Better Buy: Clovis Oncology, Inc. or Endocyte, Inc?

Developmental stage oncology companies to consider.

Mar 24, 2014 at 6:00PM

Biotechs developing treatments for diseases with few therapeutic options can perform well in a variety of situations. This is especially true for developmental stage oncology companies because of the strong demand for new treatments. Indeed, Endocyte (NASDAQ:ECYT) exploded higher by 92% after announcing back-to-back clinical and regulatory achievements for its lead oncology clinical candidate, despite the entire health care sector falling by nearly 5% last Friday. And because this market appears to be turning into a 'stock pickers' type of environment, you should thus carefully consider which developmental biotechs have the best chance for success going forward. With that in mind, here is a Foolish comparison of two biotechs, Clovis Oncology (NASDAQ:CLVS) vs. Endocyte, both developing what could be the next generation of cancer treatments.  

What does Clovis Oncology offer?
Clovis is developing three oncology drugs and companion diagnostic products for a total of five indications. The company's most advanced clinical candidate is rucaparib, which is currently in a late-stage trial for ovarian cancer. If successful, Clovis plans on filing a New Drug Application for rucaparib in 2015. Next in line is CO-1686, indicated as a potential treatment for non-small cell lung cancer, or NSCLC. During the company's latest conference call, CEO Patrick Mahaffy said that the company is "aggressively moving forward with [its] plan to initiate registration studies for CO-1686 in the second quarter."

Source: Clovis's Annual Report

On the fundamental front, Clovis exited 2013 with $323 million in cash and cash equivalents. And while that seems like a fairly large cash cushion for a developmental-stage company, management believes this amount only gives them a 12 month runway. In 2013, Clovis averaged a monthly burn rate of $7 million, so it's safe to say that the company believes the registration trial for CO-1686 is going to increase operating expenses in a major way moving forward. But the bigger issue might be $89 million in milestone payments due to Pfizer (NYSE:PFE) if rucaparib continues to meet clinical and regulatory milestones. As a reminder, Clovis licensed rucaparib from Pfizer in 2011, putting Clovis on the hook for up to $170 million in total milestone payments to the pharma giant.

What does Endocyte offer?
Endocyte's platform employs small molecule drug conjugates, or SMDCs. These SMDCs target proteins that are overexpressed in tumor cells, allowing them to largely avoid normal cell types. Moreover, Endocyte's SMDCs can carry either a drug payload or a companion imaging agent for diagnostic purposes.


Source: Endocyte Annual Report

Last Friday, the company announced that the European Medicines Agency conditionally approved vintafolide (brand name Vynfinit), a folate receptor SMDC, as a treatment for platinum-resistant ovarian cancer, as well as two companion imaging agents. In a separate press release the same day, Endocyte announced that Vynfinit showed promise as a potential treatment for NSCLC in a mid-stage trial when used in combination with the chemotherapy drug docetaxel. Vynfinit is being co-developed with Merck (NYSE:MRK) under a licensing agreement worth up to $1 billion for the successful develop of the drug across six different cancer types.

Looking at the remainder of Endocyte's pipeline, the company does have a handful of other SMDCs completing preclinical studies for prostate cancer, and Vynfinit is also expected to begin a mid-stage trial for triple negative breast cancer soon, which will be funded and undertaken by Merck.

Turning to Endocyte's fundamentals, the company is in a relatively strong position, ending 2013 with $148 million in cash and cash equivalents. Moreover, the commercialization costs of Vynfinit in Europe should be borne by Merck. So I wouldn't expect a major secondary offering to be forthcoming in the near-term.

Foolish wrap-up
In this comparison, I believe Endocyte comes out the winner. My view is that Endocyte simply offers more value to investors than Clovis at current levels. Namely, Endocyte is on the verge of having a commercial product and only boasts a market cap of $1 billion. By contrast, Clovis is at least two years away from even submitting a regulatory filing for one of its clinical candidates, yet sports a market cap of $2.7 billion. Overall, Endocyte looks like it could outperform the broader market on the back of these recent developments, whereas Clovis could struggle to hold onto its lofty market cap in this difficult market. 

6 stock picks poised for incredible growth
Finding growth stocks like Endocyte can be very difficult -- in fact, many have said that it can't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers