Incyte Corporation (NasdaqGM:INCY - News) recently received a huge boost when the US Food and Drug Administration (:FDA) approved its cancer drug Jakafi (ruxolitinib), an oral janus-associated kinase (:JAK) 1 and JAK2 inhibitor. Jakafi was cleared to treat patients suffering from intermediate or high-risk myelofibrosis (:MF), a rare bone marrow disorder. Incyte is the first company to get a drug approved for the rare disease. Jakafi will cost $7,000 per month.
We remind investors that Incyte submitted a new drug application (:NDA) to the FDA seeking marketing approval for the candidate in the US for MF in June 2011. The application was submitted on the basis of encouraging data from two late-stage studies, COMFORT-I and COMFORT-II. While submitting the application, Incyte requested the agency to review it on a priority basis. The request was granted by the FDA in August 2011. The FDA assigned a target date of December 3, 2011 for deciding on the application. However, the US regulatory body came to a decision a few weeks ahead of the target date.
While Incyte conducted the COMFORT-I trial , the COMFORT-II trial (the European phase) was conducted by partner Novartis (NYSE:NVS - News). The European approval was sought by Novartis in June 2011. Per the agreement with Novartis, while Incyte will market the drug in the US on approval, Novartis will be responsible for the same in ex-US markets. The US approval of Jakafi triggered a $10 million milestone payment from Novartis. Consequently, Incyte raised its 2011 revenue guidance to $92 million from $82 million.
We note that Jakafi enjoys an orphan drug status from the FDA. Orphan drug designation is granted in the US only to drugs that treat a disease affecting less than 200,000 people in the country. Moreover, the orphan drug status for Jakafi provides Incyte with seven years of marketing exclusivity in the US for MF.
We believe that the FDA approval of Jakafi for this rare disease is a path-breaking achievement for Incyte and will boost its top line significantly.
Currently, we have a Neutral stance on Incyte for the long run. The company carries a Zacks #3 Rank (Hold rating) for the short run.
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