Endocyte, Novartis Ink $2.1B Merger Agreement

Grant Boone
October 20, 2018

Novartis says it will pay $2.1 billion to buy Endocyte, a US company that focusses on the development of prostate cancer treatments.

Novartis has agreed to merge with a newly-formed Endocyte subsidiary by purchasing all outstanding shares of Endocyte for $24 a share, a 54% premium over yesterday's closing price of $15.56.

The deal includes 177Lu-PSMA-617, a potential first-in-class investigational radioligand therapy (RLT) for the treatment of metastatic castration-resistant prostate cancer (mCRPC).

Endocyte was founded in Purdue Research Park and has been working for more than two decades to develop personalized cancer treatments that are more targeted to a specific patient's cancer than traditional, broad-spectrum radiation therapy. The Phase III study, VISION, enrolled its first patient in June. The deal with Switzerland-based Novartis AG is valued at $2.1 billion and still requires shareholder approval.

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It's worth pointing out that buying Endocyte also gives Novartis an additional platform in CAR-T cancer immunotherapy to complement its current assets, including already-marketed therapy Kymriah (tisagenlecleucel) for CD19-positive blood cancers.

"The proposed acquisition of Endocyte builds on our growing capability in radiopharmaceuticals, which is expected to be an increasingly important treatment option for patients and a key growth driver for our business", noted Liz Barrett, chief executive of Novartis Oncology. The transaction was unanimously approved by the board of directors of Endocyte.

Radiopharmaceuticals such as Lu-PSMA-617 are innovative medicinal formulations containing radioisotopes that are used clinically for both diagnosis and therapy. Endocyte stock, which has rallied more than 445% since the beginning of the year, was up $7.89, or 50.71% to $23.45.

The acquisition of Endocyte is planned to be funded through available cash.

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