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Executives

Ron Ellis - CEO and President

Binh Nguyen - VP, Clinical Affairs

David Meek - Chief Commercial Officer

Chris Leamon - VP, Research

Mike Sherman - CFO

Analyst

Bert Hazlett - ROTH Capital Partners

Simos Simeonidis - Cowen and Company

Howard Liang - Leerink Swann

Greg Wade - Wedbush

Jason Kantor - Credit Suisse

Endocyte, Inc. (ECYT) Analyst Day Presentation Conference Call March 22, 2013 9:30 AM ET

Ron Ellis

Thank you for attending, this is Endocyte's First General Analyst Day, so we hope it goes well. And we want to appreciate the Endocyte management team being here, you’ll have an opportunity to hear from them as we go through the strategy and plans for the company. We will start off just to remind you likely to say this is we are going to be some forward-looking statements to figure our recent submission to the SEC.

I will start off by covering some of the strategic direction of the company and then I will turn it over to our Vice President of Clinical Development, Binh Nguyen, and he will mainly focus on the plans with Merck on etarfolatide and vintafolide and he will go through again some of the data that you have seen before just a reminder and tell a bit about the EU filing.

After Binh then David Meek, he is our Vice President of Global Commercial Operations recently joined us in August from Merck. We will be talking about the launch plan for Europe and that we are jointly doing again with Merck and how we are proceeding on that. Also share some of the market research we’ve done on the product with Merck, and I think that will be also very interesting to review.

Then we’ll break, we will take Q&A for a little bit and then take a break and then we will turn it over to our Vice President of Research, Chris Leamon and Chris will go through the early stage pipeline and some of the technology that we are developing, and then Mike Sherman will talk about the financials and how we plan on investing our cash over the next few years and then at the end I'll have a couple of closing remarks.

Let me just sort of start off and take you back to when Endocyte was formed in the mid 1990s and what we were trying to do. The founding scientist of course was Dr. Phil Low, who is still our Chief Science Officer and very active in the business, and we really wanted to solve a fundamental problem with the way drugs were developed and particularly in cancer. And at the time what was trying to be done as you take a molecule and you would try to engineer two components into it, one was potency and/or efficacy and the other part was safety. And because you are trying to do this in the single molecule it was a real challenge, because those were trade-offs, either you had too much potency and you lost safety or you were too safe and the drug lost efficacy.

So you end up with a compromise molecule, or you had a molecule that's very potent, but you had to only dose it once a month and you compromise the effectiveness of the drug through the dosing. So our vision which we started was let's change that model, and we will do it by dividing the problem into two parts which we call small molecule drug conjugates. At the one end which is the warhead, we will put in the potency and we will make the warhead as potent as we can possibly make it. And then we will solve the safety side by the targeting [lesions]. So on one end we have the potency of the molecule and on the other side the safety and we bring that together with these sophisticated linker systems which we use to build to ensure that those molecules have the right pharmacokinetic properties that we need to.

So at that time it was really a very, very different approach to how we wanted to improve and change the way we treat patients. We've been at this for a while and because of that we've built the dominant and leadership position in small molecule drug conjugation and predictive medicine. We are the first to push small molecule drug conjugates in the clinic. We are the very first drug to show improvement in progression free survival in a disease where there have been failure after failure in drugs of platinum resistant ovarian cancer, really a high end med need.

We are the first one and still the first one usually using molecular imaging as our diagnostic to create personalized medicine. You will see a fair amount of data about that later on, but this is a very unique and powerful approach to predict these medicines. We've built over a formidable patent position with over 100 issued patents and over 200 pending patents in this space. With the Merck deal which we did last year, we are taking the lead molecule of vintafolide and expanding that into multiple indications and we are very pleased with the partnership with Merck. They have of course the Phase 3 study going on in platinum resistant ovarian cancer. We will have by the end of the year two randomized studies. We already have the one study going and we will have another study in triple negative breast cancer which Merck will be fully funding both of those studies and pay for all the development costs. Based on the development plan that we’ve put together with Merck; we’ll have five clinical studies going on with that molecule by year end.

The Merck partnership also brought us significant change to our cash positions quite a bit. We ended the year with over $200 million in cash and Mike will talk more about the use of those proceeds, but there is a couple of very important things that that money is helping us to do. One is it’s supporting the building of the commercial organization in Europe for the potential launch of etarfolatide and vintafolide. But that organization is really just the beach head for putting in place the commercial organization that will support the other products which will see coming down the pipeline and for our potential co-promote in the US with Merck.

And we are investing in the pipeline significantly. You will see this year and next year I think very exciting new drugs enter in to the pipeline and there are more to come. So this approach we think has some fundamental differences to the current wave we are going about personalized medicine in treating new series diseases like cancer, and I think it's the reason why we saw such dramatic results in our phase 2 study in platinum resistant ovarian cancer; again an indication where prior to that there had been no drug that had ever showed any improvement in progression free survival and overall survival.

First off, the drugs that we're delivering are extremely potent. These are drugs that we’ve never been able to treat patients with before ever, because they are just too potent, and you can’t safely deliver them. For example, the warhead that is on vintafolide is about 73,000 times more potent than Cisplatin. Just to give you kind of a relative feeling for how potent the molecule is. Because of the targeting of the molecule, we can deliver this extremely potent molecule safely and tolerably, and we think this is a fundamental mission of the company as to make sure that not only you do deliver effective therapies, but we don't want patients to really ruin their life, and make them feel bad for they are sick and not able to performs their daily life functions.

With vintafolide as a single agent there were no grade core toxicities and only a few single grade [pre] toxicities. This is really a very different kind of molecule in terms of the treatments of the patients were used to receiving that were quite talkative. The other important element of the strategy, or what the technology allows us to do is to dose more effectively. Not only can we dose more of the drug then you can, if it's not targeted, but we can dose it much more often. So instead of may be the traditional, we dose once over 28 days, because we have to let the patient recovery after a single dose, and we are able to dose patients three to five times a week daily if needed and put constant pressure on the tumor.

That fundamental change in the way we dose patients it makes an enormous difference in the efficacy of the molecules. We learned early on as we started down the technology that keeping the molecules small was an important part of the technology. These small molecule as Chris will show you later half, a much higher level of tumor penetration and if the molecule becomes really large; like we will measure a 15 to 20 times more drug in the tumor if we keep the molecule small and if it becomes large. This is really important if you trying to treat solid tumors and you want to hit every cell, you have to keep them molecule small.

The other thing that small does for you is it allows the molecule to be excreted quickly. This improves the safety of the molecule by and if doesn’t hit the target then what's left is quickly eliminated from the body. And so we have focused on keeping all the therapeutic molecules in a really very small. And lastly, I think one of the most attractive and interesting and unique parts about Endocyte’s approach is our use of molecular imaging diagnostics to personalize the therapy. Of course this is also possible because we are using small molecules which allow us to give really good images. But this personalized therapy allows us for the first time to be able to take a real time full body image of the patient, to be able to determine whether they are going to likely respond to the therapy or not, we don't rely on a tissue biopsy or maybe we can do a whole body scan.

Personalized medicine is really the foundation and the beginning of our business model and our development. The first molecule that we will build when we were developing a therapy as the imaging agent. This allows us to first validate that we are hitting the right cells. Then we can take that imaging agent and we can go and start scanning patients in different diseases to make sure that when we go in the clinic we are picking the right disease. Now for example we did that in cancer, one of the reasons that ovarian cancer and lung cancers and the other cancers are selective because we’ve scanned those patients. We know that the receptor is there, we know that is there in high abundance, we know that a high percentage of the patients and that. So it helps us to be very smart about picking those diseases which we are going to develop.

And then of course the imaging agent moves along into the clinic where every patient receives a scan and then we can select those patients who are most likely to respond really personalizing the therapy for every single patient. And so as the beginning and foundation of all our development work is to use these molecular imaging agents to support the therapeutic program, doing that reduces the clinical risk because we see much better results for patients who are receptor positive and those who are receptor negative. It also increases the likelihood of regulatory approval. This is right down the wheel house of what the FDA and EMEA and everyone is looking for our personalized therapies as evidenced by the legislation on breakthrough therapies, and it also allows us to provide a better value proposition to payors where we are bringing in a therapy that we can select the patients that are most likely to treat to respondents that are treating those that aren't.

I hope one thing that you get from today is the significant opportunities for growth for using small molecule drug conjugates in these companion diagnostics. Our first priority for growth is to expand the indications of etarfolatide and vintafolide; the drugs that's partnered with Merck. And you've seen that when you are moving in that direction along with Merck; Merck’s put a significant investment in the molecule with the studies in ovarian non-small cell lung cancer and breast cancer, all of which will be randomized studies to be going this year. We should have data on lung early next year and ovarian will have a key interim analysis next year and the breast cancer study will get started this year.

The next area of growth is to change the warheads. And this is important because each patient responds to drugs differently. Some patients will experience toxicity with one drug which makes it, so it’s not tolerable or their cancer may respond to one drug but it won't to another, and so we are going to provide a series of different types of warheads for these molecules so that doctors and patients have a number of choices of warheads or drugs that they can deliver, and we will talk about some of those when Chris Leamon goes through. But really this makes a lot of sense and there's something we are certainly capable and moving. We've moved long ways in being able to do that.

The third area of growth is to change the ligands. So once you have these potent warheads then you want to look at are there other types of receptors that we can target and we have over 10 of these receptors in screening right now. One of those which we are moving into development late this year or early next year is prostate specific membrane antigen targeting. We have a really great ligand and imaging agent for that program, but this will allow us to expand to cancers that have different types of receptor expression. And in our fourth area of growth is to move the technology outside of oncology into other new diseases and there's a whole host of disease opportunities, diseases with high end met needs that this technology can make a big difference in patient lives.

We will talk a little bit about one of those, which is our targeting activated macro phases and information and needs some very exciting preclinical data on the molecule that we are using there and another opportunity is in polycystic kidney disease. Just to mention a couple of many different new diseases that we can expand this technology out to. So there's lots of opportunities for growth and with our significant cash position it gives us the opportunity to really move these programs forward.

We are very excited about the pipeline. The pipeline now has really advanced particularly in the last 12 months from where it was before, and of course vintafolide which is partnered with Merck has a very big development program, and I'll remind you that Merck’s paying for except for the ovarian cancer study where we paid majority of the cost, Merck pays part of that, all the other studies are fully paid for by Merck. We are changing the warhead out, the new warhead will be, first one is called Tubulysin; it’s in molecule called EC1456 and the molecule has changed a little bit. So if you are used to seeing I think 531, there's a new number as we made some modifications to make the molecule better and Chris will talk about that.

But that’s just an evidence of delivering different warheads. Then in changing the ligand, we have the prostate program which I mentioned will be in clinic, should be in late this year or early next year. We will start testing that molecule in prostate cancer patients. We already have a diagnostic imaging agent for that called 652 and validated the targeting in humans using that molecule. And then other diseases and opportunities and information of kidney disease and we will talk a little bit more particularly about the information program today and I think some really exciting data as we’ve gone through an image different disease types. We will show you some data particularly osteoarthritis, which we think is really quite interesting in terms of being able to target that disease. So I think the pipeline is very exciting and one that will support growth for the company in the years to come.

So I think in summary, before I turn it over to Binh to talk about etarfolatide and vintafolide. This is a very exciting timeframe to decide. We had a great last year with closing the Merck deal and getting the Phase 3 study back up and going with Doxil, lung study moving ahead and then advancing a lot of these molecules forward, bringing our commercial organization onboard with Dave and the team that he has built. It was really a very, very good year for us last year. But in looking forward, there is a lot of important thing that are going to be happening. Not the least of which is the potential for being commercially selling drug in Europe by year-end or early next year. And with our filing in for vintafolide and etarfolatide in the EMA. So a lot of greater accomplishments, I think a lot of potential, a lot of great things to look forward to in the upcoming year

So I will turn it over to Dr. Binh who will talk about vintafolide and etarfolatide.

Binh Nguyen

Good morning, in the next 25 to 30 minutes. I just would like to give you an update on the triple programs Ron just outlined and show you the direction that we are heading. So Chris Leamon, my colleague’s obviously will go in to more details on out a small molecule drug conjugate them targeting the folate receptor. I just want to show you these slide here, so that it gives you a background of what diseases we can go after with our first module vintafolide targeting folate receptor.

As you can see here that lots of different cancer cells, tumors, who have a very high expression of folate receptor, both alpha as well as beta. As you can see here all these high prevalent diseases such as ovarian, non-small cell and kidneys have very high folate receptor alpha expression, interestingly some diseases like liver as well as colorectal, it has also very high folate receptor beta. And so this is one of the as well as breast cancer, this is one of the rationale that we are targeting folate receptor vintafolide in ovarian cancer is our indication and our next indication is our non-small cell lung cancer.

So I will give a summary of the results the people who have trial in ovarian cancer. I am sure most of you have seen this, but just to give you summary so that you can see the overall data that we submitted to the EMA for the approval. Just briefly, folate receptor, positive platinum-resistant ovarian cancer is the cancer that has the high unmet needs because currently there is really no standard treatment besides the PLD. If you look at the Median PFS its overall survival is relatively short, less then four months and is about one year for survival.

More importantly is that for folate receptor positive ovarian cancer patients, those patients actually do much worst then the patient who do not have folate receptor prostate. So folate receptor is essentially a negative pronounces factor in this disease, and this is based on the literature but we also were able to confirm that on the randomized Phase 2 study that I am going to present to you the results.

So as Ron said, vintafolide is the first drug to treat folate receptor positive [prox] that shows a coercion free survival advantage comparing to single agent batch [sub-cell]. As you can see, if you look at the whole study for the whole intent to treat patient population, the median time to event in a combination of vintafolide plus PLD is almost like twice as wrong as the control arm of PLD alone, and its highly (inaudible). The curve is very well separated throughout from the beginning.

As one digs down further into the different sub states of folate receptor positivity in this study, I just want to remind you the definition of folate receptor positivity with the etarfolatide first companion diagnostic scan that we have, different from [IHD] we are actually looking at the percent of cancer [patients], are positive with etarfolatide scan is a definition of positivity with folate receptors. So it’s not intensity for the total biopsy but it’s actually if you look at overall or the lesions that has shown up and targeted for the cyst 1 or 1.1 criteria and by that percentage as you can find whether the patient has folate receptor 100%, folate receptor less than 100% or folate receptor negative.

And the advantage of these scans is that in real time its not (inaudible) so you don't need to have two biopsies and that as I said before it affects all of the tumors if you want two. So just to go over briefly our definition of folate receptor is the way that we define it.

If the patients have let's say three lesions and all three of the lesions light up then that patient is nomenclature wise called a folate receptor 100%. If the patient had three lesions but only one or two of those lesions light up with the Tc-etarfolatide scan then that patient is falling into the category of 20% to 80%.

