948 3,120 18,837 6,667 $ 11,153 $ 5,268 $ 33,150 $ 14,677 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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, as amended, 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. 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. For the three months ended September 30, 2018 and 2017, the Company recorded $2.4 million and $2.2 million, respectively, of research and development expenses related to the collaboration agreement. For the nine months ended September 30, 2018 and 2017, the Company recorded $7.3 million and $6.1 million, respectively, of research and development expenses related to the collaboration agreement. With respect to this discovery and preclinical program, the collaboration agreement, as amended, ran through September 30, 2018. Projects that were in-process at the time of the collaboration’s expiry have since been transferred to the Company’s internal discovery facility and team. 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 September 30, 2018. No expense relating to a milestone payment was recognized in research and development expenses for either larotrectinib or LOXO-195 in the three and nine months ended September 30, 2018. A milestone payment of $1.0 million was recognized in research and development expenses relating to LOXO-195 in the three and nine months ended September 30, 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 $8.3 million in LOXO-292 milestone payments from inception through September 30, 2018. Milestone payments of $4.0 million and $7.0 million were recognized in research and development expenses for LOXO-292 in the three and nine months ended September 30, 2018, respectively. A milestone payment of $1.0 million for LOXO-292 was recognized in research and development expenses in the nine months ended September 30, 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, including LOXO-292, 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 | 9 Months Ended |
Sep. 30, 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. As of September 30, 2018, these stock options are fully vested. During the three and nine months ended September 30, 2018, the Company recognized stock-based compensation expense of $0.2 million and $1.0 million, respectively, and during the three and nine months ended September 30, 2017, the Company recognized stock-based compensation of $0.3 million and $1.7 million, respectively, in accordance with the terms of the consulting agreement. Dr. Keith Flaherty, a board member, has an agreement with the Company to serve as 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. The stock options granted in 2013 are fully vested, stock options granted in 2014 and 2018 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 the three months ended September 30, 2018 and 2017, the Company recognized cash compensation expense of $15 thousand and $15 thousand, respectively, and stock-based compensation expense of $0.1 million and $0.5 million, respectively, in accordance with the terms of the SAB agreement. During the nine months ended September 30, 2018 and 2017, the Company recognized cash compensation expense of $48 thousand and $45 thousand, respectively, and stock-based compensation expense of $0.8 million and $2.3 million, respectively, in accordance with the terms of the SAB agreement. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 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 September 30, 2018, the statements of operations for the three and nine months ended September 30, 2018 and 2017, the statements of comprehensive loss for the three and nine months ended September 30, 2018 and 2017, the statement of stockholders’ equity for the period from January 1, 2018 to September 30, 2018 and the statements of cash flows for the nine months ended September 30, 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 September 30, 2018, the results of its operations for the three and nine months ended September 30, 2018 and 2017 and its cash flows for the nine months ended September 30, 2018 and 2017. Certain amounts from prior periods have been reclassified on the statements of cash flows to conform to the current period presentation as a result of the adoption of ASU 2016-18, as described further below. Additionally, operating results for the three and nine months ended September 30, 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”). |
