Loxo Oncology Inc. shares rose as much as 8% before declining nearly 3% in premarket trade on Tuesday after the company announced a $400 million partnership with Bayer AG to develop and commercialize two of its cancer therapies. Loxo is also eligible for up to $650 million in additional milestone payments for the two therapies, larotrectinib and LOXO-195; $25 million if a certain U.S. net sales level is met; tiered, double-digit royalties on net sales and up to $475 million in sales milestones. Under the agreement, Loxo will lead worldwide development activities and U.S. regulatory activities, while Bayer will lead regulatory activities outside the U.S. and global commercial activities, with the companies splitting global development costs and U.S. commercial costs and profits. Bayer will also book global revenues. Loxo shares have surged 12.4% over the last three months to $83.23, compared with a 4.8% rise in the S&P 500 and a 6.6% rise in the Dow Jones Industrial Average .
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