Loxo Oncology's (LOXO) CEO Josh Bilenker on Q3 2018 Results - Earnings Call Transcript

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About: Loxo Oncology (LOXO)
by: SA Transcripts

Loxo Oncology, Inc. (NASDAQ:LOXO) Q3 2018 Earnings Conference Call November 8, 2018 8:00 AM ET

Executives

Pete Rahmer – Investor Relations

Josh Bilenker - Chief Executive Officer

Jake Van Naarden – Chief Business Officer

Jen Burstein – Senior Vice President-Finance

Analysts

Marc Frahm – Cowen and Company

Stephen Willey – Stifel

Yigal Nochomovitz – Citigroup

Simon Gruber – JMP Securities

Paul Choi – Goldman Sachs

Andrew Berens – Leerink

Tyler Van Buren – Piper Jaffray

Michael Schmidt – Guggenheim

Raju Prasad – William Baird

Operator

Good day, ladies and gentlemen, and welcome to Loxo Oncology’s Third Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, today's program may be recorded.

I would now like to introduce your host for today's program, Pete Rahmer, Investor Relations. Please go ahead.

Pete Rahmer

Thank you, operator, and thank you all for joining us today. Before we get started, I'd like to remind you that during this conference call, Loxo Oncology will make certain statements that are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our business plans and objectives and timing and success of our clinical trials.

Such forward-looking statements are not guarantees of future performance. And therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. I refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today.

During this call, unless otherwise noted, the financial metrics will be presented on a GAAP basis and include collaboration revenue recognized and stock-based compensation. You will find reconciliations of non-GAAP measures discussed today to the most comparable GAAP measures in our earnings release. All comparisons made in the course of this call are against the same period in the prior year, unless otherwise stated.

With that, we'll turn the call over to Loxo Oncology's CEO, Dr. Josh Bilenker.

Josh Bilenker

Good morning and thanks to everyone for joining us. With me today are Jake Van Naarden, our Chief Business Officer; and Jen Burstein, our SVP of Finance. During the call today, we'll walk through recent updates for our programs, review quarterly financials and then open the line for questions. We believe that the data readouts from the past quarter, both ours and from peers, have affirmed a core company thesis that the most selective drugs have the best opportunity to deliver both durable efficacy and manageable safety over time for single oncogene addicted tumors.

Let's start with larotrectinib, our highly selective and CNS-active TRK inhibitor for patients whose tumors harbor in TRK fusions. In October, investigators presented data on larotrectinib at the ESMO meeting in Munich, Germany. In an oral presentation, Ulrik Lassen from Denmark provided a comprehensive program summary that included updated efficacy, durability and safety data. A few quick reminders about how the presented datasets were constructed.

Patients from all three ongoing clinical trials for laro were included, drawn from the adult Phase I, the pediatric Phase I/II and the adult/adolescent Phase II studies. All enrolled patients were included in the analysis, who met the following characteristics. First, they all had measurable disease, so that a response rate could be calculated for them. Second, every patient with at least one scan was included as well as patients who had discontinued prior to a first scan. To us, any other choice would have seen arbitrary and raise concern over bias.

Third, all had a TRK fusion diagnosis established by a local diagnostic test. In other words, as the sponsor we did not rerun the sample ourselves through a process called central confirmation. Had we done so, we could have likely screened out a few false positives and perhaps increased the response rate, but it would have been inconsistent with our regulatory dialogue or with the intent to treat principal.

The first take away from the presentation concerns durability of response. As of July 2018 data cutoff, approximately 18 months of median follow-up was available on the 44 responding patients in the primary dataset of 55 enrolled, but no median duration of response have been reached. That is encouraging news. In other words, more than half of the responding patients were still in response after approximately 18 months of study follow-up. The new data cutoff added one year of additional follow-up to the previously published data. And something unusual and interesting happened as well. Kaplan-Meier estimates for six months and one year duration of response actually improved with a later data cut.

Duration of response or DOR is an important regulatory concept for single-arm trials where response rate is the primary endpoint. The clock starts at the first scan, where tumor shrinkage of 30% or more is observed. So DOR is always shorter than a patient's actual time on drug, which is measured from day one on therapy. And the DOR clock ends for a given patient when a RECIST progression occurs, even though that's not necessarily when treatment ends, since some patients in consultation with their doctors elect to continue treatment because ongoing benefit is perceived.

