Are Endocyte Investors Getting Enough in the Buyout?

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Endocyte Inc. (NASDAQ: ECYT) shares were up sharply on Thursday after it was announced that Novartis A.G. (NYSE: NVS) would acquire the company. The transaction was unanimously approved by the board of directors of Endocyte, but it is still subject to Endocyte stockholder and regulatory approvals.

Under the terms of the agreement, Novartis will acquire Endocyte for $24 per share, or a total equity value of approximately $2.1 billion, in cash. This offer represents a premium of 54% to Endocyte’s closing price of $15.56 on October 17.

The transaction offers premiums of 37.8% and 101.7%, compared to the 50-day and 200-day moving averages, respectively.

Completion of the transaction is expected in the first half of 2019. Until that time, Endocyte will continue to operate as a separate and independent company.

Mike Sherman, president and CEO of Endocyte, commented:

Since acquiring exclusive worldwide rights to develop and commercialize PSMA-617 agents in 2017, the entire Endocyte team, along with our partners, have worked tirelessly to build a leading radioligand (RLT) portfolio and create value for patients and shareholders alike. We are thrilled that Novartis recognizes the potential for 177Lu-PSMA-617 to change the treatment landscape for men with metastatic castration-resistant prostate cancer (mCRPC), as well as the broader role that RLTs may potentially play in the treatment of cancer. 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.

Shares of Endocyte traded up about 50% at $23.37 just after Thursday’s opening bell. The consensus analyst price target is $23.33, and the 52-week trading range is $2.81 to $20.85.

Novartis traded at $86.22 per share, up about 1%, in a 52-week range of $72.30 to $94.19. The consensus analyst price target is $98.50.