If the patient has three, four or five lesions and the target lesions based on the cyst criteria and none of them light up with the etarfolatide scan then that patient is called folate receptor negative or folate receptor 0%. I think it is very important point because there have been confusions before I heard of how to define this and as I mentioned before you have to keep your mind up the definition up by [IAC] which is plus one, plus two, plus three etcetera.

If you want to look at these different subsets of the patient in the randomized Phase 2 study which is a pivotal study that we use for the EMA submission, you can see here that I have shown you the results of the whole patient population [intensive] three and now if you look at the subgroup of patient, the folate receptor 100% only you can see that progression-free survival is now improved by fourfold, almost fourfold.

So from the whole patient population you have improvement of only about twofold but now that you targeted with folate receptor ligand, our market for vintafolide you see actually the fourfold improvement. Its still highly statistical significance and if you look at the folate receptor negative, you don't see the advantage there but this goes to tell because this subgroup is quite small.

Let's dig a little bit deeper into the database and look at the patient disease characteristic. Overall, most of the patient disease characteristic is very well balanced between the two treatment arms except for three factors here that I highlighted.

One is the median tumor sum and baseline. It’s actually much bigger in the vintafolide [based] combination arm, the percent of patients with CA-125 baseline less than 200 is slightly less than in the control arm. If you look at the percent of patients with Hepatic or Pulmonary metastasis which is [before] disease that means a small advanced disease, you can see that actually our arm combination arm is also much higher percentage of patients has that.

So in summary, what this means is that the patient in control arms has better prognosis than the combination arm and vice versa, the combination arm, a slightly worse prognosis than the control arm of single agent cell. With that in mind, one of the analysis that we did in addition to the primary analysis of PFS is that we looked at the (inaudible) version how is that model retrofits for those factors as well as other receptors that’s [age] KPS with (inaudible) etcetera.

You can see that for the folate receptor 100% subgroup, it has a ratio improve as well as in the overall survival hazard ratio in the subgroup of folate receptor 100%, it's also improved from 1 to like less than 0.5.

So in summary, I just want to show you that this result is essentially the backbone of why we submitted and we discussed EMA and they recommend us that we should ask for the label of folate receptor 100% patient population only.

As I shown you before, for the cancer treatment patient population, the progression-free survival is significant. The second endpoint of response rate by disease over response is also higher in combination arm. The same thing holds true for CA-125 overall response rate is higher in the combination arm, the overall survival result shows that's more of an insight with the hazard ratio of 1.01. Don’t forget that this type of trial was designed for survival advantages but the primary endpoint is PFS.

In addition to the fact that the overall study is positive, the subgroup of folate receptor 100% is actually even much better from clinical efficacy standpoint, much difference in the median progression-free survival in a combination arm, higher differences in the [disease] overall criteria as well as CA-125 over response and again the overall survival show significant differences within treatment arms.

As I shown you in the previous slide, adjusted hazards ratio that actually improve when we do the progression hazard ratio. So, with that and the submission in EMA for the condition approval, we actually right now enrolling patient into the randomized Phase 3 confirmatory trial that is also used for the FDA approval requirement.

The primary endpoint is PFS for folate receptor 100 patients only. However, we are going to do a step down analysis for a lower [threshold] to determine whether there is a lesser threshold of folate receptors at which the patient feel benefit from the vintafolide treatment.

So the analysis of folate receptor a 100% subgroup is positive then we drop to folate receptors 65%, that means like three-hour, or four-hour side to see whether that is still significant or not, if that is a case then that could be used to expand the label to that patient population.

We have discussed that with both regulatory agencies and this is the reason why we do the step down analysis. The study itself is double blind as well as one-to-one randomization and that the primary end point of PFS is the best grade asset and that was the design upfront in the protocol.

From a (inaudible) standpoint, we are looking at 250 patients first with the 92% power to show hazard ratio of 0.6. I just want to remind you that this is significantly, we have leeway for proxy of trials because from the randomized Phase 2 study it has a ratio of this patient population is 0.381 and we will have a interim analysis of futility and if this fulfilled that means it passed the futility test that we add an additional 100 patients.

Folate receptor 100% patient-only, so that we can increase the power to see a trend of OS significant, that is the program for the ovarian cancer development and now just switch gear slightly to give you an update on the lung cancer indication and of what we are doing right now.

This is just to summarize the design and the result of single agent vintafolide Phase 2 study and most of you again probably have seen this data. The important thing is that for this Phase 2 singular agent study, we actually enrolled only folate receptor positive patients. The patient population in this trail is barely [factoring]. 70% of them have failed at least three prior regimens.

And that all the patients have (inaudible) disease with the meaning of 14.5 centimeters at base line. To analyze the data by looking at the two subgroups, the folate receptor 100% that is all the population positive for folate receptor and we look at the subgroup of patients who have less than 100% of the lesions positive for the scan.

(inaudible) the foremost progression-free survival as well as over survival, the subgroup with all kinds of lesion positive are doing much better than the subgroups that have only one but not all the lesion positive. If you look at the medium progression-free survival here, it does from 1.7 to 7.2 months, if you look at over survival it’s like a big difference between the two subgroups.

And if we want to put things into perspective obviously we have to do that with cautious because we are comparing against historical control here, its not a randomized study but if you look at the historical control of the standard regimen treatment of second [approach] line non-small cell lung cancer like (inaudible) you can see here that the progression-free survival is about three months and the survival, median survival is about eight months.

And as I'll show you in the subgroup of the patient with folate receptor 100% in our Phase 2 study and this is once again much more (inaudible) than these trials as shown in the results here, their PFS is quite significantly longer.

So it’s like more than twice as long as the sense of the historical control. If you look at the overall survival, once again, you see that it’s about 33% or more improvement over the current standard of using (inaudible). This is essentially a pretty good signal that we should explore further a non-small cell lung cancer.

Together with a very good safety profile that Ron actually referred to briefly before, you can see that these are single agent safety summary here. Most of the [subsidy] is in grade 1 or 2 and even that you see very few volume suppression.

We actually don't see any neutropenia of grade 3 or 4 or even grade 1 or 2. The same thing holds true for thrombocytopenia, we do see some anemia and obviously one of (inaudible) of one of standard regimen is (inaudible) as you all know its very severely suppression.

So if you look compare this against the toxicity profile of (inaudible) with very few grade 3 and 4 toxicity I think that in a minimum we can be in a safety if not also in the efficacy that we saw in the random in the single arm Phase 2 study held through as I just shown you.

Together with the clinical data of single agent vintafolide in second line non-small cell lung cancer, we also have the lookout model showing the very strong synergism with docetaxel with [Taxotere] capacity. So here is a zero graph model looking at single agents, docetaxel which is this line here as well as single agent vintafolide but when you add the two together the essential five hour five (inaudible).

So based on this as well as the clinical data that I just showed you in single agents, we are doing confirmatory essentially second important not in the sense of regulatory but confirmatory for the efficacy. By the way a randomized Phase 2 study of vintafolide single agent with a combination of vintafolide and docetaxel with standard regimen of docetaxel alone.

And we will have 50 patients for each of these arms. We will have interim futility analysis after half of the event at second place which actually should be coming pretty soon here and from those results we can decide whether we should pass vintafolide alone with the docetaxel in the Phase 3 study. The combination with docetaxel or may actually even do a Phase 3 study of all three arms, if the single agent in this randomized Phase 3 study show strong activity and less toxicity.

So essentially what we are doing here is that we have two shot at goal in non-small cell lung cancer at this point either as a single agent or as a combination.

In addition to that, we're preparing for moving into vintafolide into earlier line of treatment for both ovarian cancer as well as non-small cell lung cancer, and I am sure that you are aware that this is very standard in drug development and we try to move our drug into an earlier line of treatment but in order to do that, most of the time we did combination because the standard regimen of earlier line of treatment first line is usually in combination.

So what is the combination regimen, the standard of care for ovarian and non-small cell lung cancer taxol and carbo and I haven't solve the pre-clinical data and Chris will do that, my colleague Chris will do that but we have, if you look at model that shows strong synergism of vintafolide with both platinum as well as (inaudible).

So this is essentially very common that the next step we should do is in combination with taxol and carbo, so that we can move the line of treatment of vintafolide into first line ovarian as well as in non-small cell lung cancer. This study is actually being done a by our Merck colleague and has already started.

I believe they had six patients enrolled so far and they are passing actually interestingly two different schedules. One is every three week schedule of taxol and carbo and the other one is every four week schedule. The reason for that is because as you know, the standard treatment of different diseases, different combinations sometime use three week schedule and sometimes use four week schedule and that’s why we decided to tag both every three week schedule and every four week schedule.

So far they have about six patients and they haven’t seen much toxicity. So they [want] to go into the next dose level and continue on for that. So now leaving of ovarian cancer and non-small lung cancer, we take triple negative breast cancer and there is a rationale for that. As I shown you in the first slide, breast cancer had high expression of folate receptor alpha and beta.

Secondly is that zinc alkaloid is well established in treatment of breast cancer. Thirdly is that triple negative breast cancer, we do have a good model, zero graph model, once again from Chris’ lab showing that we actually have some cure of (inaudible) when we treated vintafolide in the (inaudible), which is one of the triple negative breast cancer cell lines.

And fourthly following the slide, we all know that triple negative breast cancer is a disease of high unmet medical needs, none of the regimens including the compound from (inaudible) had fail so essentially there is lots of room to develop that in triple negative breast cancer.

So we actually, I am sorry one more slide, it's also important as you look at here, the data that’s from (inaudible) just recently the end of last year 2012, if you look at all the different molecules subtypes of breast cancer, the triple negative breast cancer has very high folate receptor 67% of them had expression of folate receptors.

So this is one again another reason why we are testing our vintafolide in triple negative breast cancer. So Merck and ourselves we are in discussion of the clinical study is going to be randomized study again because we would like to have control arm and we are discussing with our KOLs of what is the best trail for that study.

I don't have the trail design yet because it hasn't been finalized but as you all know that (inaudible) in general especially with paclitaxel is one of the regimens that's used in this disease, so one of the test regimen we are thinking about is with paclitaxel plus vintafolide.

In summary, this is my last slide. I am quite excited that we have a pretty strong clinical program to look at disease of unmet medical needs such as platinum-resistant ovarian cancer as well as triple negative breast cancer.

We are looking at second line non-small cells but at the same time as I mentioned, we are preparing to move forward, so we are not waiting for this study to be positive before we move forward and preparing for the next wave of studies in first line both ovarian and non-small cell lung cancer by doing this combination.

Thirdly is that we actually also try to invade Japan. So we are going to start Japan, our Phase 1 study because we are going to (inaudible). So we are going to do Phase 1 single agent study with the goal that we are actually, we are able to later (inaudible) involving to our Phase 3 studies as part of the global development plan, so that we have essentially one study that could cover both geographies.

So I think that with all this that we are doing, in the next two or three years, we definitely will have more of those to show you and I'm pretty confident that most of these if not all of these will turn out to be positive so that we can explore further the use of vintafolide in the different diseases. Thank you. Yes sure. I think we have a Q&A after my next call.

David Meek

Good morning my name is David Meek. I'm the Chief Commercial Officer for Endocyte. I joined Endocyte last summer. I was at Novartis for about eight years and my most recent role at Novartis, I was the region head in Europe for Novartis oncology. So I'm pleased to take you through the commercial update as to where we are. I’d like to introduce to you our unbranded campaign. You are among the first in the world to see this campaign. And why are we sharing this, you will see throughout my presentation and follow up to Binh’s presentation. It’s real important that we establish the foundation of the folate receptor, and the need for physicians success for folate receptor status. So you will see this unbranded campaign at future oncology meeting, nuclear medicine meetings, journals and so on.

Let me move into what we are doing to play-to-win launching in Europe as well as the rest of the world. We are executing a winning plan already along with our Merck colleagues. Our awareness is increasing each and every day. How are we doing this? We've got field people out there from the Endocyte team, out there interacting with key opinion leaders and physicians everyday. The Merck colleagues are up and running already in Europe. So they've got their medical affairs, medical sciences on team already up and running in Europe. All congresses, the advisory boards and so on. So awareness is increasing everyday. The market opportunity for lead indications is large and I'll share this with you. It has been and Chris will go into it more our novel small molecule drug conjugate platform is very exciting to the physicians out there treating patients. They are really anxious to get their hands on vintafolide, etarfolatide as well as the other compounds.

We are building an experienced and high performing team not just on the Endocyte side, but also on the Merck side to prepare for success and the oncology, the alliance with Merck Oncology is going extremely well. I'm very pleased. I've been involved in many alliances over time, and this one is going extremely well at all levels. Globally, regionally, country level, cross functional and all areas its going really well. So in summary, we are executing a winning plan to be able to succeed in Europe. It’s our first entry point as well as to the rest of the world. The significant opportunities that we have in front of us begin with ovarian cancer. I'll take you through more details of how we arrived at this 11,500 patient number. Well you see we enter the market with ovarian cancer and our next indication about 10 times higher in non-small cell lung cancer and then triple negative breast cancer is being discussed, about five times higher. So we enter here and then it rapidly explodes about 17 times the number of patients eligible for vintafolide therapy.

So we are entering a big market with significant opportunities. The folate receptor 100% status patients represent a significant number of these patients anywhere from 40% to 60%. The clinical trials will validate what those two percentages, and that's just in the FR 100% patient population. And what we are learning through past work as well as ongoing clinical study is the folate receptor is a predicted biomarker for patient outcomes. This is a market research study that was done in Europe. Just in the past few months. There were 254 physicians interviewed in all the major markets in Europe, and what does market research found is physicians acknowledge a significant need for a new and predictive approach to ovarian cancer. 88% of the physicians say that significant need for new treatment approaches. Quite frankly we don’t treatment ovarian cancer patients very well these days, and there is lots of opportunities to treat these patients better and have much improved survival outcomes for these patients. They are also asking for a way to identify these patients most likely to respond to therapy. So 84%. The good news is, we can help with two of these highest unmet needs that the physicians have.

So where are we today in Europe? We got vintafolide and etarfolatide dossier pending right now with the EMA. As we shared many times publicly, this was submitted at the end of last year. We're now in the review phase. We expect our day 120 feedback anytime from the CHMP, and also we expect the CHMP decision later this year in the fourth quarter. What are the requirements for the conditional marketing authorization? We get this question quite often. The conditional marketing authorization requirements are unmet medical needs will be fulfilled as being shared and I just shared. There is significant unmet medical need for platinum-resistant ovarian cancer patients. Nothing is working well enough at this point in time and we certainly checked that box. The benefit risk ratio balance is positive. Likely that a comprehensive clinical data package will be provided later that would be the proceeds study that we will follow-up later to give us full approval, and then finally a benefit of immediate availability outweighs the risks that additional data is required.

