Cheap Stocks: Endocyte (ECYT) Lands Billion Dollar Deal

Shares in Endocyte Inc. (Nasdaq: ECYT) are no longer considered a penny stock after sgreeing to a deal with Merck & Co. today. Vintafolide, Endocyte’s experimental ovarian cancer treatment is in the third of three stages of FDA testing and Merck decided to jump on it. The deal could be worth $1 billion for the company.

Shares in, what was a penny stock before the market open, ECYT are up more than double Friday’s closing price of $3.80 on volume of roughly 5.75 million thus far in today’s trading session. It is a significant move for the stock which had an average volume over YTD of just 776,026.

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ECYT Stock Snap Shot:

Market Cap (intraday): 280.62M
52-Week High
(Jul 7, 2011): 14.80
52-Week Low
(Dec 16, 2011): 3.02
Avg Vol (3 month): 830,061
Avg Vol (10 day): 404,514
Shares Outstanding: 35.79M
Float: 25.86M
% Held by Insiders: 10.96%
Shares Short
(as of Mar 30, 2012): 1.44M

If the shorts are still out there, one word for you: OUCH!

Merck has agreed to pay Endocyte $120 million upfront with as much as $880 million in payments possible based on regulatory approvals and sales. The initial amount nearly matches ECYT’s $130 million market value, based on April 13’s closing price.

ECYT plans to ask E.U. regulators for conditional marketing approval of both products during Q3. If the drugs are conditionally approved, Endocyte and Merck will be allowed to market them to patients who do not have other treatment options pending that they complete clinical studies to prove that the drugs work.

To view the SEC filings for ECYT, click here.

Bottom Line:These are why people are attracted to penny stocks. You wont hear about Google or Apple stock going up 100% in a day just as you wouldn’t expect Disney to gain 40% on earnings news. Penny stocks like ECYT are the reason people who subscribe to get breaking alerts via newsletters have the ability to track stocks better than those who just look at their IRA statements when its time to file their tax returns.

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