Collaboration Arrangements | Collaboration Arrangements The Company evaluates its collaborative arrangements pursuant to ASC 808, Collaborative Arrangements (“ASC 808”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company considers the nature and contractual terms of collaboration arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement, the Company accounts for the arrangement as a collaboration under ASC 808. To date, the Company has only entered into a single collaboration agreement with Bayer which was determined to be within the scope of ASC 808. ASC 808 does not address recognition or measurement matters related to collaborative arrangements. Payments between participants pursuant to a collaborative arrangement that are within the scope of other authoritative accounting literature on income statement classification are accounted for using the relevant provisions of that literature. If the payments are not within the scope of other authoritative accounting literature, the income statement classification for the payments is based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational and consistently applied accounting policy election. Payments received from a collaboration partner to which this policy applies may include upfront payments in respect of a license of intellectual property, regulatory and sales-based milestones, profit share payments, and royalties. Refer to the discussion in Note 3. Collaboration Agreement, for further discussion of the accounting related to the Bayer agreement. |
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. 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 the 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 $7.1 million and $22.4 million for the three and nine months ended September 30, 2018, respectively, 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): September 30, September 30, 2018 2017 Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ 136,109 $ 80,419 Restricted cash included in Other assets 318 316 Total cash, cash equivalents and restricted cash $ 136,427 $ 80,735 |
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 ASU 2016-18. 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of 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): September 30, September 30, 2018 2017 Cash, cash equivalents and restricted cash reconciliation: Cash and cash equivalents $ 136,109 $ 80,419 Restricted cash included in Other assets 318 316 Total cash, cash equivalents and restricted cash $ 136,427 $ 80,735 |
Collaboration Agreement (Tables
Collaboration Agreement (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Collaboration Agreement | |
Schedule of components of revenue from collaboration agreement | The following table shows the components of revenue from the collaboration agreement for the three and nine months ended September 30, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 (unaudited) (unaudited) Upfront: Revenue recognized from $400M upfront payment $ 52,938 $ — $ 147,019 $ — 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 (20,936) — (47,038) — Combined collaboration co-promotion profit/(loss) (20,936) — (47,038) — Loxo Oncology’s 50/50 share of collaboration co-promotion profit/(loss) (10,468) — (23,519) — Total revenue from collaboration agreement $ 42,470 $ — $ 123,500 $ — |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 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 Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Basic and diluted net loss per common share calculation: Net loss $ (27,064) $ (73,319) $ (42,348) $ (128,248) Weighted average common shares outstanding – basic and diluted 30,502,789 29,872,198 30,230,160 27,391,020 Net loss per share of common stock – basic and diluted $ (0.89) $ (2.45) $ (1.40) $ (4.68) |
Schedule of outstanding securities excluded from the computation of diluted weighted-average shares outstanding, as they would have been anti-dilutive | September 30, 2018 September 30, 2017 Stock options 4,176,718 3,246,018 Total 4,176,718 3,246,018 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Schedule of available-for-sale securities unrealized gains or losses from changes in fair value | Gross Gross Amortized Unrealized Unrealized (amounts in thousands) Cost Gains Losses Fair Value September 30, 2018 Overnight repurchase agreements $ 44,250 $ — $ — $ 44,250 Money market funds 52,482 — — 52,482 Government enterprise debt securities 29,500 — — 29,500 Total included in cash and cash equivalents 126,232 — — 126,232 U.S. Government debt securities 143,810 — (139) 143,671 