As a side note, we did report a median progression-free survival, or PFS, of 28.3 months. The difference between DOR and PFS is that DOR only includes responders, while PFS includes everyone, both responders and non-responders. Although we reported a median PFS, it should be regarded as an unstable statistical estimate. Kaplan-Meier analysis can generate unreliable data when they are based on just a few events, which is the case here. So we are intentionally cautioning against over interpreting this number. The true median PFS could be higher or lower with more median follow-up. For our data and everyone else's for that matter, be wary of the unstable Kaplan-Meier curve.

The second take away from the update was the response rate described at ASCO 2017 and in the New England Journal of Medicine paper, both were not a fluke. The response rate in an additional 67 TRK fusion patients was nearly identical to that described for the first 55. The response rate was 80% by investigator read in the first 55 and 81% in the subsequent 67. In the new cohort of 67, the durability signal appears similar, if not even slightly better, though follow up is less mature.

Looking across the integrated dataset of 122 patients, the response rate was 92% in the pediatric patient population and 75% in adult patients. And duration of response was also similar between adult and pediatric patients, with nearly identical 12-month DOR estimates and actually longer median follow-up in the adult population, thus suggesting that a medium DOR could ultimately in fact be longer in the adult population than the pediatric population.

Third, larotrectinib continues to demonstrate activity in CNS disease, both in patients with CNS metastases and in those with primary CNS tumors. We shared an example of a case of lung cancer with CNS metastases in the ESMO presentation where the patient experienced a near CR in the CNS. That said, it appears that the overall burden of CNS disease in patients with TRK fusion cancers appears to be quite low, with over 170 patients now studied and treated across our clinical trials, both ours and from peers, CNS of metastases affected less than 10% of patients.

Fourth, the tolerability profile of larotrectinib remains encouraging and consistent with prior data presentations, with most adverse events reported as Grade 1 or 2. Some patients do experience mild dizziness, which is likely the result of on-target TRK inhibition in the brain. And some patients show a bump in their liver function test, which is monitorable in the clinic and usually low-grade when it happens.

We are heartened that a core Loxo thesis appears to be playing out in the clinic, that highly selective drugs with favorable oral pharmacology hit their target the hardest and generate differentiated data for patients with oncogene addicted cancers.

Closing out the larotrectinib clinical and regulatory remarks, as many are aware, the NDA is currently on file with the FDA with a November 26 PDUFA date. Launch preparations are underway with our partners at Bayer and Jake will comment more on that. Outside of the U.S., Bayer submitted the MAA to EMA in August with many other global regulatory submissions in process.

I will now turn it over to Jake to provide additional updates on the larotrectinib program and launch preparations.

Jake Van Naarden

Thanks, Josh. The ESMO update provided additional but still incomplete visibility into the potential time on therapy for patients receiving larotrectinib. Earlier in the quarter we provided another data point with potential implications for the commercial potential of larotrectinib, concerning the number of estimated patients with TRK fusions. At the map of pathology conference in September, we presented a poster with one of our diagnostics partners, Ventana, concerning the analytic performance of their TRK immunohistochemistry or IHC test. Included in the poster are results from assay development work, which provided inferable estimates of TRK fusion frequency across many tumor types. These data in addition to other recently published evidence allowed us to refine our estimates around TRK fusion frequency.

As announced publicly at the time, we estimate that there are approximately 2,500 to 3,000 new cases of advanced TRK fusion cancer in the U.S. each year. While we know there will be challenges in finding these patients in the near term, we remain confident and excited by the national trajectory of tumor genomic profiling overall and look forward to realizing the full commercial potential of larotrectinib over time. Increasing patient identification, coupled with larotrectinib's durability profile should make for an attractive story in the long term. In the meantime, enrollment to our clinical trials and patient access program as well as the peer programs strikes us as a reasonable proxy for the number of currently findable patients by today's practice patterns. We provided those numbers in the press release that we issued at ESMO.

In anticipation of an NDA review decision from FDA, we are prepared for a potential launch in collaboration with our partner, Bayer. As a reminder, Bayer is the lead commercial party globally with full responsibility outside of The United States. In The United States, Loxo has co-promotion rights and we share cost and profits fifty-fifty Though Bayer has a much larger operational role and final decision-making authority on all commercial matters, including matters related to pricing.

