Endocyte, Inc. (ECYT) is poised to outperform due to significant profits from its $120 million deal with Merck (MRK) for their lead ovarian cancer drug vintafolide and three major cancer drug opportunities in Europe and the U.S., says Dr. Jason Kantor, Research Analyst at Credit Suisse Group.
“They partnered with Merck (MRK). It was a $120 million upfront deal, and Merck splits the profits with Endocyte in the U.S. 50-50. It’s a lucrative deal with a validating partner,” Kantor said. “Although they have partnered with Merck, they still retain a 100% of the rights to the diagnostic and 100% of the rights to the follow-on compound.”
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Kantor sees three major catalysts for stock coming over the next 12 months: a regulatory decision in Europe on platinum-resisitant ovarian cancer, topline results from a radomized Phase II study in lung cancer and an ongoing Phase III trial designed to support U.S. approval in ovarian cancer. Together these catalysts are providing multiple opportunities for ECYT to outperform, Kantor says.
“If these events play out as we hope, there are other reasons why the stock could go even higher,” Kantor said. “I expect in general to see the small-cap companies outperform in the second half of the year.”
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