Incyte competition under-appreciated, says Morgan Stanley Morgan Stanley said current consensus estimates do not reflect myelofibrosis competition, which could impact Incyte's Jakafi sales. Shares are Equal Weight rated.
This is what MS said today in a note regarding Incyte, exactly - no specific mention of YMI:
Rating: Equal-weight Below we discuss our evolving thoughts about myelofibrosis (MF) market competition, as we expect to see increased competitor data flowstarting in 2H12. We do not currently model competition for Incyte (INCY) as most other JAK's have struggled. However, in light of: a) the growing Jakafi driven valuation; b) the evolving and more crowded competitive landscape, and c) the longer development horizon of Incyte's pipeline assets, we see it as worth noting. Short-Term: Competition with Trials Could be Real. From clinicaltrials.gov, we estimate that there are ~1k patients to be enrolled in currently recruiting MF studies and a total of ~1.5k MF patients either to be recruited or in ongoing trials (~12% of our 2012 U.S. addressable market - many, but not all, trials are U.S. only). Given that higher volume (academic) docs are likely to continue to enroll their patients predominantly in clinical trials, we see competition for academic patients and locating community patients as a near-term risk that could persist if the current drugs move into Phase 3. Long-Term: A True Competitor Will Affect Valuation. While we do not model a competitor given the low success rates to date, we do believe that the acceleration in companies with new JAKs or other drugs in the clinic for MF increases the risk of competitor success, although importantly not all non-JAK drugs will be direct competitors. Since we have always viewed Jakafi as a strong drug that could address most highly symptomatic MF patients, we do not expect a new entrant would meaningfully grow the market size. Rather, we expect a primarily share driven dynamic, where even a competitor that gains 30% share of just new starts (no switching) would meaningfully impact our DCF (DCF would go from $16 to $13), as operating leverage would lessen due to the relatively high R&D spend (may be less malleable in 2013-17 as Incyte pays 30% of Phase 3 RA spend).