Our role in the U.S. co-promote is to interface with lab directors and pathologists to raise awareness around tumor genomic profiling. We have now hired most of our commercial and medical field teams. We call them diagnostic account managers and diagnostic medical science liaisons. We continue to make good progress alongside our diagnostic partners at Ventana and Illumina. As mentioned, we presented data at the meeting together with Ventana around the IHC assay. Based on the emerging profile of that assay, we believe it maybe best used as an add-junk screening tool by labs that would prefer to pre-identify patients with certain cancer types for referral to a molecular panel. Ventana is likely on track to launch the assay by year end, as a research used only track protein staining tool.

Our work with Illumina is also proceeding well. Though timelines are longer. In April 2018, we signed a diagnostics deal with Illumina that covered both track and RETs. For the first time, Illumina has committed to the development, FDA approval and sale of a prepackaged large NGS panel that can be distributed to local labs who wish to conduct NGS testing locally on their own. The panel will be much bigger than the track and questions, which is good because comprehensiveness offers the greatest likelihood of learning something actionable for the patient. It also makes the best use of scarce tissue sample. We're harder work with Illumina to get this test FDA approved.

I'll now turn it back over to Josh to provide updates on the reset of the pipeline.

Josh Bilenker

To close out our track related updates, a couple of brief comments regarding LOXO-195. LOXO-195 is a track inhibitor in development to address certain mechanisms of acquired resistance in patients who have stopped responding to larotrectinib or other track inhibitors. It has also partnered with Bayer. In October, the FDA granted orphan drug designation to LOXO-195 for the treatment of cancers, harboring alterations of track with potential acquired resistance. As learned from the larotrectinib updated ESMO, patients are staying on laro for an increasing length of time, so the LOXO-195 program is in turn enrolling fairly slowly. As mentioned last quarter, we hope to share data from the program at a medical meeting in the first half of 2019.

Moving on to LOXO-292, I'll summarize recent updates for this highly selective, and CNS-active RET inhibitor. We are pleased with the growing investigator enthusiasm around the program and ongoing accrual to the LIBRETTO-001 clinical trial. In the last quarter, investigators provided incremental updates for patients with RET fusion-positive, non-small cell lung cancer, RET fusion-positive positive thyroid cancer and RET-mutant medullary thyroid cancer. These presentations occurred at the World Lung meeting in September and at the ATA Thyroid meeting in October.

Both presentations were based on the Phase I cohort of patients defined originally by the ASCO 2018 presentation. Additional patient follow-up and response assessments were provided for the patients enrolled as of the ASCO data cutoff. We believe both updates provide evidence that LOXO-292 delivers a high degree of antitumor activity across a range of starting dose levels. Also emerging signals around response durability were encouraging though early, especially in light of the heavily pretreated nature of the enrolled population. The study employed a feature called infra patient dose escalation, which allows patients to have their dose increased as higher doses – at higher those cohorts are cleared for safety.

We have received some attention for this trial feature, so it's actually quite common nowadays, even within the RET development space. Many companies use this trial design feature for targeted therapy Phase I trials. So while we like this feature, we don't believe it's unique. We continue to observe a safety profile that's consistent with LOXO-292's minimal off-target liabilities. Going into the LOXO-292 discovery process, we knew that VEG-F was going to be problematic and we are happy with the window we have achieved there.

It's not absolute, but we believe it's substantial enough to achieve our desired RET target coverage without seeing a significant burden of VEG-F related side effects such as hypertension. Another problem problematic off target was JAK2, which have inhibited can cause anemia, neutropenia and CNS toxicity. On the JAK2 front, our extensive preclinical benchmarking suggests that we have dialed out this problem for the purposes of clinical exposure.

As we have been saying for years, for targeted therapies against oncogene addicted targets, safety and efficacy are two sides of the same coin. If safety issues and P. dose intensity then in the long run, there is likely to be an efficacy impact as measured by response rate, durability of response, or both. Selectivity, coupled with highly available oral pharmacology is the goal for all of our programs.

From a regulatory perspective, we now have three breakthrough therapy designations from FDA for LOXO-292 in the three main populations we are enrolling to libretto trial: RET fusion lung cancer, RET fusion thyroid cancer and RET mutant medullary thyroid cancer, or MTC, for short.

As discussed on the last earnings call, we anticipate filing for an initial accelerated approval of LOXO-292 in these indications in late 2019 using single arm data from the libretto study. Our current plans put us on track to present registrational data for the program next year ahead of an NDA filing in late 2019. We hope that we are in a position to offer patients and their doctors the first commercially available selective RET inhibitor in 2020.

