Ahead of the Bell: Analyst hikes Endocyte target

Wall Street has largely overlooked the opportunity that Endocyte Inc. has in developing potential treatments for solid tumors, inflammation and kidney disease, according to a Wedbush analyst who raised his 12-month price target on the drugmaker's shares.

Endocyte, based in West Lafayette, Ind., is developing targeted and highly potent small molecule drug candidates, analyst Gregory R. Wade said in a research note.

The company is teaming up with pharmaceutical giant Merck & Co. on the potential cancer treatment vintafolide, which regulators in Europe are currently reviewing. Vintafolide is an experimental treatment for ovarian cancer that is resistant to platinum-based chemotherapy.

It is designed to target a folate receptor that appears on cancer cells but doesn't exist on most other cells. Endocyte has said the receptor is found on 80 to 90 percent of ovarian and lung cancers.

The European Medicines Agency also is reviewing an application from the companies for a diagnostic agent intended to help identify patients who could benefit from the drug.

Vintafolide likely will be approved and on the market in the European Union by the end of this year, Wade said. The analyst raised his price target on the shares to $20 from $16 in part to reflect estimated cash from future vintafolide sales.

He estimated that the treatment could reach peak sales of $400 million in European and $500 million in the United States if it is approved there as well.

"Vintafolide could represent a breakthrough in treatment for women with ovarian cancer, a disease for which few good treatment options exist," the analyst wrote.

Endocyte shares rose 20 cents, or 1.9 percent, to $10.95 in premarket trading on Wednesday. That is near their 52-week high of $11.08 set Monday.