One of the biggest names in genetics, Illumina (NASDAQ:ILMN), has teamed up with Loxo Oncology (NASDAQ:LOXO) to develop and commercialize a multi-gene panel for broad tumor profiling for cancer indications.
The companies’ first plan of action is co-developing Illumina’s TruSight Tumor 170 as a companion diagnostic for Loco’s larotrectinib and LOXO-292, both of which target different gene alterations in specific tumors.
Cancerous tumors are triggered by different genetic mutations. Illumina’s product teamed with Loxo’s drug candidates could be a winning combination to address and solve the genetic implications of certain tumors, the two companies said on Tuesday (April 10).
“We are leveraging our leadership in next-generation sequencing to deliver in-vitro diagnostic solutions to improve the management of cancer patients in the clinic,” said Garret Hampton, executive vice president of clinical genomics at Illumina.
“To this end, we are partnering with leading biotechnology companies, such as Loxo Oncology, to develop companion diagnostics for best-in-class therapeutics,” he added.
Jacob Van Naarden, chief business officer of Loxo Oncology, is equally excited for the partnership, and said that Illumina’s TruSight Tumor 170 “has consistently demonstrated robust performance with the assessment of both DNA and RNA.”
TruSight Tumor 170 is a gene-sequencing test that interrogates point mutations, fusions, ampliciations and splice variants in 170 genes that are associated with solid tumors.
The first of Loxo’s products, larotrectinib, is a TRK inhibitor in clinical development for treating patients with cancers that harbor a neurotrophic tyrosine receptor kinase gene fusion — a next-generation method of curing cancer types. This product has received three special designations from the US Food and Drug Administration (FDA). In November 2017, Loxo entered a collaboration to develop the drug with Bayer (ETR:BAYN).
The second candidate, LOXO-292, is also in clinical development for treating patients with cancers that harbor abnormalities in the rearranged during transfection kinase. It’s currently in a Phase 1 trial for non-small cell lung cancer, medullary thyroid cancer, colon cancer and solid tumors.
Both companies saw share price increases following Tuesday’s announcement. Shares of Illumina increased 3.25 percent to $237.67 that day, with the rally continuing throughout the week to reach $242.09 as of market close on Thursday (April 12).
Piper Jaffray analyst William Quirk reiterated a “buy” target for the company the same day as the partnership announcement, and gave the company a $269 price target.
Loxo’s share price increased 7.79 percent the day of the announcement to close at $121.86 on Tuesday. By Thursday, shares of Loxo had increased by 11.67 percent to $126.24.
Oppenheimer analyst Leah Cann issued a report assigning a “buy” rating for Loxo and a $122 price target on Tuesday. “We believe accurate and widely available patient-identification in precision medicine is critical to enrolling clinical studies, and more importantly, to the successful launch of these drugs if FDA-approved,” Cann said in the report.
As this partnership deepens, the two companies could see profitable years ahead while these products are combined — as long as regulatory milestones are reached.
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Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.