We recognize that LOXO-292 is not the only RET inhibitor in development. We continue to monitor whether other drugs could offer something different or better for patients and we actually see an opportunity there. In fact, we inspired to bring one of our own forward in the setting of acquired resistance. We are in the later stages of a preclinical program for a second RET inhibitor designed against anticipated mechanisms of resistant to LOXO-292 and other RET inhibitors currently in clinical testing.

Our work suggests that acquired resistance biology for LOXO-292 and its leading peer drug are similar. Thus we believe that sequential therapy with these two agents in either order would not make sense for patients who experienced true acquired resistance. That is a molecularly-defined on-target explanation for clinical progression following an initial response. As such, we think a second generation inhibitor will be needed and we are working hard to build it. We still have imperfect information regarding the exact desired molecule profile for that molecule, given the few progressing responders we've seen so far on our program.

Now let's move on to LOXO-305. LOXO-305 is a highly selective non-covalent BTK inhibitor. As you know, BTK is a validated molecular target in various B cell leukemias and lymphomas. There are many BTK inhibitors approved during later stage of development. All of these have the same binding mode and therefore, a common Achilles' Heel that explains about half of the progression of events described in patients. LOXO-305 was specifically designed to address this mechanism of acquired resistance. LOXO-305 may also have a role in treating patients who are intolerant to other BTK inhibitors.

We are looking forward to getting the Phase I first in human trial underway and remain on track to enroll the participation by the end of 2018. We will issue a press release when that happens, which will include a high-level overview of the trial design. Once we start the study, we will be watching the pace of enrollment and getting a read on human pharmacokinetic data. A better understanding of these variables will allow us to better predict timing for an initial data readout and other next steps for our program.

I'd like to close our program summary with a quick mention of our ambitions and discovery. We continue to grow the discovery team at our facility in Colorado and to broaden our preclinical efforts. As mentioned, we are rapidly advancing a second-generation RET inhibitor designed to address predicted mechanisms of acquired resistance to LOXO-292 and other RET inhibitors. Importantly, we are also working on additional undisclosed targets. We would guide to a clinical start for these when a clinical candidate is in hand and thus IND timing could be estimated. There are many emerging targets that we are passionate about, and we aspired to build an industry-leading pipeline of drugs that matter for patients. We plan to rely on in-house discovery efforts, third-party discovery collaborations and business development activities to achieve this goal.

Now with that, let me turn it over to Jen Burstein, our SVP of Finance, for a review of the financials

Jen Burstein

This morning we issued a press release, which included our quarterly financials. We will be filing our 10-Q after the close today. To briefly summarize the financials, as of September 30, 2018, we had $647.6 million in cash, cash equivalents and investments. Net loss for the third quarter was $27.1 million on a GAAP basis and $68.8 million on a non-GAAP basis. This difference was primarily driven by excluding revenue recognized related to the Bayer upfront payment and partially offset by exclusion of share-based compensation expenses.

Our total operating expenses increased quarter-over-quarter from Q2 to Q3 due to expanded development activities across our LOXO-292, LOXO-305 and discovery programs. For larotrectinib and LOXO-195, our R&D expenses reflect a net effect of the 50-50 cost sharing with Bayer.

Revenue from the Bayer collaboration agreement was $42.5 million for the third quarter of 2018. This represents $52.9 million in revenue recognized from the $400 million upfront payment from the Bayer collaboration offset by $10.5 million, our share of the joint larotrectinib co-promotion costs.

Josh Bilenker

So many thanks to everyone for joining the call today. We'll now open the line for questions.

Question-and-Answer Session

Operator

Certainly. [Operator Instructions] Our first question comes from the line of Marc Frahm from Cowen and Company. Your question, please.

Marc Frahm

Hey, thanks for taking my questions. Just maybe to start with larotrectinib. It is, obviously, a pretty data in both the adult and pediatric settings. But I was wondering if you think that small difference in response rates that you did see is real? Or do you think that's an artifact of maybe their small numbers or something maybe about the quality of the testing in the two different settings, something like that?

Josh Bilenker

We think the numbers are functionally comparable. There are patients who have tumor shrinkage less than our RECIST PR, but have regression. They're probably at some degree of a false positive rate, though very, very rare on the diagnostics side. It's hard to know whether there was differential effect from that variable. But I think in the clinic and our distort qualitative experiences, the populations are equivalent with regard to their sensitivity of laro.

Jake Van Naarden

And I don't think pediatric and adult investigators feel like they're having a different experience with the drug.

