No post-IPO blues for Endocyte


Endocyte continues to shine – in a relative sense. After premiering at a heavily discounted $6 on the public markets in February, the Purdue University spin-out now equals its proposed float price of $13-$15 on the strength of phase II data and a go-ahead to file for accelerated European approval for its advanced ovarian cancer treatment and companion diagnostic.

Last week, the group's shares hit a record of $14.65 in defiance of prevailing market conditions for recently floated drug companies, as the anticipated EU filing raised partnership hopes (Tough IPO scene continues in first half 2011, 12 July, 2011). Whilst analysts reckon its IPO, which left Endocyte with $94m in cash at the end of the first quarter, will be sufficient to fund its recently initiated phase III programme, a partnership could help the Indiana company finance additional pipeline projects.

Speeding ahead

Endocyte’s lead project is EC145, a small-molecule drug conjugate targeting ovarian cancer, with a companion molecular imaging diagnostic called EC20 that identifies tumours expressing the folate receptor that EC145 targets. The active ingredient of EC145 is desacetylvinblastine monohydrazide (DAVLBH), which has toxicity issues; phase 1 trials showed that when paired with a folate to bind with the receptors on tumour cells, DAVLBH can be tolerated at doses of up to 2.5mg.

The key patients are those whose tumours have developed resistance to platinum-based chemotherapies. In the phase II, 149-patient Precedent trial, EC145 in combination with doxorubicin extended progression-free survival by 2.3 months when compared to doxorubicin alone, and by 4 months in folate-receptor positive patients.

Based on those results, presented fully at the Asco cancer conference, Endocyte is going ahead with a 640-patient phase III study called Proceed, and has received EU regulators’ blessing to file for accelerated approval with existing phase II data and a European submission could be made later this year. Data from the phase III trial, which will assess progression-free and overall survival, is not expected until early 2013.

Endocyte's technology has been likened to antibody drug conjugates that have shown mixed success so far; Mylotarg made it to the market in acute myeloid leukaemia in 2000, but its commercial potential was always limited and Pfizer had to withdraw the product last year due to safety concerns. An FDA advisory panel will vote on Seattle Genetics’ Adcetris (brentuximab vedotin) for treating blood cancers later this week, whilst Roche’s Trastuzumab-DM1 is in phase III for HER2-positive breast cancer (Event - Confidence high in Seattle Genetics' lymphoma candidate, July 6, 2011).

In both approaches with small molecule and antibody drug conjugates, a binding protein is combined with a cytotoxic drug payload that allows for targeting of tumour cells with fewer side effects of a systemic chemotherapy. Endocyte argues that its small-molecule conjugates can more easily penetrate solid tumours, clear more quickly from the bloodstream, and are simpler to manufacture. By replacing the drug payload with a radioisotope imaging agent, Endocyte can also build companion diagnostics, which are growing in importance particularly in oncology (BIO 2011 – Diagnostics want barriers to compensation torn down, June 30, 2011).

Good news wanted

Endocyte had filed for its IPO at a price of $13-$15 before dropping its to $6. At that level, it was still able to raise a similar amount of money by more than doubling the number of shares on offer from 5.4 million to 14.4 million (Another tough quarter for biotech IPOs, April 26, 2011).

The steady flow of good news surely will please the original shareholders who took significant dilution with the decision to increase the number of shares issued; the biggest share price trigger was the news that the company would file for accelerated approval in Europe, which precipitated a 25% increase in the stock to $11.88 on April 26, its first time over $10.

However, with news from the phase III trial at least a year and a half off, regulatory news in Europe and partnership discussions will be the big catalysts for Endocyte’s shares. If the surprisingly positive Endocyte story is to continue to a happy ending, it will need to perform as flawlessly in business development and regulatory affairs as it has on the science so far.

Share This Article