And that’s why the EMA asked us to submit for a conditional marketing authorization. The basis for our submission is pretty much what’s been shared with you. The four clinical programs for vintafolide, and then also with etarfolatide the diagnostic imaging agent you see patient data and lesion data is all the basis for our submission. So we are in the process right now, we are having active conversations with CHMP, stay tuned for the rest of the year, and hopefully decision by year-end. So what are we doing right now to prepare for success? There are three strategic areas that focus our strategy and tactics; preparing the market, the payor community in particular in Europe. We know reimbursement is a must have in Europe to be successful. We are preparing the customer, talking about the folate receptor story, vintafolide and etarfolatide. These conversations are also very important to have, and then prepare for launches beyond Europe, the US, Japan and other major markets throughout the world.

As I mentioned, I joined Endocyte from Novartis Oncology, and my experience as a region head in Europe for Novartis Oncology; I was there during a very fortunate time, but we had eight launches in the period I was there (inaudible), Tasigna, Afinitor, Jakavi, the list goes on and on. And also the collective experience that we have from our Merck colleagues and even our new colleagues that have joined our organization. We have a lot of experience launching in Europe and we thought it’s just a basis of our understanding, what are some the important lessons learned when launching in Europe. First thing we know Europe is not a country, it is not; it is the collection of many countries. So we will be launching over a period of zero to 24 plus months. We have major markets like Germany, thank goodness launched right away, but other major markets take about a year so to launch. And launch in Europe is really upon reimbursement, it’s not upon EMA approval because of the way the system is over there, their drug needs to be reimbursed in order to be accessed.

Rapidly reimbursement success means accelerated adoption. It’s very hard to market a compound in Europe unless you have reimbursement. I would like to say it’s like selling hamburger to a vegetarian. So it’s really important to have reimbursement as soon as possible, and then reimbursement at the country and the hospital level. This is also important in certain countries like Spain and like Italy, it’s not just a national system, it’s also a hospital by hospital system. So we have got plans in place to make this happen already. We are preparing robust health technology assessment for vintafolide and etarfolatide right now. This is pretty obvious reimbursement equal clinical use, equals revenue. Reimbursement decisions are taking a little bit longer than they did take maybe 3, 4 and 5 years ago to do the macroeconomic conditions and some places the microeconomic conditions in some of the countries.

So they may take a little bit longer but we are prepared for that now. Keeping the awareness and support is absolutely critical not just for product adoption but for payor adoption, how fast do they see the unmet medical needs and then need that vintafolide will. So this is important and I would say, we have the who’s who of ovarian cancer and also nuclear medicine relationships already established and improving each day. And what we do today determines the velocity of product adoption at launch. So just a little background here from some lessons learned launching in Europe. The foundation for scientific communication is a folate receptor message. It’s fundamentally important that we get this message across to physicians. It is a somewhat new message to physicians looking at the folate receptor as a target. So we need to establish the folate receptor as a valid target. Physician gets this pretty quick, when you share the information with them. But being new, this has not been a discussion with them before, but they get it really quick as I mentioned.

We need to establish etarfolatide as the expanding imaging agent that accurately measures folate receptor status. This is a gateway to vintafolide, and then vintafolide is safe and efficacious folate receptor targeted therapeutics. Again this is a fundamental platform for scientific communication. How are we going to do this, we've got our scientific share voice, publication plan, public affairs and key opinion leader engagement, and I'll take you through a little bit deeper level on increasing the awareness from where it is today. Ultimately we want the physicians to walk away from the conversation that there's a new standard of care for folate receptor 100% patients, and that would be vintafolide. The reason to believe are the folate receptor is a predictor of response to vintafolide. Folate receptor expression on normal tissue is limited and it’s not a target. Etarfolatide is a non invasive real time whole body imaging agent. It’s predictive, folate receptor status predictor of full response to traditional therapy is being showed in this data. If a patient is folate receptor 100%, they don't respond very well to POD alone. When you add vintafolide they get a much better response; and those patients that are folate receptor 100% have a poor prognosis for ovarian cancer. And etarfolatide is the only way to determine vintafolide eligibility and being shared with the significant PFS results with vintafolide plus PLD.

For these reasons to believe should get us to our ultimate outcome of the new standard of care for folate receptor 100% patients. This is an example of what the new patient journey could be like for a platinum resistant ovarian cancer patient. What will remain the same is conferring the recurrence or confirming the status that the patient is now platinum resistant. She has advanced the platinum resistant ovarian cancer phase, mainly they evaluate via the increase in CA125 levels. What's really important for us now; we need the physician to think I need to know the folate receptor status of these newly diagnosed platinum resistant ovarian cancer patient. The only way to determine the folate receptor status is to have this patient scanned. So scan all the patients that are now platinum resistant. Once they scan these patients with an etarfolatide SPECT scan; by the way for (inaudible) there that will be brand name for etarfolatide. That's why that's there. So once they scan this patient and about 40% of these patients will be folate receptor 100% positive. That's the data we have up to this point and it’s the data we will probably see in the proceed trial. So about 40% of these patients are now eligible for vintafolide. When you take a look at the lesions in this case the patient has three lesions, all three are lighting up as positive. So that patient would be deemed folate receptor 100%.

From there the nuclear medicine physician would report that to the oncologist and then the oncologist would treat with vintafolide plus PLD, and I will take you through the data, why we're very confident that this new patient journey will happen and then the patient ultimately will end up on vintafolide plus PLD. How are we going to increase this fundamental understanding of the fully receptor message vintafolide plus etarfolatide? Our scientific share of voice historically has not been low, but as I mentioned, it's changing every day. We’ve got in the world’s 30 plus papers for peer-reviewed journals and congress abstracts. Already this year, I would say by the time ASCO and the North American Meeting for Society of Nuclear Medicines happens in June. They will be more published this year than what's been published in the last few years combined. You will also see significant news flow of new publication coming this year. Our Congress President between Merck and Endocyte will be there. So would all the major oncology meetings, international, national meeting in Europe will happen in all the major market, is (inaudible) oncology as well as the Nuclear Medicine Community. So we will cover all of these key opinion leader relationship as mentioned. We're already aligned with the who’s who of ovarian cancer as well as nuclear medicine. So we're quite pleased with our progress. We have a long way to go here, but we are quite pleased with the progress of increasing our scientific share voice.

We have an experience team ready to launch etarfolatide in Europe. What we're going to do is we've already done it, we have established our headquarters in Zug, Switzerland. So that will be up and running. We only need a lean organization to target a pretty small nuclear medicine community, about 400 targets. That's what we need to cover. So we don’t need a massive team of representatives and MSLs out there to cover our pretty small audience of nuclear medicine physicians which is good and then our expansion will occur as the data matures and as we get closure to approval as well as reimbursement timing in the later launch countries. Very pleased with our new General Manager and Vice President of Europe that we have hired, Thurston Howell, he comes to us most recently he was at Bristol-Myers Squibb, has a lot of launch experience, he is German, has worked here in the US. He has been the Vice President of a Business unit regionally in Europe. He was a global leader for Sprycell. So he knows oncology very well. Our Head of Market Access and Pricing, [Ul Stagnanus], we just hired for Amgen so he comes with significant oncology experience and prior to Amgen he was at Novartis Oncology, you see some of the product he has launched in Europe and we are in the late stages of hiring head of medical affairs for Europe.

I will talk more in depth about our clinical science managers in subsequent slides. So the team is getting up and running. Our clinical science manager team that is out there now in Europe will cover the major markets in Europe. So the top five markets represented by 60% of the business. They have two primary objectives, the nuclear medicine customers, so they will build key opinion leader relationships and it's really important to be trained and educate the nuclear medicine community on this new technology. They know how to scan patients, they know how to inject drugs, they know how to interpret scan that etarfolatide is noble and this would be a great entry point for them to be into the oncology field and not just help diagnose, but actually guide treatment decisions for cancer patients. So the nuclear medicine physicians are quite excited. So that’s their primary mission. Secondarily, we have them out there; they are going to be visiting many the clinical sites that we have for the proceeds study as well as the target study. So they will help with patient enrollment to accelerate patient enrollment in both of these pivotal studies for us.

Overtime what will our commercial footprint look like in Europe? Well we will focus on the EU side markets. We will definitely have the presence in each of this markets and in core western markets such as Belgium, Austria, the Netherlands and so on. So it may get up to run the top 10 markets. And then for the central and eastern European markets we’ll have distributors, local distributors and what we have found through our diligence this is quite common especially in the imaging field, even with the other multi-national companies that have imaging agents has used local distributors in the smaller markets. So again our commercial footprint will cover everything, but the Endocyte owned employees will pretty much in the major European markets and we will build this overtime.

And the other thing I would say on this footprint; this footprint is the foundation for the future proprietary assets. So we will talk about the pipeline and being ahead and as these other products enter the market overtime, we will not need to expand our nuclear medicine team, because the nuclear medicine traders or nuclear medicine specialist remain the same, but when we launch with ovarian cancer then we have lung and breast and so on and so on, the nuclear medicine community will remains the same, just the oncology community is what we would have to expand overtime to be able to commercialize on assets. So we got a good foundation in place. People ask a lot well what is Merck doing and what’s Endocyte doing? So along the value chain one can see who is responsible for what. So this is Endocyte marketing etarfolatide and Merck marketing vintafolide and then you see the respective functions. So for the most part we are taking care of etarfolatide exclusively. We will do the manufacturing, distribution, determine price, that all with Endocyte. So at Merck they take the lead and they have everything is in their corner for vintafolide.

A couple of places that are joint only because they make sense and that is around market access or reimbursement. You know, the conversation earlier today many, the customer, the decision maker is pretty much the same for reimbursement and market access for etarfolatide and vintafolide and Merck has a much larger presence than we do. So where it makes sense for both organizations maybe Merck will take the lead.

The launch sequence. So the major market, the top five markets are above the line and then the smaller markets are below the line. So upon EMA approval, we should be able to go pretty quick in Germany and obviously the UK and then the other markets will follow on later throughout the year.

So this would be with the price relatively rapid market access. And France as you may know through the ATU process we would get earlier sales in France before that reimbursement kicks in and then the smaller markets pretty much month-by-month will move onboard for reimbursement and the launches in those markets.

What's really important to take away here is because we've talked about etarfolatide and vintafolide is the oncologist is a key decision maker for both, for both products, the oncologist drives the decision making process. I won't go through this chart here. It comes up a little bit later may be a little bit more clear. The oncologist orders the etarfolatide scan.

If you think back to that patient journey once the oncologist has determined that patient is now platinum-resistant, the next decision point he has is he wants to know the folate receptor status of that patient. So he would order the etarfolatide scan, the oncologist also prescribes vintafolide.

The nuclear medicine is in between these two decisions and the nuclear medicine physician would conduct the etarfolatide scan and then report those results back to the oncologist. We are very confident that the etarfolatide scan will happen and this is just one example that’s very representative of the physician community in Europe.

We have to check if the scan was order make sense and we have to approve it. However, it does not happen very often that a patient does not receive a test. So pretty much if the oncologist orders it, the nuclear medicine physician is going to do the scan with the caveat assuming it's reimbursed.

But Merck targets oncology and gynecology in many of the markets in Europe especially Germany, there's gynecologic oncologist. So gynecologists in some markets are there. So they do all the treatment in ovarian cancer and Endocyte, we will focus on nuclear medicine.

Go back to the patient journey again the patient has determined, has been diagnosed as platinum-resistant. Oncologists report they will order the scan for pretty much everybody. If the woman is platinum-resistant, they need to know her folate receptor status to guide the next treatment decision once vintafolide becomes available.

So they tell us almost all platinum-resistant patients will be scanned. The only reason they wouldn't be scanned according to the physicians is if the patient’s co-morbidity or the product does not reimbursed, say (inaudible) just not reimburse for some reason in that market.

Those are the real reasons but the majority of the reasons; majority patients would get the etarfolatide scan. So we have a quote from a physician in France and one from Germany and the French oncologist reports if the outcome that you show me on this profile is proven, I would prescribe it to all the patients who could use it, and then in Germany a gynecologist report, if the test is reimbursed, I would test all the platinum-resistant patients.

This results in a very high intensive prescribe across the oncology community. I am going to share with you a couple of market research study. This was the study that was down in the US as well as Europe and on a scale of 1 to 7, you see the US at 5.9 and tend to prescribe and then in Europe 6.3.

Another key takeaway from this slide you see the red line. The US physicians report that about 62% of the patients that are platinum-resistant would go on to get vintafolide. In Europe, that number is higher at 77%. So this is pretty much a trend. The majority of the patients would move on to vintafolide assuming the patient folate receptor 100%.

The scan rate as I mentioned earlier, we got to get the patient scan first to determine the folate receptor status. If the patients are scanned and about 40% of them are folate receptor 100%, they would move on to vintafolide. So that take you through this chart. The patient diagnose as platinum-resistant ovarian cancer, the majority would be scanned.

Of the majority scanned, about 40% are folate receptor 100%. Then about 95% of those patients would move on to vintafolide.

And our final chart here, this talks about the patient population. By looking at the incident that is in Europe, this is Europe specifically. So in the top 27 markets in Europe, there are about 42,300 patients with ovarian cancer. Of these patients, 17,100 are platinum-resistant. So that 17,100 determined to be platinum-resistant full potential. So what do we mean by full potential that is everybody, that is a maximum potential out there for us with platinum-resistant ovarian cancer.

The full potential patients test well these are qualified, you see would be around 90% of those patients pretty much in line with the market research, this is a combination of the market research that we put into this funnel.

But 90% of the patients go on to get scanned with etarfolatide. And of those 15,300 patients assuming 40%, 6,100 those patients are eligible for vintafolide because they are folate receptor 100% and again this is only folate receptor 100%, it doesn’t look at the 20% to 80% of patients.

So only the full potential over the 100% population and obvious it's probably a realistic to say some of these patients will not go under therapy for some reasons. The physicians report everybody would go on vintafolide, but we all know for whatever reason the few of the patients would drop out. So we took out about 5% of the patients.

So we have about 5,800 patients eligible for platinum-resistant ovarian cancer alone in Europe with (inaudible) indication. I mentioned earlier, reimbursement is [mission] critical to success vintafolide and etarfolatide. Right now, we have a quantitative payor research study underway in Europe in the top 10 markets in Europe. This market research study quant study will report end of the year.

So we will not have price until the end of the year for both products. And again, we at Endocyte decide the etarfolatide price and Merck would decide vintafolide price. The feedback we have heard already that a premium price to our qualitative research that we have already relative to pricing, feedback has being quite positive and we are very optimistic around premium pricing.

Why is that? The cost saving potential due to patient pre-selection, when you think about etarfolatide scan is in ovarian cancer, it will deselect about 60% of the patients. The payors really appreciate that. They did not want 100% of platinum-resistant ovarian cancer patients going on to a therapy.

