NEW YORK (AP) -- Shares of Incyte Corp. dropped Monday after the company said a patient taking its bone cancer drug Jakafi developed a rare and potentially deadly brain infection, which could hurt sales if it proves to be a side effect linked to Jakafi
THE SPARK: The company said it learned last week that a 75-year-old British man who was taking Jakafi has been diagnosed with progressive multifocal leukoencephalopathy. PML, an infection associated with weakened immune systems, can cause death and there is no treatment.
THE BIG PICTURE: It is not known if the illness is related to Jakafi, which is Incyte's only approved drug and treats bone marrow disease myelofibrosis.
The company said some medical studies suggest that patients with diseases like myelofibrosis could be at higher risk of developing PML. About 9,800 patients have been treated with Jakafi and this is the first known case of PML in those patients.
The Food and Drug Administration approved the drug in November 2011, and European Union regulators approved the drug in August 2012. Incyte said sales of Jakafi totaled $136 million in 2012, and the company expects $210 million to $225 million in sales in 2013.
THE ANALYSIS: The report doesn't change Jefferies & Co. analyst Thomas Wei's view of Jakafi's benefits. He said it's possible some patients will receive smaller doses or will be taken off the drug because of concerns about its effects on patients' immune systems, but he believes the number will be small enough that it won't affect sales.
He kept a "Buy" rating on Incyte stock with a price target of $36 per share.
SHARE ACTION: Shares of Incyte lost $1.76, or 7.1 percent, to $23.08 in afternoon trading. Incyte shares had risen 50 percent in 2013, recovering from a sell-off this summer and fall.