Marc Frahm

Okay, great. And then on LOXO-292, you've talked a little bit in the past about wanting to kind of do some trials in the earlier settings. Can you give us an update on kind of where those plans are, timing? What type of combinations we might expect?

Jake Van Naarden

We're currently in the planning stages there. We need to get some regulatory advice and nail those down. We hope to be in a position next year, 2019, of talking probably about those plans.

Marc Frahm

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Stephen Willey from Stifel. Your question, please.

Stephen Willey

Yes, good morning. Thanks for taking the questions. I know that there was some discussion at ESMO regarding the drafting of a consensus statement suggesting TRK screening in all cancer patients. Is there anything that is analogous happening in the U.S. right now with respect to either, I guess, ASCO Guidelines or NCCN Guidelines?

Jake Van Naarden

I don't think there's a dedicated effort in the way that the ESMO consensus guidelines were being crafted, though it's worthy of note that many of the people leading that ESMO consensus guideline are actually from the United States. So the likelihood of it being a European-specific concept really in function, I think, are low. I anticipate those efforts having a lot of impact on the U.S. as well.

But that having been said, I think the trajectory of next-generation sequencing in the U.S., inclusive of TRK fusions, is on a pace that's different than Europe. And so it may be slightly less necessary over the long-term in the United States than it is in Europe, where there are larger constraints on how they're spending.

Stephen Willey

Got it. And then, I guess, when I just look at some of the other next-gen BTK trials, patient enrollment into those studies appears to be rather slow. And just kind of curious if you think patient identification might prove to be a rate-limiting step in the 305 development program? Or do you think that's really just may be perhaps more reflection of the assets themselves? Thanks.

Josh Bilenker

I think there's a universal truth in early Phase I studies that before therapeutic doses are achieved, it's harder – it's hard to generate investigator enthusiasm around patient enrollment, especially in this case where patients can be somewhat fragile, sick and not terribly able to withstand subtherapeutic doses.

So I think it – when programs see activity or describe activity, it tends to kickstart enthusiasm around enrollment. So we really see it as a function of the dynamics of an individual drug in the context of an individual dose escalation and not really reflecting a patient need or other interest variable.

Stephen Willey

Got it. Thanks for taking the questions.

Operator

Thank you. Our next question comes from the line of Yigal Nochomovitz from Citigroup. Your question, please.

Yigal Nochomovitz

Hey, guys. Thank you very much for taking the questions. Jake, you mentioned that, I believe, you now hired all the diagnostic account managers and liaisons. So with regard to that, I'm just curious as to whether your message to the sales force is to be agnostic with respect to the Thermo-based platform or the Illumina-based platform regarding NGS because, obviously, with Illumina, given the way that technology works, you are able to find new fusions, whereas with the Thermo PCR-based approach you can't find new fusions. So just curious on what the level of emphasis is there on each respective technology as you prepare your sales force for the launch? Thanks.

Jake Van Naarden

It's a great question. So you know in the early days of its launch, there will be no on-label companion diagnostic, as you know, and the Illumina test will eventually get there, but it won't be there initially. And so out of the gate, our folks will be talking about a variety of different ways of testing, both in-house and send-out, by the way. Your question invoked the in-house options, but there are send-out options as well at a variety of reference labs, with varying capabilities to detect in TRK fusions.

And so our folks out there, both the account managers as well as the MSLs, are really out there to be trusted intermediaries, educators about the various options that exist for a given practice or a given oncologist. And that includes Illumina, that includes Thermo and that includes the reference labs, all the above. But it's important that physicians understand the trade-offs they're making when they choose any, given one of these options.

Yigal Nochomovitz

Okay, great. And then just on the ESMO update, obviously, you've emphasized the duration of therapy Kaplan-Meier curves – sorry, the duration of response Kaplan-Meier curves. I was curious about the duration of therapy, given that that's sort of the more relevant question in terms of revenue potential.

Do you have an estimate of the median duration of therapy, given that several of the patients are still being treated post progression and, obviously, the vast majority are still on therapy such that the – just looking at the average duration based on that silver line spot would likely substantially underrepresent the – what could be expected from median duration of therapy?

Jake Van Naarden

That's a good question. I think you're zeroing in on the variable that for folks financial models matters the most. In fact, I think what you really care about is the mean duration of therapy, not even median, which is, of course, not a clinical trial statistical concept that is typically reported out, including by us. So we don't have those numbers handy. But I think that's the right way to think about it.

