Loxo Oncology Inc. is seeking to raise approximately $120 million through an underwritten public offering of 3.87 million common shares priced at $31 apiece, a discount of about 5 percent from Wednesday's close of $32.69 for the company's shares (NASDAQ:LOXO).

Loxo, based in Stamford, Conn., outlined plans last month for an accelerated path to FDA approval for lead candidate larotrectinib (LOXO-101, or laro) to treat unresectable or metastatic solid tumors with NTRK-fusion proteins in adult and pediatric patients. Laro is a selective inhibitor of tropomyosin receptor kinase (TRK).

In a conference call with analysts following presentation of phase I data at ESMO-Asia, CEO Josh Bilenker pointed out that durability of response continued to grow in conjunction with additional months of follow-up across the study, with the longest patient on the drug for "22 months and counting" with durable disease.

Loxo also is enrolling a pediatric phase I/II trial called SCOUT, which includes unselected and TRK fusion patients, giving the company an opportunity "to learn more about an interesting subset of TRK fusion cancers in the setting of a disease called infantile fibrosarcoma," or IFS, Bilenker said, which typically manifests as a large mass affecting the limb or head and neck of a newborn or infant under age 3.

"Laro has the opportunity to deliver high clinical impact to IFS patients if it prevents limb amputation or disfiguring surgery in cases where clean surgical margins are otherwise difficult to achieve," he pointed out.

The company's ongoing phase II NAVIGATE study is a basket trial that can enroll patients with any solid tumor diagnosis. The single-arm trial, with a primary endpoint of RECIST overall response rate based on independent radiology review, is designed to form the basis of a new drug application (NDA), but Loxo also is keen to show durability of response with sufficient follow-up and drug tolerability at the indicated dose, which are "essential parts of the risk-benefit story and will be reviewed carefully by regulators," Bilenker said.

Although he declined to disclose the number of patients that might be needed for approval, the CEO assured analysts that "we are progressing nicely within our enrollment," adding, "I'd like to reassure you that the efficacy and safety database sizes for laro will be within precedent set by prior target therapy drug approvals. As of today, we are approximately 85 percent enrolled toward our agreed upon primary efficacy analysis population. We expect full enrollment in early 2017."

Following that update, Cowen and Co. analyst Eric Schmidt wrote that "we are encouraged that Loxo has been able to enroll 'many dozens' of TRK-fusion patients into the pivotal phase II NAVIGATE trial and that this study is now ~85 percent enrolled. We also place importance on Loxo commentary that the activity observed in NAVIGATE is similar to the reported phase I experience, and that [central nervous system] responses have been observed. While there had been indications that Loxo might be able to use NAVIGATE to file for a broad label covering all tumor histologies, we are pleased that management has been able to confirm such a strategy. This will be particularly important given that over 10 tumor types are represented in NAVIGATE."

Commercial sales of laro could begin as early as next year, Schmidt suggested.

In its SEC filing, the company said net proceeds from the offering will be used, in part, to prepare for that prospect. Loxo expects to report top-line data from the laro program during the second half of the year and to file a new drug application with the FDA in late 2017 or early 2018, followed by a marketing authorization application with the EMA in 2018.

A spokesman for Loxo did not respond to BioWorld Today inquiries.

The company granted underwriters a 30-day option to purchase up to 580,500 additional common shares, potentially adding nearly $18 million to its raise.

The offering is expected to close Jan. 10. Morgan Stanley, Citigroup and Cowen are joint book-running managers, with Stifel as lead manager.

In 2013, newly formed Loxo closed a $33 million series A only after inking a potential $434 million deal with Boulder, Colo.-based Array Biopharma Inc. to advance the still-preclinical TRK inhibitor and other early-stage assets. (See BioWorld Today, July 11, 2013, and Oct. 4, 2013.)

The following year, Loxo hauled in a $24 million series B before setting out for the public markets, closing its IPO in October 2014 to raise $77 million. (See BioWorld Today, May 7, 2014, and Aug. 4, 2014.)

In its filing, the company reported an estimated $141.7 million in cash, cash equivalents and investments as of Dec. 31, 2016.

On Thursday, Loxo's shares topped $36 early – the stock hit a one-year high of $36.71 on Dec. 19 following the laro update – before closing at $33.25 for a gain of 56 cents.