Endocyte Loss Widens

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West Lafayette-based Endocyte Inc. (Nasdaq: ECYT) is reporting a fourth quarter net loss of $2.9 million, compared to an $800,000 loss during the same period the previous year. The company says the loss is partially due to increased research, development and administrative expenses.

February 24, 2014

News Release

West Lafayette, Ind. -- Endocyte, Inc. (Nasdaq:ECYT), a biopharmaceutical company and leader in developing targeted small molecule drug conjugates (SMDCs) and companion imaging agents for personalized therapy in cancer and other serious diseases, today announced financial results for the fourth quarter ending Dec. 31, 2013, and provided a business update.

"We made significant progress during 2013 with our lead program, vintafolide, across multiple indications and advancing our proprietary pipeline of SMDCs into the clinic, setting the stage for several major milestones in the first half of 2014," said Ron Ellis, Endocyte's president and chief executive officer. "On the regulatory front, we were pleased to provide a recent oral explanation to the CHMP of the European Medicines Agency for our conditional marketing authorization applications for vintafolide and companion imaging agent, etarfolatide and anticipate receiving an opinion at the CHMP's next meeting in March. The FDA's recent orphan drug designation of vintafolide for the treatment of ovarian cancer is also an important step forward in bringing this potential new treatment option to patients in the U.S."

"We expect to announce top-line results for our Phase 2b TARGET trial of vintafolide and etarfolatide in non-small cell lung cancer in March.

Investigators completed enrollment for the TARGET trial ahead of schedule and it has achieved the targeted number of events. Patient enrollment remains on track for the Phase 3 PROCEED registration trial of vintafolide and etarfolatide in ovarian cancer, and we expect enrollment of the 250th patient in the targeted FR(100%) patient population in the second quarter; evaluation of interim results by the independent data and safety monitoring board (DSMB) will determine whether the final 100 patients are enrolled. If the progression free survival (PFS) hurdle is achieved, they will recommend the enrollment of the final 100 patients.

Because the PFS hurdle at this interim analysis is similar to that required for a positive result at the end of the trial, achieving this hurdle will increase confidence in achieving the primary PFS endpoint. Additionally, we have made substantial progress with our pipeline of proprietary SMDCs and companion imaging agents, including the start of enrollment for a Phase 1 trial of our folate-tubulysin oncology agent EC1456 in the fourth quarter of last year and preparing the IND submission for PSMA-targeted tubulysin," Ellis continued.

Recent Highlights

-- In December, Endocyte announced the enrollment of the first patient in

the Phase 1 trial of EC1456, the folate-targeted tubulysin SMDC, for the

treatment of advanced solid tumors. Etarfolatide (EC20) is the companion

imaging agent for EC1456.

-- In February, Endocyte and Merck provided an oral explanation to the CHMP

in support of the conditional marketing authorization applications for

vintafolide and etarfolatide.

-- The Phase 2b TARGET trial of vintafolide and etarfolatide in NSCLC has

achieved its targeted number of events needed for analysis of the

primary endpoint.

-- Vintafolide received orphan drug designation by the U.S. Food and Drug

Administration (FDA) for the treatment of ovarian cancer. The companion

imaging agent etarfolatide also has orphan drug designation for the

identification of folate receptor positive ovarian carcinomas.

Upcoming Expected Milestones

-- Report top-line data from the Phase 2b TARGET trial in NSCLC in March.

If the TARGET trial is successful, Merck will be responsible for

execution and funding of the Phase 3 trial.

-- Receive opinion from CHMP on pending EU conditional marketing

authorization applications for vintafolide and etarfolatide at the March

meeting to be held between March 17 and March 20.

-- File IND for proprietary PSMA-targeted tubulysin SMDC for prostate

cancer in March.

-- Under Endocyte's collaboration with Merck, a Phase 2 randomized trial

for vintafolide in folate receptor-positive triple negative breast

cancer is expected to begin in second quarter. This is the third

indication being studied in patients with folate-receptor positive

tumors for the vintafolide program.

-- Announce late in the second quarter the DSMB decision on whether to

complete the enrollment of the final 100 FR(100%) patients in the Phase

3 PROCEED trial of vintafolide and etarfolatide in platinum resistant

ovarian cancer.

-- File IND and launch clinical trial for proprietary folate inflammation

SMDC and companion imaging agent candidates in early 2015.

Fourth Quarter 2013 Financial Results

Endocyte reported a net loss of $2.9 million, or $0.08 per basic and diluted share, for the fourth quarter of 2013, compared to a net loss of $0.8 million, or $0.02 per basic and diluted share, for the same period in 2012.

Revenue was $17.3 million for the fourth quarter of 2013 associated with the collaboration with Merck. Of this revenue, $14.5 million related to the amortization of the upfront license payment, milestones and reimbursable expenditures occurring prior to the fourth quarter of 2013. The remaining $2.8 million of revenue related to amortization of reimbursable expenditures incurred during the fourth quarter of 2013.

The amortization of the upfront license fee, ongoing research and development services, and general and administrative expenses relating to patent expense for vintafolide is recognized as revenue ratably over a performance period that began at the closing date of the agreement, April 27, 2012, and is expected to conclude at the end of 2014.

Research and development expenses were $13.5 million for the fourth quarter of 2013, compared to $10.5 million for the same period in 2012.

The increase was driven by costs associated with the increased number of patients active in both the PROCEED and TARGET trials, as well as development costs related to the expansion and advancement of the preclinical pipeline and compensation expense. Merck funds manufacturing costs for vintafolide, along with a portion of the PROCEED trial and all of the TARGET trial costs under the companies'

collaboration agreement. As of the end of the fourth quarter, vintafolide manufacturing responsibilities have been fully transitioned to Merck, and those manufacturing costs will not appear in research and development expenditures going forward. Adjusted research and development expenses were $9.3 million for the fourth quarter of 2013, net of the $4.2 million current period expenses reimbursable by Merck referred to above.

General and administrative expenses were $6.7 million for the fourth quarter of 2013, compared to $5.0 million for the same period in 2012.

The increase in expenses was attributable to establishing commercial capabilities and an increase in compensation expenses driven by new hires. Merck funds all patent expenses for vintafolide under the companies' collaboration agreement. Adjusted general and administrative expenses were $6.5 million for the fourth quarter of 2013, net of the

$0.2 million current period expenses reimbursable by Merck referred to above.

Cash, cash equivalents and investments were $148.9 million at December 31, 2013, compared to $159.2 million at September 30, 2013, and $201.4 million at Dec. 31, 2012. Net cash outflow from operations for the fourth quarter of 2013 was $10.3 million compared to $10.6 million in the third quarter of 2013 and $3.3 million in the four