April 16 (Bloomberg) -- Endocyte Inc. shares more than doubled after entering an agreement to develop its ovarian cancer treatment with Merck & Co.
Endocyte gained $3.82 to $7.62 at 4 p.m. New York time, the biggest jump since the shares began trading in February 2011. The West Lafayette, Indiana-based company had fallen 60 percent in the past 12 months before today.
Merck will pay Endocyte $120 million upfront with as much as $880 million in payments possible based on regulatory approvals and sales, the companies said in a statement today. The initial amount almost matches Endocyte’s $130 million market value, based on April 13’s closing price.
Endocyte’s experimental treatment vintafolide is in the third of three stages of testing usually required for approval by U.S. regulators. The compound is also being tested for treatment of non-small cell lung cancer.
The agreement gives Merck worldwide rights to the medicine, and it will split any profit from U.S. sales with Endocyte. Whitehouse Station, New Jersey-based Merck also gains rights to develop the drug for other types of cancer.
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