So we can deselect 60% and only treat those 40% of the patients that have greater likelihood of benefiting from vintafolide they really like that. This is personalized medicine at its finest. And that's why they are important to us. The small patient population therefore granted orphan disease designation. This is also very important and makes us optimistic they treat orphan disease slightly different in Europe from a payor standpoint.

The high unmet needs for platinum-resistant ovarian cancer these patients don't live very long, is our outlook for these patients. And it’s a one-time test for etarfolatide, only needs to be administer for one-time and that's it, and due to the non-invasive nature and don't need surgery, they will like the test on etarfolatide.

So what we need to demonstrate to the payor is highlight the fact they are no other treatment options for these platinum-resistant ovarian cancer patients.

Patient stratification is important in the ability to select and deselect and the advantage of one-time test, so stay tune for the pricing or feedback again that would be very close to launch, when we are been able to do real price. Ron, mentioned earlier during his opening, our intent is to create a fully integrated biopharmaceutical company with international scale.

We will build the US organization and why is that, it will be oncology as well as nuclear medicine organization. The deal is many of you are well aware of, the deal provides us to co-promote opportunity with vintafolide in the US. So ex-US we have etarfolatide, US we would have vintafolide and etarfolatide.

So we will co-promote with Merck in the US. The profits will changes to 50-50. I mentioned about the etarfolatide worldwide rights and then the timing of the build would really be driven by the PROCEED trial. So we will strategically and smartly invest in the US as well as any other place in the world that's based on the expected FDA approval time.

The market preparation, key opinion leader relationships, clinical studies, they are already underway in the US, around the world. And I mentioned, we've got great alignment with Merck oncology. Beyond the US and Japan, it’s the second largest oncology market. So we are, we know our capabilities and we know where we can succeed and where we probably should hand it off to another partner. In this case, we made the decision we will go with a partner in Japan so in the late stages of signing a deal with a partner in Europe to market etarfolatide and a very experienced partner is that and Merck is fully on board with this decision.

They have been with us along the way selecting the right partner for the launch date in Japan around 2017. It’s been showed earlier, the clinical program begins in Japan later this year. In other markets, Latin America, Russia, South Korea as we will see local partners in those markets to market etarfolatide.

So in summary, for the commercialization of our assets, we are playing to win. The physicians are very excited and they display strong demand. They say 85% of the patients will get scanned with etarfolatide, of those patients that are folate receptor 100%, the vast majority of them will move on to vintafolide.

We are working hard to achieve premium price and accelerated reimbursement because of the benefits that vintafolide offers to the patients. Our key success factors, strong cooperation with Merck, very strong stakeholder engagements and raising the awareness of folate receptor, vintafolide and etarfolatide messages.

Our presence is building to market etarfolatide and we've established the platform for our future proprietary assets as well. And we've got a great team in place to make this happen and the team’s getting better each and every day and the partnership’s getting better each and every day.

So with that, we are done with the first session. I think we will take Q&A at this point in time. So Binh and myself.

Question-and-Answer Session

Unidentified Company Representative

Thank you. So we will have two Q&A sessions. So we thought this might be a good time to break right before break and take one question. Europe first, that will be a good one.

Unidentified Analyst

Great, thank you very much. So there is only one question, I'm going to leave two in that. So for Binh real quickly, I think the model that you had showed in 25, the preclinical model showing the synergy with docetaxel, that was a lung cancer model, correct?

Binh Nguyen

Actually it’s a [KB] cell.

Unidentified Analyst

Okay, and then why do you think the response rate in the FR positive 100% patients is in that you know, kind of mid single-digit range. I mean it's along the lines of other monotherapy agents but with this targeting and again it's definitely impressive duration and fast but you know, what do you think affecting or keeping that response rate alone?

Binh Nguyen

Don’t forget one thing is that as I mentioned, the data that I showed you for --- by the way, that is second line lung cancer and the 70% of the patients in our study actually have mostly or more. So it's much more the (inaudible) patient population than [necessity].

Unidentified Analyst

And I guess for David, the market research that showed up a higher interest for the compounds in Europe, anything you can kind of attribute as to the more knowledge over there? Maybe because of some of the studies in the filing with respect to folate receptor, just with some of the market research has showed there is a higher interest to prescribe?

David Meek

I would say that those numbers are not specifically significant based on (inaudible) in that study. I look at it more as a study with 254 physicians is probably more relevant one but the numbers are very close. The awareness levels because of the European filing, the awareness level is a little bit more advanced in Europe than it is in the US.

Unidentified Analyst

The question I have to discuss the assumptions you have for the Phase 3 PROC study? Are those assumptions based both on the investigator and independent analysis that you have been seen done in the past for the…

So talking about the assumptions for the Phase 3 study the platinum-resistant ovarian cancer study ongoing, where those assumptions keep in mind, I think the differences that you saw between the investigator and the independent analysis that were done in the past?

David Meek

Yeah. So there was both the near FR 100% both were sophistically significant results hazard ratio was roughly 0.38 in the investigator assess and then it was 0.45 in the independent review. Truly not that due to difference between those two. So we use both of those as we serve except the [powering] up for the 250, the other thing we look at in the powering was we want to have a meaningful difference. We could have a difference significant with the clinically or it wouldn’t be a meaningful and so those are both considerably went through that.

Unidentified Analyst

Okay. And then the second question, the step down analysis when will that be done in the study and if the patients that will be added for the step down the FR 100% patients or that a different analysis to FR 100%?

Binh Nguyen

But no I think that the step down, the way the step down is going to be done as mentioned the primary analysis is on FR 100%. So all the patient have all their target lesions positive will be analyzed with PFS. If that is significant then we go down to the next threshold of how many lesions positive out of the target lesion. So we had currently I believe 65% and not forget that these numbers depends on the [disease] 1.1. So if the disease 1.1 has maximum modified lesions, so obviously FR 100, the next one would be four out of five.

So that is the percent of we are going to hold as a threshold, if the FR 100% is going to be significant then we got to analyze the next one which is from 65% to 100%. We see whether that is just still significant or not and if it is still is then the likelihood that we will be to expand that [duplication] to that level.

Unidentified Analyst

Okay, so just one question for David, if I may. You mentioned pricing again (inaudible) economic percentage, will the pricing decisions change based upon label expansion?

David Meek

Upon label extension?

Unidentified Analyst

Yes.

David Meek

In Europe, it was upon you know, given the indication, we have to go back and we negotiate price. So we go out and (inaudible) ovarian and then you enter (inaudible), so that is why extremely important to get the right price the first time.

Unidentified Analyst

Yeah, (inaudible) with Baird here. Thanks for the opportunity to ask question. Since you have initiated proceeds, it appears that your landscape has evolved somewhat deposit or a data as for last year, so given that kind of occurred midstream, how are you controlling for prior (inaudible) and PROCEEDS, I think that is not part of your stratification that you mentioned and then there is anything from precedence that they can help us to think about prior (inaudible) to PROCEEDS and the impact that could have for vintafolide?

Chris Leamon

Yes, we have the handful of patients not only exactly number of patients I don't remember exact number of patients in Phase 2 studies that we have seen in (inaudible) before, and unlikely that data is the too difficult because I don't rely on small number of patients there, but you are absolutely correct is that now that with the trails, and the patients couldn't receive that's a problem plus, I mean that (inaudible) first before study.

However, the current trail that the way we have done, is that they still need to fail prior platinum regimen, whether it’s primary or secondary. So if they fail our prior regimen and then receive Avastin let's say with [Glaxo] plus Avastin and will obtain a longer eligibility for our study. So the patient population in our study is still primary and secondary platinum failure. And the other thing I am sorry I forgot to mention is that don't forget that the ovarian trial doesn't have folate receptor status to determine that.

So it could very well be that those patients who have folate receptor 100%, that trial might not be doing well in general patient population. So that is the data that they don't have, we don't have. So as they mention it essentially might change the paradigm of treatment of ovarian cancer in that its just like the other two, everybody will receive close to same, to determine whether they should have receptor or not. So we are trying to change a paradigm in that ovarian cancer patients should get etarfolatide scan first, if they are positive they should go on to etarfolatide treatment before completing other treatment.

Ron Ellis

And the other factor on that you know as we've highlighted there were balances in the Phase 2 study. Fortunately they went in the right way meaning that the PLD patients had a better prognosis. I think the two major things that we are doing to help control for that in the Phase 3 is of course it’s over 500 patients. That could make a big difference in balancing. We are keeping a high priority stratification factors in place and instead of two to one randomization, we are one to one randomization. So with those changes we should see a much more balanced study than we saw in the Phase 2, sorry at the oncology (inaudible). I know that sorry. Yeah. Sorry. It could be oncology but maybe (inaudible) can now ask you a question sorry go ahead.

Bert Hazlett - ROTH Capital Partners

Bert Hazlett here from Roth. I just have a question for David on EU pricing discussions. Are there separate discussions to clarify there are separate discussions for vintafolide and etarfolatide, and if there's a disconnect in terms of timing how do you expect to manage that.

David Meek

Good question Bert, right now the conversations are going on with the payors as we speak. So when the major markets, Merck is really leading the way on it at this point in time, as our team is getting up and running and we are engaged to an extent. So the conversations are happening is a package, the payors want to talk about both product. So we are really having a conversation, but it’s not a package or a bundle, they are distinct but the conversations are happening at the national levels about vintafolide and etarfolatide. Does that answer your question?

Bert Hazlett - ROTH Capital Partners

Could there be a disconnect between the results of the two or will they be viewed.

David Meek

I mean could one get reimbursed than the other one. Not. We don’t thing that being happening. No we think it will be a joint decision made because again having one without the other doesn't really make sense. So the feedback we are hearing early on is they want to have a joint decision and make a joint decision about both at the same time.

Bert Hazlett - ROTH Capital Partners

And then just very quickly on the interim look for target, you mentioned that an interim look is being conducted, what's being looked at there and just a little more color there would be terrific.

Binh Nguyen

The interim analysis hasn’t taken placed yet, because we don't have the number of events, number of patients enrolled yet. As I mentioned the study is going to enroll 60 patients from 108 patients. And the interim analysis is mainly for two scenario; one is that if for utility especially for single agents. So if the single agent like doesn't do well, reduce that a bar there so that we don’t have to carry on for the rest of the study for the single agent. That holds true for the combination too, but obviously we don’t expect that. (inaudible) of strong synergies between (inaudible) and our drug vintafolide. So that is one thing is utility, to cut out early if you don’t see enough activity.

The other two scenarios is that if the combination let’s say show a really good strong activity and we set up hazard ratio of 1.64 somewhere around there. So that means, we show an advantage of PFS going from 3 to almost like 5. Then we can go directly in to Phase 3 trial. For that comparison alone; so we don’t have to wait to enroll the whole 120 patients for those two arms to go in to Phase 3. And the middle scenario is that if you are somewhere in between so the results are so-so, not too strong but not too bad, then we carry on the whole study as planned. So we have 60 patients for arms that is the idea of whether we should have two arms or three arms (inaudible). So the interim analysis really help us in gaining speed. If we see a good activity in any of those two arms in vintafolide alone or combination or in helping us in saving money and time, if one of the arms especially single agent arms is underway.

Unidentified Analyst

Could you talk a little bit about the launched dynamics of a drug with companion diagnostic in Europe? So the concept of pharmacoeconomic advantage of the drug makes sense when the diagnostic of its own product. We have to screen a larger pool of people. So can you give us some examples of some recent drugs that launched with companion diagnostics may be say like (inaudible) Europe or talk about what is a lead kind of sign of success of that kind of approach?

David Meek

So to go on the analog, I’d be a little nervous going to analogs in other because I don’t know all the details for those like good understanding, but what I will tell you what we are hearing already the fact is, we don't have to and some (inaudible) and so on, you got a test about you could test 100 patients just to find six or seven, correct. We don't need to do that, we would take say probably two patients, one will go on therapy, so it's about if you look 40%, 2.5 scans for each patient that can move on to the vintafolide. The payors absolutely loved it; not only the payors but physicians really appreciate this that they could deselect patients. So that’s the feedback we are hearing; so not everyone did it's platinum-resistant, it's going to get exposed to vintafolide and some other compound that are out there (inaudible). That’s what we are hearing in the conversations (inaudible). So, it's slightly different depending on diagnostic, because what our each are followed by dosage for all, it predicts whether or not the (inaudible) going to work.

Unidentified Analyst

Then quickly on the phase 3, and I apologize if that (inaudible) but your choice of using the investigator determine PFS in the phase 3, what like you treat to go that way out versus (inaudible)

Ron Ellis

So the choice to the investigators of PFS was (inaudible) I think on two fronts; one was the feeling from the European that that’s a more accurate measure actually for PFS. In fact that’s generally in the oncology community that the physician seeing the patient, is going to make a more accurate assessment of progression than someone will randomized in the selection bias and all the things that go with independent reviews, and so they felt that that was a better endpoint for the study. The second part is there is a lot we can do that as preferred by (inaudible) double blinding don’t have to worry about buyers. We didn’t see any buyers, we tested for buyers in the phase 2 and didn't see any, and we have shown that data before as we split [DMA], but by double blinding it gives us the freedom to use that investigate or assessment as we think as just the more accurate measure of what the drug that’s going to be.

Unidentified Analyst

Two questions, wonder if you could characterize the sort of in the (inaudible) process [DMA] went through to get you (inaudible) accelerated (inaudible). I think there is some uncertainty about how much pull there is over there for that, and then secondly with respect to the (inaudible) phase 3, so could PFS that would be clinical, radiological and biochemical progression and if you just tell us these are each being assessed by the investigator and whether the say confirmatory finding acquired in order for us to call a progression?

Ron Ellis

Okay, so let me take the last one, its only our measurable disease progression in the phase 3, radiological progression is not clinical progress, we did have as you know on the phase 2 some clinical progression and when we exclude those patients as we wish it actually gets a little better. So didn't see the impact for study, but in the final phase 3 of the measurable radiological progression only. On the other part on the you guess the question is how did we end up with the filing in Europe, so how is the process once you get there.

Well, we really can't go into a lot of details, but I can cover a couple of key points probably strategy. One was our first meeting we went over and then we disclosed this. We went and talked to Sweden, but Sweden is really the most influential in oncology their country and so we took the data over to Sweden just in a country meeting and we presented the data to Sweden. And it was their suggestion that we take the data to what's called the Scientific Advice Working Party which is a formal CHMB Group. It’s designed to give companies advice on their clinical design and programs. We took that data then to that group and had a favorable response in terms of filing. Then from that period, I think we must have had over a dozen, maybe even close to two dozen meetings with the EMA prior to the filing. And these were filings where we reviewed the OS data. This is the data where we reviewed orphan drug status. We had numerous meetings just back and forth with the repertoire once they were signed leading up to the filing.

