Endocyte, the SMDC, and the future of clinical oncology...

...or the future of arthritis treatment and cardiovascular disease prevention?

Part One: The Premise

I'd like to take the time to disclaim here that I'm long Endocyte ($ECYT). I'm also ridiculously, unhealthily bullish about the prospects of this company in the next decade or two. Just so we get that out of the way: I'm going to try and make this the most fair and even-keeled assessment that I can, but be aware of my stance toward this company. Now that that's out of the way, onto the show!




The Background

Bear with me here, as it sets the stage for my interest in ECYT. Also it's educational. Also I like to hear myself type.

We could nuke the patient too,
for all the good it would do.

It's really easy to get depressed reading headlines on biomedical research, because every other one is screaming "SCIENTISTS CURE CANCER" without the subtext properly being written "in a Petri dish" or "in a special mouse model with a mutation in TGF-Beta" or "by dumping bleach onto a tumor, lighting it on fire, and then dousing it with ammonia". You have to remember, though, that these miraculous claims are often made by un(der)paid interns working for the University of North Dakota Technological Institute for Farms and the Military -- Louisville Campus (I sincerely hope this isn't a real school) in official university press releases that are, to put it lightly, misleading. So, what is getting lost in translation between the scientist, the intern, and your Monday morning internet perusal?


Well...a lot. The reason for these misunderstandings are simple to describe, yet difficult to understand. I'll try to illuminate for you now how exactly that happens.

The past two-to-three decades of biomedical science have -- I believe rightfully so -- been called the "Golden Age" of molecular biology. This "Golden Age" has been the result of a number of technical advancements, chief among them being the ability to mutate/modulate/otherwise perturb the genetic make-up of our 'model organisms', be they cells in a dish or mice (or a fish). This has allowed researchers to have remarkable control over the progression and status of any number of diseases, cancer being one. With this ability have come stunning insights into the pathology of cancers; for instance, reintroducing p53 --a gene which is commonly lost or damaged in cancer-- with these new genetic tools can dramatically reverse the progression of tumors in mice. Now, give this groundbreaking study to a PR person in a University office for a press release, and instead of the title of the scientific paper being given accurately about how the researchers genetically engineered the mice to be able to have their p53 switched back on (or some similar, extremely complex protocol that would be technically impossible --not to mention ethically repugnant-- in humans), we get a headline that's much more tantalizing and palatable: "Researchers Cure Cancer!". I am, perhaps, overstating the extent to which these things happen, but I believe that any reader of this article will be able to remember at least a few "too good to be true" biomedicine articles that have piqued their interest in the past few years only to be found wanting in their actual effects on clinical medicine.

So, what's the difficulty in transitioning so much of the cutting edge biology that occurs today to the clinic? Well, a few things. One of the issues is that we're still not to the point of being able to modulate the genetics of specific cells in a safe, effective, and precise way in human patients. It does no good to understand that "hey, the BCR-ABL mutant gene is driving leukemia" without having a way to actually get into the cell and reverse whatever genetic changes have occurred. Of course, the BCR-ABL gene discovery in leukemia that I just described is actually a huge success in clinical oncology, because scientists were able to develop a drug that can interact with and inhibit the BCR-ABL fusion protein, and thus essentially cure patients with this mutation. However, these success stories are all too rare in cancer medicine today. Essentially, it's just really difficult to target a specific protein in a cancer cell in an effective manner.

So, what does this have to do with Endocyte?  (I thought you'd never ask!)

The premise under which Endocyte functions is to leverage the fact that cancer cells often have big flashing neon signs all over their membranes that say "I'M UP TO NO GOOD". Often, it has been found that certain types of cancer (for instance, prostate cancer cells) will have very specific "signs" all over their surfaces (like prostate membrane specific antigen), which is a very strong signal found in prostate cancer. Typically, this is of little therapeutic benefit; some compounds have been developed which allow for imaging of these special cancer hallmarks, but little else can be done. Endocyte, however, aims to change this with their small molecule drug conjugate (SMDC) proprietary technology.

How does the SMDC function?

The SMDC, from the ECYT
website. Source.

The SMDC is basically a 3-part beast; a 'ligand' (which is really just bio-talk for something that binds to something else), a 'payload' (the actual drug that we're interested in delivering), and a 'linker' (which links the ligand to the payload). So, what the SMDC allows Endocyte to do is to design a ligand which binds to those special cancer signs on the surface of a cell, and then is brought into the cell, bringing the payload with it. The payload can then be released, to do whatever it was meant to do. This allows for specific cancer markers to be used to guide the payload directly where it needs to go, a laser-guided missile instead of a carpet bomb.

This is, of course, a potential game changer. The advantages are numerous: more specific targeting of tumor cells (greater likelihood of success), less off-target effects (none of the awful side-effects of chemotherapy) since you can use much less drug with less of the drug going where you don't want it to, and the ability to use much more potent therapeutics than are currently safe in the clinic. Finally, ECYT can also swap out the drug payload for something more benign, like an imaging agent: this allows physicians to see test patients BEFORE giving them the drug, to both make sure that the SMDC with the drug payload is going to be effective, and also to monitor the course of the disease/size of the tumors.

I think it's easy to see now why I (and I'm sure many physicians) are so excited about the prospect of this technology: the SMDC allows for medicine to finally deliver on the promises of so many of the "SCIENTISTS CURE CANCER" articles that have been written, due to its unique ability to precisely target the actual "bad guy" proteins that scientists have been playing with in the lab for years.

With this, I'll end Part One. See you in Part Two, where I'll talk about the prospects of the company, the current valuation, and why I wish I would have bought this stock in the last few weeks instead of the last few months!

JVS




This is not a trade recommendation, or any advice on a financial decision.