I wrote a long response to yellow, but fortunately Yahoo ate it. He's insane and fixated on me. In case you're a newcomer, I've been around Incyte investing for over 10 years and have a good reputation I've never predicted a future price above the then-current one (I once did under some duress on Seeking Alpha), I've never mentioned a technical indicator without expressing skepticism, and I've certainly never predicted a buy-out (absolutely opposite what yellow's ravings might suggest, I've garnered some hostility from hot-money bulls by pointing out that management has the tools to fend off a hostile offer, and wouldn't accept an offer at any plausible price).
If anyone serious wants to challenge my valuation estimate (based on the UBS valuation) of $96 rock-bottom, $135 typical case and above $160 optimistic, go at it. But DO go at it in the kind of detail I used.
I have seen stock in a profitable company trade for less than cash-on-hand, so I'm not going to predict a bottom. The Newlink boogie man was just flashed on the wall again, with some effect. Their drug is a competitor for epacadostat exactly like Geron's drug is a competitor for ruxo....not at all.
any idea on what the estimates are for this quarter's eps? jakafi is going to hit 1 billion in annual says.. but late stage trials are expensive.. looking for some rational input
I'm just reposting this as a summary for those who need a nugget.
INCY has $1.2 billion in liabilities including $650 million in long term debt. If they use this secondary money to renegotiate their debt terms, then you'll know they're seriously strapped for cash. Not saying they will do this, but just keep an eye for it. If that happens we'll see a 20% correction on top of whatever it already corrected at that time.
Does today stop the bleeding? We did come back strong from the low... Thoughts longs..
Ok, people expect me to say something about why the price shouls be considered too low now. Long-timers will know that my REAL attitude is that today's price just IS. The famous Graham / Buffett quote about voting machine and weign machine and all. But first, to dispose of the insinuation that something is leaking--the question is, where would it be leaking from? Lilly and Merck simply don't leak. Neither, with a shorter track record, does Incyte. I may have seen occasional pre-reactions to Novartis news, but they aren't a critical spot for Incyte.
Ok, the meat. What is Inccyte worth? Let's start with the UBS analyst's opinion: "Our price target is based on our NPV sum-of-the-parts analysis, including $49 for Jakafi, $54 for Epacadostat, and $10 for Olumiant." They allow $23 for "everything else." Translating those value components to peak annual income (I've done the math in public before), at a "normal" 7% prime rate that's about $2.2bln for [I'll call it ruxo because presently unapproved uses are included], $2.5bln for epac and $250MM for bari [same reason for using the generic term]. So we can go on to asking how optimistic or pessimistic each number is. Start with $23bln for "everything else." That's pretty cheap for a little drug developer with half a dozen known candidates, ita, the delta drug, the mixed FGFR drug and the GITR drug in phase 2---if the drug developer was for sale, which it isn't. So the $23bln looks reasonable.
It's hard to be sure about ruxo: it's still only at about half plausible penetration in MF, but above projected penetration in PV. Penetration in ET is probably small at present (the disease isn't generally severe enough to demand off-label treatments), and it's a high prevalence condition. Frankly, I think ruxo will continue expanding into less severe MF, and get a decent penetration into ET on the same basis as it has penetratrd PV (ruxo treats people better than it treats charts; hydroxyurea treats charts MUCH better than it treats peeople). We don't know what penetration ruxo has presently in GvHD, but I doubt much further growth will be available once it comes on-label. So: $2.2bln peak sales looks plausible, maybe conservative.
15% drop on 2.5% dilution a bit much--look for major recovery next week unless market tanks big time. I thought 120 was a good buying opportunity but nobody is perfect.
Let’s put the Pump King’s recent posts in perspective.
“OK, PEOPLE EXPECT ME TO SAY SOMETHING ABOUT WHY THE PRICE SHOULS BE CONSIDERED TOO LOW NOW.”
Really egotistical. It’s the internet. They couldn’t care less. If they followed your recommendations then they’re in the deep red.
