Sorry. I have a lot of internal dialog (that is, I worry a lot). I claim to be a nearly-pure fundamentalist, but there can be a lot hidden in choice of valuation models.
Board consensus is clearly still to remain independent until Dr Paul can claim vindication (he held out for a science-driven drug company in the early aughties when business-orientation was peaking). So I see actions by board members and top execs through that filter.
Looks to me like a combination of simply trying to make money (way I do the arithmetic, the pipeline is presently valued at zero or a bit less) (Either an optionality calculation or a realistic probability-adjusted NPV calculation would assign a lot more value to bari than my rule-of-thumb valuation. I think the low number is appropriate for kids looking into the window, like us, but someone looking at control-sized investments is better with the more formal approaches) and a warning shot at approaching acquirers (Before you make an offer that'll put Incyte in play, be sure you won't be hurt by a vigorous defense).
One other thing: he has almost certainly seen Lilly's proposed label for bari, and he said something about a good label when the drug is approved.
With Incyte's research program looking like it could absorb an infinite amount of money, Incyte locked out of the convertibles market by recent trading halts and serious negotiations already going on with Lilly over non-RA uses of bari, I at least half expect a deal for Lilly to get RA and psoriasis rights (and maybe some others) on Incyte's JAK-1 candidates. Negative evidence of ongoing talks: we've heard nothing lately about IBD, which had been held out previously as the natural target for an anti-inflammatory JAK-1 drug.
This isn't the time for novel stuff. The most interesting thing was probably that he didn't mention EITHER diabetic nephropathy or atopic dermatitis in connection with the Lilly collaboration, which suggests that the negotiations for research funding in BOTH indications is in a sensitive stage.
There was some talk about the ruxo vs cancer systemic inflammation program. Absolutely, you had to keep going on PaCa. I'll buy that you had to have trials against other tumors with other drug combinations, but I still don't see that those trials had to be as large as they were.
It was a bit disingenuous to suggest that the Merck combo study with epac just happened to have enough melanoma patients enrolled to generate a signal calling for follow-up. It was presented at the time it started as a trial mostly against melanoma.
It's almost all late-breaking clinical, so we don't have full abstracts to tear up. Item of minor interest: JAK-2 inhibition specifically interferes with pathological pathways in glioblastoma. A treatment involving a specific JAK-2 inhibitor and something other than JAK-1 inhibition to moderate the associated toxicity might be useful. I'm pretty sure Incyte has the best library of JAK inhibitors with varying specificities. It's unclear whether hematopoietic agents would ruin the desired effect.
We DO have Dr Verstovsek's full abstracts. One suggests that bromodomain inhibition may be helpful in AML treatment, but it's VERY early stage, and there are other papers suggesting powerful mechanisms for bromodomain homeostasis; in other words, tumor escape may be rapid.
I think the decision was more likely inward-looking than outward-looking. For all Incyte's hope, there's not enough clinical data to make a judgment of superiority. It would be especially unsurprising if Gilead's apparent shotgun approach to combinations turned up an instance or two of synergistic adverse events. Inositol phosphorylation is pretty widespread. On that theme, I wouldn't be shocked if a combination of delta with a JAK inhibitor went screwy, but combo with epac would be expected to behave sensibly.
Motivational speakers tell you to see opportunity. Mr Market is in a different mood/mode.
There seems to be a perception that all drug makers, particularly those using specialty pharmacies, are Valeant.
Gilead has cut back research on its known-problematic (but US-approved) PI3K delta inhibitor Zydelig (idelalisib). Incyte claims to have an enormously less risky drug candidate against the same target, but at this stage investors are likely to discount the whole category.
The ongoing studies are open-label, so we may get interim safety reads this year.
From the MPR newsletter: "Regeneron and Sanofi announced their Phase 3 study for sarilumab has met its primary endpoint, demonstrating superiority over adalimumab in improving symptoms in patients with active rheumatoid arthritis (RA) at Week 24, in the SARIL-RA-MONARCH trials."
This is another biologic, but targeting IL-6 pathways. As such, it ought to be synergistic with just about everything. Side effects also ought to get combined, so value of combinations is hard to predict. IL-6 signaling is pretty central to the immune response, so even though the safety results in the study were good, adoption figures to be cautious.
You're [sour] cherry picking. Most likely. the present share price reflects extremely little value imputed to the pre-phase-3 pipeline. I can't imagine that persisting in a hostile takeover atmosphere (the alternative is that it reflects an unrealistically low estimate of eventual ruxo sales, and that wouldn't last in a hostile takeover atmosphere either). Major events have to happen for INCY to get back above $100, but baricitinib approval ought to be major enough. It's possible that the actual start of the pure phase 3 of an epac combo in melanoma (with Merck) may reassure some people who became convinced by the miserable handling of the phase 2 topline that the project was a failure. Thinking a year ahead, a lot depends on what's actually said about the drug industry during the presidential campaign (I don't expect much to be said).
