Endocyte Stock Plunges As Merck Opts Out Of Cancer Drug Development

(RTTNews) - Shares of Endocyte Inc (ECYT) sank 17 percent in extended-hours trade on Tuesday after it disclosed that Merck (MRK) has decided to abandon the development of cancer treatment vintafolide. Endocyte also regains worldwide rights to vintafolide for all indications from Merck.

Endocyte shares have tended to ebb and flow on announcements related to vintafolide.

As per an April 2012 deal, Endocyte received a $120 million upfront payment from Merck and was eligible for up to $880 million in milestone payments along with a share of vintafolide's profit from sales.

However, in May, the companies announced halting a clinical trial of the drug in ovarian cancer because the treatment failed to meet goals, and the company's stock sank 62 percent on the news.

Endocyte said it will now evaluate vintafolide for future development opportunities pending final results from the Phase 2b Target trial in patients with non-small cell lung cancer.

The companies announced in March that the Phase 2b Target trial met its primary progression-free-survival endpoint and overall response rates and early overall survival trends were positive. Neither company has received updated overall survival data since that announcement. Endocyte expects to present detailed data from the ongoing Phase 2b trial at an upcoming scientific conference later this year.

Vintafolide is an investigational proprietary, injectable, SMDC (small molecule drug conjugate) consisting of folate (vitamin B9) linked to a potent vinca alkaloid chemotherapy agent, desacetylvinblastine hydrazide.

The drug is designed to target the chemotherapy agent to rapidly growing cancer cells that actively take up folate via the folate receptor. The folate receptor is expressed in a wide variety of cancers including ovarian cancer and non-small cell lung cancer.

"We remain confident in our SMDC platform and are in a strong financial position to continue to advance two proprietary SMDCs with the more potent tubulysin warhead," Endocyte Chief Executive Ron Ellis said in a statement.

Endocyte stock closed Tuesday at $7.72, up $0.71 or 10.13%, on a volume of 2.8 million shares on the Nasdaq. In after hours, the stock dropped $1.36 or 17.62% at $6.36.