Nice find. But don't leave out the word 'systemic,' it's an essential part of the name. You got me to do some reading.
Systemic sclerosis is a somewhat mysterious disease (non-specialist physicians would cover the mystery by saying "autoimmune." Immunologists gladly accept it as part of their field, but have no real explanation. So I'll leave it as 'mysterious'). It overlaps with scleroderma, a slightly-better-understood condition, sufficiently to make patient counts unreliable. SSc is rare, but probably more prevalent than IPF. However, because it is usually mild and progresses slowly, the potential market may be small.
The course of SSc is usually, but not always, pretty benign. When it goes bad, lung damage is usually the leading threat, with kidney damage trailing.
I like the choice of target--in some ways it's a middle ground between IPF and the jackpot indication, diabetic nephropathy. The trial is not a hugely ambitious one, mostly about safety and tolerability, and at 6 weeks duration it may detect hints of therapeutic signals, but nothing dramatic should be expected.
Please expand. Referring to the wrong study? Did I find the wrong disease? Is it bad corporate strategy? I'd definitely entertain any of these ideas.
Getting briefly away from character assassination, the question can be asked. I'm not a technician, neither do I play one on TV, but the answer is clearly 'no.' There are 2 traditional ways of identifying support levels: the easy one is putting it at the old resistance level--that would be the $25 range. The other is looking afresh at levels where significant downturns have stopped--around $20.
You all KNOW that I'm bullish on Incyte, but I'm fearful about the budget abyss Congress appears to be headed for. I'm not in "circle the wagons mode" yet, but I'm scouting out favorable spots to do it. I have net cash, so strategies are less constrained than if I was heavily margined. One attractive possibility is selling both stock and puts around a resistance level in case of panic (basically, selling the stock a few bucks above market and collecting cash to get back in later--by force if the damage lasts or voluntarily if it doesn't). I rarely BUY options (I'd rather collect than pay time value, which goes away automatically). I've found that while selling calls gives a nice boost when a rising stock runs out of steam, it is scant protection in a panic, and the need to keep positions balanced slows my reactions.
Anyway, I've always believed in knowing both the bull case and the bear case. In the present situation, I think the bear case on Incyte is mostly the bear case for the market as a whole. (Imagine, if you will, a NEJM letter next week reporting 2 cases of PML clearly linked to Jakafi: we've already considered what that would mean to the MF indication (dilution of the push for earlier treatment--something everyone treats as a long shot gets longer); it would mean less for the cancer wasting indication (it would probably force use of a companion diagnostic in the PV indication--again, I don't see that the indication gets much respect). So I could see such a letter dropping INCY $3-4 a share. A destructive budget outcome is both more likely and worse.
Very very technically, the US defaulted on bonds the last time there was a serious budget confrontation (not the time everyone decided they preferred "the sequester" to any deal available, but the one that led to design of the sequester). A more-than-technical default on US obligations this time would result in disappearance of a large amount of money from the financial system Probably not like the collapse of the CMO / CDO bubble (unquantifiable, but probably $40 trillion), but probably bigger than the collapse of Russia ($2-3 trillion). Everything would get unpleasant. It's hard to see a non-disruptive way to avoid a problem.
If anyone can get us out of this cleanly, I'll support putting his face on a $500 bill.
But yeah, Incyte is an attractive company in a bunch of ways.
I don't know anything useful about the company or the drug. I think you want SOME JAK2 inhibition when you're attacking cancer cachexia, just maybe a lower proportion than you get from Jakafi.
From last week. I just read it (as usual, I won't re-post copyright material). By Matthew Roden. Very nice dynamic valuation of Incyte (a lot of people like to see such things, but you've read my opinions before). He makes an interesting point in conjunction with the PaCa results: the survival benefit is interesting and a bit unexpected. I, at least, had been dividing probabilities between anti-tumor activity of Ruxo and postponement of death by wasting. Roden suggests that by combatting the side effects of the drug it was paired with, Ruxo allowed more patients to stay on (effective) treatment. The potential nice feature here is that effective anti-cancer drugs do tend to have [sometimes dose-limiting] inflammatory side effects, so we have another activity that may not be restricted to one of a few tumor types.
I mostly agree with you. But I can also see this as a negotiating tactic. Any hope at all relative to a nephropathy indication could generate new financing options. And even a hope of a hope would support a "Well, I don't think that offer takes everything into account" step in making a deal.
I think it was announced in early October last year. There was also apparently some board resistance against the increase last year. One can hope.
I'm not entirely joking when I wonder if this study is being conducted with a protocol that would meet FDA requirements for a registration study. They may well finish before PLC finishes its study.
Nice way of handling it. No introduction, jump to Q&A. Nice to see the neutropenia/margination issue reopened, because that had the potential to be a killer and it seems to be coming down all pro-Jakafi in practice. All the hinting around the magic subset has me thinking that it might be something non-obvious to outsiders. Also, much hinting about early stage testing in a lot of possible solid tumor indications. There was some hinting about a possible instance of what I call the staging paradox (but is more often called The Will Rogers Phenomenon) in the PaCa data (this usually reduces the impact of a result, but in this instance it was a suggestion that even though casual analysis suggested that only the magic subset was helped by Ruxo, the detailed analysis is at least leaving the question open). The message that emerging-from-pipeline candidates are unencumbered was emphasized heavily. There was some braggadocio about the financial strength of Incyte (we could do anything independently....well except for a heart drug...) that frankly sounded delusional.
