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Incyte (INCY) Up 7% in a Year: Will the Momentum Continue?

Incyte INCY had a good run in the past year as shares gained 7.8% against the industry’s decline of 9.9%.

Incyte’s lead drug, Jakafi, has been driving growth for the company through label expansions. Jakafi is a first-in-class JAK1/JAK2 inhibitor, approved in the United States for the treatment of patients with polycythemia vera (“PV”) who have had an inadequate response to or are intolerant to hydroxyurea. It is also approved for the treatment of patients with intermediate or high-risk myelofibrosis (MF), including primary MF, post-PV MF and post-essential thrombocythemia MF. The drug is also approved in the United States for treating steroid-refractory acute graft-versus-host disease (GVHD) in adult and pediatric patients aged 12 years or older.

Jakafi’s sales were $1.8 billion in the first nine months of 2022, up 14% year over year, as demand for the drug has been steadily increasing over the last few quarters.

Zacks Investment Research
Zacks Investment Research

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Jakafi is marketed by Incyte in the United States and by Novartis NVS as Jakavi outside the United States. Incyte also earns product royalty revenues from Novartis for the commercialization of Jakafi in non-U.S. markets.

Apart from Jakafi, the approval of additional drugs diversified the company’s portfolio and generated an incremental stream of revenues. The approval of Opzelura, a novel cream formulation of ruxolitinib, for the topical short-term and non-continuous chronic treatment of mild-to-moderate atopic dermatitis (AD) in non-immunocompromised patients aged 12 years or older, has strengthened the company’s portfolio. Per the company, over 62,000 units of Opzelura were shipped in the third quarter, with growth fueled by both AD and vitiligo.

Incyte Corporation Price and Consensus

Incyte Corporation Price and Consensus
Incyte Corporation Price and Consensus

Incyte Corporation price-consensus-chart | Incyte Corporation Quote

Last month, Incyte and CMS Aesthetics, a dermatology medical aesthetic company and subsidiary of CMS, announced that the companies entered into an agreement for the development and commercialization of ruxolitinib cream for the treatment of autoimmune and inflammatory dermatologic diseases in Greater China and certain countries in Southeast Asia.

Earlier, approval of drugs like Pemazyre (pemigatinib), a kinase inhibitor indicated for the treatment of adults with previously-treated, unresectable, locally advanced or metastatic cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or other rearrangements, broadened the portfolio. The initial uptake of the drug has been encouraging. The FDA also approved a label expansion of Pemazyre for the treatment of adults with relapsed or refractory myeloid/lymphoid neoplasms (MLNs) with FGFR1 rearrangement.

The adoption of other newly approved drugs like Monjuvi is also a positive and should boost sales in the upcoming quarters.

INCY also receives product royalty revenues from Eli Lilly LLY for Olumiant (baricitinib). The drug is a once-daily, oral JAK inhibitor discovered by Incyte and licensed to Lilly. It is also approved for the treatment of adults with moderate to severe rheumatoid arthritis. Recent label expansions will propel the top line further and generate more royalties for INCY.

However, increasing competition for Jakafi is a concern. The company is highly dependent on its lead drug Jakafi for a major chunk of its revenues, and a slowdown will adversely impact sales.

Incyte currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the biotech space is Syndax Pharmaceuticals SNDX, which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, loss estimates for Syndax have narrowed to $2.48 from $2.53. Syndax also surpassed estimates in each of the trailing four quarters, with the average surprise being 95.39%.

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