Endocyte/Novartis deal driven by positive FDA update
19 OCT 2018
Following a key US Food and Drug Administration (FDA) decision in September, Novartis [VTN:NOVN] believes now is the best time to acquire biotech firm Endocyte [ECYT], a spokesperson for Novartis said.
“Whilst we have been monitoring Endocyte’s progress for some time, given our interest and expertise in RLT (radioligand therapy), recent de-risking events including FDA acceptance of rPFS [radiographic progression free survival] as an alternative primary endpoint for full approval” of the Phase III trial of Endocyte’s lead development program, “in addition to OS (overall survival), makes this the optimal time for Novartis to invest”, the spokesperson said in a statement to this news service.
The FDA update, disclosed by Endocyte on 10 September, could potentially accelerate the approval timeline for the company’s lead program, Lu-PSMA 617. Approval is now expected to come before the end of 2019, according to the company.
Lu-PSMA 617, a potential first-in-class radioligand therapy, is currently in Phase III development for the treatment of metastatic castration-resistant prostate cancer (mCRPC).
“Radiopharmaceuticals are becoming an increasingly important treatment option for patients and a key growth driver for our business”, the Novartis spokesperson said.
This week the Swiss pharmaceutical company announced plans to acquire West Lafayette, Indiana-based Endocyte for USD 24 a share in cash, a 54% premium to Endocyte’s closing price on the prior day. The USD 2.1bn transaction is expected to close in 1H19, according to the press release.
The merger agreement includes a no-shop provision, a termination fee of USD 73.5m and a reverse termination fee of USD 150m.
The acquisition of Endocyte would expand Novartis’ oncology presence and “build on its radio-ligand therapy platform by adding a second RLT to launch following the very successful launch of Lutathera,” the spokesperson said.
Novartis can maximize the potential of Lu-PSMA 617 thanks to its “knowledge of the radiopharmaceuticals space and complex supply chain dynamics and accelerate the development of Endocyte’s pipeline”, the spokesperson added.
Centerview Partners and Jefferies served as financial advisor to Endocyte. Faegre Baker Daniels acted as legal counsel to the company. Cravath, Swaine & Moore advised Novartis.
Endocyte declined to comment.