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Endocyte (ECYT) Up 0.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Endocyte (ECYT - Free Report) . Shares have added about 0.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Endocyte due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Endocyte Posts Wider-Than-Expected Loss in Q3

Endocyte incurred a loss of 17 cents per share in the third quarter of 2018, wider than the Zacks Consensus Estimate of a loss of 16 cents. The figure was narrower than the year-ago loss of 55 cents.

The company earned collaboration revenues of $0.086 million in the reported quarter, up 61.6% year over year.

 Quarterly Details

Research and development (R&D) expenses increased 53.8% year over year to $8.9 million, due to an increase of $4.5 million in expenses related to development of PSMA-617, including expenses related to the phase III VISION study; an increase of $1.2 million in compensation expenses, of which $0.4 million was related to stock-based compensation charges; and an increase of $0.1 million related to the company’s EC17/CAR T-cell therapy program.

General and administrative expenses surged 59.1% year over year to $4.8 million due to an increase of $0.8 million in compensation expenses, $0.6 million in legal and professional fees, and $0.4 million in other general and administrative fees.

Pipeline Update

The company’s key pipeline candidate is 177Lu-PSMA-617, a first-in-class radioligand and therapeutic (RLT) that targets prostate-specific membrane antigen. During the quarter, the company announced FDA acceptance of radiographic progression free survival (rPFS) as an alternative primary endpoint of the ongoing phase III VISION study to support the submission of a new drug application (NDA) for full approval of Lu-PSMA-617 for the treatment of metastatic castration-resistant prostate cancer (mCRPC).

Endocyte expects to file an investigational new drug application (IND) for phase I study of EC17/CAR T-cell therapy in patients with osteosarcoma in late 2018.

The company presented pre-clinical data from the company’s chimeric antigen receptor T-cell (CAR T) adaptor molecule (CAM) platform at CAR-TCR Summit 2018.



 

Acquisition

In October 2018, Endocyte entered into an agreement and plan of merger with Novartis AG, per which the latter will acquire the former for $24 per share, or a total equity value of approximately $2.1 billion, in cash. The transaction was unanimously approved by the board of directors of Endocyte.

The transaction is expected to close in the first half of 2019, subject to approval by Endocyte stockholders, antitrust and other regulatory bodies. Until then, Endocyte will continue to operate as a separate and independent company.

The acquisition will enable Novartis to have Endocyte's lead program,177Lu-PSMA-617 in its portfolio.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Endocyte has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Endocyte has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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