Top Stories in Biotech: Merck & Co., Endocyte, Inc. and Eli Lilly

Today's top stories in health care and biotech.

Mar 21, 2014 at 9:40AM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Let's take a look at the top stories in biotech and health care this morning -- keep an eye out for Merck (NYSE:MRK)Endocyte (NASDAQ:ECYT), and Eli Lilly (NYSE:LLY)

Endocyte is a fountain of good news this morning
Shares of Endocyte are up over 100% in trading this morning and for good cause. In a press release, the company announced that the Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a positive opinion for Vynfinit (vintafolide), Folcepri (etarfolatide) and Neocepri (intravenous folic acid) as potential treatments for adult patients with folate receptor-positive platinum-resistant ovarian cancer. While Endocyte developed these therapies, they are licensed out to Merck in ex-US territories under a deal worth up to $1 billion in milestone and royalty payments. Merck is also responsible for the clinical development of additional indications, per the terms of the deal. Final word from the EMA should come within three months of today's opinion. Shares of Merck are up slightly in trading. 

On the back of this regulatory news, Endocyte also announced that a mid-stage trial for vintafolide and docetaxel met its primary endpoint as a treatment for folate receptor (FR)-positive recurrent non-small cell lung cancer (NSCLC). Digging deeper into the press release, what's key to understand is that each drug met its primary endpoint in terms of median overall survival alone, but they have yet to achieve statistical significance when used in combo. Additionally, Endocyte reported that the combo arm of the study showed a higher rate of hematologic and peripheral neuropathy adverse events, which may be an important safety issue moving forward.

Looking ahead, it's important to understand that drugs for NSCLC are notorious for showing intriguing efficacy signals in mid-stage trials, only to peter out in larger, late-stage trials. Indeed, we saw this exact scenario unfold yesterday with GlaxoSmithKline's late-stage cancer vaccine MAGE-A3 that was once believed to be a major clinical breakthrough in the treatment of NSCLC. 

Eli Lilly also gets a positive nod from the EMA -- market appears unimpressed 
Pharma giant Eli Lilly announced this morning that the EMA's CHMP recommended its Type 2 diabetes drug empagliflozin for approval. Earlier this month, the U.S. Food and Drug Administration, or FDA, rejected empagliflozin due to manufacturing deficiencies at facilities owned and operated by Boehringer Ingelheim, Eli Lilly's partner for the drug.  Until these manufacturing problems can be cleared up, the drug's regulatory path to approval will be on hold, despite showing promising results in a late-stage study. What's notable is that empagliflozin is one of Eli Lilly's top clinical prospects and could become a blockbuster, if approved in both the U.S. and Europe. Yet, Eli Lilly shares barely moved upon the drug's rejection in the U.S. and haven't budged in premarket trading this morning following today's news. 

This stock could have even more potential than Endocyte
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George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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