Cowen Sees Favorable Risk/Reward in Endocyte (ECYT) Amid Phase III Trial of PSMA-617
Endocyte, Inc. (NASDAQ: ECYT) recently announced that the commencement of a pivotal Phase III trial of its leading drug, PSMA-617, a radioligand therapeutic that targets the prostate-specific membrane antigen. This announcement, coming alongside the company's 4Q earnings, has prompted analysts at Cowen to upgrade ECYT to an Outperform rating (from Perform). Management plans to begin the trial shortly and estimates the first interim assessment as early as 2H19.
PSMA has been in the clinic since 2013. Until very recently, development of the drug has been primarily pursued by academic institutions and driven by physician and researcher interest without substantial investment by commercial entities. The drug has been tested in 2,000-3,000 patients in Germany and feedback from one of the German doctors is very positive.
Commercially, Cowen conservatively estimates the trial to run to completion and for PSMA-617 to launch in 2022 with peak US sales of $700M. However, there is a possibility of the trial stopping earlier for efficacy during one of two planned interim analysis.
Analyst Boris Peaker believes that at the <$200M valuation, the stock offers a favorable risk/reward profile. Peaker sees “US peak sales potential for PSMA-617 of $700MM+ and no direct competitors in clinical development.”
Meanwhile, the analsyt said the little-known about CAR-T program is not in the company's current valuation and provides a "free lottery ticket."
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