Endocyte emerged out of Purdue University in 1996, completed an initial public offering in 2011 and has now agreed to an acquisition by Novartis worth $2.1bn.
Endocyte, a US-based biopharmaceutical company based on research at Purdue University, agreed to a $2.1bn acquisition in cash by pharmaceutical firm Novartis last week.
Novartis will pay $24 a share – a 54% premium on the $15.56 at which Endocyte’s shares traded on Wednesday immediately preceding the announcement. The deal is expected to complete in the first half of 2019, subject to customary closing conditions.
Founded in 1995, Endocyte is developing personalised treatments for cancer using a platform that enables a highly targeted approach and higher doses than alternative therapies.
The approach relies on creating small molecules that attach to chemotherapy or radioactive isotopes to enable the direct targeting of diseased cells, thereby avoiding harming healthy surrounding tissue.
The company has licensed several technologies developed at Purdue University, with a majority based on research by co-founder and chief science officer Philip Low, the presidential scholar in drug discovery and the Ralph C Corley distinguished professor of chemistry.
He continues to work closely with Chris Leamon, vice-president of research at Endocyte, who completed his doctoral work under Low and later joined the company.
In October 2017, Endocyte won a competitive bid for cancer drug Lu-PSMA-617, which is aimed at metastatic castration-resistant prostate cancer. It licensed the asset from Germany-based drug developer ABX and is currently enrolling patients for a phase 3 trial.
Mike Sherman, president and chief executive of Endocyte, cited PSMA-617 as one of the key aspects that piqued Novartis’s interest.
The $2.1bn price tag for Endocyte is impressive, but it is not the first significant milestone in Purdue’s commercialisation efforts. Endocyte became the first Purdue spinout to reach a $1.5bn valuation earlier this month.
Sherman said at the time: “The team has been executing exceptionally well, advancing this prostate cancer therapy ahead of most expectations. This has allowed us to raise additional capital, positioning us to bring this and other drugs forward to potentially improve and extend the lives of more patients more quickly.”
The additional funding came in the form of Endocyte issuing more than 10.8 million shares and attracting more than $188m from investors and a full exercise of the underwriters’ over-allotment option to buy more shares.
Endocyte went public on the Nasdaq Global Market in February 2011 following a $75m initial public offering. It had priced shares at $6, meaning their value has quadrupled in seven years.
Its principal stockholders at the time were notable primarily because they did not include any of the investors typically involved with spinouts – instead they included Sanderling Ventures, the Pension Fund of the Christian Church (Disciples of Christ), ABV Holding, Blue Chip Venture Company, Burrill & Company and Triathlon Medical Ventures.
This was partly because some of the most influential players of today did not exist at the time Endocyte raised equity funding, though some well-established investors predate the spinout by many years, such as Arch Venture Partners, the venture capital firm formed by University of Chicago in 1986.
It is too late now, of course, and Endocyte’s acquisition leaves a lot of investors wishing they had bet on the spinout.
Mitch Daniels, president of Purdue University, said: “The sale of Endocyte is a landmark moment, but given the explosion in entrepreneurship and new startups at Purdue, I am sure it is the first of many to come. We are so deeply proud of our Purdue scientists, whose genius is saving lives from cancer, and now has brought great new wealth to Indiana.”
Purdue managed to retain Endocyte’s operations locally in West Lafayette for more than two decades – a sign that the university commands a strong ecosystem and a solid indicator that Indiana is a place to keep watching closely.