And then once the filing goes in and you know we wait for the 120 day questions, the response then after that the clock starts again for 90 days and then hopefully we will hear something after that. But I'd I would just characterize the conversations with the EMA have been very collaborative, really open, lots of exchange of data. It hasn't been kind of a black box you are just going to toss it in, there's been feedback going back and forth during the entire process.

Unidentified Analyst

George (inaudible). Looking at the progression free survival and the world survival curve for about a third of your quarter of the patients there is overlap of both curves, is there anything about that the early failures as it were that is similar. For example if you cut it perhaps by rapid progressors from diagnosis to slow progressors from diagnosis, can you eliminate that, perhaps eliminate or make that overlap of the curve smaller. Have you looked at that other cut in the patient population?

Ron Ellis

I'll take a look, maybe Binh could comment, I think you are referring to the OS curve where it crosses twice, is that what you are referring to?

Unidentified Analyst

Well the OS and the PFS curve, they essentially overlap in the non-small cell lung cancer for about, for the first few weeks.

Ron Ellis

Okay. Binh?

Binh Nguyen

I think that the overlap early on that you are talking about was just laid on.

Ron Ellis

Early on, the first few weeks, that's true.….

Binh Nguyen

Right, right, right, I think that is way too early before the (inaudible) drugs are you see some overlapping beginning and it’s always spread out more at the end which is typical of the survival [efficiencies] reliable for that matter. So I really don't think that we should pay too much attention, its very, very early because our drug is given, don't forget every four weeks, not every four weeks but at a four week cycle. So in order for a drug to take effect, we'd like to see at least two cycles treatment which is eight weeks in our case before we see something. So that's why usually I don't pay much attention, its very early on before even we finish a two cycle treatment. The survival curve though for the ovarian study is overlap back and forth and I think that that is more due to the small sample size of this study more than anything else. So essentially its overlapping.

Ron Ellis

That's a great question though I did not have that one before. So I think if you try to look at the data and see. One thing that also could be going on there the first scan was at eight weeks and these patients that came on some of them since we didn't control for prior therapies, we had patients who are very, very end staged. So I know in some cases patients who came on the study died within a week or two of randomization or not randomization so what randomized. So putting on, so in that early part of the curve, you got a lot of things going on for patients who are dying very early before even the first CT scan. Once you get to that first CT scan, at eight weeks, you will see the curves then start to make a little more sense. That probably reflect what you are seeing, you had some patients early on, who just had a very, very poor prognosis because the curves did occur.

Unidentified Analyst

If you eliminate those from the study maybe you could get earlier seperated.

Ron Ellis

I think we've done that. We're careful about limiting patients in a small study anyway, but I think we've done that and looked at it. We see much, even better results because you had patients who really have a chance to respond to the drug.

Unidentified Analyst

You elaborated a little on the economics between you and Merck. Was the non-US split and is there any recapture of upfront expenses for them and on the pipeline, are there any other deals that of this nature?

Ron Ellis

So, I can give you as much as we're able to disclose. I think it's a great deal for both us and for Merck. The first, I guess, the economic was the upfront payment was $120 million and then $880 million in additional commercial and development milestones. Those are spread over different indications and countries and we don’t have any specifics on that. And they get, we get double-digit royalties which are outside of the US. We haven't disclosed what those are. We have a 50:50 co-promoting profit split in the US, and we're able to chose how much of that we want to take, for there is different time points where we can opt in and out or in and we can say what we want 30% or 50%, there is the profit provision in there for the United States.

The scope of the agreement is limited to folate-targeted zinc alkaloids. So any other warhead that has a (inaudible) like structure if we develop in the future or Merck they would owned that. All other warheads or other ligands are still proprietary to Endocyte. I am sorry, so on the expense side, on the ovarian study which we were already running before the deal; we paid the majority of that cost for that study. So all other development expenses were paid a 100% by Merck. So the lung trial, the breast cancer this phase 1 100%, we just (inaudible) we are running the lung study, we submit the bills to Merck and they pay it for it and no recapture.

Unidentified Analyst

And question for Binh. You mentioned patients group are group based on (inaudible) cancer lesions that are positive right in the diagnostic and so not on intensity, but a percent of cancer lesions. So theoretically if there is one receptor in one cell, and the lesion lights up you count the lesion as positive right. So does intensity matter you think in this whole discussion and if it does, you think it may affect your ability to correlate between positive signal and your diagnostic and responses?

Binh Nguyen

Ron has a better history on this, but actually early on we did look at to the same intensity in the same start, but it’s relative to background and we do that analysis. So for example background with (inaudible) or background on the opposite side of that lesion, to qualitate the density of signal and look at that, it doesn't seem like much difference. So at the end we decide to go with the percentage of lesion then looking at quantitative way of try to quantitative density of signals.

Ron Ellis

Yeah, so we look at that intensity didn't seem to correlate to response with (inaudible) SPECT scan that is quite a little more technical answer that we want to get into. But with SPECT scan it’s difficult to measure intensity accurately, you need what’s called SPECT CT and we are collecting SPECT CT images now that you can more accurately measure the intensity. I think you will probably see a correlation, but we won't know until we finish collecting scans on SPECT CT cameras instead of just that.

Unidentified Analyst

So when do you think you have some data there?

Ron Ellis

In the phase 3 we’ll have that. End of the phase 3 we will be able to look at both and see.

Unidentified Analyst

And this is John (inaudible) from Credit Suisse. Regarding the Japanese partnership do you have full rights for the demagnification or we get to split the revenue from that with Merck?

Ron Ellis

So we are responsible for worldwide commercialization of the diagnostic that’s completely Endocyte, and we haven't put in place the Japanese partnership yet, so I don’t really have any comment on how the economics of that would work. But I would tell you, we are looking at partners right now for helping in Japan to commercialize and support that product in Japan.

Unidentified Analyst

And in regards to PROCEED study, you know I mentioned that after initial TFS we can now first (inaudible) patients and then as an optionality to add another 100 patients. If you add those 100 patients how will that change the current assumptions of the study in terms of the OS readout?

David Meek

We haven't disclosed being --- but we haven't disclosed the powering assumptions on the OS for the study. Also it’s going to be much better if you go into more patients and so now we've characterized that as we are getting with 350 patients, we will have a good look at OS.

And I think that kind of puts us in the window where you could see a positive OS result there, as results were quite robust but we've fortunately disclosed for you the powering assumptions for the OS analysis. And there's a long reason for that but no reason to go into it now.

Unidentified Analyst

(Question Inaudible).

Binh Nguyen

I think that's an excellent question. We actually have about 1,000 a little bit more than 1,000 patients in randomized Phase 2 study as we did that which is we did the scan after they had progressed and looked at folate receptors status and majority of them often actually seen any changed there folate receptor status. So they most probably progressed because they have refractory through the treatment. And not because of change in folate receptor status and actually Chris will talk a little bit more about that and that's why also the advantage of second generation drug. So he’ll be…

Unidentified Analyst

I'm still just a little confused in the mechanics of the step down analysis. So assuming the 100% patients hit on efficacy you then just expand the overall patient pool to include those 65% and above into one patient pool and [return] the significance for those patients looked at that as a separate bucket to 65% and 100%.

Binh Nguyen

Yeah, let me clarify that, that's a very good question. The (inaudible) is that 100% is of statistical significance and the analysis will be from 65% to all the way to 100%. So if we look at that whole group but at the same time, we also look at the subgroup between 65% and less than 100% to make sure that there is still a signal of efficacy there. So we do both.

Ron Ellis

It’s probably time for I think we are ready for a break and I don't know what time we reconvene, do we know? Okay we'll see you in 15 minutes. I'm sure that --- and we will finish up with the pipeline and financials.

[Break]

Chris Leamon

We're going to get going again. Good morning everyone. My name is Chris Leamon. I head the Discovery Research at Endocyte. And I am here to talk about essentially where we're going next with the company in terms of directions and signs. And it's a pleasure to be here.

I wanted to rehash a little bit what Ron had said earlier this morning by showing the same slide and really I think watching someone close to you be treated with a chemotherapeutic, that does nothing but make them sick is a real eye opener. And this is what got us very motivated to exploring alternative approach towards treating cancer and so you heard the term SMDC and it's my opportunity to explain that in greater detail for you.

So by targeting a drug, we can actually deliver more of that compound to the exact site that we wanted to be. We can take drugs and in some cases enable them. So drugs that have no therapeutic window period and I will show you an example of that but it really comes down to delivering more drug to where you wanted.

The other thing is having the ability to select the patients where you believe that drug is going to work the best and that’s where our companion diagnostic imaging agents come into play, you know, etarfolatide but that’s a common theme for all the newer pipeline agents that are going to be coming forward where we envision having another receptor besides the folate receptor, having a ligand that has high affinity for that receptor, so we can target it. And then having a matched imaging agent therapeutic [mobility], just like we have with etarfolatide and vintafolide. So it's really personalizing the medicine.

Now, I have had the pleasure of being around this technology since it started and actually started on my laboratory bench when I was a grad student many, many years ago working for Phil Low, our Chief Science Officer. And this concept evolved after we proved that we could target drugs very selectively to those cells that express receptors.

And so, I think it's very important to take everyone through this design its modular. And it's modular for a really good reason, multiple reasons in that just simply a catching a targeting ligand to an active drug will not guarantee success.

So keeping in mind that a ligand has very high affinity for receptor and for the moment we just call it folate it's a good fraction of what we do centers around the vitamin folic acid with the high affinity targeting ligands to which we want to attach a very active drug, but how we attach these two modules together is critical, very important.

First, we introduce what we call a spacer; hydrophilic is a fancy word for meaning that it loves water. Most drugs we work with just are not soluble in water, which presents a challenge for formulating when you going to treat someone. Folic acid is water soluble attaching that to something does not nine times of 10 make something that’s not soluble.

So in a very straight forward manner, we produce a spacer that tethers those two together. Separates the targeting ligand from the drugs so that we get optimal binding to its target receptor. But also provides a lot of water solubility, so I am sure most of us have heard the term docetaxel you know the drug that's in toxal. Docetaxel isn't very soluble in water.

We can produce in SMDC of docetaxel and make that as SMDC soluble to greater than 10 milligrams per milliliter which is far more than you need to dose someone. So that’s the purpose of our spacer, but we have another module that is very critical to the success and this is a linker system specifically I say releasable linker system, where it is stable in the blood because we don't want this entity falling apart once we inject it into the patients.

So it has to remain stable while through circulation, while it cleaves once this whole unit, the whole SMDC gets inside the targeted cell. And it releases not just the drug with this little piece of linker still attached; we don't want that because more often than not that reduces the efficacy of this drug. We want everything in green to be liberated and the fancy word though we use is called self-eliminative, self-annihilating.

The bottom line is we want a most active form of that drug to be released inside that targeted cell. And that's the stringent level of criteria that we have when built these SMDCs. To put things in and I guess cartoon fashion, so here we have an SMDC approaching this green cancer cell and you see receptors on the surface. And so as the SMDC approaches the cancer cell its affinity target log binds with very high specificity like a key going into a lock. That triggers the membrane around that receptor to start pinching inward to the point where we have an intracellular vesicle, a sphere that forms, that houses our SMDC and through the magic of the chemistry that we employ, the red drug separates from the SMDC and then the red drug is free to defuse wherever it’s going to go.

In this example, we were targeting an active drug that goes to the nucleus to affect DNA, kills all the green cancer cells but because there are no receptors on the normal blue cells we don't harm them. Now in some cases the ligands that we use may have an ability to get in through cells to transporters.

Oleic acid is one of them and this is on lot of normal cells. So the question is how come we don't get into normal cells. Well attaching a bulky drug to that targeting ligand makes it less stable to go through than normal channel. In fact, it doesn't happen because they are just too large.

So that's where we gain even greater selectivity, it's not the fact that there's no receptors on those normal cells but also we can get in through other means. So this SMDC approach gives us the ability to work with very potent compounds. If you look on this line which is in a log scale of potency, you can see agents on the far left side here like Cisplatin, you know some of the (inaudible) 5-FU I'm sure you've heard about a lot of these drugs (inaudible).

These are active compounds but you've got to give large dose levels of these compounds to make them work. Well, we have made SMDCs of these inferior compounds and it doesn't work. It doesn't work for us. We gravitate towards the right side of this continuum. We are all working with extremely potent compounds but this is great for us because most of these compounds don't have therapeutic indices.

They can't be dosed because they are too toxic. You throw them on cells, you know in a Petri dish sure you are going to see the cell killed but you put those drugs into an animal and you don't have the ability to dose them safely. So these are the drugs that we like because we can enhance more often to the point to enable their use.

So let me give you an example, we have a drug now called Tubulysin, it’s a very potent microtubule destabilizer, microtubules are very important for pulling chromosomes apart when a cell wants to divide into two daughter cells. If that process is interrupted those cells, the cell will die. It gets confused and doesn't know what to do. And so it dies.

And so that's the mechanism of these potent microtubule inhibitors. With Tubulysin, we dose this drug into animals and this was done at the Mtb, the maximum tolerated level that we could dose but I'm not showing for simplicity’s sake on this curve, it’s a massive weight loss that this regimen produced in these animals. So what we are following here is the growth, exponential growth of the tumor which is in these mice.

So Tubulysin alone you can see that curve is no different from the untreated mice which is the black curve. There is no activity, no efficacy yet there is tonnes of toxicity. Contrast that to a folate targeted form of Tubulysin and SMDC of Tubulysin where in the red curve we are starting dosing when there's well established tumors and if you don't treat this is your control curve, the vertical line here, vertical dotted line in all my graphs show the final day of dosing.

So this is a very short regimen of what we did, Monday, Wednesday, Friday, two weeks in a row and look at the red curve, those tumors melted away and they didn't come back with folate Tubulysin. This was not dosed at the [Mtb]. Again I'm not showing the toxicity curve because there's no weight loss associated with this. This is enabling.

You can’t dose this drug because they won't do anything by itself. You have to put it and present it in a form of SMDC. And so considering this, we have a newer approach for targeting cancer cells, where, yes, we're going to deliver more drug to the tumor site and we can dose it more frequently because there is not that toxic component that comes along with it.

Now the S in SMDC stands for small. Why does that matter? Well, we've done many experiments to show this and I know there is a glare. So you probably see it better on the screen down there than you look here but just look at the graph for a moment that we have a high molecular weight size [payload]. The same, what we call, hydrodynamic volume of an antibody and we put folate on to that large payload and there is also a red dye on that payload so we can track it and using intervital microscopy, we track the uptake in the tumor and you can see there is very large molecule after the first 65 minutes, there was very little that have accumulated in the tumor.

At 65 minutes in the same animal, we dose an SMDC of that red dye. Same ligand, just small package, same read out molecule, the red dye and almost instantaneously we got a large quantity of that dye which is a drug surrogate in this experiment. We have that localized in the tumor which persists for a long period of time.