Wellington MAY change the landscape, but BB are definitely in the "Not for sale until at least one non-partnered product launch" camp. Given Wellington's major Philadelphia presence, I strongly suspect some social ties, and that would make them more partial to the same thing. So while I'll go as far as to use "buyable company" price estimation, I think the barrier to a hostile deal remains larger than its surface appearance. And the friendly price remains prohibitive.
For the "so what?" guys: This suggests that continuing spectacular growth in Jakafi sales is unlikely to spark much further price gain; that the generally-anticipated promising results from epac combos are unlikely to spark much further price gain (unless something is SO dramatic as to offer hope of early commercialization), but that movement of early pipeline candidates beyond phase 2 trials (the popular format is mow phase 2 with designed-in optional phase 3 continuation) is likely to get a stock price reaction.
Today, Yahoo lists the market capitalization of Incyte at about $13B. There is the existing product, Jakafi, anticipating stated peak sales of $1.2B, but it is "instantly obvious to the most casual observer" (no, really) that that is an under-estimate, based on more anticipated competition in the MF space and an underestimate of the level of dissatisfaction with existing PV treatments. I'll split the difference between plausible estimates and say $1.9B peak sales. It seems to be a pretty good benchmark that a product in a drug company that might plausibly be a takeover target contributes 5x peak sales to "waiting around value." So attribute $9-10 of that 13 to Jakafi; leaves $3-4B for "everything else."
Baricitinib is certain to be approved, but when and how sales will go are unknown. Historically, products at this stage are worth very roughly 1x estimated peak sales. I simply can't come up with a scenario where peak sales for bari are less than 1/4 of the present market for RA biologics, which sends $1B a year Incyte's way. So that's $2-3B for the rest.
You see where this is headed: epac is "a very promising early phase 3 compound," and those are generally valued generously. Basically, by customary valuations of acquirable drug developers, Incyte is priced with no credit for the early pipeline; no credit for GVHD or alopecia prospects. (And no credit for palliative use of ruxo, but we can talk about that after the Janus 1 results are published).
So: you could say that Incyte is priced for the stated, rather frugal, estimates of Jakafi and bari sales with a decent allowance for the pipeline, of that it is priced for realistic estimates of those sales with virtually no credit for the pipeline. The reaction to the failure of the "fighting systemic inflammation should promote survival in cancer" line of research suggests the latter.
I checked back too. Apparently it isn't. Presumably, I mistook a story about it having been scheduled for consideration (which it was, in September) for a story about it having been approved (Novartis backed out). Makes the journal publication a much bigger deal.
For the less-involved: it is common for milestone agreements relating to Europe to be conditioned on full approval in 4 of the 5 countries with the largest market sizes: Germany, France, UK, Spain, Italy. Spain and Italy are relatively chaotic, but somehow Jakavi got approval in Spain. The obstacles in UK are a drug cost law that taken literally would impose a cap of about $100,000 per year of 100% QoL (They tend to count an extra year of decent life, or substantial QoL improvement as a 100% year, because an awful lot of drugs wouldn't be available if they took the law literally), and the fact that the single reported case of PML associated with ruxolitinib occurred in the UK.
Can the leopard change his shorts (Pratchett)? I could eyeball it either way, so I had Yahoo draw Bollinger bands with the default settings. Very slight upward trend.
Anticipated response between September and February, most likely first response a letter in October claiming more time. FDA is very cautious with drugs that relatively healthy people will take for the rest of their lives, and while we don't have Lilly's proposed label, the delay in filing suggests that they revised it to include broader use than they had originally intended. So not soon. (And shall we say that the political power of the owners of potentially-gored oxen is non-negligible)
Lilly? I can't think of anything soon.
Only interesting development that I can think of with a moderately determinate due date "soon" is journal publication of the second follow-up to the COMFORTs (postered at ASH). I could imagine Novartis dragging their feet a little on that publication because it would lead pretty directly to N.I.C.E. approval of Jakavi for MF (and no, there doesn't need to be a logical reason why they approved right away for PV and are still dawdling for MF). That, in turn, is likely to trigger some milestones out of proportion to the UK-only MF market.
There have been hints that Novartis may have some comments on their open label trial with capmatinib. Timing on results from BMS on nivolumab/epac are totally without a schedule. The early trials on newly-clinical candidates aren't likely to move the stock (I wouldn't be surprised to see more than one of those reported as a late-breaking clinical result at AACR).
I could imagine Novartis seeking orphan/rare disease privileges for ruxo in GVHD; would be neither surprising nor material, but it might attract some attention.
The last Motley Fool article I saw FINALLY stopped repeating the lie that Jakafi isn't disease modifying. But you still have to go to the NEJM article (most revealingly to the on-line appendix) to see that in the "successful" Mayo demonstration series on Im, there were more serious (grade 3 and higher) adverse events than subjects in a nominally 9-month trial.
I think Daly was brought on board for some specific tasks, including getting Dr Paul away from operations and public speaking (by implication, getting HH to the helm). He did what he was hired for and left.