Novartis Acquires Endocyte for $2.1 Billion

In an all cash deal, Novartis (NYSE:NVS,SWX:NOVN) has acquired Endocyte (NASDAQ:ECYT) for US$2.1 billion.

Novartis benefits from the acquisition by expanding its radioligand therapy (RLT) platform, while Endocyte and its shareholders will receive a premium price for the deal. Novartis will acquire each share at US$24 — which represents a 54 percent premium in value to its share price at US$15.56 as of market close October 17.

“The global reach and expertise of Novartis in developing and commercializing RLT therapies will be critical in efforts for patients to benefit from these therapies as quickly as possible,” Mike Sherman, CEO of Endocyte, said in the press release.

Endocyte is working with Centerview Partners, Faegre Baker Daniels and Jefferies as lead financial advisor, legal counsel and financial advisor respectively.

According to the release,the transaction is expected to close in the first half of 2019 following approval from Endocyte stockholders, antitrust and regulatory approvals among additional customary closing conditions. The company will continue operating as an independent company until it closes.

Novartis plans to “accelerate development” of Endocyte’s innovative RLT therapies, which have “significant sales potential,” according to the press release.

Endocyte acquired the exclusive worldwide licensing rights to PSMA-617 agents from the private, German-based ABX.

Lu-PSMA-617 is an RLT targeting a specific group of prostate cancer patients. 80 percent of patients in this unique group have metastatic castration-resistant prostate cancer (mCRPC), which may benefit from the treatment. Endocyte is currently enrolling patients for the Phase 3 Vision trial.

Aside from this set of drugs, the company also has two CAR-T programs: one for a bone cancer, while the other is in pre-clinical development.

Novartis is a global company focused on a variety of healthcare needs such as neuroscience, respiratory, oncology, ophthalmology and more.

Investor takeaway

Over the trading period Thursday, investors have shown enthusiasm in the acquisition. Endocyte’s share price increased over 50 percent to US$23.40.

TipRanks shows one analyst, David Nierengarten with Wedbush Securities, downgraded the company from outperform to neutral from the acquisition.

Investors can follow both companies’ news over the next to monitor the acquisition until its close in the first half of 2019. Investors can follow additional information on Endocyte’s website regarding its pipeline and the Vision trial.

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Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.