What's Driving Incyte’s Valuation?
As discussed earlier, Incyte’s (INCY) Jakafi is the only FDA-approved drug for the treatment of myelofibrosis and polycythemia vera, both of which are rare types of blood cancer. Incyte sells the drug in US markets and has entered into a collaboration with Novartis (NVS) for commercialization of the drug outside US markets. Incyte receives royalties for sales in international markets.
During 2015, the revenues for Jakafi rose by over 68% to $601 million as compared to $357.6 million in 2014. These revenues are reported from the sales in the US markets. The increase in revenues is because of the volume growth as well as price growth for the drug during 2015. The above chart shows revenues for Jakafi over the past five years.
Other details about Jakafi
Some other details investors should know are as follows:
- Jakafi is Incyte’s first product approved for sale in US markets.
- The company has patents that cover the composition of matter and use of Jakafi to November 2026, and extensions have been granted for these patents through late 2027.
- The US Food and Drug Administration (or FDA) has granted orphan drug status to Jakafi for myelofibrosis, polycythemia vera, and thrombocythemia.
- Jakafi is the first FDA-approved Janus-associated kinases (or JAK) inhibitor for any indication. It is an oral JAK1 and JAK2 inhibitor.
- The FDA approval was based on two phase III studies, Comfort-I and Comfort-II, which demonstrated significant reductions in splenomegaly, or enlarged spleen, through the use of Jakafi.
- The company has established a patient assistance program called IncyteCares (Connecting to Access, Reimbursement, Education and Support) so all eligible patients can have access to Jakafi.
Investors can consider ETFs like the iShares Nasdaq Biotech ETF (IBB), which holds ~2.8% of its total assets in Incyte, or the Vanguard Midcap Growth ETF (VOT), which holds ~1.0% of its total assets in Incyte, in order to divest company-specific risk. Apart from Incyte, IBB also holds 7.0% of its total assets in Regeneron Pharmaceuticals (REGN), 4.2% in Illumina (ILMN), 7.7% in Celgene (CELG), and 3.6% in Vertex (VRTX).
Browse this series on Market Realist: