Endocyte stock sinks due to possible drug-filing delay

Endocyte Inc. saw its shares fall nearly 7 percent Tuesday morning after the drug development firm announced that its application for U.S. approval of a cancer treatment could be delayed another 10 months.

West Lafayette-based Endocyte is developing an ovarian cancer drug called vintafolide, which would be the first new drug approved to treat the painful cancer in more than a decade.

Its shares fell to as low as $8.50 each in morning trading after the company released fourth-quarter financial results Monday following the close of financial markets.

Endocyte has applied for approval of vintafolide in Europe, at the encouragement of regulators there, even before it completed a Phase 3 clinical trial.

But, in the United States, Endocyte will need to complete its Phase 3 trial before the Food and Drug Administration will consider it for market approval.

That Phase 3 trial was supposed to end in the first half of 2014 but now may last another nine to 10 months.

That’s because Endocyte and its development partner, New Jersey-based Merck & Co. Inc., have lined up a plan to test 100 extra patients next year in order to have better data on vintafolide’s ability to prolong patients’ lives.

As it stands, Endocyte’s Phase 3 trial of vintafolide will include just 250 patients and is designed to measure only the amount of time the drug extends the time in which patients have no regression of ovarian cancer.

But the FDA has been increasingly interested in seeing cancer drugs not only improve patients’ progression-free survival timelines, but also to lengthen their lives, which is called overall survival, or OS.

“I think it’s safe to say that we have a much, a better chance, of course, of hitting an OS endpoint at 350 [patients] than we do at 250,” Endocyte CEO Ron Ellis told Wall Street analysts during a conference call Monday evening.

The downside of that decision is that it delays the timeline for potential approval of vintafolide in the United States.

Endocyte has no products on the market, and is slowly burning through cash it raised via two public offerings in 2011.

The company had more than $200 million in cash on hand at the end of 2012, but expects to spend $65 million in 2013.

Much of Endocyte’s research on vintafolide is supported by Merck, which now includes studies in lung and breast cancer. For example, Merck will pay 75 percent of the costs of enrolling the extra 100 patients in Endocyte's ovarian cancer study. Merck has also committed to help Endocyte commercialize the drug in Europe.

The companies expect to receive a decision from European regulators on whether vintafolide can be sold there by the end of 2013.

In the fourth quarter of 2012, Endocyte lost $849,000, or 2 cents per share, on revenue of $14.5 million, most of which came from Merck.

For all of 2012, Endocyte lost $17.3 million, or 48 cents per share, an improvement from the previous year’s loss of $40.5 million, or $1.40 per share.

Its full-year revenue totaled $34.7 million, compared with $191,000 in the previous year.