Endocyte, Inc. (NASDAQ:ECYT)
Endocyte, Inc. (NASDAQ:ECYT) continues to elicit strong selling pressure in the market after its long-term prospects have been questioned. Fuelling the selling pressure is confirmation that the cancer company is set to carry out a major restructuring that will significantly affect ongoing drug programs.
The developer of targeted therapies for the treatment of cancer and other serious diseases says it will lay off nearly half of its employees as part of a cost-saving drive. A 40% workforce reduction will result in 47 employees losing their jobs. The company has confirmed plans to set up a severance program for affected employees as it moves to complete the third quarter reduction.
Endocyte, Inc. (NASDAQ:ECYT) is anticipating $2.4 million in restructuring costs of which $1.1 million will be used to cover benefits and severance. Fixed asset impairment charges should total $0.3 million in addition to $1 million being used to cover clinical termination charges.
Clinical Programs Uncertainty
The company has also reiterated plans to end patient enrollment in one of its trial programs – something that has not gone well with investors.
“Endocyte, Inc. (the “Company”) is implementing a strategic restructuring to focus on an updated business plan. Based on safety and efficacy data, the Company is stopping enrollment in the EC1456 trial, but will continue to enroll a small number of patients in the EC1456 ovarian cancer surgical study to gain additional insight to inform the development of future small molecule drug conjugates (SMDCs),”said the company in an 8-K filing.
The company is also planning to pare down the number of patients in EC1169, which is being investigated as a novel treatment for prostate cancer. A reduction in some trials, according to the biopharmaceutical company, should result in the refocusing of efforts on CAR-T and dual targeted DNA crosslinker trials.
Endocyte, Inc. (NASDAQ:ECYT) has since revised its full year guidance in view of the upcoming strategic restructuring. The company expects its cash balance for the full year to be around $105 million.
A once high-flying stock, Endocyte, Inc. (NASDAQ:ECYT) continues to lose ground in the after its lead candidate drug, vintafolide, posted poor results in its Phase 3 test for ovarian cancer. A wider than expected net loss of (-$11.5) million for Q1 2017 compared to (-$10.2) million last year has all but dented its sentiments in the Street.
The stock was down yet again in Friday’s trading session, shedding 30.04% to end the week at $1.91 a share.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.