The offer represents a premium of 54% to Endocyte's closing price of $US15.56 on Wednesday.
Until the deal is finalised, Endocyte will continue to operate as a separate and independent company.
"We are thrilled that Novartis recognizes the potential for Lu-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", said Mike Sherman, president and CEO of Endocyte.
"Note a below-average reaction time at the business development department considering that the Endocyte market cap was at $110 million only 12 months ago", Baader Helvea's Bruno Bulic said.
The transaction is subject to customary closing conditions, including the approval of Endocyte's stockholders and receipt of regulatory approvals. Novartis has also boosted its revenue outlook for the year, noting that it expects a low to mid-single digit rate of growth.
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By 1410 BST, Novartis shares were 1.83% higher at CHF85.82. Under the terms of the agreement and plan of merger, upon closing, holders of Endocyte common stock would receive Dollars 24 in cash per share.
Novartis AG is a holding company, which engages in the development, manufacture, and marketing of healthcare products.
Endocyte's knowledge and abilities will help Novartis in its development of a drug that can be used earlier in the treatment of prostate cancer.
Since taking over in February, Narasimhan has shed over-the-counter medicines and generic pills while pushing a spinoff of Novartis's Alcon eyecare unit come 2019. It uses a proprietary technology to create novel small molecule drug conjugates and companion imaging diagnostics for personalized targeted therapies.
Another company developing drugs that deliver targeted radiotherapies is New York-based Actinium Pharmaceuticals.