Government enterprise debt securities 342,525 — (306) 342,219 Short-term available-for-sale securities 486,335 — (445) 485,890 U.S. Government debt securities 11,854 — (6) 11,848 Government enterprise debt securities 13,769 — (14) 13,755 Long-term available-for-sale securities 25,623 — (20) 25,603 Total fair value financial instruments $ 638,190 $ — $ (465) $ 637,725 December 31, 2017 Overnight repurchase agreements $ 51,750 $ — $ — $ 51,750 Money market funds 50,744 — — 50,744 Government enterprise debt securities 23,444 — — 23,444 Total included in cash and cash equivalents 125,938 — — 125,938 U.S. Government debt securities 192,473 1 (129) 192,345 Government enterprise debt securities 292,274 — (444) 291,830 Short-term available-for-sale securities 484,747 1 (573) 484,175 Total fair value financial instruments $ 610,685 $ 1 $ (573) $ 610,113 |
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 September 30, 2018 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Significant Other Significant Unobservable Markets for Identical Assets Observable Inputs Inputs Total as of (Level 1) (Level 2) (Level 3) September 30, 2018 Assets: Cash and cash equivalents Overnight repurchase agreements $ 44,250 $ — $ — $ 44,250 Money market funds 52,482 — — 52,482 Government enterprise debt securities — 29,500 — 29,500 Total cash and cash equivalents 96,732 29,500 — 126,232 Short-term investments U.S. Government debt securities 143,671 — — 143,671 Government enterprise debt securities — 342,219 — 342,219 Total short-term investments 143,671 342,219 — 485,890 Long-term investments U.S. Government debt securities 11,848 — — 11,848 Government enterprise debt securities — 13,755 — 13,755 Total long-term investments 11,848 13,755 — 25,603 Totals $ 252,251 $ 385,474 $ — $ 637,725 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: Significant Quoted Prices in Active Significant Other Unobservable Markets for Identical Assets Observable Inputs Inputs Total as of (Level 1) (Level 2) (Level 3) December 31, 2017 Assets: Cash and cash equivalents Overnight repurchase agreements $ 51,750 $ — $ — $ 51,750 Money market funds 50,744 — — 50,744 Government enterprise debt securities — 23,444 — 23,444 Total cash and cash equivalents 102,494 23,444 — 125,938 Short-term investments U.S. Government debt securities 192,345 — — 192,345 Government enterprise debt securities — 291,830 — 291,830 Total short-term investments 192,345 291,830 — 484,175 Totals $ 294,839 $ 315,274 $ — $ 610,113 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 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 3,225,356 $ 25.82 $ 188,626 Granted 1,554,775 98.36 Exercised (574,913) 17.56 Expired — — Forfeited (28,500) 89.00 Outstanding at September 30, 2018 4,176,718 $ 53.52 $ 490,720 Vested and expected to vest at September 30, 2018 4,035,232 $ 52.53 $ 478,110 Exercisable at September 30, 2018 1,931,667 $ 27.14 $ 277,712 Weighted-average grant date fair value of options granted during the nine months ended September 30, 2018 $ 59.72 |
Schedule of weighted-average assumptions under the Black-Scholes option pricing model to estimate the fair value of option awards | Nine Months Ended September 30, 2018 Risk-free interest rate 2.45 % Expected dividend yield 0 % Expected stock price volatility 68.84 % Expected term of options (in years) 6.1 Expected forfeiture rate 9.08 % |
Schedule of share-based compensation expense recognized | Share-based compensation expense recognized was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 4,205 $ 2,148 $ 14,313 $ 8,010 General and administrative 6,948 3,120 18,837 6,667 $ 11,153 $ 5,268 $ 33,150 $ 14,677 |
Organization and Description _2
Organization and Description of the Business (Details) | 9 Months Ended |
Sep. 30, 2018segment | |
Organization and Description of the Business | |
Number of operating segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Nov. 14, 2017 | Sep. 30, 2018 | Sep. 30, 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 | $ 7.1 | $ 22.4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Cash, cash equivalents and restricted cash reconciliation: | ||||
Cash and cash equivalents | $ 136,109 | $ 142,025 | $ 80,419 | |
Restricted cash included in Other assets | 318 | 316 | ||
Total cash, cash equivalents and restricted cash | $ 136,427 | $ 142,341 | $ 80,735 | $ 30,376 |
Collaboration Agreement - Agree
Collaboration Agreement - Agreement Terms (Details) $ in Millions | Nov. 14, 2017USD ($) | Mar. 31, 2018USD ($) | Nov. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) |
