Endocyte, Inc.
Nov 1, 2012
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Endocyte Reports Third Quarter 2012 Financial Results and Business Update

- MAA Filing Process for Vintafolide and Etarfolatide on Schedule for Completion by Year-End 2012 -

- Conference call today at 4:30 EDT -

WEST LAFAYETTE, Ind., Nov. 1, 2012 (GLOBE NEWSWIRE) -- Endocyte, Inc. (Nasdaq:ECYT), a biopharmaceutical company developing targeted small molecule drug conjugates (SMDCs) and companion imaging diagnostics for personalized therapy in cancer and other serious diseases, today announced financial results for the third quarter ending Sept. 30, 2012, and provided a business update.

"Our marketing authorization application filing process for vintafolide and etarfolatide in the EU remains on track for completion by the end of this year and we continue to prepare for commercial launch of these cancer products in the EU in collaboration with Merck," commented Ron Ellis, Endocyte's president and chief executive officer. "In addition, we are actively recruiting patients for the Phase 3 PROCEED trial in platinum resistant ovarian cancer and the Phase 2b TARGET trial in second line non-small cell lung cancer (NSCLC)."

Recent Highlights

Third Quarter 2012 Financial Results

Endocyte reported a net loss of $1.2 million, or $0.03 per basic and diluted share for the third quarter of 2012, compared to a net loss of $12.1 million, or $0.36 per basic and diluted share, for the same period in 2011.

Revenue was $12.4 million for the third quarter of 2012 associated with the collaboration with Merck. Of this revenue, $11.7 million related to the amortization of both the $120.0 million upfront license payment and $4.8 million in reimbursable research and development expenditures incurred prior to the third quarter of 2012. The remaining $0.7 million of revenue related to amortization of reimbursable research and development expenditures incurred during the third quarter of 2012. The amortization for both the upfront license fee and ongoing research and development services are recognized as revenue ratably over a performance period that began at the closing date of the agreement, April 27, 2012, and will conclude at the end of 2014.

Research and development expenses were $9.9 million for the third quarter of 2012, compared to $8.9 million for the same period in 2011. The increase was driven by an increase in clinical trial expenses, development costs of the preclinical pipeline and compensation expense, partially offset by a decrease in manufacturing costs related to process and method validations for Endocyte's lead candidates vintafolide and etarfolatide. Merck is obligated to fund manufacturing costs for vintafolide, along with a portion of the PROCEED trial and all of the TARGET trial costs, as part of the collaboration. Adjusted research and development expenses were $5.3 million for the third quarter of 2012, net of the $4.6 million current period expenses reimbursable by Merck referenced above.

General and administrative expenses were $3.8 million for the third quarter of 2012, compared to $2.7 million for the same period in 2011. The increase in expenses was the result of an increase in legal fees associated with obtaining patent and trademark rights, professional fees associated with being a public company and an increase in compensation expenses.

Interest expense was $0 million in the third quarter of 2012 compared to $0.4 million in the same period in 2011. The company retired its credit facility in the second quarter of 2012 and the average debt balance was $13.0 million in the third quarter of 2011.

Cash, cash equivalents and investments were $204.7 million at Sept. 30, 2012, compared to $211.5 million at June 30, 2012 and $128.1 million at Dec. 31, 2011. The increase compared to Dec. 31, 2011 was attributable to the upfront payment from Merck of $120.0 million and Merck's reimbursement of certain research and development expenses, which was partially offset by the cash disbursements for operations and the repayment of the outstanding balance on the credit facility. 

"We have remained disciplined in managing our expenses and benefit substantially from Merck's support of ongoing development of vintafolide," stated Mike Sherman, Endocyte's chief financial officer. "Looking forward, we will be investing in the preparation for potential commercial launch in the EU and the initiation of new clinical trials for pipeline drugs."

Upcoming Expected Milestones

Conference Call

Endocyte management will host a conference call today at 4:30 p.m. EDT.

U.S. and Canadian participants (877) 845-0711
International (760) 298-5081

A live, listen-only webcast of the conference call may also be accessed by visiting the Investor Relations section of the Endocyte website, www.endocyte.com.

A replay of the call will be available beginning at 7:30 p.m. EDT on Nov. 1, until midnight EDT on Nov. 8, 2012. To access the replay, please dial (855) 859-2056 (US/Canada) or (404) 537-3406 (International) and reference the conference ID 58062954. Additionally, the webcast will be recorded and available on the company's website for two weeks following the call.

