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Endocyte (ECYT) Reports Narrower than Expected Q1 Loss

Endocyte, Inc. ECYT reported a first-quarter 2016 loss of 24 cents per share, narrower than both the Zacks Consensus Estimate of a loss of 26 cents and the year-ago loss of 26 cents.

The company earned collaboration revenues of $12,000 in the reported period, flat year over year.

The Quarter in Detail

Research and development (R&D) expenses were $6.5 million, down 1.3% year over year primarily due to a decrease in expenses related to the TARGET trial, which is now complete, along with lower discovery research expenses. General and administrative expenses were down 12.4% to $3.8 million due to a reduction in legal and professional fees in the reported quarter.

2016 Outlook

Endocyte continues to expect cash balance between $125 million and $130 million at the end of 2016.

Pipeline Update

Endocyte’s pipeline includes vintafolide (non-small cell lung cancer/NSCLC), EC1456 (NSCLC) and EC1169 (recurrent prostate cancer).

In a phase IIb study, vintafolide, in combination with docetaxel, resulted in higher rates of hematologic and peripheral neuropathy adverse events. Hence, Endocyte has shifted focus to the development of its second-generation folate targeted agent, EC1456, in second-line NSCLC. A phase I dose-escalation study on the candidate is currently underway to determine the maximum-tolerated dose.

The company is considering two schedules for the candidate. With the determination of the maximum-tolerated dose, the company will evaluate these schedules in up to 40 second-line NSCLC patients selected by EC20 imaging with all FR-positive disease. It expects single-agent efficacy data in NSCLC on the candidate by 2016 end.

The company is also conducting a phase I dose-escalation study on EC1169 to determine its maximum-tolerated dose. After determining the maximum-tolerated dose of EC1169 (currently in a dose-escalation trial with a once-weekly schedule), the candidate will be evaluated as a single-agent therapy in advanced prostate cancer patients, who were previously treated with hormone therapy. Endocyte expects single-agent efficacy data in prostate cancer in late 2016 or 2017.

The company expects to present data from the phase I dose escalation studies on EC1456 and EC1169 later in 2016.

Our Take

Endocyte’s narrower-than-expected first-quarter loss as well as its efforts on pipeline development are encouraging. 2016 is going to be a data-rich year for Endocyte and we expect investor focus on further pipeline updates from the company.

Endocyte carries a Zack Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Shire plc SHPG, Nektar Therapeutics NKTR and Mallinckrodt Public Limited Co. MNK. All three carry a Zacks Rank #2 (Buy).

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