Endocyte Loss Widens
West Lafayette-based Endocyte Inc. (Nasdaq: ECYT) is reporting a second quarter net loss of $8.2 million, compared to a loss of $5.4 million for the same period a year earlier. The report comes as the company focuses on a potential osteoarthritis treatment. We featured the research in a recent Life Sciences INdiana newsletter. August 1, 2013
WEST LAFAYETTE, Ind. – Endocyte, Inc. (Nasdaq:ECYT), a biopharmaceutical company and leader in developing targeted small molecule drug conjugates (SMDCs) and companion imaging diagnostics for personalized therapy in cancer and other serious diseases, today announced financial results for the second quarter ending June 30, 2013, and provided a business update.
“We made important progress during the second quarter, completing enrollment in the TARGET trial ahead of schedule, with top-line results now expected in the first quarter of 2014,” said Ron Ellis, Endocyte's president and chief executive officer. “We also have been strengthening our commercial presence in Europe in anticipation of potential EU approval, which has already significantly increased physician awareness and support of vintafolide and etarfolatide.
“We are also encouraged by the progression of our proprietary pipeline and are preparing several compelling candidates to enter clinical trials in the coming months, including our folate-targeted tubulysin and prostate specific membrane antigen (PSMA)-targeted drug candidates.
Our SMDCs also have important applications beyond cancer, and we have demonstrated the ability to target activated macrophage cells in numerous inflammatory indications and are preparing an imaging diagnostic and therapeutic drug candidate for a clinical study in 2014.”
— Completed enrollment of TARGET Phase 2b trial of vintafolide (EC145) in
non-small cell lung cancer (NSCLC) patients with all lesions expressing
the folate receptor, FR(100%), as determined by the companion imaging
diagnostic etarfolatide (EC20)
— Established commercial capabilities in Europe, including key
senior-level appointments, and made preparations ahead of potential
conditional approval, with reimbursement evaluations in progress
— Presented data demonstrating cancer applications for several new lead
molecules from the Company's SMDC technology platform at the 2013 Annual
Meeting of the American Association for Cancer Research (AACR)
— Presented the first clinical data showing the involvement of activated
macrophages in osteoarthritis at the OARSI 2013 World Congress on
Osteoarthritis, along with etarfolatide's ability to differentiate
inflammatory from non-inflammatory disease states in osteoarthritis
Second Quarter 2013 Financial Results
Endocyte reported a net loss of $8.2 million, or $0.23 per basic and diluted share for the second quarter of 2013, compared to a net loss of $5.4 million, or $0.15 per basic and diluted share, for the same period in 2012.
Revenue was $16.5 million for the second quarter of 2013 associated with the collaboration with Merck. Of this revenue, $13.4 million related to the amortization of the upfront license payment, milestones and reimbursable expenditures occurring prior to the second quarter of 2013. The remaining $3.1 million of revenue related to amortization of reimbursable expenditures incurred during the second quarter of 2013.
The amortization for 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 $18.6 million for the second quarter of 2013, compared to $8.8 million for the same period in 2012.
The increase was driven by PROCEED trial costs, including the purchase of DOXIL(R) satisfying supply through 2013, costs associated with accelerated patient enrollment in the TARGET trial, 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. Adjusted research and development expenses were $12.0 million for the second quarter of 2013, net of the $6.6 million current period expenses reimbursable by Merck referred to above.
General and administrative expenses were $6.2 million for the second quarter of 2013, compared to $3.2 million for the same period in 2012.
The increase in expenses was attributable to establishing commercial capabilities and an increase in compensation expenses. Merck funds all patent expenses for vintafolide under the companies' collaboration agreement. Adjusted general and administrative expenses were $5.8 million for the second quarter of 2013, net of the $0.4 million current period expenses reimbursable by Merck referred to above.
Interest expense was $0 million in the second quarter of 2013 compared to $0.3 million in the same period in 2012. The company retired its credit facility in the second quarter of 2012, and the average debt balance was $10.8 million in the second quarter of 2012.
Cash, cash equivalents and investments were $169.8 million at June 30, 2013, compared to $185.9 million at March 31, 2013, and $201.4 million at Dec. 31, 2012. The decrease compared to prior periods was attributable to the cash disbursements for operations. Net cash outflow from operations for the second quarter of 2013 was $16.1 million compared to $15.5 million in the first quarter of 2013 and $12.8 million in the second quarter of 2012.
Endocyte confirmed prior guidance, expecting that its cash, cash equivalents and investments will be between $145.0 – $160.0 million at Dec. 31, 2013.
Upcoming Expected Milestones
— Receive European Medicines Agency (EMA) decision on pending marketing
authorization applications for vintafolide and etarfolatide in the
fourth quarter of 2013
— File investigational new drug application (IND) and initiate clinical
trial for folate-targeted tubulysin therapeutic in the third quarter of
— Under collaboration with Merck, initiate randomized trial for
vintafolide in folate receptor (FR)-positive triple negative breast
cancer in the fourth quarter of 2013
— File IND and initiate clinical trial for PSMA-targeted tubulysin
therapeutic and companion imaging agent in early 2014
— Report top-line data from the Phase 2b TARGET trial in NSCLC in the
first quarter of 2014
— Complete enrollment of 250 FR-positive patients, FR(100%), in the Phase
3 PROCEED trial and provide update on independent data safety monitoring
board (DSMB) decision for potential expansion of enrollment in the first
half of 2014
— File IND and initiate clinical trial for folate inflammation therapeutic
and companion imaging drug candidates in the second half of 2014
Note on Non-GAAP Financial Measure
As used in this press release, the term “adjusted research and development expenses” is a financial measure that is not expressly recognized by accounting principles generally accepted in the United States, or GAAP. Adjusted research and development expenses are net of the amounts reimbursable during a period by Merck pursuant to the collaboration agreement for vintafolide which for U.S. GAAP purposes are ultimately recorded as revenue. Endocyte provides adjusted research and development expense to enhance comparability with prior periods and uses it as a basis fo