Note on Non-GAAP Financial Measure

As used in this press release, the term "adjusted research and development expenses" is a financial measure that is not expressly recognized by accounting principles generally accepted in the United States, or GAAP. Adjusted research and development expenses are net of the amounts reimbursable during a period by Merck pursuant to the collaboration agreement for vintafolide which for US GAAP purposes are ultimately recorded as revenue. Endocyte provides adjusted research and development expense to enhance comparability with prior periods and uses it as a basis for guidance regarding future operations. A reconciliation of this non-GAAP measure to research and development expenses computed in accordance with GAAP is included in the financial tables below.

About Endocyte

Endocyte is a biopharmaceutical company developing targeted therapies for the treatment of cancer and other serious diseases. Endocyte uses its proprietary technology to create novel SMDCs and companion imaging diagnostics for personalized targeted therapies. The company's SMDCs actively target receptors that are over-expressed on diseased cells, relative to healthy cells. This targeted approach is designed to enable the treatment of patients with highly active drugs at greater doses, delivered more frequently and over longer periods of time than would be possible with the untargeted drug alone. The companion imaging diagnostics are designed to identify patients whose disease over-expresses the target of the therapy and who are therefore more likely to benefit from treatment.

For additional information, please visit Endocyte's website at www.endocyte.com.

Forward-Looking Statements

Certain of the statements made in this press release are forward looking, such as those, among others, relating to the company's expectations for seeking regulatory approval and commercial launch of its products, including the success of the Merck collaboration, receipt of conditional marketing authorization for vintafolide, etarfolatide and folic acid from the EMA, initiation of future clinical trials, future availability of DOXIL or CAELYX, and data availability from ongoing and future clinical trials. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference include risks that the company may experience delays in the completion of its clinical trials (whether caused by competition, adverse events, patient enrollment rates, unavailability of DOXIL or CAELYX, regulatory issues or other factors); risks that data from its clinical trials may not be indicative of subsequent clinical trial results; risks related to the safety and efficacy of the company's product candidates; the goals of its development activities; estimates of the potential markets for its product candidates; estimates of the capacity of manufacturing and other facilities required to support its product candidate; projected cash needs; and expected financial results. More information about the risks and uncertainties faced by Endocyte, Inc. is contained in the company's periodic reports filed with the Securities and Exchange Commission. Endocyte, Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Endocyte, Inc.
Statements of Operations
(in thousands, except per share amounts)
  For the Three Months
Ended September 30, 
For the Nine Months 
Ended September 30,
  2011 2012 2011 2012
Collaboration revenue $ — $12,415 $ — $20,228
Costs and expenses:        
Research and development 8,915 9,930 21,075 25,153
General and administrative 2,723 3,815 7,138 10,104
Total costs and expenses 11,638 13,745 28,213 35,257
Loss from operations (11,638) (1,330) (28,213) (15,029)
Interest income 35 96 91 137
Interest expense (449) (1) (1,637) (628)
Other expense, net (18) (4) (19) (923)
Net loss $ (12,070) $ (1,239) $ (29,778) $ (16,443)
Net loss per share — basic and diluted $ (0.36) $ (0.03) $ (1.11) $ (0.46)
Weighted average number of common shares used in net loss per share — basic and diluted 33,414,303 35,881,112 26,732,173 35,841,116
Endocyte, Inc.
Balance Sheets
(in thousands, except per share amount)
  As of
December 31,
As of 
September 30,
Cash, cash equivalents and investments $128,085 $204,707
Other assets 3,590 11,114
Total assets $131,675 $215,821
Liabilities and stockholders' equity     
Current liabilities $5,470 $6,955
Deferred revenue, current portion  — 48,546
Long-term debt, net of current portion 12,833  —
Deferred revenue, net of current portion  — 60,683
Other liabilities, net of current portion 20
Total stockholders' equity  113,372 99,617
Total liabilities, convertible preferred stock and stockholders' equity  $131,675 $215,821
Endocyte, Inc.
Reconciliation of Adjusted Research and Development Expenses
(in thousands, unaudited)
  For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
  2011 2012 2011 2012
 Research and development expenses $8,915 $9,930 $21,075 $25,153
 Amounts reimbursable by Merck (1,020) (4,620) (1,286) (7,763)
 Adjusted research and development expenses $7,895 $5,310 $19,789 $17,390
CONTACT: Paul Cox, Stern Investor Relations, Inc.

         (212) 362-1200


         Martina Schwarzkopf, Ph.D., Russo Partners

         (212) 845-4292


         Tony Russo, Ph.D., Russo Partners

         (212) 845-4251

Source: Endocyte, Inc.

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