Bayer | |||||
Collaboration Agreement | |||||
Percentage of profits or losses of the entity recognised as collaboration revenue | 50.00% | ||||
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 | $ 150 | $ 250 | ||
Collaboration Agreement | Bayer | Outside the United States | |||||
Collaboration Agreement | |||||
Royalties on net sales, and sales milestones | 475 | ||||
Collaboration Agreement | Aggregate U.S. net sales threshold | Bayer | |||||
Collaboration Agreement | |||||
Milestone payments | 25 | ||||
Collaboration Agreement, larotrectinib | Bayer | |||||
Collaboration Agreement | |||||
Allocation of estimated consideration | $ 280 | ||||
Remaining weighted average period of recognition of collaboration revenue | 1 year 1 month 6 days | ||||
Collaboration Agreement, larotrectinib | First commercial sale events | Bayer | |||||
Collaboration Agreement | |||||
Milestone payments | $ 450 | ||||
Collaboration Agreement, LOXO-195 | Bayer | |||||
Collaboration Agreement | |||||
Allocation of estimated consideration | $ 120 | ||||
Remaining weighted average period of recognition of collaboration revenue | 1 year 8 months 12 days | ||||
Collaboration Agreement, LOXO-195 | First commercial sale events | Bayer | |||||
Collaboration Agreement | |||||
Milestone payments | $ 200 | ||||
Collaboration Agreement, larotrectinib and LOXO-195 | Bayer | |||||
Collaboration Agreement | |||||
Number of license agreements | 2 | ||||
Percentage of development expense receives reimbursed | 50.00% | ||||
Reimbursement recorded as reduction to Company's research and development costs | $ 7.1 | $ 22.4 |
Collaboration Agreement - Reven
Collaboration Agreement - Revenue Recognition (Details) $ in Thousands | Nov. 14, 2017USD ($) | Mar. 31, 2018USD ($) | Nov. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018USD ($) |
Collaboration Agreement | |||||
Revenue recognized from $400M upfront payment | $ 52,938 | $ 147,019 | |||
Combined cost of goods sold, distribution, selling, general and administrative expenses | (20,936) | (47,038) | |||
Combined collaboration co-promotion profit/(loss) | (20,936) | (47,038) | |||
Loxo Oncology's 50/50 share of collaboration co-promotion profit/(loss) | (10,468) | (23,519) | |||
Total revenue from collaboration agreement | $ 42,470 | $ 123,500 | |||
Collaboration Agreement | |||||
Collaboration Agreement | |||||
Profit split ratio | 50 | ||||
Bayer | Collaboration Agreement | |||||
Collaboration Agreement | |||||
Upfront payment | $ 400,000 | $ 150,000 | $ 250,000 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Anti-dilutive securities excluded from computation of diluted weighted-average shares outstanding | ||||
Total (in shares) | 4,176,718 | 3,246,018 | ||
Basic and diluted net loss per common share calculation: | ||||
Net loss | $ (27,064) | $ (73,319) | $ (42,348) | $ (128,248) |
Weighted average common shares outstanding - basic and diluted (in shares) | 30,502,789 | 29,872,198 | 30,230,160 | 27,391,020 |
Net loss per share of common stock-basic and diluted (in dollars per share) | $ (0.89) | $ (2.45) | $ (1.40) | $ (4.68) |
Stock options | ||||
Anti-dilutive securities excluded from computation of diluted weighted-average shares outstanding | ||||
Total (in shares) | 4,176,718 | 3,246,018 |
Fair Value Measurements - Amort
Fair Value Measurements - Amortized Costs and Fair Values (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 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 | $ 44,250 | $ 51,750 |
Fair Value | 44,250 | 51,750 |
Money market funds | ||
Fair value measurements | ||
Amortized Cost | 52,482 | 50,744 |
Fair Value | 52,482 | 50,744 |
Government enterprise debt securities, cash and cash equivalents | ||
Fair value measurements | ||
Amortized Cost | 29,500 | 23,444 |
Fair Value | 29,500 | 23,444 |
Cash and cash equivalents | ||
Fair value measurements | ||
Amortized Cost | 126,232 | 125,938 |
Fair Value | 126,232 | 125,938 |
U.S. Government debt securities, short-term | ||
Fair value measurements | ||
Amortized Cost | 143,810 | 192,473 |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | (139) | (129) |
Fair Value | 143,671 | 192,345 |
Government enterprise debt securities, available-for-sale securities | ||
Fair value measurements | ||
Amortized Cost | 342,525 | 292,274 |
Gross Unrealized Losses | (306) | (444) |
Fair Value | 342,219 | 291,830 |
Short-term available-for-sale securities | ||
Fair value measurements | ||
