Raymond James Sees $1B Potential In Loxo Oncology's Vitrakvi, LOXO-95

The FDA announced approval Monday of Loxo Oncology Inc LOXO and Bayer AG BAYRY Vitrakvi — chemically larotrectinib — for adults and pediatric patients with advanced or metastatic solid tumors that have a neurotropic receptor tyrosine kinase, or NTRK, gene fusion without a known acquired resistance mutation.

The Analyst

Raymond James analyst Dane Leone maintained a Strong Buy on Loxo with a $235 price target.

The Thesis

The PDUFA outcome came in line with Raymond James' positive outlook on Vitrakvi, Leone said in a Monday note. (See the analyst's track record here.) 

A review of the label did not bring any surprises or unexpected annotations regarding toxicity of the drug, he said. 

The analyst projects that Bayer, which shares 50 percent of commercialization costs for the drug and is entitled to 50 percent of profits, will qualify for a priority review voucher that could be used to expedite its other drug candidates.

Although Leone said he expects the commercial launch to be limited by the number of NTRK+ cancer patient cases and identification methodology, he forecast for Vitrakvi and LOXO-195 to collectively generate sales of over $1 billion in 2026.

The expectation is premised on the potential for premium pricing, given the small patient population, unmet need and efficacy and the impressive duration of response, according to Raymond James. 

The Price Action

Loxo shares were slipping 6.23 percent to $143.19 at the time of publication Tuesday. 

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