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Endocyte Scores Double Win With Targeted Cancer Drug

Stocks in this article: ECYTMRK

Endocyte (ECYT) shares rose sharply Friday on a double dose of positive news for its targeted cancer drug vintafolide.

European regulators issued a positive opinion, recommending conditional approval to vintafolide for the treatment of women with advanced ovarian cancer. Endocyte expects Europe to issue the final approval decision in two or three months. Once approved, vintafolide (under the brand name Vynfinit and coupled with a companion diagnostic test) will be sold in Europe via an existing partnership with Merck (MRK).

Endocyte and Merck also reported positive results from a phase IIb study of vintafolide in non-small cell lung cancer. The combination of vintafolide and the chemotherapy drug docetaxel reduced the risk of disease progression or death by 25% compared to docetaxel alone.

It was very good morning for Endocyte and its shareholders, with the stock up 88% to $27.50.

Before digging into the details of the European approval and the lung cancer study, some praise and reckoning is required.

Congratulations to TheStreet contributor David Sobek, an Endocyte bull. Sobek laid out the bull case for a positive European approval of vintafolide in a column published in October. Endocyte was a $10 stock at that time.

I learn towards a positive approval recommendation on vintafolide from Europe, but Endocyte's application is not without risks. The company has told investors its interactions with European drug reviewers to date have been generally supportive of vintafolide but we all know this doesn't insure a favorable outcome. With that said, I'm bullish about Endocyte and its ovarian cancer drug regardless of the European approval decision. 

The Endocyte bear thesis outlined by a healthcare fund manager in this February column was wrong.

I believe Endocyte (ECYT_) is a short for two primary reasons. 1) European regulators are unlikely to grant conditional marketing approval to the company's experimental cancer drug vintafolide for the treatment of ovarian cancer; and 2) an ongoing phase II study of vintafolide in non-small cell lung cancer is likely to fail. 

"I got kicked in the $%^& today, no doubt, but I did have my Endocyte position hedged so I'm still here to fight another day," this investor told me in a phone call Friday morning.

Vynfinit consists of a folate (vitamin B9) linked to the chemotherapy drug vinblastine. The drug is "targeted" -- meaning it binds to folate receptors on cancer cells and delivers its chemotherapy payload while leaving normal cells intact.

Patients must have cancer which over-expresses folate receptors in order to benefit from Vynfinit, so doctors use a companion diagnostic test to find eligible patients.

In Europe, Endoycte estimates Vynfinit will be a potential treatment option for between 7,500 and 9,000 women with advanced ovarian cancer which fully expresses for folate receptors.

The conditional approval in Europe is based on a phase II study which showed Vynfinit delayed the time to tumor progression in patients with ovarian cancer that was folate-receptor positive.

In the phase IIb lung cancer study, the combination of vintafolide and docetaxel met the primary endpoint of progression-free survival with a p value of 0.696. Endocyte uses a more forgiving statistical hurdle in the phase II than you'd typically see in a large phase II study, which explains why a p value of greater than 0.5 was considered statistically significant.

Of course, this raises some concerns about how vintafolide will ultimately perform in a follow-on phase III study in lung cancer. But that's a battle for another day.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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