Amortized Cost | 486,335 | 484,747 |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | (445) | (573) |
Fair Value | 485,890 | 484,175 |
U.S. Government debt securities, Long-term | ||
Fair value measurements | ||
Amortized Cost | 11,854 | |
Gross Unrealized Losses | (6) | |
Fair Value | 11,848 | |
Government enterprise debt securities, Long-term | ||
Fair value measurements | ||
Amortized Cost | 13,769 | |
Gross Unrealized Losses | (14) | |
Fair Value | 13,755 | |
Long-term available-for-sale securities | ||
Fair value measurements | ||
Amortized Cost | 25,623 | |
Gross Unrealized Losses | (20) | |
Fair Value | 25,603 | |
Available-for-sale securities | ||
Fair value measurements | ||
Amortized Cost | 638,190 | 610,685 |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | (465) | (573) |
Fair Value | $ 637,725 | $ 610,113 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring Basis of Measurement (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018USD ($)Institution | Dec. 31, 2017USD ($)Institution | Sep. 30, 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 | $ 637,725 | $ 610,113 | |
Recurring | Cash and cash equivalents | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 126,232 | 125,938 | |
Recurring | Short-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 485,890 | 484,175 | |
Recurring | Long-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 25,603 | ||
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 | 252,251 | 294,839 | |
Level 1 | Recurring | Cash and cash equivalents | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 96,732 | 102,494 | |
Level 1 | Recurring | Short-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 143,671 | 192,345 | |
Level 1 | Recurring | Long-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 11,848 | ||
Level 2 | Recurring | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 385,474 | 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 | 29,500 | 23,444 | |
Level 2 | Recurring | Short-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 342,219 | 291,830 | |
Level 2 | Recurring | Long-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 13,755 | ||
Overnight repurchase agreements | Recurring | Cash and cash equivalents | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 44,250 | 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 | 44,250 | 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 | 52,482 | 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 | 52,482 | 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 | 143,671 | 192,345 | |
U.S. Government debt securities | Recurring | Long-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 11,848 | ||
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 | 143,671 | 192,345 | |
U.S. Government debt securities | Level 1 | Recurring | Long-term investments | |||
Financial assets measured at fair value on a recurring and non-recurring basis | |||
Available-for-sale | 11,848 | ||
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 | 29,500 | 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 | 342,219 | 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 | 13,755 | ||
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 | 29,500 | 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 | 342,219 | $ 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 | $ 13,755 |
Stock-Based Compensation - Ince
Stock-Based Compensation - Incentive Plans (Details) - shares | Jun. 13, 2018 | Jun. 12, 2018 | Sep. 30, 2018 |
Inducement stock options | |||
2013 and 2014 Equity Incentive Plan | |||
Shares available for future issuance (in shares) | 98,525 | ||
Maximum | Inducement stock options | |||
2013 and 2014 Equity Incentive Plan | |||
Expiration period | 10 years | ||
2013 Plan | |||
2013 and 2014 Equity Incentive Plan | |||
Shares available for future issuance (in shares) | 0 | ||
2014 Plan | |||
2013 and 2014 Equity Incentive Plan | |||
Shares authorized for issuance (in shares) | 5,228,625 | ||
Shares available for future issuance (in shares) | 1,521,732 | ||
Additional number of shares available for issuance | 1,500,000 | ||
Increase in common stock reserved for issuance as percentage of the aggregate number of outstanding shares of common stock (as a percent) | 4.00% | 3.00% | |
Non-employee director | 2014 Plan | |||
2013 and 2014 Equity Incentive Plan | |||
Shares authorized for issuance (in shares) | 30,000 |
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 | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Weighted-average assumptions used to estimate fair value of option awards using Black Scholes option pricing model | |||