“ WHAT IS INCCYTE WORTH?” “ $23BLN LOOKS REASONABLE.”
This from the guy who pumped a $300 per share buyout, now saying $115 is reasonable.
“IT'S HARD TO BE SURE ABOUT RUXO.”
Bingo. The reality is that all your measures of rux only exist on paper and only for the present. You think the future doesn't change? There will be other competitors sooner or later. And anyways rux is a way way underwhelming drug at a way way expensive price for the patients. It does so little but costs so much. As the rux use declines because people don’t get enough benefit then the price for rux will drop too. What happens to cash flow then?
“ABSOLUTE WORST CASE VALUE $96; TYPICAL CASE, WELL, A LITTLE OVER $130.”
Do you realize the Pump King’s bloated $300 target has come down to what I’ve been saying all along? He hates me for saying sub $100, but then his range now includes what I’ve been projecting. Notice how more and more of his posts start sounding like mine? Difference is, I haven’t changed my tone.
“THEN THERE'S YELLOW, WHO DOESN'T BELIEVE OWNING A THING [LIKE THE RUXOLITINIB PATENT ESTATE] THAT BRINGS IN OVER $1BLN THIS YEAR AND WILL PREDICTABLY BRING IN A LOT MORE PER YEAR, GIVES A COMPANY VALUE.”
No, Mr. Pump King, I never said INCY or rux has zero value. All along I’ve only said that the value doesn’t measure up to the hyperinflated price. I even said rux does have value but a reasonable price would be $60-$70, and add some whipped cream on that and you can even say $80-$90... but not $150, and never $300. And who cares if cash flow is $1 billion but they only make $100 million, for the love of all that’s good, just their debt costs $39 million to service. Either you’re missing the point, or you’re really just pumping the board.
“I'VE SEEN A FAIR NUMBER OF BEAR RAIDS.”
This is not a bear raid. If the bears are buying up cheap shares, then shouldn’t the price stabilize or even go up? This is a dump. The pump phase is over.
“IT ISN'T MANAGEMENT'S ROLE TO MANIPULATE THE STOCK PRICE”
Before the drop the Pump King was singing about the stock price, now that it’s in the dump he suddenly pooh poohs the price.
Ok, I spent more time than I should have yesterday groveling through clinicaltrials, looking for a time bomb comparable to the too-large phase 2s of the "treat systemic inflammation to cure cancer" program. Nothing. Some investigator-initiated phase 2s in epac, which is good. An odd-looking phase 2 with the GITR agonist antibody (which is, by the way, a product of the Agenus collaboration), but neither too large nor front-loaded. We're a couple months away from the next time people might expect progress reports on epac + Opdivo. There may be some results on no predictable schedule regarding the epac + Tercentriq combo. Nothing is really expected there, but stopping trials could be taken badly.
Of course, operating management have NEVER in the history of [post-gene licensing] Incyte owned meaningful amounts of the company's stock, so anyone reading something into operating insider stock sales is [shall I say it?] insane. (and in no position to convince even a somewhat dull portfolio-runner)
But as I've said before, when a [this] stock leaves its trading range, it's appropriate to look for something that has happened. And frankly, since the re-filing schedule for bari [which includes the end of the rumored disagreement with Lilly about how to proceed) looked like a substantial positive development to me, the shortfall is worse than it looks.
I think the obvious reason, here, is correct. People, portfolio-runners, are looking at the NewLink presentation on Indoximod and seeing a drug in the same class as epac, with comparable marketing attributes, about as effectve as epac and close enough behind it to market to prevent epac becoming installed as the assumed drug of the class. Now, everything about that interpretation is false, but it makes a heckuva story [DO look on Seeking Alpha for the takedown of the trial presented. Look at a Kaplan-Meier curve for any drug trial in advanced melanoma for a graphic demonstration of why excluding subjects who withdraw (or progress) before a scan at 12 weeks SEVERELY [totally] degrades the value of the result. Consider the expense and staffing requirement of a 700-patient phase 3 and try not to laugh at the idea that NewLink could conduct such a thing on a fast schedule. Oh--and there's no evidence that indoximod acts on the IDO axis] The presentation was made at a small meeting coincident with the major ESMO conference, effectively insulating it from criticism on the spot.
