Endocyte Plunges Most Since 2011 After Drug Trial Is Stopped

Endocyte (ECYT) Inc., with no marketed products, plunged the most in more than two years after the drug it’s developing with Merck & Co.’s backing failed to help patients in a trial for ovarian cancer.

The phase III study was stopped after an analysis showed that vintafolide didn’t demonstrate efficiency when treating patients with platinum-resistant ovarian cancer, the companies said in a statement today. Endocyte, based in West Lafayette, Indiana, declined 62 percent to $6.62 at the close in New York, its biggest one-day drop since December 2011. Merck, which has the rights to sell the medicine, fell 2.4 percent to $58.22.

“Certainly it was a disappointment today, but we have multiple drugs in our pipeline and we’re very optimistic about that,” said Endocyte Chief Executive Officer Ron Ellis in a telephone interview. “It was a very important drug because it’s the one that was most advanced.”

Endocyte said it will continue to test vintafolide for lung cancer, with late-stage data possible toward the end of the year. The lung cancer indication is the more important one because that market is bigger, said Adnan Butt, an analyst with RBC Capital Markets.

“The stoppage was unexpected, mostly because previously both the non-small-cell lung cancer study and other studies that they’re running have run favorable data,” Butt said in a telephone interview from San Francisco. Until the lung cancer treatment data is released, Endocyte shares are “going to be overpenalized,” he said.

Merck’s Participation

Ellis said that Whitehouse Station, New Jersey-based Merck won’t drop its participation in the lung cancer study and will reach a decision when all data is viewed.

Merck doesn’t know how soon they will complete a review of the vintafolide data, said Ian McConnell, a Merck spokesman.

“It’s a fair question to ask” whether Merck will stay the course, said Christopher Raymond, an analyst with Robert W. Baird & Co, in a telephone interview from Chicago. “If you have a major indication like this fail to show efficacy, one of the things that smart pharma makers do is pull the plug early.”

“There’s definitely an amount of skepticism on whether their other pipeline drugs will succeed,” Raymond said. “Is there pressure? Yeah, it’s a pretty critical event for them.”

To contact the reporter on this story: Sonali Basak in New York at sbasak7@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Bruce Rule

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