On August 8, 2017 Endocyte, Inc. (NASDAQ:ECYT), a leader in developing targeted small molecule drug conjugates (SMDCs) and companion imaging agents for personalized therapy, reported financial results for the second quarter ending June 30, 2017, and provided a clinical and pipeline update (Press release, Endocyte, AUG 8, 2017, View Source [SID1234520166]).
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"We’ve continued to make important progress on each of our three development programs," said Mike Sherman, President and CEO of Endocyte. "Dr. Michael Jensen at the Seattle Children’s Research Institute has exceeded our expectations in the breadth of work he has completed in optimizing the vector to be used in our chimeric antigen receptor T-cell (CAR T-cell) therapy, and we are happy to report that we expect to initiate the CAR T-cell manufacturing process for clinical supply in the fourth quarter of this year. In addition, we have filed an Investigational New Drug (IND) application for EC2629, which we believe is the first agent in development that simultaneously targets cancer cells and the tumor associated macrophages (TAMs) that support and protect them – an approach that could continue to evolve the immunotherapy treatment landscape. Finally, we expect to complete enrollment of taxane-exposed prostate cancer patients in the EC1169, PSMA-tubulysin expansion trial this fall."
"We believe our pipeline has significant potential to create value and we are committed to effective, timely execution in bringing these assets forward through clinical development and identifying paths to accelerate value-driving catalysts. With this in mind, our strategy is to select receptor-positive patients in highly-targeted indications from the beginning of development, including during dose escalation," continued Mr. Sherman. "We will also continue to objectively measure our pipeline investments relative to opportunities to outlicense assets or access external opportunities to ensure we are deploying capital productively."
Development Programs Overview
CAR T-Cell (Bi-specific adaptor molecule): Today, Endocyte announced that Dr. Michael Jensen of Seattle Children’s Research Institute will lead the clinical evaluation of Endocyte’s first CAR T-cell adaptor molecule in patients with osteosarcoma. This is primarily a pediatric indication with a significant need for new therapeutic options. Recent results from tumor micro-array analysis and human intravital fluorescent imaging studies have confirmed this disease as positive for the folate receptor, the target of Endocyte’s first bi-specific adaptor. Pre-clinical evaluations for the CAR T-cell program by Dr. Jensen are expected to be completed in the second half of 2017, in anticipation of a potential IND filing in 2018. Multiple additional adaptor molecules designed to be directed to distinct tumor targets including, potentially, PSMA, NK1R and others, are in development through the company’s collaboration with Purdue University.
In April, Endocyte announced new research in a late-breaking poster session at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting on this application of Endocyte’s SMDC technology. Data demonstrated that Endocyte’s bi-specific adaptor molecules can mitigate or eliminate adverse cytokine storms in animal models which could meaningfully improve the safety and tolerability of CAR T-cell therapies.
EC1169 (PSMA-targeted tubulysin): Endocyte is currently enrolling a phase 1 expansion cohort of 40 metastatic castration-resistant prostate cancer (mCRPC) patients who have previously been treated with a taxane-based therapy. Data presented at the annual meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) in June demonstrated EC1169’s anti-tumor activity particularly in patients with previous exposure to taxane therapy. Endocyte stopped enrollment of taxane-naïve mCRPC patients in the trial in June. Updated interim results will be presented at the annual meeting of the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) in September. This presentation is expected to be an incremental update to data presented at ASCO (Free ASCO Whitepaper) a few months prior. Completion of enrollment is expected in the fall.
EC2629 (Folate-targeted PBD): Endocyte recently filed an IND with the U.S. FDA and is planning to initiate a phase 1 clinical trial in patients selected as positive for the folate receptor in cancers where TAMs are known to be prevalent in the tumor micro-environment, for example, breast, endometrial, ovarian, and non-small cell lung cancers. This novel agent leverages a proprietary DNA crosslinking warhead targeted to cancer cells and the TAMs that both support their growth as well as protect them from the immune system. This mechanism is particularly compelling in light of recent research that has identified mechanisms by which TAMs can mediate resistance to the use of checkpoint inhibitor therapies such as PD-1 and PD-L1.
Financial Expectations
The company anticipates its cash, cash equivalents and investments balance at the end of 2017 to be approximately $105 million. As the full expense impact of the company’s restructuring is expected to be realized by the end of the fourth quarter of 2017, the company anticipates cash expenses to be approximately $5 million per quarter prior to potential increases associated with advancing clinical trials and new investment opportunities currently under evaluation.
Second Quarter 2017 Financial Results
Endocyte reported a net loss of $11.7 million, or $0.28 per basic and diluted share, for the second quarter of 2017, compared to a net loss of $14.0 million, or $0.33 per basic and diluted share for the same period in 2016.
In June 2017, the company stopped enrollment in its EC1456 phase 1b trial as the assessment of trial data did not yield the level of clinical activity necessary to support continued advancement of EC1456. The company is, however, continuing enrollment of a small number of patients in its EC1456 ovarian cancer surgical study to inform other SMDC programs in development. In addition, in June, Endocyte narrowed the focus of its EC1169 development program, refocused its efforts on two pre-clinical programs, and reduced its workforce by approximately 40% to align resources to focus aggressively on the company’s highest value opportunities while maintaining key capabilities. Endocyte recorded $2.3 million of restructuring expenses for the three months ended June 30, 2017 as follows:
Included in research and development expenses were expenses for employee termination benefits of $0.9 million, $0.9 million for the remaining EC1456 phase 1b trial expenses, including site close-out expenses, $0.3 million related to other restructuring expenses, and $0.1 million related to fixed asset impairment charges; and
Included in general and administrative expenses were expenses for employee termination benefits of $0.1 million.
Research and development expenses were $8.7 million for the second quarter of 2017, compared to $6.8 million for the same period in 2016. The increase was primarily attributable to $2.2 million of expenses recorded in June due to the company’s restructuring relating primarily to severance for the workforce reduction, EC1456 trial termination expenses and fixed asset impairment charges. Other increases included expenses for the EC1169 phase 1 trial, development of EC2629 and other pre-clinical and general research. These increases were partially offset by a decrease in non-cash stock compensation expense as a result of employee terminations since the second quarter of 2016.
General and administrative expenses were $3.3 million for the second quarter of 2017, compared to $7.4 million for the same period in 2016. The decrease was due to a decrease in compensation expense, including non-cash stock compensation expense and severance expense related to the resignation of our former Chief Executive Officer in June of 2016.
Cash, cash equivalents and investments were $118.4 million at June 30, 2017, compared to
$154.6 million at June 30, 2016, and $138.2 million at December 31, 2016.