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After its big setback in December Endocyte (NASDAQ:ECYT) looks as if it might be getting back on track. The group announced last week that it would resume US and European phase III trials of it lead compound EC145 in ovarian cancer after sorting out Doxil supply problems and submit a conditional marketing authorisation application based on its phase IIb data to European regulators later this year.

This slew of good news, which also included a positive update on overall survival data for EC145, added up to a 44% rise in Endocyte shares last week, boosting the company's market value to $183m. If the phase III data expected in the first quarter of 2014 is positive the group could have its first product on the market soon after.

Bad history

A mere three months ago the situation was very different. Endocyte had been left reeling after its phase IIb Precedent trial found platinum resistant ovarian cancer patients receiving standard of care Doxil lived longer than those on EC145, by more than two months.

Shares in Endocyte, which had only listed on the market in February 2011, plunged by 65% on the news. The company blamed the small sample size, just 49 patients, as one reason for the control arm doing so well.

The group was also at pains to point out the study was not powered for overall survival and instead was measuring progression free survival. But even here the results were mixed with the greatest benefit being seen in women deemed FR++. These patients have a higher number of folate receptors and make up about 40% of women with platinum resistant ovarian cancer.

Niche patient population

Endocyte will now only be focusing on FR++ women, who can be identified using its companion diagnostic, EC20. Like EC145, EC20 has been granted orphan designation in both the US and Europe. The drug is a anti-folate.

There could be financial benefits for Endocyte in shifting to FR++ patients. Called Proceed, RBC Capital Markets estimate this could trim 400 patients from the study size and more than half from the cost, which should drop from $45m to $15m.

Opinions remain divided on whether the European filing will result in early approval, given the ambiguous data and the fact the FR++ subgroup was identified retrospectively. Some take the fact that the group has held discussions with European regulators, giving it the confidence to file, as a good sign. A filing is expected in the third quarter.

The group will also ultimately file for use in FR++ patients in the US too, potentially through an accelerated process on the back of the Proceed phase III data.

With a poor prognosis and fast disease progression, the FR++ population needs effective therapies any drug that has an impact on progression of disease or survival would be viewed very favourably by regulators both in the US and Europe.

Few available options

Overall, there are few available options for women with ovarian cancer. Last year, AstraZeneca (NYSE:AZN) announced that it would be shelving olaparib, the drug joining an ever growing list of late stage failures in this class that has included EPO906, abagovomab and phenoxodiol.

The few recently approved treatments in Europe also look unlikely to cross the Atlantic. Johnson & Johnson's (NYSE:JNJ) Yondelis was turned down by the FDA while it is still unclear whether Roche's Avastin will pass regulatory muster.

Last week, the company released data from the Precent trial showing that FR++ women who received EC145 showed a 62% reduction in their risk of disease progression compared with chemotherapy alone. Median free disease progression was 5.5 months compared with 1.5 months for chemotherapy. Updated overall data revealed a 52% reduction in the risk of death.

If Endocyte can replicate these results in its larger phase III trial approval in both the US and Europe could be a distinct possibility.