A year ago, with its stock in the toilet after its lead drug flopped in Phase III, forcing a restructuring, new Endocyte CEO Mike Sherman said everything you would expect a biotech chief to say after completing a small licensing deal for a new lead drug. The $12 million upfront deal with ABX was transformational, he boasted to reporters. It was a blockbuster headed to a multibillion dollar market.
Everything was great. (Yeah, sure.)
But Sherman proved to skeptics today that he was right to be optimistic about big things to come.
Thursday morning Novartis stepped in and bought the company for $2.1 billion just so it could get its hands on that drug. That’s a modest-sized bolt-on for the likes of Novartis, but it’s the kind of blockbuster money that investors in little biotechs dream of.
The drug is Lu-PSMA-617, a radioisotope targeting prostate-specific membrane antigen, or PSMA, commonly found in metastatic prostate cancer. Endocyte hustled it straight into Phase III.
The seeds of this buyout go back to just a few weeks after Endocyte did its licensing deal. Novartis bought out France’s Advanced Accelerator Applications in late October, 2017, for $3.9 billion. That acquisition gave the pharma giant Lutathera and its platform tech on radiopharmaceuticals.
This new deal gives Novartis a late-stage asset at an economical price for its new group, falling into its sweet spot of a $2 billion to $5 billion snap-on deal.
They’re buying a drug that registered a progression-free survival rate of 7.6 months among PSMA-positive patients, with one cohort hitting an overall survival rate of 13.5 months — all statistically significant. A few weeks ago an obliging FDA OK’d radiographic progression-free survival as an alternative primary endpoint to OS in the Phase III trial.
Liz Barrett, Novartis’ oncology chief, did the honors in heralding the deal.
Today’s announcement about 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. We are also excited about the opportunity to break into the prostate cancer arena with a near-term product that has the potential to make a meaningful impact for patients in great need of more options.
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