Endocyte (ECYT): Targeted Cancer Therapeutics with R&D Warchest
In the wake of Amazon (AMZN) notably breaching $1,000 per share today, CNBC highlighted that just five technology leaders have accounted for one-third of the S&P 500’s gains this year. The NASDAQ bellweathers – Amazon, Alphabet (GOOGL), Apple (AAPL), Facebook (FB) and Microsoft (MSFT) – are pacing a 20% rise in the technology sector, leaving all other sectors far behind. Marc Chaikin of Chaikin Analytics, as quoted in the CNBC story, said that the rest of the S&P has “to catch up. Otherwise, it leaves the market vulnerable to a correction.”
As we’ve chronicled in this space, microcaps have outpaced large caps over the past 12 months despite the large cap rally since the election, and we’ve seen microcaps closing the gap over the past 3 months. We think the protracted uncertainty surrounding the administration’s tax reform proposals will benefit smaller stocks – biotechnology in particular – as we see the continued rotation out of large caps.
Source: Endocyte Company Overview, May 2017
Clinical Progress
In its Q1 results reported earlier this month, Endocyte reported good progress in the clinic with its two lead candidates for prostate cancer and lung cancer
Strong Cash Position
As of the end of March 2017, Endocyte had $128 million in cash on the balance sheet. The company expects to still have $100 million at the end of the year. We like the company’s science and clinical approach, and we appreciate that the company won’t be diluting shareholders with any equity capital raises in the near term. The current market cap of $117 million means that the company is valued solely on its cash balance, with investors getting a free call option on the entire research and development pipeline.
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