Endocyte Shares Sink on DSMB Recommendation - Analyst Blog

Endocyte, Inc. ECYT shares tumbled 61.9% after the announcement by the Data Safety Monitoring Board (DSMB) to stop the PROCEED trial evaluating vintafolide.

A phase III, randomized, double-blind PROCEED study was designed to evaluate vintafolide in combination with pegylated liposomal doxorubicin PLD compared to PLD plus placebo for the treatment of folate receptor-positive, platinum-resistant, ovarian cancer. The primary endpoint of the study was progression free survival PFS.

The DSMB conducted a pre-specified, interim futility analysis. Subsequently, DSMB recommended that the study should be stopped because vintafolide did not demonstrate efficacy on the pre-specified outcome of PFS in patients with platinum-resistant ovarian cancer.

We note that Endocyte and Merck & Co. Inc. MRK had entered into a partnership in Apr 2012, wherein Endocyte granted Merck an exclusive license to develop, manufacture and commercialize vintafolide outside the U.S. As per the agreement, Merck is funding manufacturing costs for vintafolide, including some portion of the PROCEED and TARGET trials.

Till further review of the data is conducted, the companies have notified investigators that screening and randomization of patients in the study will be suspended.

The failure of the lead small molecule drug conjugate, vintafolide, is a major setback for the company. We note that vintafolide is also being evaluated in other studies. In Mar 2014, the phase IIb TARGET study evaluating vintafolide in non-small cell lung cancer patients met its primary endpoint of improved PFS. Endocyte and Merck are about to initiate a phase II randomized trial on vintafolide in folate receptor-positive triple negative breast cancer in the second quarter of 2014. We expect investor to focus to remain on these studies.

Endocyte carries a Zacks Rank #2 (Buy). Investors looking for better-ranked stocks in the biopharma sector may consider companies like Alexion Pharmaceuticals, Inc. ALXN and Gilead Sciences Inc. GILD, both carrying a Zacks Rank #1 (Strong Buy).