His scribbling in the Incyte board is why I'm visiting. I actually read the 2 articles and the editorial in NEJM, which few of you seem to have done (many hospitals have publicly-accessible libraries).
My only nastygram today is that the NEJM editors added together the fact that ONLY patients with mutated JAK-2 responded to Imetelstat, the lack of apparent shortening of telomeres in Imetelstat-treated patients and some prior results. They suggested that most likely, the response to Im was mediated by cell-surface receptors [that's from the prior data and the JAK-2 dependence]. they though that perhaps ANY medium-sized thiophosphoramidate oligonucleotide might be similarly effective. I don't think Geron has patents on all therapeutic use of S,N oligos. Your crown jewels could be worthless. And THAT'S from the editors of NEJM.
I will remain calm. I am calm now. I WILL REMAIN CALM. Really, they're perfectly happy to be corrected or abused. As I said, they eat rats and pigeons if they're deprived of other food.
Call will be at 8 AM Eastern. The plot thickens by the hour.
There are MANY (possibly hundreds of 'em) unacknowledged pharmacy subsidiaries. Valeant claims that they are consolidated. but even if that turns out to be true, they leave full-price sales in the "headline" part of the financial statements and move discounts into the shrubbery (to be fair, all drug companies do some of that, but generally in much more transparent ways). The degree of mass discounting both reduces the impact of the large price increases Valeant has taken on patients, and explains why they have encountered relatively little customer push-back.
I have a generally accepted (but not acceptable) accounting principal to propose: "If you can hide it for a quarter, you can hide it for a year; if you can hide it for a year, you can hide it forever."
The larger holders especially may want to listen to Valeant's Monday conference call addressing the accusations made by Citron Research.
A Valeant supporter said something to the effect that Citron just don't understand how US drug distribution works.
What it looked like to me was that one [unacknowledged] wholly-owned subsidiary was caught red-handed suing to force another [unacknowledged] wholly-owned subsidiary into bankruptcy. This would have left [self-dealing] product sales on Valeant's books while creating a delayed and apparently non-recurring charge in some obscure accounting category. BEFORE the one subsidiary sued the other it might have been a convoluted corporate structure. AFTER, it'll be hard to call it anything legal. The CC should be interesting, and the response may flush out similarly "unusual" practices elsewhere.
Incyte's specialty pharmacy connections are with companies that already existed before Incyte came along, so our company din't do nothin', but there may be consequences anyway.
Why is this on the Incyte board? We don't have any interest in the MDSs (The plural should always be recalled. It's what makes intentional targeting difficult and what gives Im, which kinda came in by the back way, a potential strong franchise). And when I'm trying to hedge my exposure to a middle-sized risky drug development company, I don't do it with a riskier tiny drug development company.
Im has 1 aplastic anemia and 1 liver failure on its slate (signals, not proof). Of substantial concern, a remarkably large fraction (comparing 2 small numbers) of patients in the ET demo progressed to MF. Tell me it's safe AFTER the phase 2 (and preferably a few more trials).
I'll just ask about other dark aspects of Dr Scarlett's presentation: what was said about Im's mechanism of action? What does the number 33 really refer to now that we know that it wasn't total patients dosed?
I just don't understand the mechanics. Getting a large market pretty much requires delivering data to sub-specialty medical associations and lobbying them to get specific combinations recommended. This is a different world from getting an SPA, having a pivotal trial succeed and then selling bottom-up. I think buy-siders have the same kinds of questions as I do. The problem of combinations is already there, but less severely, in Janus 1. But there, you have a worthwhile separate activity (the drug [we hope] potentiates a regular chemo agent, AND ALSO relieves generalized illness). Time course and amount of revenue are just beyond me to predict. And I'm an optimist--I think something from the early phase 2 group will distinguish itself by the time we get clarity on the epac business.
In preparation for the CC, I've been doing some global thinking. A stock price in the $100-150 range (I said broadly) would be supported by $5-6bln peak revenues. We'll get a fairly important read on peak sales of Jakafi vs MPNs this CC. The peak sales look around $2bln +/- 10%, which is an important range. We can take bari as a definite product, but sales estimates are wide open. While sell-side analysts don't give bari much respect, you can read the price history as buy-siders having long assumed roughly the same peak as Jakafi. So you need another $bln to justify the price; an even chance on Janus 1 basically takes you there...but this is not going to be a probability come next CC--by then it will be either a yes or a no. The sell-siders pay a lot of attention to epac, but I still don't see a way to make any sort of plausible guess about sales--either when or how much.
So to get serious gains, we will need something beyond the foreground pipeline. One item in our favor is that Incyte has a good history of pausing or stopping work on candidates that are going bad. The over-emphasis on pipeline secrecy resulted in epac, '110 and the cMet drug being substantially more advanced than drug candidates traditionally are when first announced. I'm not sure that applies to the new bunch of early candidates.
So basically, I can see a clear path to $150; sell-siders acknowledging the potential of bari give a mechanism for doing it. It's hard to attach specifics to the path beyond that price.
The HCV treatment market puzzles me. Basically, it's a disease of baby boomers, and we're going away. That's a [usually] unspoken reason for the high drug prices--the market figures to go away before patent protection expires.
Link didn't make it through. Check what Citron Research says about Valeant. Basically, their relations with specialty pharmacies [that they didn't mention up front that they owned] gave them a heads we win / tails you lose way to deal with possible customer resistance to their price hikes.
We don't really need explanations for volatility these days. but a couple of things happened today.
