West Lafayette drug company stocks soar in wake of buyout

Novartis Basel

Novartis Basel

The Swiss pharmaceuticals giant Novartis is beefing up its cancer treatment portfolio with the purchase of Endocyte (ecyt), a USA firm, for $2.1 billion.

The companies expect the takeover to close in the first half of next year, pending approval by regulators and Endocyte's shareholders, who would receive $24 per share-which is 54% more than Endocyte's closing price on Wednesday.

Heading up Endocyte's pipeline is Lu-PSMA-617, a potential first-in-class drug for the treatment of metastatic castration-resistant prostate cancer (CRPC).

"The global reach and expertise of Novartis in developing and commercializing RLT therapies will be critical in efforts for patients to benefit from these therapies as quickly as possible". Lu-PSMA-617, which targets PSMA, has shown promising Phase II data. It is now in a phase 3 registration trial - called VISION - that is due to report results in 2020.

As part of the restructuring, Endocyte said it was ending patient enrollment in a Phase I trial of its folate receptor-targeted tubulysin solid tumor cancer candidate EC1456 (NCT01999738), but continuing enrolling a "small number" of patients in a Phase I ovarian cancer surgical study of EC1456 (NCT03011320). The transaction was unanimously approved by the board of directors of Endocyte, but it is still subject to Endocyte stockholder and regulatory approvals.

If completed, the Endocyte acquisition would expand the Novartis RLT platform with both a potential near-term product launch and early-stage clinical development programs. Shares in Endocyte were up as much as 51 percent Thursday morning. AAA's radiopharmaceutical drugs are used to diagnose and treat cancer and other diseases.

Separately, Novartis raised the lower end of its forecast for sales growth for the year, saying that annual sales will rise by a mid-single-digit percentage.

The acquisition of Endocyte is planned to be funded through available cash.

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