Endocyte raises another $100M in stock offering

Endocyte Inc. raised $101.8 million in a public stock offering, the West Lafayette-based drugmaker announced last week, giving it more cash to keep developing its stable of cancer drugs.

The biotech drug firm said in December it would sell up to $60 million in stock “from time to time". But Endocyte was able to raise far more because its stock shot up March 21 after its first drug, Vynfinit, passed a critical hurdle to get onto the market in Europe and the drug showed promise in a trial of lung cancer patients.

Those announcements even sparked talk of Endocyte being acquired by a large pharmaceutical company.

“This could be a machine that produces multiple drugs,” Simos Simeonidis, a New York-based analyst at Cowen, told Bloomberg News. “I think definitely big pharma or big biotech would be interested in bringing this in house.”

Even so, investors were disappointed by the price of Endocyte’s public offering of $21 per share. The price was announced after markets closed March 25, when Endocyte shares closed at $27.19 apiece. They fell more than 19 percent the rest of the week.

The additional funds now mean Endocyte has $225 million to perform clinical trials and other R&D work on its drugs, as well as to build the commercial team it needs to launch its drug in Europe.

In 2013, Endocyte burned through $83 million on R&D and administrative costs, although more than $20 million of that bill was paid by New Jersey-based Merck & Co. Inc., which has licensed the rights to Vynfinit.

Merck will handle sales and marketing of Vynfinit, if the drug receives final approval from the European Union. But Endocyte will handle sales of a companion diagnostic agent called Folcepri, which is key for identifying patients who will benefit from Vynfinit.

Endocyte’s technology was first developed at Purdue University by chemist Philip Low. Since some cancer tumors have an abundance of “receptors” that bind easily with the vitamin folate, Low figured a powerful chemotherapy drug could be combined with a folate molecule so it would target only cancerous cells and not healthy cells.

That allows Endocyte’s drugs to be more deadly to cancer without more serious side effects than patients can tolerate with traditional chemotherapy agents. The company is also developing drugs to treat other diseases, such as inflammation.

Endocyte, founded in 1995, went public in 2011, raising $145 million in two public stock offerings.