Endocyte files to sell up to $60M in new stock

Endocyte Inc. plans to raise as much as $60 million by offering new shares to the public “from time to time,” the drug development firm announced this month.

West Lafayette-based Endocyte will use the money to fund its research and development, as it extends its targeted-drug technology to more diseases, the firm disclosed in a prospectus filed Dec. 23 with the U.S. Securities & Exchange Commission.

Endocyte on Dec. 16 announced the launch of a clinical trial for a new drug—one the company will fund by itself. The development of Endocyte’s other experimental drug has, so far, been paid for by its partner, New Jersey-based Merck & Co. Inc.—to the tune of $58 million this year.

The news of the stock sale comes as Endocyte is on the cusp of receiving market approval for its first drug. Analysts expect European regulators to give the green light to vintafolide, Endocyte’s drug for ovarian cancer, in late January, allowing for the drug’s launch as early as the second half of 2014.

“With a January decision expected, we think this name is worth a hard look,” wrote Baird Equity Research analyst Christopher Raymond in a November note to investors.

If approved, vintafolide would be marketed by Merck. Endocyte will receive royalties from Merck, and will also directly sell a companion imaging agent, called EC20.

Wedbush Securities analyst Gregory Wade expects a late 2014 launch that will bring Endocyte nearly $1.5 million in revenue next year. He expects Endocyte’s product revenue to ramp up to $92 million in 2016, when he expects vintafolide to hit the U.S. market.

RBC Capital Markets analyst Adnan Butt expects both a European and a U.S. launch in 2015, with Endocyte’s revenue totaling $98 million in 2016. Raymond, the Baird analyst, also expects a 2015 launch in both Europe and the United States. He predicts Endocyte will reap $120 million in revenue by 2016.

What excites analysts about Endocyte is that it is using the same base technology to attack multiple kinds of cancer and to develop multiple drugs. For example, Endocyte is developing vintafolide to treat non-small-cell lung cancer. If approved, that indication by itself could bring $70 million in revenue in 2018, Wade predicts.

Also, Endocyte and Merck are studying vintafolide as a treatment in breast cancer patients. The companies announced earlier this month the launch of a new Phase 2 clinical trial in breast cancer patients.

Also earlier this month, Endocyte began a Phase 1 clinical trial to use another drug, known as EC1456, to treat solid tumors.

All those tests use Endocyte’s imaging agent, EC20, to identify cancer and tumor patients that have cells that are set up to bind aggressively with the vitamin folate. Endocyte’s drugs are then attached to folate molecules so that they deliver a potent drug payload while avoiding the side effects so common with older chemotherapy treatments.

Endocyte went public in 2011, raising $145 million in two public offerings.