Endocyte Inc. has zero sales and a work force of just 54. But the fledgling life sciences firm may end up as one of Indiana’s most powerful economic engines of the 21st century.

Or at least that’s what many of the leaders of Indiana’s life sciences and entrepreneurial communities have been hoping for years. And now that the cancer-fighting West Lafayette firm has filed for an $86 million initial public offering, that reality seems tantalizingly close.

A successful IPO would be huge on many levels.

For the state of Indiana, it would help validate key parts of its economic-development strategy. From 2001 through 2004, the company received a total of $4 million in grants from the state’s 21st Century Research and Technology Fund—money that helped sustain it at a crucial time and drew in tens of millions of dollars more in venture capital.

Endocyte also demonstrates the potential payoff from the state’s push to transfer promising new technologies from academic laboratories to startup companies. Philip Low, a Purdue University chemistry professor who serves as Endocyte’s chief science officer, led the research team that developed the company’s treatment—an approach that delivers high doses of cancer drugs to diseased cells while leaving healthy cells untouched.

Venture capitalists in Indiana and nationally have thrown money at the company with abandon. Local investors include CID Capital, Clarian Health Ventures and the Indiana Future Fund.

The life sciences initiative BioCrossroads launched the Future Fund in 2003, raising $73 million from the Public Employees’ Retirement Fund, Ball State University, OneAmerica, WellPoint Inc. and others. The money then flowed to six venture capital firms, including San Francisco-based Burrill & Co., which became one of Endocyte’s biggest investors.

An even larger investor is the pension fund of the Indianapolis-based Christian Church (Disciples of Christ). Endocyte’s IPO filing, submitted to the Securities and Exchange Commission Aug. 17, said the fund invested more than $10.3 million and holds a 15-percent stake. Pension fund President James Hamlett declined to comment, citing regulatory restrictions while an IPO is pending.

P. Ron Ellis, Endocyte’s CEO, also declined to comment, citing the same restrictions.

The company’s 150-page IPO filing, however, tells an intriguing story—one of a company that slugged through years of research in its quest to bring a ground-breaking treatment to market. The company operates out of 14,000 square feet at Purdue University Research Park as well as a 4,000-square-foot corporate office in Indianapolis.

Here’s how Endocyte’s technology works: The cancer-fighting drug is linked to a substance that targets receptors that are overexpressed in diseased cells relative to healthy cells. Endocyte uses companion imaging technology to identify patients who have the overexpressed receptors and thus are more likely to benefit from treatment.

It’s a powerful combination. “This targeted approach is designed to enable the treatment of patients with highly active drugs at greater doses, delivered more frequently, and over longer periods of time than would be possible with the untargeted drug alone,” Endocyte says in its filing.

Endocyte now is on the cusp of commercialization. In early 2011, it expects to begin enrollment in a phase-three trial for an extremely difficult-to-treat form of ovarian cancer. Women receiving the treatment in a phase 2 trial saw a 105-percent improvement in progression-free survival compared with women receiving the standard therapy.

The company also is working on other treatments, including one for non-small-cell lung cancer that has completed a phase two trial.

For now, however, Endocyte is piling up massive losses, burning through the more than $90 million in private investment it’s raised since forming in 1995. Over just the past three years, losses have totaled $49 million. And there’s no guarantee of ultimate success, said David Menlow, president of IPOfinancial.com in Millburn, N.J.

He said life sciences firms often go public before their products have won U.S. Food and Drug Administration approval. Some ultimately succeed spectacularly, he said, while others flame out. Some investors stay on the sidelines “because they don’t feel like buying lottery tickets,” he said.

Yet economic development leaders are focusing on the upside—and what Endocyte’s long-term success would mean for efforts to cast Indiana as a hotbed for life sciences entrepreneurism.

“For us, as this moves ahead, it is proof of concept that Indiana companies can go the distance,” said David Johnson, CEO of BioCrossroads.

And—oh, yeah—there’s the potential benefit to humanity, too.

“The product itself has the promise of saving tens of thousands if not millions of lives in this country and around the world,” said Mitch Roob, Indiana’s secretary of commerce.•