Hardly worth mentioning that they have their facts scrambled. The full results of the PaCa trial WERE reported. The magic subgroup was the only one singled out, but that isn't the same as data from other subgroups being omitted--they just weren't treated separately in the report. There was one primary endpoint (survival) and one secondary endpoint (weight change) in the study design; both were reported. We're talking about topline data from a small study that really doesn't have statistical power to generate in-depth information. And yes, the study was a home run and then some. The declared purpose of the study was to see whether a label-expansion study would be feasible; and the result shows that it wouldn't just be feasible, it would be easy.
You can say that valuing a company with one marketed product at $5.7 bln looks rich, or you can mention that the one marketed product looks certain to generate $1 bln a year sales (that assumes about half of MF patients and 5% of PV patients) and has a decent chance to triple that (with no contribution assumed from solid tumors other than pancreas), and has another product in p3 with a partner that has comparable potential. Doesn't look so richly-valued then.
For a company with 1 marketed product, /intermune has an awful lot of moving parts. And a bunch of them were touched on. Start with Jakafi (the name means Ruxolitinib used on-label, that is for myelofibrosis, and in the US). Jakavi is the same in Europe (roll-outs in Europe happen slowly because of national and even finer-grained regulatory differences). Then there's Ruxo off-label for polycythemia vera (off-label but soon to be brought on) and Ruxo off-label for solid tumors (probably already happening, but far from coming on label). Physicians may use a marketed drug pretty much as they please.
Not-yet-marketed are Baricitinib, "The emerging pipeline" (mostly JAK inhibitors with mixes of specificities different from marketed ones) and the 2 anti-cancer candidates (IDO and cMet inhibitors).n hour is bound to be confusing.
Having all those stories touched on in half a
Sorry for getting the name wrong and the transposed text, though. If you want to learn entirely too much about selling a drug in Europe, listen to some Intermune CCs.
Without having studied the exact terms of the present conversion... When they did the big conversion, the usual suspects moaned about dilution and the stock went down for a while. Finally, somebody did the actual arithmetic and realized that the deal was marginally accretive...and the price went up. Then it turned out that not ALL the bonds got converted and there was moaning about management incompetence, etc...
It's jest bidness.
To be sure, Incyte now has more big plans than there's money to support, so SOMETHING can be expected. The people who can make decisions and make them stick don't seem to think capping the upside is a good idea, so I don't see a sale to a big player. The financial structure has no bearing on single-program partnerships, so that doesn't seem to be something the conversion bears on. The company simply isn't solid enough yet for straight debt to look good. If I had to pick something that could be done by year-end, it would be a revolving credit facility. That's actually a pretty plausible way to finance a small p3 to put PaCa on the Jakafi label. Not by any means a prediction.
You talk as if you were disagreeing with me about the conversion, but we said the same thing near as I can tell (you DID have the full story which I didn't)
The registration pivotal trial to put PaCa on the label is the LEAST expensive of the items I think management would like to do. Listen to them and you'll hear that they'd like to bring at least 2 more candidates forward soonest, and they want to do some independently. They don't remotely have the money. They COULD have the money if PaCa goes on-label as fast as a bunny rabbit; they recently said that the "magic subset" will be revealed at ASCO next June, which is incompatible with starting a pivotal trial before then (they have to publish subject selection criteria). With present financial resources that makes sense--it would be a race between 2 big numbers (cash coming in and the expense of the trial--I'd make that $50MM a floor on the price. The big payoff wouldn't depend too much on FDA action because the drug is already available.
What could "induced conversion" possibly accomplish? It has zero pertinence to a single-drug partnership. It has minor impact relative to a buy-out (you know what the 'leveraged' in LBO means? It means lots of debt around). Getting rid of senior debt COULD be preparing to meet covenants attached to loan-like financing. I've seen [much] shakier companies than Incyte get revolvers. You pay a commitment fee and a scandalous interest rate on any balance and can stop worrying about when that milestone comes in within a 1-month window. Management says that they just run the figures and it makes sense to encourage conversion. One or t'other; what else makes sense?
I don't know what a good takeover offer would look like, but with RA and toxic cancers up in the air, I think it's a bigger number than anyone is going to risk.
I CAN do a lot of those financial calculations, but I rarely bother. I'm not a corporate financial officer, I'm an investor (for more than 40 years). When I used to talk to corporate finance officers, they said that they hoped to get -50%/+100% accuracy (and didn't always succeed). When I look, on the other hand, at the calculations done by financial analysts, I see that the inputs are wild guesses and the outputs strangely similar to a medium-sized move in the direction the person doing the figuring wants the move to be. I've teased out the most remarkable details when it seemed worthwhile ( I actually found the Ruxo patent on the balance sheet, but it really was just a subset of "other" so I didn't bore people), but here, they don't much matter. The thing that matters is going forward quickly while giving up the minimum to keep the cash-on-hand number always positive.
The behavior is only puzzling if you expect stock behavior to make sense. You have to get over that. I recommend the epilogue to "The Intelligent Investor."
What I was TRYING to say was that even though the latest induced conversion is not an especially material event, we were already starting to hear one bunch of the usual suspects moan about dilution and another bunch of the usual suspects crow about an imminent buy-out. And that we'd been through this before (I didn't say more than once, but in fact we got similar noise when the original convertible bond issue was rolled over).
I have problems with persuasive writing; one of them is going on too long. I mentioned the only place where it seemed that paying off senior debt might make a practical difference (and I said that I wasn't predicting it). I may yet learn to keep one message to one point.