Loxo Knocks It Out of the Park for Second Year in a Row

(Bloomberg) -- Same company, same conference, different drug.

Loxo Oncology Inc. just hit a home run for the second year in a row at the American Society of Clinical Oncology conference this weekend. Shares rose 12.5 percent pre-market after results for its second targeted cancer treatment, LOXO-292, satisfied investors and led analysts to raise their price targets to new highs.

Loxo Knocks It Out of the Park for Second Year in a Row

Loxo analysts including Stifel and Morgan Stanley both raised their price targets over the weekend. Stifel analyst Stephen Willey has a new Street high of $225, with “LOXO-292 looking increasingly larotrectinib-like,” he wrote, comparing the latest drug results to last year’s for Loxo’s first targeted cancer therapy. A decision from the Food and Drug Administration on larotrectinib is expected before the end of this year.

Morgan Stanley analyst Matthew Harrison raised his target on Loxo to $215, writing that if all his risk adjustments were removed his valuation of the drugmaker would rise to $250. Loxo’s study “sets a high bar,” he said in a note.

Meanwhile shares of Blueprint Medicines Corp are indicated sharply lower (indicated $75.00/$79.50 vs $84.48 close) as the Street draws comparisons to its drug and LOXO-292, both targeted cancer therapies known as RET-inhibitors.

“Loxo appears to have the edge,” said Goldman Sachs analyst Terence Flynn, who rates Blueprint a buy. He also sees Loxo’s drug as having a competitive advantage over Blueprint in lung cancer. Recent share weakness should offer investors “an attractive entry point” as he sees most of the competitive risk already reflected in shares.

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