John Scarlett presented for Geron at a forum in SF. Really, he only said one thing that impacts Incyte (there are a lot of Jakafi discontinuations for ineffectiveness--this has been addressed in the past and will probably be addressed again. It should be seen in the context of the similarly high discontinuation rate reported for imetelstat in the NEJM article). I think just the fact that he spoke and suggested that Geron is a going concern was responsible for a lot of that sharp trough in INCY around lunch time.
The other thing happening is a focus on the way Valeant and Turing have used relationships with specialty pharmacies to promote their "interesting" pricing. Incyte distributes Jakafi through specialty pharmacies. In Jakafi's case, there were serious issues of a need to do post-marketing surveillance for the feared infection signal, and a need to protect the Lilly relationship from off-label use of Jakafi. The fear of unusual infections is generally laid to rest and Lilly will soon have bari to sell, so the distribution model COULD change if it became politically necessary. We may well hear something about that in the CC.
Management advancing these programs suggests that the "fight systemic inflammation and you're fighting cancer" story remains intact. I choose to read that as a promising sign for Janus 1. [while that study remains blinded, the total number of survivors can't be hidden. Since it has continued beyond median expected life expectancy of the subjects, total survivorship is a strong clue to how it's going] [On the other hand, it hasn't been halted for 'slaughter rule,' so there's a limit.] The special importance of Janus 1 stems from Jakafi already being approved--in case of success, sales could begin quickly.
Since we're talking tyrosine kinase inhibitors, Incyte certainly has some similar stuff in the lab. And since the activity isn't what the drug was designed for, it may not be the optimum fit. But unless Incyte accidentally has something that is accidentally perfect, this isn't one to jump into. RA, a couple of solid tumors and maybe diabetic nephropathy are a full plate.
That's 'nivolumab,' or Opdivo. 5 Minutes on Google didn't give any results, except for coincidental hits. Let's control our enthusiasm until information is less scarce.
However: you don't pull the mask off that ol' Lone Ranger and you don't get into a head-to-head marketing contest with a world-class pharma giant.
Really. You demolish them and they don't even notice. And see "Inside the Boiler Room" on Seeking Alpha. The junior ones get paid by the reply (We seem to have some junior ones and some senior ones, and you can't always tell by the login)
For rhe manyth time: I had good stocks but too much exposure during 2002, and it cost big. It's cheaper to learn from other people's mistakes.
Baricitinib "Can't get no respect." Historically, it was a sort of an afterthought. Away from Jakafi, epacadostat was always daddy's favorite, and analysts got that message. Well, we've seen the first round of analyst reaction to bari topping The World's Highest Selling Drug head-to-head, and sure enough, there's a lot of moderation out there.
Make no mistake: the potential maximum market size for bari is over $10bln for RA alone, with Incyte getting a little over a quarter of that in participation (or royalties or whatever). Pricing is going to be tricky, but I have faith in Lilly (they may be inclined to price a bit lower than they otherwise would to keep options open for the even-larger diabetic nephropathy target. It's a good sort of problem to have).
In principle, analysts can recognize that and leave price targets unchanged. Bari was always a strong prospect, and they can say that it's just filling in the slop they left in their models. Much more likely, though, one-by-one they'll raise targets once or twice over the next 9 months. Like the much-lamented Mr Dangerfield, we figure to have a good run of profitable bookings to make up for the lack of respect. And of course, epac will still get headlines and those kids in the pipeline will keep trying to steal the show.
I've sold my weaker airline holdings and put the money into INCY.
I can buy that one a lot more happily than anything going through microbiome. While it's a bit long, it lets my much cruder idea of "over-activated immune foci dropping the ball on their obligation to maintain structural integrity" get involved at some stages, too. Big thing is that it's target-related, so ling-term deep inhibition of JAK 3 looks like a bad idea.
That other thing isn't about an Incyte business, so discussion wouldn't belong here (well, maybe epithelial cells losing their commitment to maintaining structural integrity...)
I translate that into my language as "The intestinal perforations are almost certainly target-related, but the mechanism isn't known." (I was really really impressed by a talk on the stable and disjoint clusters that individuals' intestinal microbiota fall into); an effect caused by disrupting intestinal bugs is unlikely to reach 90% prevalence.
You sound like a pro, possibly with good library connections. I invite you to look at doi:10.10016/j.mehy.2006.07.023 and tell the corresponding author that he's crazy.
I looked at some binding curves in conjunction with a different issue. Xeljanz is about as selective against JAK 2 as Jakafi and baricitinib are against JAK 3; very. The Hb and NEUT effects COULD be mediated by JAK 1. just as well.
Any guesses at why Xeljanz has that association with digestive perforations? The signal seems to be just strong enough so they don't get any breaks on other issues. With the focal organization of the GI immune system I can fantasize a target-related cause, but it seems unlikely.
I'm afraid you're recapitulating the problem. No "could be" in the JAK 3 problem. It's a different, and generally riskier, mode of action from bari. It's a little surprising that XEL isn't more powerful than it is against RA, because JAK 3 signaling is involved in the actual attack on cells marked as foreign, but "Id modo mansuros" (that's how Google renders "That's the way the cookie crumbles" into Latin). Perhaps it's a maximum tolerated dose issue. Anyway, JAK 2 signaling is more tied to summoning the components of immune attack. Xeljanz is JAKs 1 + 3; baricitinib is JAKs 1 + 2 (JAK 1 signaling in this context is mostly tied to overall feelings sick / well). The actions are as different as a motion sickness remedy and a stomach acid reducer (both sorts of antihistamines).
If this makes you think that background baricitinib with intermittent Xeljanz for flare-ups might be a very good approach, join the club.