Loxo Oncology's Candidates Are 'Impressive,' Piper Jaffray Says In Bullish Initiation

Loxo Oncology Inc (NASDAQ: LOXO) is up 280 percent year-over-year — and, by one estimate, still has room to run.

The Rating

Piper Jaffray analyst Tyler Van Buren initiated coverage with an Overweight rating and a $200 price target.

The Thesis

Piper Jaffray sees promise in Loxo’s TRK fusion and RET alteration franchises. The analyst considers larotrectinib and LOXO-292 “impressive,” with the former serving as “the perfect proof of concept” and the latter demonstrating superior response rates to Blueprint Medicines Corp (NASDAQ: BPMC)’s BLU-667.

“In a short period, Loxo has become a leader in the precision medicine field, which is a reflection of the company's efficient approach to drug discovery and development,” Van Buren said in a Thursday note.

The analyst expects improved LOXO-292 data at the upcoming ASCO conference as well as larotrectinib’s regulatory approval in the fall, laying a foundation for a $1-billion-plus global franchise.

Altogether, with Loxo’s favorable results, Piper Jaffray anticipates near-term opportunity for a takeover.

“Given the data generated by the laro/195 and 292 programs, we believe that the promise of Loxo's approach to drug development is clear and that any significant player in oncology would benefit from the company's drug discovery platform.”

Price Action

Loxo shares were trading up 1.77 percent at $176.72 at the time of publication. 

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