As I am going to run this movie, where you are going to see before I started up is that we have through the center is a blood vessel and this image that we have start here with is representing this time point. So right like 64 minutes where anything that’s in this space outside of that blood vessel, which is tumor cell? The blue little circles there are the nuclei of the individual tumor cells. You kind of gauge where how many cells there are and if there is red in this area that means we were successful delivering the surrogate drug with red dye.

Well, that’s with the larger size molecule is. Let show you what the small molecule does in real time. Look how fast we are talking seconds, its small which means it can get escape the vascular and get into that solid tumor with ease. We this time and time again and it's really has to do with the network of how that solid mass, it is how it's put together.

So again, I think just for sake of showing it, I mean I have love this particular set of data just showing how fast that we can access all of those tumor cells. So considering that we now also combine with companion diagnostics to select those patients that we believe we can treat better, here is evidence to show you that our agent is really a full-body real time diagnostic agent showing the benefits of the targeting, this is a lesion right here that lights up and we know that this was folate receptor positive and (inaudible).

So we access that solid tumor very easily. Down here this patient has a tumor turns out of his folate receptor negative and we see no uptake we can't, there is no accumulation because there is no biomarker, there is no means for us to get our drug there and so these types of data sets really help us to understand that yes indeed, etarfolatide our imaging agent will predict if we can access that lesion, it will predict that we can target our drug to that lesion as well because it’s the same exact mechanism and you can see that only when you start seeing lesions decrease in size and all this blue are the folate receptor positive regions, these are the folate receptor negative lesions which progress. So truly this is showing the benefits of having the selection process to guide the therapy.

For the next few slides what I am going to do is talk about how we validate this system, the small molecule drug conjugates. We will talk about receptor, we will talk about the ligand because we are more than just folate receptors and I hope after I am done talking I convince you that we have more than that, more than folate receptors, we have lots of ligands that bind to different receptors.

And we have methods of validating the warhead and improving upon the warhead. We can take drugs that have been around 20 years, make modifications to them and make them more active and then validating the whole SMDC process.

So on the left side here, this is actually a cell, this is the outer memory of a cancer cell and again we are delivering the red dyes, so we are trying to do is validate that we can exploit a particular receptor and we have lots of in vitro means by doing, so what I want to do is direct your attention to this bottom of curve here and bottom of --- and you will see here that we have an entry of that vesicle and I will show you the cartoon, this is actually following and real time how fast this molecules get in, all right. Let me show one more time.

So you can see this is an endosome forming that vesicle where our drugs are going to be housed and how it gets into the cell and you can see on all this other areas we have multiple vesicles coming in to deliver the drug. So that helps us validate in the laboratory setting that yes cells that have the receptors we can target those cells using our methodology. We also have means of validating in patients. So as Ron alluded to earlier what we desire is to get proof of concept pretty quickly in the clinic with another receptor system. We get patients that we believe have the receptor and we will scan them with the companion imaging agents. So in this setting, this individual did not have cancer and we don't see any up tick in pretty much anywhere in the body. The kidneys are involved in removing the agent.

Contrast that to this individual who had late stage cancer. We see the primary ovarian mess and then we see the peritoneal metastasis, multiple (inaudible) as well as the liver being studded with the cancer which is very common. That validates the receptor. We have means of validating the ligand as well. In this case I'm going to talk a little bit today about PSMA, Prostate Specific Membrane Antigen which is you can think of that as a different type of receptor. It’s present on prostate cancers, present on neovascular (inaudible), but we were fortunate enough to gain access to a crystal structure.

So this is the actual protein in a model sense and we know that there is a binding pocket to which a small molecule can go in and bind and there's a level of affinity associated with every molecule. So some molecules will bind tightly, some will bind weaker and there's a way for us to tell that, but there's also a way for us to try to optimize what that structure should be for optimal targeting and this is a cut away view of where the ligand will bind and notice this is a stick structure of a molecule. This is the ligand that we have for PSMA and we engineered this little piece right here because we knew that there was a greasy pocket that there was nothing in our previous ligands that didn't exist. This little piece and we knew that this greasy pocket exists. So we said hey let's modify that ligand, put something that is also greasy and grease loves grease it will go in there and fit better, right.

In so doing we made a superior ligand that can target PSMA and this is proprietary to Endocyte. We produced a compound called EC652 which is analogous to etarfolatide; only this one is the companion imaging agent to light up prostate cancer. We see this by validating ligand in this example PSMA looking at a bio distribution in PSMA tumor bearing animals and we see up tick in the tumor and kidneys involved in the process of removing the agent. These are two different types of tumors that we have as models. We can do whole body imaging of the laboratory animals and you can see the tumor up tick, you can see the kidney there.

The nice thing about companion imaging is, you could take a picture very quickly, an hour, two hours or so. This will go down in time whereas the tumor up tick persists. Likewise we can image patients. So this is a patient that has highly metastatic prostate cancer. Prostate cancer metastasizes to the bond and literally up and down the spine. All these little black dots are little tumors, and you can see that our agent and I didn't want to flood this whole image with red arrows, but I mean all of these little black dots are tumors and this was taken only one hour. So if you look at subsequent images, four hours and so forth the kidney, that goes down the background, liver, spleen, that all goes down. So what's most important for the diagnosis is confirming that the up tick occurred in the tumors very specifically and it persists.

The next stage of validation comes around the warhead and what we performed what's called Structural Activity Relationship study, SAR. There is just one recent example actually where we have a new molecule. I won't tell the name at this point but it's not necessary for this purpose. We have a molecule and we're following tumor volume at day 50, and you take the one molecule that we have to start off with me and it delayed tumor growth, but at day 50 there was a sizeable tumor still left. We take that drug and say right lets modify site A and we do so and that’s SAR 2. Well, it didn’t really make any change. Nothing positive for us. So we say alright, what if we modify site B on that molecule and that’s SAR3. Wow, we got greater activity. We want that bar to be down and so that was a positive change. But wait a minute, let’s learn from this and make another change, that’s SAR4. Well, okay, we went the wrong direction.

But the learning that occurs throughout this iterative process eventually led us to SAR5 where we produce an SMDC that was carried out, and this is what gets us excited. So this is a warhead validation. Similar to that and I talked about the different modules of conjugate. This is a compound called EC531 which was a formal pre-clinical lead for us until it was replaced recently. It has folate of the ligands. It's got very active drug called Tubulysin. It's got self [modeled] releasable linker system.

Well, if we said, let’s optimize this spacer functionality here. We made 14 different analogs where we just changed the blue part and 531 which was our formal lead had 233 fold level of specificity and obviously the greater that number the better off we're and through this process of changing spacers, we identified a molecule called EC1456, highlighted in yellow. That brought this level of specificity up four fold greater than what we already had, which was fantastic. So we had almost a 1000 fold specificity with this agent, plus when you compare the serum half life or plasma half life to vintafolide, our phase 3 asset right now, look at the human stability, human plasma stability. So vintafolide 6.3 hours this one jumped up to 17 hours.

Now to be fair our compounds because of their smaller size exit the plasma fairly quickly. But having an enhanced amount of stability will also help because outside of the plasma compartment if the SMDC gets into the wrong tissue, before it's cleared out, we don't want to fallen apart there either. So the higher the number that better. So we were extremely pleased by the results of these studies. Now we validate the entire SMDC once we have a series of checkpoints that have been cleared, and one of them quite frankly is to confirm specificity in vivo.

And so on this slide showing in the red curve that yes indeed we get very substantially greater activity with vintafolide over the free drug in green. We are also consequently without toxicity components the green, free drug gives you toxicity, the period of activity with our conjugate and we don’t see that. But it's equally important to show that we can block that activity to show specificity. Meaning, that in the cartoon up here, if the receptor was completely full of ligands, there is no place for the SMDC to bind that would tell us we shouldn’t see any activity and that’s exactly what happens in animals.

We block that activity, when we block the receptors. Now the fatuous thing here is that highest infinity ligands in this setting is just not found in plasma cell. This is a test system for us to prove specificity, but nonetheless it tells us we are truly targeting. So validating the whole system show us that when we take the ligand this is going to be something that will be useful for human studies because we can get early leads by doing imaging studies in phase zero or even phase 1 clinical study. So we can validate that. The warhead we are using drug that are known to be active, we are just optimizing them and giving them some chemical information to get to the right place, and then validating the entire SMDC in multiple models when compare to the free drug and we have all the specificity controls in place and we also I didn't mention but we also use receptor negative models, all right and under those settings we would expect receptor negative model would be like a normal cell, we wouldn’t won activity here instead and we don't see that.

This all give us the confidence of taking that particular SMDC into the clinic. So that is kind of an overview of the process of developing an SMDC. What I want to do now is transitioning to talking about what’s next, what’s next beyond vintafolide. I introduce BC1456, but why are we so jazz about this compound. First of all Tubulysin is an active compound, its as I mentioned before a micro tubule inhibitor it’s a natural product, it comes out of bugs, it comes back with bacteria. Years ago it was only available through isolation, fermentation, its an inefficient process something that we couldn't move forward with developing and so we embarked on making Tubulysin through a total synthesis. And we are the only one that can make this particular compound, we have a patented process for this, the only one to make Tubulysin in the quantities and through a very efficient means that we have patented.

But this compound Tubulysin is highly accurate, especially when we produce an SNBC its highly active against cells that have few receptors. So whereas and we will show you evidence of this for vintafolide is inaccurate because there is just not enough receptors to deliver enough of that warhead, this agent will be accurate. We see curative activity at dose levels where vintafolide is completely inactive so low dose levels. You don't have to saturate all the receptors on these particular cells with the folate tubulysin SNBC. It’s confirmed to be active against naturally occurring vintafolide resistant cancer. This is really unique, because it extrapolates this to the clinical setting. If a patient progresses on vintafolide, we already know and we mentioned this before the break that the receptors persist. The receptors persist even though a patient may progress. Well if that's the case switch out the drug and treat them with something else, alright and so you will see that as a recurrent theme here.

So I mentioned that Endocyte has the IP on the synthesis and we will start the clinical investigation of 1456 this year. Tubulysin as a drug, if you compare all the blue curves which are tubulysin just the base drug alone to the drug that's in vintafolide which is in red you can see in three different human tumor models, or cell models here that in every case tubulysin is more active and in some cases 250 times more active. The NCI they have a panel of 60 human cell lines where they will test new agents against this panel and you can see the (inaudible) as a class of compound and the tubulysin, and I just highlighted the two lead indications that we are moving forward with vintafolide. And you can easily see there's at least a 25-fold difference in what the NCI found with this class of compound, and I can tell you we have an even more potent tubulysin in what they tested.

If you look at the conjugates, the SNBC forms; again in blue is the tubulysin flavor. In red its vintafolide. Here we have two models that expressed lower levels of receptor, and under this setting there's one breast cancer model, triple negative breast cancer. Alright vintafolide had some activity but the tubulysin SNBC had greater activity, 250 times fold greater. In this human model of non-small cell lung cancer vintafolide was completely inactive, but not the tubulysin SNBC EC531. So again bringing this back to that theme that this is an enabling approach even folate tubulysin you can enable it and you show the specificity. So we can block that activity just as I mentioned a moment ago. So these compounds are passing all of the critical criteria that we have in place.

We tested the folate tubulysin small molecule drug conjugates against the broader set of tumors. Keeping with the color scheme blue is the folate tubulysin SNBC, red is vintafolide and its very easy to see in human models even (inaudible) models that we have of different types of cancers, we are getting superior activity with folate tubulysin compound. Talking about resistance, patients will progress as they develop chemo resistance. In this particular model that we have which is a human ovarian cancer model, these cells express a drug exporter. So you get the drug inside the cell, well its going to kick it right back out. And this cell is now insensitive to vintafolide, but it was not, it did not escape the folate tubulysin SNBC EC531 and then to make it even more stringent we developed an in vivo resistance model.

Now let me just take a second here and explain what we do. We allow the tumors to grow without treatment to a fairly large size and then we start a therapy. We start a therapy and treat them until the tumor reduce in size but not cured, and when we stop therapy and then the tumors grew and then we started again, and we went back and forth, see saw, back and forth until we reached a point where none of them were responding to vintafolide. The entire time from the developing the in-vivo resistance, all these animals were treated with were vintafolide. We didn’t introduce the tabulation SNBC until this point right here. I am just for graphic purpose is showing you the different colors. We keep vintafolide therapy and they resist it. Here we switched over to the tabulation SMBC and we start to get an anti tumor [frac]. We could not dose anymore because from a technical point of view, hitting a little tiny mouse frame, I would surprise my staff to do it much as they could, but nonetheless we got proof of concept from an in-vivo model, just fantastic results, we are writing this stuff right now for publication.

And then most recently, we developed a model that is resistant to Paclitaxel. So lots of patients get treated with Paclitaxel in front line. And so this model resists Paclitaxel. We found surprisingly that it also resists vintafolide. So the resistance started with Paclitaxel but there is cross resistance because it's no longer sensitive and it's not due to folate receptor, because the folate receptors persisted. The resistance was due to something else. While that something else didn’t matter when we treated with DC1456, we got beautiful single-digit nanomolar IC50 activity, very high activity.

But I can tell you this, we know what's going on and that is there are drug efflux pumps. So imagine Paclitaxel in this resistant model. Paclitaxel slips through the cell, but then it gets kicked right back out. So you never build up an effective concentration of the drug to have activity. With vintafolide in this model we treated it binds, it gets in we know that and it releases the drug, we know that, but the drug is getting kicked out. That’s not happening with the Tubulysin. In fact here’s an in-vivo model that’s currently underway, where you can see in a solid tumor model that the tumors are resisting Paclitaxel at a very high dose, they are also resisting vintafolilde, they are super imposable to one another, but they are not resisting 1456. So we treated, treated, treated up in to this point, it's an interesting question, if we keep treating, if we bring that blue curve even lower, I mean as it is we two cures in five right now.

So I just wanted to show this to contrast that the newer pipeline agent has some very favourable properties, and more than that we’ve got lots of other opportunities for looking at other agents. So, we are in the microtubule world right now. But moving forward into the DNA world, where we can use agents that are very active against the DNA, our mTOR inhibitors are right now, we have proven concepts with those that are highlighted but there are lots of targets, lots of drugs for these targets that are still worthy of exploring.

And let me just tell you, I will spend a few words on targeting DNA reactive agents. So we are currently working with one that is also in a very potent range and I remember I continued in my show it's all the way on the right time. So here we are sticking with the same ligand folic acid, but now we are using a DNA reactive compound, we are not using (inaudible) we are not using Tubulysin, we are using some with an actual DNA and in this particular example it actually cross links. These are two DNA chains here, strings and this agent fits right in the middle and just grabs on them, cross links them, cross links them to the point where the DNA can't be separated and celll don’t like that so they kill themselves when that happens.

