Why Endocyte, Inc. Shares Were Throttled

Endocyte shareholders' wild ride in 2014 continues with a surprising disappointment in a late-stage study.

May 2, 2014 at 1:55PM

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.

What: Shares of Endocyte (NASDAQ:ECYT), a biopharmaceutical company focused on developing therapies to treat cancer and inflammatory diseases, collapsed as much as 63% after it and collaborative partner Merck (NYSE:MRK) announced that its phase 3 trial PROCEED was recommended to be stopped for futility following an interim analysis.

So what: According to the press release, the data safety monitoring board (DSMB) recommended the late-stage trial be stopped because "vintafolide did not demonstrative efficacy on the pre-specified outcome of progression-free survival in patients with platinum-resistant ovarian cancer." On the bright side, the DSMB did not find any safety issues with vintafolide. Merck and Endocyte will now pore over the data to determine what their next step will be for vinatfolide. Following the news, research firm RW Baird lowered its rating on Endocyte to neutral from outperform.

Now what: It's been a really odd year for Endocyte shareholders, who saw their investment basically double in March following a favorable view of Vynfinit (the EU name for vintafolide) by the Committee for Medicinal Products for Human Use in patients with platinum-resistant ovarian cancer. The experimental drug when combined with docetaxel was also successful in meeting its primary endpoint in a U.S. non-small cell lung cancer mid-stage study. Now, of course, we're finding out it failed to meet its primary endpoint in the U.S. for patients with platinum-resistant ovarian cancer and shares are now 80% off their highs set just weeks ago.

Overall, I can't say I was a big fan of Endocyte prior to this announcement, but believe the move lower may be a bit overdone. Yes, the loss of vintafolide revenue in the U.S. for PR ovarian cancer is going to sting, but it could be well on its way to a marketing authorization in Europe. It also has a fairly diverse pipeline considering its size with six ongoing clinical studies and three additional preclinical studies under way. Let's not forget as well that the company in April issued shares in April that netted $101.8 million in proceeds. Based on this offering, Endocyte has $233.3 million in cash and cash equivalents, which is practically what the company is being valued at as of this writing ($239 million). While Endocyte's clinical results will still need to do the talking, the risk-versus-reward ratio may have moved back toward "reward" at these levels.

Endocyte may offer a lot of promise from here on out, but it'll likely be hard-pressed to keep pace with this top stock over the long haul
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

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.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

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. The show is also heard weekly on dozens of 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. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers