Investor support spurs progress at Stamford biotechs – The Advocate

Photo: Michael Cummo / Hearst Connecticut Media

Loxo Oncology CEO Joshua Bilenker, center, and Chief Business Officer Jacob Van Naarden pose for a photo inside Loxos Tresser Boulevard offices, in downtown Stamford, on Tuesday, July 18, 2017.

Loxo Oncology CEO Joshua Bilenker, center, and Chief Business Officer Jacob Van Naarden pose for a photo inside Loxos Tresser Boulevard offices, in downtown Stamford, on Tuesday, July 18, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street offices in downtown Stamford, on Thursday, August 3, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street offices in downtown Stamford, on Thursday, August 3, 2017.

Loxo Oncology Chief Business Officer Jacob Van Naarden discusses the biotech firms business strategies inside their Tresser Boulevard offices in downtown Stamford, on Tuesday, July 18, 2017.

Loxo Oncology Chief Business Officer Jacob Van Naarden discusses the biotech firms business strategies inside their Tresser Boulevard offices in downtown Stamford, on Tuesday, July 18, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street office in downtown Stamford, on Thursday, August 3, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street office in downtown Stamford, on Thursday, August 3, 2017.

Loxo Oncology CEO Joshua Bilenker makes a point during an interview in Loxos Tresser Boulevard offices in Stamford, Conn. on Tuesday, July 18, 2017.

Loxo Oncology CEO Joshua Bilenker makes a point during an interview in Loxos Tresser Boulevard offices in Stamford, Conn. on Tuesday, July 18, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street office in downtown Stamford, Conn. on Thursday, August 3, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street office in downtown Stamford, Conn. on Thursday, August 3, 2017.

Loxo Oncology Chief Business Officer Jacob Van Naarden makes a point during an interview in Loxos Tresser Boulevard offices in downtown Stamford, on Tuesday, July 18, 2017.

Loxo Oncology Chief Business Officer Jacob Van Naarden makes a point during an interview in Loxos Tresser Boulevard offices in downtown Stamford, on Tuesday, July 18, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street offices in downtown Stamford, Conn. on Thursday, August 3, 2017.

Cara Therapeutics CEO Derek Chalmers poses for a photo inside Caras Elm Street offices in downtown Stamford, Conn. on Thursday, August 3, 2017.

Loxo Oncology CEO Joshua Bilenker makes a point during an interview in Loxos Tresser Boulevard office in Stamford, Conn. on Tuesday, July 18, 2017.

Loxo Oncology CEO Joshua Bilenker makes a point during an interview in Loxos Tresser Boulevard office in Stamford, Conn. on Tuesday, July 18, 2017.

Investor support spurs progress at Stamford biotechs

STAMFORD Two months ago, Memorial Sloan Kettering Cancer Centers Dr. David Hyman revealed to an audience at McCormick Place in Chicago the promising results of clinical trials for a Stamford biotech firms leading drug. Those in attendance were not the only ones impressed by the data.

The price of Loxo Oncologys stock would spike after Hyman announced at the American Society of Clinical Oncologys annual meeting that Loxos Larotrectinib oral treatment significantly shrank tumors in 76 percent of patients with a range of cancers. With that validation, Loxos leaders decided they should capitalize by issuing more of their companys shares.

Loxo and fellow Stamford biotech firm Cara Therapeutics have benefited from increasing investor confidence in their work. This year, the two enterprises have cumulatively attracted hundreds of millions of dollars to support their costly operations. Their records show biopharmaceutical businesses enduring ability to tap into large amounts of capital if they have the scientific results to prove their progress.

When we came out of the meeting at ASCO, there were investors who said Youve passed a level of risk that were now comfortable with, Loxo CEO Joshua Bilenker said in a recent interview at the firms offices at 281 Tresser Blvd. When we have that kind of interest from high-quality shareholders, thats always a good time to think about a fundraising event in a biotechnology company.

Attracting investment

As companies without products yet on the market, Cara and Loxo rely on outside capital to finance the tens of millions of dollars their businesses are spending annually on research and development. Typical of biotechs at their growth stage, both are operating in the red: Loxo ended 2016 with an approximately $72 million loss; Cara finished the year with a roughly $57 million deficit.

But the latest stock offerings for the firms which both went public in 2014 more than made up for last years losses.

Loxo netted nearly $261 million from its June public offering. It plans to use the proceeds for early commercialization activities related to Larotrectinib; R&D initiatives for other drugs and additional uses that could include acquisitions or investments. It announced last Monday the $40 million acquisition of a program that focuses on inhibiting a molecular target in B-cell leukemias and lymphomas.

In January, Loxo closed on another offering that raised about $138 million.

Caras last offering, which closed in April, brought in about $92 million to support further testing of its signature CR845 drug. The therapy treats chronic and acute pain and the itch condition pruritus. By issuing new shares, Cara aimed to take advantage of an uptick in its stock prices following a batch of encouraging test results for CR845.

We want to return value to shareholders, so were always working to increase the overall value of the company, Cara CEO Derek Chalmers said in an interview at the firms offices at 107 Elm St. The most important time when we look to share prices is when we look to raise money in the market.

The two companies are raising capital amid a shift from a 2015 bull run for biotech stocks.

The market is willing to back the folks who look like theyre winners or are going to be winners, said Clarke Futch, managing partner and co-founder of Stamford-based health care investment firm HealthCare Royalty Partners. But theres very little capital available for companies not showing substantial progress.

Reflecting market confidence, Cara and Loxo have forged major gains in their share prices in the past year. On Aug. 4, 2016, Caras shares closed at $5.94; exactly a year later, their worth had nearly tripled to $16.34. During the same span, Loxos shares also grew nearly threefold: from $27.53 to $72.92.

While shares can spike, they can also plunge. Caras stock shed 40 percent of its value between June 29 and 30 in the wake of a mixed set of results for CR845. Its value soon stabilized.

Both firms said they prefer institutional investors whose commitment helps to steady the share prices.

They tend to be focused and conditioned and educated about the opportunities and risk of biotechnology; they understand the enterprise, Bilenker said. They hopefully are with you as you move through these different gates of development.

Onward with R&D

Executives at Cara and Loxo said they focus mostly on the science underlying their drugs in development, not on share prices.

Loxo hopes to secure U.S. Food and Drug Administration approval for Larotrectinib as early as mid-2018. Larotrectinib and Loxos other drugs in development focus on treating cancers linked to genetic abnormalities.

We pay a lot more attention to getting the science right every day and getting patients enrolled onto our studies who have an opportunity, we hope, to benefit, Bilenker said. We pay a lot of attention to how to get information out into science journals and medical meetings, so that the world can monitor our progress. To us, thats far more important than what our stock does on any given day.

Cara aims to file its first new drug application with the FDA within the next two years for an intravenous form of CR845 to treat acute post-surgical pain or pruritus.

In a boost to its regulatory prospects, the company announced in late June that it had received breakthrough therapy designation for the IV form of CR845 for uremic pruritus in patients with chronic kidney disease undergoing hemodialysis.

It brings us regulatory advantages in terms of our interactions with the FDA, Chalmers said. We can speak to them more frequently, we can elicit their input more frequently into our program, and it allows us to hopefully have a faster review of the NDA (new drug application) once we actually submit it.

Coincidentally located within a block of each other in downtown Stamford, both companies envision a long-term presence in the city. Cara relocated last year from Shelton, as it sought a more central location. Loxo has been based in the city throughout its four-year existence.

Its worked out nicely because Stamford is close to New York City, where a lot of our large shareholders are and where Memorial Sloan Kettering is, said Bilenker, a Stamford resident. There is a biopharma community here It has turned out that were reasonably situated to build a strong team here in Stamford.

pschott@scni.com; 203-964-2236; Twitter: @paulschott

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Investor support spurs progress at Stamford biotechs - The Advocate