Well new results that we just obtained about a month ago, we made an SMDC out of this DNA reactive compound. We started with animals ahead; established subcutaneous tumors and we gave them a single dose, just a single dose. A dose that didn’t cause any weight loss as you see down here, but that single dose generated 100% cures in the model. It blew us away and just remarkable results here. This is non micro tubule mechanism potentially avoids the cross resistant’s that we are seeing with for example vintafolide. We maybe able to dose with a lower frequency, and we are going to extrapolate that to the clinical situation. We don't know but this is our goal, this is our goal to produce compounds that will be more patient friendly and have a greater punch. That’s the future where Endocyte is pushing.

The status right now is preclinical, I am not even going to tell you an EC name right now, because that helps for clinical it is but we are very excited about this new class of molecules. So how does this work in to a clinical strategy? So the way at least I look at it is imaging selector our receptor positive patient using one of our companion diagnostic. Treat that patient with SMDC1 and maybe for the moment its vintafolide because that will hopefully be on the market, and will be the first shot at a patient seeing an SMDC.

We are delivering a potent micro tubule inhibitor and we get therapy, where at some point that might be chemo resistant [stack] of ours, and so if we have progressions at some in the future let's rescan that patient and confirm that the receptors are still there right now with that in the thousand that seems to be the case, that the receptor remains. Let's confirm that and then we will switch therapy over to SMDC2 and maybe that’s a DNA reactive mechanism, so whereas maybe some resistant interfering with the micro tubule there won't be resistant potentially to a DNA reactive mechanism. So that's a snapshot there in the folate world. Let me give you a snapshot in the PSMA world. So PSMA, prostate specific membrane antigen expressed in predominantly almost all of the prostate cancer patients but you know this we still need to do scanning to confirm all of those but certainly it is a good fraction of them.

PSMA increases as the cancer gets worse. It’s kind of a similar story to folate receptor. Folate receptors seem to appear and help the cancer become more aggressive and PSMA seems to be that way. PSMA is normally on the inside of the cell.

For some reason with the cancer cell, when the cell transforms it likes to put PSMA on the surface. Anyway, so we know we can use this, exploit it as a receptor. We already have an agent [EC652] that is analogous to etarfolatide but this is specific with PSMA.

We already completed a Phase 0 study, so micro dose we enrolled 10 men that have prostate cancer and we saw really nice images on each one of them. So we have our proof of concept now. We know we can target the tumors. And so what we want to do now is target, introduce a therapy into the clinic and we are working to get the studies started in the early of 2014.

So we are not far away believe it or not. We have an agent that's Tubulysin based but ligand that we call [gulu] and this is just an in-house name, but the ligand in gulu binds extremely tightly to PSMA. Tubulysin is a drug that's going to be released specifically in the cells. Here's just an example showing the performance if you don't treat the animals the tumor grows exponentially. If you treat them, it brings them down to nothing. Very tolerable therapy. So excited about that. We are working with other payloads besides Tubulysin in the PSMA space.

Now I'm going to switch to information. I'm going to talk about [EC1669]. So in 1999 when we brought etarfolatide in the clinic, we started imaging patients and started, excuse me, in 1999 we were imaging patients. We were imaging women that had ovarian cancer and this is one of the images you can't see a cancer that's above the plain but we saw something weird which was for me lit up and just many of you probably heard the story but I'll just cut the chase.

We explored this in the lab space wondering what cell type was in that in the claimed area and it turned out to be an activated macrophage which is one of the many white blood cells that we have and normally a macrophage is good for us because it helps us fight infection but every now and then the cell wants to get med to get activated.

It can't shut itself off and under that scenario that leads to disease and so you could see in osteoarthritis active OA, rheumatoid arthritis. This is etarfolatide imaging here, ischemic bowel disease so you can have the perforations in the gut, even (inaudible) which is inflammation of the glands up in the head and neck region.

We have proof of concept to targeting these active inflamed areas in diseased patients. Pre-clinically we could take it even further. Arthrosclerosis we can look at the aortic arch and deliver agents right there where the inflammation is. Of course irritable bowel syndrome, transplants, you know, you take an organ from one person one, I mean I'm a transplant recipient so this is very interesting to me, having an organ from one person put into another. That creates inflammation and if you suppress it, how well does it allow the graft to take.

And well the percentage of the takes go up. So, that's interesting to us. Even infections we can target areas of high active inflammatory responses. So what we are doing is we are not targeting these macrophages to kill them. What we are doing is we are developing something called macrophage modulation.

We just want to shut it down. We just want to shut those cells down because again they are activated, they are mad and when they are mad, they are releasing these potent what we called cytokines and other factors that do lots of other things to peripheral tissue.

I am sure you are well aware of these $1 billion agent. They go after (inaudible). (inaudible) is just one product of many that this engine releases. Our approach to this is to deliver an agents, we are very found of this compound called [aminopterin] which we once get it inside the cell very specifically it just shut this down and all of other stocks, all these agents don’t get released anymore.

We have confirmed, we published on this a number of papers now in models, laboratory models of rheumatoid arthritis. Arthritis leads to not only inflammation you can see on the X-Ray but also the generally bone reagents here. You treat and you prevent all that. We have models of uveitis. So retinal attack of inflammation the [text] to retina on and this black arrow really need to go right there but nonetheless that’s a (inaudible).

If we can return the eyes back to normal after we induce this, which is --- need to see, I mean eyes are really bloody and stuff but --- you can’t really tell if they are bloody but we can see it when we're there in the lab. Returns it back to normal. You know, when you look at the tissue, you know, this is all destroyed, the retinal tissue here, it goes right back to normal. Just by simply removing that activated cell.

It just doesn’t need to be there and when we take it out, it goes back to normal. Even MS. MS, just to help orient you in this graph here. All this little black dots, those are macrophages and they are all there on the spinal cord. Well, when we treat with our compounds, they disappear. You know, when we deactivate them, they have no reason to be in that tissue, so they leave, okay.

And then also some models of valve disease --- that are small and (inaudible) and we decrease the size of those things. And having the ability to scan patients is really helpful. We can collaborating with (inaudible) and she is a specialist in osteoarthritis and you can, she knows that there is inflammation in the area and the joints here. What she didn’t know up until, a while ago is that, those active areas of inflammation are all folate receptor positive. So we can take folate and target in imaging agent now again if we can target the imaging agent there in a small molecule drug conjugate format now we can target an active drug in that circle.

So 1669, this is the lead compound that we are fond of, it is in SMDC, it's very high affinity. We can increase the drug concentration to the site of inflammation, multiple folds. The mechanism inhibits a specific enzyme in the cell but if what that outcome really does is basically just shuts the cell down.

And we have lots of indications, these are just four literally there is probably 20 different indications that have caught her eye but these are the top four that we are interested at the moment. Dosing for this agents are going to be subcutaneous and it has very favourable properties for us to move forward with.

So hopefully in reviewing my slides, what I wanted to show is that in a small molecule drug conjugate format, it's really is a platform to generate lots of compounds for the company. We have new opportunities, having the companion diagnostic to help in patient selection is very important. These compounds are targeted. I mentioned, we can enhance and in many cases enable the use of drugs, drugs that we probably just sit on the shelf in pharmaceutical lab because there is no therapeutic index. Well we can make them into something that is usable.

Our concept, our technology is validated. We can optimize the clinical candidates. I will walk us through that process. It really as an engine to generate multiple compounds for the company. We had new ligands. Right now, we are evaluating more than 10. So folate and PSMA those are just two. We have a handful more than a handful of others that we are exploring.

And it’s all in terms of getting proof of concept. New warheads, I talk about a couple of them but there is lots of opportunity there as well and because SMDCs are modular, move out the other portion that you are familiar with and instead of folate put PSMA, put something else drugs put something else optimize the linker systems.

In terms of diseases, well cancer in the field of oncology have smears and gears that most of us at the company if not all, opening opportunities in other areas inflammation. PKD stands for polycystic kidney disease something I had and I was very curious to see that the system and kidney were folate receptor positive and guess what they were and so that opens up potentially new door for us.

And having more products that are going to coming to the clinics, so the next year and half, please keep an eye certainly for 1456 you will see that this year. The Tubulysin PSMA specific SMDC for cancer that is coming very soon as well as the agents that I talked about for inflammation EC1669.

So, at this point I will turn it over to Mike, but at the Q&A, I will be happy to answer any questions.

Mike Sherman

Thanks Chris. I'm Mike Sherman, the Chief Financial Officer at Endocyte and I think you probably now have a sense of the excitement that we have at Endocyte about this platform, these pipeline drugs and we are really finally in a position I'd say to bring these forward aggressively and that's the basis of what I want to talk about here at the close is how do we turn this promising platform, and engine for new drug, a robust clinical development plan and an emerging commercial capability.

How do we turn that into value? We are on the start of the day with this discussion of our business model and I want to make sure that everyone appreciates the value of this model and the uniqueness of it. The uniqueness of starting the process with companion imaging agent.

By the time we get a drug to the clinic, we essentially validated that we've got the right target. We've got a target that's relevant to the disease that we are targeting and we ultimately even have a glimpse into the safety profile. We see where this drug is going to go and we see where it’s not going to go and this is very informative as we head into the clinic and ultimately then the diagnostic imaging agent again helps us in the clinic to enrich the patient population. So we know we are treating the right patient.

It transforms the risk profile of traditional drug development and it’s really the reason why in our first three trials, in our first two indications we've seen success. That kind of hit rate is really not typical. It allows us to have a leaner investment approach, timelines are tend to be faster and the returns greater because the benefit you are bringing to patient is one that's greater, its of more value and translates to better reimbursement and pricing.

Fortunately this is a concept, a model, a business model that Merck has bought into quite literally. And it led to a partnership with Merck that has been transformational for the company. Most importantly, it accelerated the development of our lead program.

We have five trials active with vintafolide and etarfolatide in 2013, with indications that will follow. Importantly, these are developments that Merck will fund. It gives us immediate commercial presence not only to Merck’s effort but also allows us to build our own presence with the etarfolatide organization on a global basis but also the 50% profit split we will co-promote in the US.

The financial flexibility it provides us is clear, a $125 million we've earned in milestones during 2012, another almost $900 million milestones to come and again the development funding that they are supporting as you extend into multiple additional indications would end up being the majority of the development for that lead program.

The strategic flexibility that we have through this arrangement is also very important, often overlooked. The fact that we have struck a very narrow deal with the vintafolide agent allows us to continue our development in even other folate targeted drugs. The fact that we've maintained rights to etarfolatide not only allows us to retain the value, economic value of that program downstream, but it also allows us to essentially have a different kind of seed at the table as we work with Merck on the, not only the development plans but the commercialization of these compounds.

Reflecting on Merck for a bit and it's been an extraordinary partnership I would say. The commitment that they have demonstrated publicly, it's a partnership that they talk about frequently and demonstrate their commitment for this to be successful.

When we look at the resources that they’ve dedicated to the partnership both in a number of resources, people, the financial resources around the clinical programs and most recently their commitment to fund the majority of any additional patients that we might add to the PROCEED trial.

And also just as we look at the team that they are assembling, we're getting the A team and we feel very good not only about their commitment and commitment of resources and talent but also the dynamics that we created initially. It's a collaborative effort, really stands the spectrum, the full value chain from the work we're doing on identifying the next indication of pre-clinical work.

It's been very much a joint decision, the work on designing clinical trial, the work that Dave is doing in collaborating with their commercial organization and again because we have two elements of this product offering that are quite inseparable, it really ensures that that collaboration is going to happen.

I also heard whispered in the hall that Merck that that is among the best examples of teamwork that they've seen on a project and I think part of that has to do with commitment, part of that has to do with the structure and the arrangement and I think it's a tremendous transaction and partnership for both parties and that’s why initially it's going so well and why it's very important for us to maintain that high level of the performance that we have just seen.

It also fits our growth strategy quite well, so we talk a lot about this leadership that we have and some molecule drug conjugate technology and companion imaging diagnostic development the fact there is, are coming a little early on gives us a tremendous advantages that you will see a lot of companies that are trying to accomplish the same thing through partnerships and ended as the whole layer of complexity and that we really have enjoyed the lack of complexity.

Our initial focus will on maximizing the opportunity as a lead program and as part of that we will be leveraging the commercial capabilities that Merck brings to the table, but we will also be establishing a footprint, not only through our etarfolatide organization but also through the co-promote with Merck in the US.

That footprint then is one that we can leverage as we bring some of the proprietary compound that Chris has talked about whether there folate targeted initially or even new targeting ligands into oncology. Now given this capability there is inevitably going to be this opportunistic drug development that yields the drug that may not fit our commercial strategy and we will not shy away from that but what we will do in those cases and inflammation is probably a good example of that.

We would look to license those commercially once we have good initial human data to ensure that we are capturing the value for those programs. Chris wants the videos and I am going to figure out before the next presentation, how to show financial results in the form of the video but I haven't figure out that yet.

The company is in a great position financially. One, we ended the year with $200 million in cash. You can see that even as we invested and increased on investment during 2012 on an adjusted basis after Merck has reimbursed expenses, we have essentially maintained a flat burn rate.

Now that is going to go up in 2013 and I will talk a little bit about what is driving that but we are still in a very good financial we are in the strong financial position in 2013.

The three areas of investments include our share of vintafolide development subprogram which is essentially the Phase 3; Binh covered a majority of the Phase 3 trail in ovarian cancer. They pick up a greater percentage of that if we have the additional patients but we are not responsible for any of the other development outside of that one trail.

We are preparing for the potential commercial launch as Dave alluded to you, it’s a measured investment, its not any huge organization that we need to put in place but we are making sure that we are putting the right talent in place, so this is a platform that is going to be in the position to launch future drug, future proprietary drug.

And I have to say part of what’s so compelling about the story as we talked to physicians ends up being quite compelling as you talk potential candidates and commercial leaders for the organization in Europe and I have been really pleased with the kind of talent that we have been able to attract. I think it goes beyond what you might expect for our stage of development, really top tier talent that's been there and done that in terms of launching these kinds of products. And then finally the pipeline where we will specifically bring the three drugs that Chris had mentioned the folate tubulysin agent, the folate inflammation and the folate PSMA during the course of 2013 and 2014. We talked a lot about the internal capabilities and in particular both on the therapeutic and the diagnostic side and one of the benefits of that is that we don't have to rely on a partnering strategy to execute this path forward. There are elements of partnering that will help us create value and we will take advantage of that.

But for example in the targeting ligand, as Chris mentioned more than 10 new ligands in development. We are not in a position where we are having to aggressively go out and look for new opportunities there. It’s going to be more a question of prioritizing those that come from our collaboration with Dr. Phil Low, one of the founders of the company and his work at Purdue University where we have an ongoing relationship and right to new ligands that are developed there. Also there will be times where there are very interesting super potent drug payloads that we believe we can utilize that maybe can't otherwise be utilized and targeted and we will selectively seek the end license as it makes sense.