As we saw with the ruxo patent expiration rumor, even a totally baseless rumor can move a [Incyte's, at least] stock price substantially. And as we've seen with imetelstat, the low quality of data supporting a competitor doesn't necessarily wear off quickly.
As it happens, we're seeing a classic decay curve in the price of NLNK, supporting the idea that among people payig attention, the weakness of their meeting presentation is becoming known.
The mechanism by which such a "news" item damages the INCY price is that people only modestly classier than our perma-bashers keep repeating it in places where portfolio runners get information (I'm told that company-restricted Bloomberg chat rooms figure in).
Is it management's responsibility to fight this? Generally, no. When Feuerstein outright stated the ruxo patent lie in his column, they had an arguable responsibility to correct a false material statement. But for most of this, management's responsibility is to permit the market to be orderly. Trying to manage the stock price [as opposed to its value] is outside the job description and often destructive [Chainsaw Al anyone? Enron?).
there must be some bad news out there, maybe by 4thq report they will be open about it
**remember why your long** Sept 12
Argus said in a note that it sees bullish growth outlook for Incyte Corporation (NASDAQ: INCY) given its solid late-stage pipeline and key strategic R&D partnerships with companies such as Merck & Co., Inc. (NYSE: MRK), Novartis AG (ADR)(NYSE: NVS), Bristol-Myers Squibb Co (NYSE: BMY) and Eli Lilly and Co (NYSE: LLY).
The firm has a Buy rating on the shares of the company and a $150 price target.
Analyst Jasper Hellweg noted that the company's main drug Jakafi is the first and only drug approved for the treatment of myelofibrosis and polycythemia vera, two types of rare blood cancer. The analyst said he likes the growth outlook for Jakafi.
The analyst also noted that Jakafi's net product revenue was up 33 percent year-over-year in the second quarter to $276 million, helped by patient demand for both of its approved indications. Since the second quarter, the analyst noted that the number of patients on Jakafi rose at a CAGR of 46.5 percent.
Additionally, Argus is upbeat about the company's other approved drugs and their pipeline, including other oncology drugs and treatments for rheumatoid arthritis and atopic dermatitis.
The firm said Incyte is perpetually a potential M&A candidate for a larger biotech or big Pharma company. However, the firm noted that the company is not consistently profitable and that its shares are volatile.
Accordingly, the firm said Incyte is appropriate only for risk-tolerant investors as part of a diversified portfolio.
Meanwhile, the firm noted that the shares of Incyte have outperformed the S&P 500 over the past quarter, as they have run up by 7.1 percent even as the market has gained only 2.4 percent. However, since the beginning of September, the stock has pulled back by 10 percent.
The firm recommended using the recent weakness as a buying opportunity.
If you're one of those pretenders who claim to understand finance, here's a biscuit for you.
What's the dilution for? A dilution obviously means you need cash. It doesn't mean they planned a dilution and that's the end of it. They can have other secondaries after seeing how the market reacts. A crafty board doesn't schedule a huge secondary all at once, they might follow with a reverse split before issuing another secondary. Or if the damage was limited, then they ight go straight for another secondary. Finance isn't a science. The dilution doesn't mean their cash needs are solved.
INCY has $1.2 billion in liabilities including $650k in long term debt. This is how you'll know if they're REALLY in need of cash... if they leverage this secondary money to renegotiate their debt. INCY isn't in a financially strong position, and a renegotiated debt with this secondary would signal a serious cash problem.
I'm not saying this will happen, just that it is one common financial play when a company is cash starved. Watch for this move. If this happens, then we're going to see a 20% correction on top of whatever it already corrected at that time. People aren't scared of a 2.5% dilution, they're scared of what might underlie the need for that cash.
