Commentary

Endocyte's $12M Investment In Cancer Therapy Lures Novartis' $2.1B

Novartis this morning said it will pay $2.1 billion for West Lafayette, Ind.-based Endocyte, a biopharmaceutical company that specializes in targeted therapeutics for cancer treatment. Basel, Switzerland-based Novartis’ offer represents a premium of 54% percent to Endocyte’s closing price of $15.56 yesterday.

“Vas Narasimhan, who took over as Novartis’s chief executive in February, has sought to streamline the group to focus on core innovative medicines business. On Thursday he said Novartis could make further deals which strengthened its capabilities in cell, gene and radio therapies. Novartis was ‘always looking for those kind of bolt-on opportunities,’ he told journalists,” reports Ralph Atkins for Financial Times.

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, it said,” writes Reuter’s Rishika Chatterjee. 

“Endocyte will be merged with a newly formed Novartis subsidiary,” Chatterjee adds. “The transaction is expected to be completed in the first half of 2019 and Endocyte will continue to operate as a separate and independent company until then.”

Endocyte uses drug conjugation technology to develop targeted therapies with companion imaging agents, including 177Lu-PSMA-617, a potential first-in-class investigational radioligand therapy (RLT) for the treatment of metastatic castration-resistant prostate cancer, according to Novartis’ press release about its acquisition.

“Endocyte was in the doldrums when it pinned its hopes of recovery from previous clinical setbacks on … 177Lu-PSMA-617. The radioconjugated PSMA antagonist had just shown promise in an open-label, single-arm prostate cancer trial but its owner, [the German biochemical company] ABX, was willing to let it go for $12 million upfront. That has proven to be a remarkably good deal,” observes Nick Paul Taylor for FierceBiotech

“ABX stands to gain milestone payments up to $160 million, plus royalties from sales if Endocyte can bring the drug to the market,” Frank Vinluan reports for Xconomy

“Approximately 80,000 patients are potential candidates for Lu-PSMA-617 in the late stages of the disease, and this is just in major markets,” Endocyte CEO Mike Sherman toldFierceBiotech’s Phil Taylor at the time of the ABX licensing deal a year ago. “That’s about a $5 billion market, assuming a price near that of similar therapies. As potentially first to market with a PSMA-targeted agent, we clearly see this opportunity as greater than $1 billion.”

Just a few months earlier, “Endocyte was shedding R&D programs and staff, with questions being raised about its future,” Taylor writes.

Novartis, meanwhile, has been tightening its own belt. It announced late last month that it would lay off “at least 2,000 workers as part of a broader global restructuring plan” through 2022, Karl Utermohlen reports for InvestorPlace, with most of the cuts coming in its home market. But at the same time as it slashes these mostly “production” jobs, it said it would “add 450 new positions in its home market, as well as 700 positions in its business services,” Utermohlen adds.

“Today’s announcement about the proposed acquisition of Endocyte builds on our growing capability in radiopharmaceuticals, which is expected to be an increasingly important treatment option for patients and a key growth driver for our business,” said Novartis Oncology CEO Liz Barrett, Fortune’s David Meyer reports. “We are also excited about the opportunity to break into the prostate cancer arena with a near-term product that has the potential to make a meaningful impact for patients in great need of more options.” 

Novartis “already sells a radiopharmaceutical directed at a rare form of gut cancer, which it acquired as part of a $3.9 billion deal last year,” Denise Roland and Donato Paolo Mancini write for the Wall Street Journal.

Today’s deal is the latest move of Narasimhan “to refocus Novartis on medicines. Over the past year the company has decided to shed its Alcon eye-care unit, sold parts of its generics business and announced layoffs. It also bought U.S.-based gene-therapy company AveXis Inc. for $8.7 billion and sold its stake in a consumer health-care business to joint-venture partner GlaxoSmithKline PLC for $13 billion,” Mancini writes for MarketWatch.

1 comment about "Endocyte's $12M Investment In Cancer Therapy Lures Novartis' $2.1B".
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  1. Marc Winston from Biotek, October 18, 2018 at 12:31 p.m.

    There were a number of promising therapies at ASCO 2018   That showed  potential efficacy in prostate disease. The two That captured my attention were Combined external beam radiotherapy (RT) and androgen deprivation therapy (ADT) study conducted at Duke. The second was the metabolic pathway to entering the cancer cells and causing death by oxidative stress. This study is being conducted by Tyme Inc and it is capturing the attention of many. If Tyme tightens their message up and clearly explains to the word what they are doing, the sky is the limit. I met with a rep in their booth. My takeaway is they have something significant, however their team is not apprised of Pharma vets and so they fail to send a clear message. 

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