And then finally commercially we will look again Dave alluded to this to support the commercialization of etarfolatide selectively outside the US in some smaller markets and sometimes through partnership sometimes through distributor relationship, and where we have particularly a non-oncology platform we'll look to maybe broader commercial partnering strategy to make sure that we are capturing the value for those. Again this focus on the capability internally has allowed us to build a patent portfolio that is quite robust.

We have over 130 patents that have issued, another 200 that are pending and these are everything from composition of matter on each of our compounds, method patents, linkers. We've identified what we believe is every possible way that you can link these small molecule drug conjugates and capture all of the mechanisms by which we think it will be appropriate to influence the pharmacokinetics of those drug and capture IP around that space. Of course we have IP around the imaging agents but maybe more importantly the use of those imaging agents to select patients is a critical feature. So we've developed really this web, this multi-layered web of patent protection that protects our lead through at least 2026 and gives us a very strong position I think relative to what you might see from other profiles.

2013 is set up to be a very exciting year. We have at least four major milestones on the lead program vintafolide and etarfolatide with the initiation of the triple negative breast cancer trial in the fourth quarter. You've got a potential decision from the EU and a potential launch late this year, early next year on vintafolide and etarfolatide and then data from the target Phase 2 trial and then there is 250 patients analysis on proceed ovarian cancer trial in the first half of 2014, and in the pipeline development as mentioned, folate Tubulysin and the next drug in clinic and hopefully is an appreciation of in each case here the pipeline that was posted on the website yesterday is now much more robust just in terms of the folate Tubulysin agent that we were so excited about several months ago through Chris’s work has been able to bring forward again a folate Tubulysin but one that we think is going to be much more effective but certainly signals that pre-clinically. The PSMA Tubulysin which is validated, the imaging screen. So again, we know what we’ve got a relevant target for the disease. We know we can target a drug specifically to that site via the imaging work that's been done and so now we move in to the clinical therapeutic phase. And then finally during 2014, we would expect to bring forward, the folate inflammation drug as well.

We covered a lot of ground today. Hopefully you walk away with an enhanced understanding, both of the opportunity that faces the company, but also your confidence in our ability to execute that. Not only based on what this team has done in the past but the model we're using which is one that I think as I said, takes a lot of risk out of the development process. The fact that we're using this personalize approach really changes the risk profile and potential payout. With a lead drug program under review multiple studies with the potential that take it into multiple very large patient population generate in number of milestone in the coming several months. We have strong capabilities augmented recently the Merck partnership, which again is more than the commercial capability as fits all up and down the value chain that we have really feel good about the partners that we have selected in Merck. The pipelines I think speak to itself after Chris’ commentary and we are in a very strong financial position to be able to take advantage of each of these elements.

So very exciting time for the company over the next year and beyond, and with that I would love to take some additional questions here particular, Chris and I can answer those or I guess the full gamut is available. Simos?

Simos Simeonidis - Cowen and Company

Simos Simeonidis from Cowen. Chris you have a great variety of tools to use within its modular approach and you already have a couple of warheads that are very potent in DAVLBH and tubulysin. So how do you, at which point do you say I have this part of my tool kit ready, now I am going to spend more time mixing and matching and testing versus looking for even more potent, because it's looks like one of the graphs you showed. You really cannot be one of the spectrum in terms of potency and we don't do this certainly to get more potent or is it – or you may be at the time where you need to just find better spacers or test out the better spacers, better linkers?

Chris Leamon

Thank you for the question and spot on. I think the evolution from going from a [thinker] is Tubulysin to see what I had shown earlier about the enhancement in activity, the overcoming resistance those are two compounds that fall under the class of micro tubule inhibitors, all right, and so by using that tubulysin being the better of the two or certainly more active, we are incorporating Tubulysin now into PSMA targeting and the other receptor systems that we are currently exploiting. As the micro tubule inhibitor of preference at this moment does that makes sense? I mean and then moving forward into the DNA world where we have other agents that react with DNA. Attracted to that based on the and even greater enhanced potency but different mechanism of action. So to me looking in a cell, we don't need 100 micro tubule inhibitors, we don't need I think the pressure, wanting the question there. But micro tubule inhibition is attractive to go after and certainly on oncology and then DNA and there is probably a handful of really important intercellular processes that have to be focused on, and once we have optimized drugs there, our expansion on other receptor is obvious.

But that is for oncology, so for us to look forward towards other compounds it depends on the indication. So inflammation some of these compounds work very well on oncology, the [vacate] doesn’t work against activated microphages we know that. And so that's where further exploration and other types of mechanisms that are more geared towards different diseases is probably makes a lot of sense to us.

Simos Simeonidis - Cowen and Company

Thanks. Then you mentioned you are looking at another, took another potential receptors in oncology so you think some of them are looking pretty good potentially to go into later preclinical testing because a lot of this test we've seen in most of the folate receptor with some PSMA and then if you look outside of all the inflammation and other therapeutic areas?

Chris Leamon

Yes. So you are right we have eight to 10 other receptor systems that look very interesting to us. It’s starting in Phil Low’s lab at Perdue. He is doing the pioneering work there. It gets to a certain stage where he gets some initial data that looks promising and then we get involved and we are at the point now where we are involved with a number of them because we are seeing the properties that all the other agents in the past have had. I can't tell you for certainty if all eight to 10 of these are going to pan out, that's the fun part of research is to figure that out but we do have some very encouraging early data on a number of these new receptor systems.

Simos Simeonidis - Cowen and Company

Couple of questions for either Ron or Mike, maybe I'll start with Mike, on the Merck deal, all these tools that Chris talked about, does Merck have any rights of first negotiation or to any either receptor system or any warhead outside of EC145 or vintafolide?

Mike Sherman

The short answer is no. There were two sister compounds essentially folate targeted being similar to the vintafolide that we were not bringing forward in development that were part of that deal and I don't think they, I'm not sure there are plans to bring those forward. They have none at this point. So, very narrow deal and no right of first refusal for any future technology or compound.

Simos Simeonidis - Cowen and Company

And then in terms of the regulatory, the last two are regulatory questions, in Europe in addition to (inaudible) is there any other example you guys can think of where you had a compound that was approved without NOS benefit that was the only compound you could think of?

Binh Nguyen

(inaudible) balanced that Avastin approval is not part of (inaudible) as well as (inaudible).

David Meek

And also save (inaudible) is a great model. A drug evaluated in colorectal cancer met its endpoint but had some number of concerns about the results that was not accepted for approval. They went back and identified a subgroup. Subgroups that really appeared to be driving the benefit and the ability to select those patients, next thing to do that, resubmitted in Europe and it was actually approved on that basis. So, an example where we had predefined similar analysis but a parallel story at what I think the regulators are willing to consider.

Simos Simeonidis - Cowen and Company

And finally, what's the latest status in your discussions with FDA in terms of expectation about SO, PFS what would you take to get an approval and different types of approvals I guess?

Ron Ellis

It hasn't really changed from what we reported earlier that the PROCEED Phase 3 study with PFS as the primary endpoint would lead to a solid approval based on PFS. To get full approval, we would need to see positive OS but the reason for expanding the size of the study to…

Simos Simeonidis - Cowen and Company

How is that PFS would get you some of their approval?

Ron Ellis

Yeah, I think the wording is if it's robust and clinically meaningful and (inaudible) obvious caveats but they have reviewed it and we've clarified that we're putting this forward as the approval study and we will power throw as for a full approval is a secondary endpoint.

Howard Liang - Leerink Swann

Thank you very much; I am Howard Liang from Leerink Swann. So a question on EC1456, how do you plan to develop an indication to your plan to develop the compound and that your agreement with Merck present either you or Merck from developing a competitor to vintafolide?

Binh Nguyen

Well, actually, it's a good thing that we have potentially different agents than work with the same diseased patient population because we don’t know whether one of them works or both of them works or not. So essentially the way I look at it that the number one, does we have two shots at goal and A, just on a [previous] data is more potent than the vintafolide. So our current still plan A is that to develop another (inaudible) that specialize in developed just at least in Phase 1, Phase 2 to get a feel way right up. If it is, we also look at other diseases like carcinoma.

As I shown you in the first slide of my top, that is behind (inaudible) data and that is they had unmet medical needs. So we will look at some other diseases that vintafolide has not been look at that’s number one. And number two is also because that has good activities as Chris have shown in lookout models that if (inaudible) is vintafolide, so one of good thing from my previous experience is nearly that we just think one time so we can move as you saw that in vintafolide we try to move it upfront in the combination of taxol and carbo.

So there is no reason that one quantity. It that is holding true then we can treat that in first line using vintafolide and once they have failed we are going to treat the patient with second generation EC1456. So those are the different scenarios that we can work with either in sequential and different patient population of same disease, different line treatment, a totally different disease this like (inaudible) carcinoma and (inaudible) etcetera. So there is a lot of room to play with.

Ron Ellis

Howard, there is nothing in the agreement that limits us from being into any indication. That your first partner has been so there is a lot of opportunities in that space to put the molecule, we will sort that as we go through early clinical studies.

Unidentified Analyst

Hi two questions. One metaphases in the brain are -- do you see any of your information targeting agent line up anything in the brain?

Ron Ellis

No. But we haven’t image like active MS and some another indications were that may be compromised if you look at a normal patient or of a cancer patient; there is nothing that we see in the brain. If I can get through the blood brain barrier unless there are some…

Binh Nguyen

However, let me add today that it's not just any microphage that we target it has been activated form, the resting macrophages don't expressed the folate receptor, its when they become activated, and so there is another layer of selectivity with that.

Unidentified Analyst

And just looking in newer to general diseases, that microphages do get activated…

David Meek

Yeah, true, but no data at this point.

Unidentified Analyst

Same question, if you thought about parallel administration of two different agents that have --- Tubulysin or vintafolide (inaudible) agents?

Binh Nguyen

Yes, clinically we have done that and we have taken the step far there by putting two active agents on to one ligand. So think of that as a targeted combination therapy, and actually we put four on the same ligand. Our [CMC] guys just stop you know because becomes an issue making it, but we have been very successful with that. So I think future we will tell with multiple drugs on the same as well as serial and in parallel.

Greg Wade - Wedbush

Greg Wade from Wedbush, Chris, perhaps you could give us an update on polycystic kidney disease program, where are you guys with respect to a candidate if you identify one and the timeline (inaudible) for that. How soon can you get into the clinic?

Chris Leamon

All right, thanks, Greg, So polycystic kidney disease; we have very active collaboration with one of the experts in this area, Thomas Weimbs of UCSB. He has models that are (inaudible) to the human disease, so they have the same generic defect, very excited to work with his lab. We are in the process of screening additional compounds. We already publish last fall on a compound called 371 which showed very high anti-cystic activity. So it prevented future cystic growth in laboratory model. So the next plan is to produce or to screen a few other compounds with varying degrees of mechanisms of action that look promising to us and in a short period of time select a frontrunner. In terms of development that's under consideration at this point. There's been no formal decisions made but the front and foremost we want to identify a lead.

Bert Hazlett - ROTH Capital Partners

Bert Hazlett from ROTH again, just strategically Mike I think you touched on this with regard to inflammation autoimmune, in terms of considering those particular programs with regard to partnering or taking them to more product development to yourself, it seems that you've indicated that you would prefer to partner them but at what point and is there any potential for any selective indications to hold on to yourself?

Mike Sherman

I think there's always a possibility that even outside of oncology there would be an indication that we would determine as it is something that we could manage both the development and commercialization but as it relates to I think some of these very broad indications and where we see the opportunities with our inflammatory compounds, its likely that we would move those forward.

I think the stage at which we move those forward, our bias is always to generation some human data because that's where the value, you really hit a value inflexion point. There are probably given the prolific nature of our pipeline and the ability to generate these other ligands there maybe some earlier stage deals where it'd be otherwise something that we just couldn’t prioritize in our other work and bias the license it earlier as opposed to sit on it. So I think you'll have a little bit of flavor of both as the pipeline matures.

Jason Kantor - Credit Suisse

In regards to the Merck partnership, is there any timeline that they are required to initiate that there's no indication you [almost] already indicated so far?

Binh Nguyen

There is a clinical development schedule that's part of the agreement and we continue to work closely with them and very closely in terms of selecting not only the right indications but also the development strategy. I would say that there's some flexibility in the plans and then great evidence of that is what they've decided to do in triple negative breast cancer.

You could have chosen to do a smaller trial looking for a signal. Their decision to go straight to a randomized Phase 2 is an example of not only the departure from their potentially their originally plan but one that's more aggressive. So we've been really pleased with how they can (inaudible) quickly.

Jason Kantor - Credit Suisse

In regards to [EC1569] confirmation, is there any sort of, have you guys any thoughts in terms of the administration for that type of therapy?

Chris Leamon

Yeah, currently it’s subcutaneous. The compounds although we have small, in the small molecule drug conjugates, oral bio availability is somewhat compromised. Subcutaneous, the administration for this agent is expected to be fairly infrequent. It could be you know and we don't know until we run the trial but at least in animal models once or twice a week is very powerful and human disease which tends to, we don’t know yet but it could be even less.

Ron Ellis

There were more renewals. We were happy to stay after (inaudible) more questions.

Unidentified Analyst

I have one question. Once these are endocytosed and I am assuming the (inaudible) happen in the cystic compartment of the live cell (inaudible). So can you say that hydrazine carbonate that you showed in that example, how do they then leave those live cells to get into cytoplasm itself to…

Chris Leamon

Great question. The drugs that we're delivering in the, what I had shown today, they all have a greasy label to them. So once they separate from the SMDC, they have an intrinsic property to split through the biological membrane. They don’t need any kind of physical health to transport it outside of that vesicle. We don’t access lysosomes which is a highly degradative compartment that’s the other beauty of our approach but nonetheless the drugs once they separate, slip through the membrane and they can fuse throughout the cell they have their target.

Unidentified Analyst

So basically everything you looked at has been able to get out so far. Are there candidates to…

Chris Leamon

In the small molecule world, yes, they will get out. When we look at other types of compounds that are highly charged and much larger in size, that presents a greater challenge for us but the small molecules that we're heavily focused on right now is not an issue.

Ron Ellis

Okay, well, thank you for. We hope it was a productive first Analyst Day for coming and we hope this gives you a better flavor not only what Endocyte is trying to accomplish but to look at some very promising compounds and activities or moving forward with. I think the big news will be later this year, next year as we hear about the lung data will be coming in data and some compound and of course we will start to update on our data on our ovarian data at least of the 250 patient mark will be reached. So thank you again for coming and we will stay after the management team and ask any questions that you have of course. Thank you.

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