**fun one** JAK inhibitors for hair loss receive US patents
September 5, 2017 The US patent office has issued two patents for janus kinase inhibitors for hair loss, according to a press release from Aclaris Therapeutics.
STORY CONTINUES BELOW
One of the patents includes coverage for tofacitinib, baricitinib (Olumiant, Incyte & Lilly), ruxolitinib (Jakafi, Incyte) and decernotinib (KareBay Biochem) as therapeutic options for androgenetic alopecia, or pattern hair loss. There are 22 claims in this patent, according to the statement.
The other patent focuses exclusively on baricitinib as an agent for both inducing hair growth and managing a number of hair loss conditions including alopecia areata and androgenetic alopecia. There are 10 claims included in this patent.
"The fact is that Incyte has over 1 billion of cash flow now"
"Michael-P" you are an ignoramus. Seriously?
They just did a secondary. That speaks volumes "Michael-P". And do you realize that earnings is a paltry $100 million? LOL. You sound so ignorant, it's like I'm dealing with a toddler. When you pretend to understand finance you only embarrass yourself. A supermarket makes high cash flow but low earnings, but that's ok because they sell high volume. Pharm can't do high cash flow/low earnings. Not for long, anyway. Because that means they need to raise money a la secondaries and debt. And voila! There's INCY's secondary explained!
There is no substitute for earnings. That's why INCY suffers. There's no other reason for INCY's price suffering except that their earnings are more than 200x smaller than their cap and the speculator's drunken spell was broken and they saw what a minefield they walked into. Now they're selling 12 million shares and trying to remember the footsteps they took backwards. The problem is they all want to get out but they're bottlenecked. That's what's going to drive this sub $100 by end of year. Confidence is broken and eventually they will cut losses to avoid disaster. They bought on rumors and they'll sell on rumors. Easy come easy go.
gotta say my frustration is building...down 10 days in a row... Company needs to grow up and be more investor friendly.... no news, dilution, etc. etc. Yes, Tommy I am starting to feel the pain.....
Incyte's shares have come under pressure as of late, following regulatory setbacks, a cool down of M&A speculation and slightly slower pace of growth. The compa
Folks, reason for the heavy selling the last few days is obvious: 1) JNJ got thier arthritis drug rejected on 9/22 so people assume that bari will be rejected again 2) the secondary wasn't good timing 3) incyte management is a joke and poorly manages news... that being said, we did form a hammer candlestick pattern today which could be a bullish reversal, but I'll believe it when I see it... incy would have to close up "bigly" tomorrow to confirm the pattern. Hopefully McCain and friends can kill the HC bill tonight and we can move on to tax reform.
For people who hate facts to guide their investments, don't read this post. You want to see a CLEAR sell signal? Then look at the volume difference starting Aug 25.
These are many many consecutive days of high volume selling. When you have sustained selling it means that people are rebalancing or closing positions. Let's make a note of the institutional ownership today it's at 90%. You'll see the market fundamentals in action at the next reporting. My guess is that this move is more than the recent 12 million shares sold. If the price is going to rebound "Michael-P"'s unsubstantiated $300 fantasy, where are the buyers now? They'll have to pick up all these shares first. Sub $100 by EOY.
From THE FLY copy/paste:
Morgan Stanley says baricitinib efficacy could be better if trial design changed SEP 15, 2017 | 07:59 EDT Morgan Stanley analyst David Risinger said Eli Lilly (LLY) and partner Incyte's (INCY) efficacy data from a Phase 2 study of baricitinib in atopic dermatitis looks inferior to competitors' "on the surface," but he contends that a steroid run-in period and usage during trial makes cross-trial comparison difficult. He thinks better efficacy is likely in Phase 3 if Lilly changes the trial design; however, if it does not, it could "end up being a commercial liability," Risinger tells investors. He keeps an Equal Weight rating and $86 price target on Eli Lilly shares.