Endocyte, Inc. (NASDAQ:ECYT)

CAPS Rating: 3 out of 5

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Player Avatar zzlangerhans (99.80) Submitted: 7/5/2013 5:18:27 PM : Underperform Start Price: $16.01 ECYT Score: +6.68

Endocyte seems to be running hard ahead of a CHMP decision on vintafolide and etarfolide expected in Q4 2013. The MAA is based on the results of the PRECEDENT phase II trial of vintafolide which met the primary endpoint of stat sig prolongation of PFS in ovarian cancer. In late 2011 the stock was driven down to the 3's after the company released a "supplemental" analysis of PRECEDENT data showing no trend towards a survival advantage with vintafolide. Notably, this release of unfavorable data came just a few months after the company raised 67M in dilutive financing at a share price of about 11.

Kudos to those who saw the opportunity when Endocyte was beaten down, as the share price rebounded once it became clear that the company would submit vintafolide for accelerated European approval regardless of the negative OS data and partnered the drug with Merck globally on very favorable terms. The stock has gapped up at regular intervals and the latest may be occurring as I write. Nevertheless, I think the valuation has become excessive given the possibility that CHMP might not wish to give a favorable opinion with the topline PFS data from the PROCEED phase III trial of vintafolide expected in H1 2014. Even if CHMP issues a favorable opinion, PROCEED will have to yield positive PFS and likely OS data to maintain approval and have a strong commercial impact. I missed the easy money here but those more fortunate would be wise to take at least some of their profits off the table.

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