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Novartis to Buy Biopharmaceutical Company Endocyte for $2.1 Billion

- By Sydnee Gatewood

Expanding further into the increasingly competitive field of oncology, Swiss drugmaker Novartis AG (NVS) announced on Thursday morning it is buying biopharmaceutical company Endocyte Inc. (ECYT) in a deal valued at $2.1 billion.

According to the terms of the all-cash agreement, Novartis will pay $24 per share for the West Lafayette, Indiana-based company, a 54% premium to the stock's closing price on Oct. 17. The combined company would consist of Endocyte and a newly formed subsidiary of Novartis.

Endocyte makes radioactive drugs that target specific cells to deliver treatments to tumors. By bringing the cancer drugmaker into its fold, Novartis CEO Liz Barrett said the deal "builds on our growing capability in radiopharmaceuticals."

"We are also excited about the opportunity to break into the prostate cancer arena with a near-term product that has the potential to make a meaningful impact for patients in great need of more options," she continued.

The therapy, Lu-PSMA-617, is currently being tested in a phase III trial.

In a statement, Endocyte President and CEO Mike Sherman said he is "thrilled that Novartis recognizes the potential for Lu-PSMA-617 to change the treatment landscape for men with metastatic castration-resistant prostate cancer" as well as the broader role radioligand therapies may 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," he added.

Following the announcement, shares of Endocyte surged about 50% in morning trading to $23.38. Shares of Novartis gained 1.42% to $86.49.

GuruFocus estimates Novartis' stock has risen 2% year to date while shares of Endocyte have climbed approximately 447%.


The deal is expected to close in the first half of 2019.

Disclosure: No positions.

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This article first appeared on GuruFocus.