Endocyte slides on concerns about cancer drug

Shares of Endocyte Inc. continued to slide Wednesday on concerns about its experimental ovarian cancer drug EC145.

THE SPARK: Endocyte stock had lost two-thirds of its value Tuesday after the company reported additional data from a trial of EC145. It said patients who were treated with both EC145 and the cancer drug Doxil, a form of the drug doxorubicin, had median survival of 14.1 months after starting treatment. But it said patients treated with doxorubicin alone had median survival of 16.9 months.

Endocyte said some patients may have lived longer because they were treated after the trial ended.

It said the overall survival data was not statistically significant because that's not what the trial was designed to show. The trial was meant to show the drug could delay the progression of the disease, and Endocyte said in June that the drug met that goal. The new analysis was conducted by independent reviewers, while the earlier data came from the doctors treating the patients.

THE BIG PICTURE: The company has said it plans to file for marketing approval of EC145 in 2012, but a late-stage trial is being slowed down because of a shortage of Doxil.

Equipment failures and manufacturing problems have left thousands of patients on a waiting list.

Based on the new data, Endocyte plans to alter the design of its late-stage trial of EC145. It said it wants to include more patients with high levels of folate receptors, and will exclude patients who don't have the receptors because it is clear the drug won't work for those patients.

The clinical trial tested EC145 on 149 women whose cancer was no longer responding to platinum-based chemotherapy.

The company had said in June that women treated with EC145 lived for five months before their disease resumed progressing or they died and patients treated only with Doxil lived 2.7 months before their disease resumed or they died. EC145 is designed to target folate receptors on tumors, and patients whose tumors had high levels of those receptors had greater survival.

THE ANALYSIS: Wedbush analyst Gregory Wade said Wednesday that the drop in Endocyte's stock price was an "overreaction." He maintained an "Outperform" rating on the stock but cut his price target to $16 from $20.

Robert W. Baird analyst Christopher Raymond downgraded Endocyte shares to "Neutral" from "Outperform."

He said the new analysis will make it harder for Endocyte to get conditional approval of EC145 because the data show the drug didn't significantly postpone the disease's progression.

He cut his price target on Endocyte shares to $9 per share from $17.

SHARE ACTION: After falling 65.3 percent Tuesday, Endocyte shares tumbled another 6.4 percent, or 23 cents, Wednesday afternoon to close at $3.34.

Between its February initial public offering and Monday, the stock had traded as low as $6.15 and high as $14.80.