Unrecognized compensation expense | $ 108,800 | $ 108,800 | |
Stock option | |||
Number of Shares | |||
Outstanding at the beginning of the period (in shares) | 3,225,356 | ||
Granted (in shares) | 1,554,775 | ||
Exercised (in shares) | (574,913) | ||
Forfeited (In shares) | (28,500) | ||
Outstanding at the end of the period (in shares) | 4,176,718 | 4,176,718 | 3,225,356 |
Vested and expected to vest at the end of the period (in shares) | 4,035,232 | 4,035,232 | |
Exercisable at the end of the period (in shares) | 1,931,667 | 1,931,667 | |
Weighted-Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 25.82 | ||
Granted (in dollars per share) | 98.36 | ||
Exercised (in dollars per share) | 17.56 | ||
Forfeited (in dollars per share) | 89 | ||
Outstanding at the end of the period (in dollars per share) | $ 53.52 | 53.52 | $ 25.82 |
Vested and expected to vest at the end of the period (in dollars per share) | 52.53 | 52.53 | |
Exercisable at the end of the period (in dollars per share) | $ 27.14 | $ 27.14 | |
Average Remaining Contractual Term (in years) | |||
Outstanding Contractual term (in years) | 7 years 11 months 27 days | 7 years 8 months 19 days | |
Vested and expected to vest at the end of the period (in years) | 7 years 11 months 12 days | ||
Exercisable at the end of the period (in years) | 6 years 11 months 9 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period | $ 490,720 | $ 490,720 | $ 188,626 |
Vested and expected to vest at the end of the period | 478,110 | 478,110 | |
Exercisable at the end of the period | $ 277,712 | 277,712 | |
Weighted-average assumptions used to estimate fair value of option awards using Black Scholes option pricing model | |||
Risk-free interest rate (as a percent) | 2.45% | ||
Expected dividend yield (as a percent) | 0.00% | ||
Expected stock price volatility (as a percent) | 68.84% | ||
Expected term of options (in years) | 6 years 1 month 6 days | ||
Expected forfeiture rate (as a percent) | 9.08% | ||
Unrecognized compensation expense | $ 108,800 | $ 108,800 | |
Weighted-average period for recognition | 2 years 11 months 9 days | ||
Weighted-average grant date fair value of options granted (in dollars per share) | $ 59.72 | ||
Non-employees | Stock option | |||
Weighted-average assumptions used to estimate fair value of option awards using Black Scholes option pricing model | |||
Unrecognized compensation expense | $ 10,900 | $ 10,900 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock based compensation expense | ||||
Share-based compensation expense | $ 11,153 | $ 5,268 | $ 33,150 | $ 14,677 |
Research and development | ||||
Stock based compensation expense | ||||
Share-based compensation expense | 4,205 | 2,148 | 14,313 | 8,010 |
General and administrative | ||||
Stock based compensation expense | ||||
Share-based compensation expense | $ 6,948 | $ 3,120 | $ 18,837 | $ 6,667 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Feb. 29, 2016item | Jan. 31, 2016item | Jan. 31, 2015item | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | |
Commitments and Contingencies | |||||||
Research and development costs under collaboration agreement | $ 56,928 | $ 64,754 | $ 130,473 | $ 109,321 | |||
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 | 1,000 | 0 | 1,000 | |||
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 | 4,000 | 1,000 | 7,000 | 1,000 | |||
Milestone payments made or accrued from inception through December 31, 2017 | 8,300 | ||||||
Array | Collaboration Agreement | |||||||
Commitments and Contingencies | |||||||
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 | $ 2,200 | 7,300 | $ 6,100 | |||
Array | Collaboration Agreement | Product candidates directed to TRK | |||||||
Commitments and Contingencies | |||||||
Maximum milestone payments which the entity could be required to pay | 223,000 | 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 | $ 213,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transactions | ||||
Stock-based compensation | $ 33,150 | $ 14,677 | ||
Consulting Letter Agreement | Dr. Lori Kunkel | Research and development | ||||
Related Party Transactions | ||||
Stock-based compensation | $ 200 | $ 300 | 1,000 | 1,700 |
SAB Agreement | Dr. Keith Flaherty | Research and development | ||||
Related Party Transactions | ||||
Cash compensation expense | 15 | 15 | 48,000 | 45,000 |
Stock-based compensation | $ 100 | $ 500 | $ 800 | $ 2,300 |