Josh Bilenker

The similar plot does offer some clues. Obviously, it's color coded for patients who've been treated past progression. Of course, this decision is a very local one between patient and doctor. As a company, we have no desirability or wish to, obviously, influence that at all. It was just characterizing and describing a clinical practice behavior.

Jake Van Naarden

And as Josh mentioned in the prepared remarks, duration of therapy is always longer than duration of response because you, at least, have one to two cycles before the first response actually starts.

Yigal Nochomovitz

Right. Right. And then just on 305, just so I'm clear, just want to confirm that the starting doses for that study are homeopathic doses. And it wasn't clear if we – will there or not be some initial data from that study next year? Thanks.

Jake Van Naarden

Thanks for the question that is important clarifying one. We presented some data, which I think you're alluding to, at a hematology meeting earlier in the fall, describing the preclinical characterization of the compound, including some – what we call projected human dosing. We showed two exemplary – or example, I should say, dose levels that we anticipate reaching within the Phase I study and how those would look from a target coverage perspective. But those dose levels that we showed in that presentation are not the first and second dose levels in the actual trial. There are doses we expect to be able reach.

And so to your direct question, we don't expect the first dose level to be therapeutic. And we'll see once we get into human beings, and we look at pharmacokinetic data, how data, how close we are or aren't to getting to the levels we hope to achieve.

Yigal Nochomovitz

Okay. Thank you.

Josh Bilenker

Thanks.

Operator

Thank you. Our next question comes from the line of Konstantinos Aprilakis from JMP Securities. Your question, please.

Simon Gruber

Hey, guys. This is Simon on for Konstantinos. Just wanted to ask about the durability of larotrectinib. Looks superior to the competition. So is the mechanistic reason for that, you know, just that it's more selective and you can be more flexible with dosing? I am just curious if there's anything more to it than that. And also whether you think the durability data that we had seen so far will help you get a leg up with payers when it comes time to negotiate? And maybe your latest thoughts on reimbursement in general.

Josh Bilenker

Obviously, a bit of a speculative question. We are very pleased by the durability, which is ongoing in terms of final characterization of median. We speculate, but we speculate with conviction, that we can attribute this kind of feature to, again, a very highly selective drug with limited off-target liabilities that has great oral exposure. And this all translates to this concept of target inhibition.

And the more intensely one can inhibit a pathway, we believe the higher likelihood there is to generate the highest response rate possible for that biology as well as the highest durability of effect that's possible for that biology. So we do think there is a correlation between the drug's intrinsic profile, both selectivity wise and pharmacology wise, that could have predicted this.

With regard to other datasets that are ours, it's always a cautionary gain to make such cross-study comparisons. However, we just don't believe that the selectivity or pharmacology profile of other agents are as compelling. So over time, as datasets are finally characterized, we'll see where truth lies. With a rare population as this, one will likely never have a head-to-head comparison in the randomized study. So we'll have to do our best inferences as a field.

As it relates to payer conversations, I, obviously, can't go into that with any detail. Bayer is the lead partner in those kinds of commercial strategy decision-making areas as well as the final pricing decision. We believe at a sort of a big picture level, though, that a high response rate drug with – that's oral, that has a long duration of therapy is very much in up-to-middle grade profile for the emerging pay-for-performance kind of world we seem to be moving into. It's a very compelling place to be when you can look ahead and expect the best from your drug in any given patient, rather than a statistical crapshoot of the usual 25% ORR that a lot of other approved drugs have. We think will be in a collaborative place with the payor community, really taking our cues from Bayer, but in seeing how that plays out.

Simon Gruber

Okay, great. Thanks a lot.

Operator

Thank you. Our next question comes from the line of Paul Choi from Goldman Sachs. Your question please.

Paul Choi

Hi, thanks for taking our questions and congratulations on all the progress. Maybe first with commercial one, with regard to label claims, can you maybe give us your updated thoughts as to how you think what could go into the laro label? And how are you thinking about converting clinical trial patients to commercial pay? And what would be the sort of the timeframe for that?

Josh Bilenker

As it relates to label, historically, we've guided investors to think about the breakthrough therapy indication as until proven otherwise the best proxy for what a label could look like and given how approximately out of the PDUFA data, I don't think it will be appropriate for us to comment further on that. As it relates to converting clinical trial patients, that's a topic of discussion. We're not ready to comment specifically on how that would happen and if that would happen. But suffice to say that we do need to continue following these patients on the clinical study for at least some future period of time.

So I would not expect that there is a sort of rapid or immediate transitional patients over to commercial drug plan. That's not currently what we are planning.

Paul Choi

Okay thanks for that. And then on the pipeline side with regards to 305, it looks like also venetoclax increasingly looking like to move into the frontline setting in CLL. So if you think about the future trial designs for the 305, after you establish therapeutic dosing, is that a population that you would also consider? Or are you just going to focus for now solely on the BTK refractory or intolerant populations?

Jake Van Naarden

Yes I mean venetoclax is an incredibly important drug for this population, but it's not for everyone. It does have a thin therapeutic window and for many patients with B cell leukemias, lymphomas it can be challenging especially for physicians in the community. But there is no doubt it's an important modality. There are some interesting real-world evidence that’s actually emerged now just highlighting the difficulties in using that drug, some of that’s been peer reviewed and published that you can pull up. I expect that in context of our Phase I study, we will treat patients who have seen venetoclax and will learn about what 305's profile is in that population, which will inform from a data-driven perspective your question

Paul Choi

Great, thanks for taking our questions.

Operator

Thank you. Our next question comes from the line of Andrew Berens from Leerink.

Andrew Berens

Hi good morning. My question is relation to some of the prepared comments that Josh made in the RET dynamic and acquired resistance and sequential treatment. Some of the translational chemists we step into have suggested that the differences between BLU-667 and LOXO-292 could lead to different types of mutations basically solvent front mutations and gatekeeper mutations that could open the door for sequential treatment of the drugs. I was just wondering your thoughts on that, is that not correct? Or should we be looking at it in a different way?

Josh Bilenker

It’s not that doesn't drive with our data. And I would find it hard to imagine that folks out there have more data on this topic than we have in house. Both drugs purport to cover the gatekeeper mutations, we have now plenty of clinical evidence that we presented and published on, showing patients with gatekeeper mutations responding durably to LOXO-292. So we anticipate seeing other mechanisms of acquired resistance that we're not prepared to comment on specifically right now. But again, we don't anticipate that the resistance profile of the two drugs will be dramatically different. We anticipate there will be mostly similar. And as a result, we do not believe sequential therapies likely to play out in the context of true acquired resistance.

Andrew Berens

Okay, when will we see more data on the emergent resistance? I know it's early days, but – and the drugs are obviously having very long efficacy. But when do you think we'll start to get a better idea?

Jake Van Naarden

We're not really prepared to comment on that right now. We are finishing up preclinical work, seeking a track candidate molecule for second gen profile. And as Josh mentioned in the prepared remarks, we are watching emerging clinical data to help inform that decision.

Andrew Berens

Okay. And then just one question on the BTK program, I think, one of the things we've heard from physicians is that right now patients that relapsed on IMBRUVICA don’t get screened for 481S and that's one of the problems identifying these patients. I was just wondering what's your strategy will be to increase that screening rate?

Josh Bilenker

This is a dynamic word we're familiar with. Until there's clinical validation, there's really no reason to screen for a biomarker, such as C41S. We've lived this dynamic before and we feel that the best argument for changing that dynamic is compelling clinical data generated in the centers that adopt the concept among earliest.

Andrew Berens

Okay thanks a lot. I appreciate the questions.

Operator

Thank you. Our next question comes from the line of Tyler Van Buren from Piper Jaffray. Your question please.

Tyler Van Buren

Great, thanks guys. Good morning. Based upon the positive update we saw this fall for LOXO-292, obviously, a lot of patients continue to remain on treatment. And I know it's still fairly early, but I was hoping you guys just give us your updated thoughts on potential duration of treatment for these patients, and how long it could be? Or perhaps if it's tracking similarly to what you've seen with laro early on, that would be helpful?

Jake Van Naarden

It's really early days to answer that question. As I think ultimately I wouldn't think of it in the same sort of wane as laro though. I think the way to think about this program is to think about the different disease settings differently. They are more homogenous than the laro experience, you really have lung cancer and thyroid cancer. And so I think in the context of lung cancer you can think about LOXO-292 aspirationally like other best-in-class targeted therapies for different oncogene-addicted settings, where it's osimertinib for EGFR or alectinib/brigatinib for ALK.

In the context of medullary thyroid cancer, there are numbers out there for drugs like cabozantinib and vandetanib, and we hope to be able to do better than that since that's the entire thesis of the compound. So again these are aspirational forward-looking ideas because we don't have enough data yet to really predict such a thing with LOXO-292 from a true data driven in terms of our own data experience.

Tyler Van Buren

Great, thanks so much.

Operator

Thank you. Our next question comes from the line of Michael Schmidt from Guggenheim. Your question, please.

Michael Schmidt

Hey guys, thanks for taking my questions. I had a couple on LOXO-305 maybe first on, on the Phase I study, just wondering if you will also use a sort of intrapatient dose escalation-type design similar to what we’ve done with the other molecules, to sort of accelerate that dose escalation study. And then I had a follow-up on that one.

Jake Van Naarden

We'll be in a position to talk more about the trial design when we treated the first patient and put out a press release. So unfortunately I can't answer more specifically.

Michael Schmidt

Okay. And then, just regarding the broader sort of development strategy for LOXO-305, I know you said it will be sort of data-driven, but obviously you do have a wild-type BTK inhibition as well in addition to the C41S mutation. I was just wondering how you – what considerations you will use sort of think about sort of longer term development strategy? For example, initially in ibrutinib or BTK refractory patients were just going broader from the get-go. How do you make that decision?

Jake Van Naarden

I'll just make two general comments. One is that as you're perhaps alluding it's a complex development space because of the many different classes of active agents. And so understanding sequence combos, patient selection, community versus academic, age, molecular predictors of outcome, these are all factors that need to be built into a target population for ultimate drug development. And we are hard at work and have existing plans within those considerations that, again, will be informed by actual data. So that's just an important dynamic to keep in mind. As it relates – if you're alluding to sort of upfront use, we think that's an unlikely scenario as it relates to the covalent class of drugs.

That's a very established, well proven paradigm at this point with drugs like acalabrutinib, ibrutinib and others. And we, at this time, have no desire or interest in going to the earliest line settings and establishing head-to-head data against that class, if that's what you're asking.

Michael Schmidt

Yes thank you very much.

Operator

Thank you. Our next question comes from Raju Prasad of William Baird. Your question please.

Raju Prasad

A question on the laro launch kind of post year one. What are your thoughts on kind of where we might see an inflection point kind of the uptake of the product? Is it going to be getting the Illumina sequencing assay kind of on label? Is it going to be IHC use? Or your NSLs kind of getting more penetration, or increased clinical data. Thanks.

Josh Bilenker

The way we see this playing out is it comes down to more and more diagnostic tests, whether it's Illumina, thermal, others that achieve FDA approval and thus allowing them to fall under the Medicare National Coverage Determination, which help to private payor reimbursement as well. In other words mechanisms that allow for reimbursement either locally or through the send out model that will therefore, drive utilization. And again physicians and patients we hope once performed these type of tests not because of the track, but we're doing it for antitumor mutational and MSI status.

And as long as they're using assays capable of detecting TRK fusions and, frankly, RET fusions and RET fusions and RET mutations for that matter, the alterations of interest to Loxo will emerge as part of the exercise. That is a multiyear thesis. We're not there today. But that's – those are the inflection points we monitor, and we hope to impact actually with our efforts.

Raju Prasad

Great. And then on 292 just maybe some thoughts on obviously the competitor product maybe a little bit closer than the competitor product in TRK. Just thoughts on potential competitive dynamic particularly in the thyroid indication where your enrollment trends for both your trial seem a little more comparable than NSCLC, for example.

Josh Bilenker

Yes, I don't think we know enough about enrollment trends in a real time way. We know how our accruals going, obviously, but that's a single variable. We’ll continue to monitor the emerging profiles of our drugs and the others. And we'll check in and obviously engaged with Wall Street as those profiles emerge, But I think it's premature to comment on that.

Raju Prasad

Okay. And then is there anything you can leverage from the laro launch and learnings that maybe would be translatable that you can share?

Jake Van Naarden

Absolutely. I mean we structured our entire collaboration with Bayer around this idea. So as we mentioned in the prepared remarks and talked a little bit about during the Q&A, our entire field force is focused on increasing the adoption of tumor genomic profiling. We leaned into that concept in the context of this Bayer collaboration, specifically, because of how much it synergizes and primes the pump for everything else we're doing, starting next with 292.

So, absolutely believe in that concept and that's a fundamental part of how we're constructing our commercial presence and our developmental pipeline.

Raju Prasad

Thanks a lot.

Operator

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Josh Bilenker for any further remarks.

Josh Bilenker

Thanks everybody for joining us. We look forward to an exciting quarter to come.

Operator

Thank you ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.