Incyte (INCY) Outperforms YTD: Will the Momentum Continue?
Shares of Incyte INCY have gained 5.9% in the year so far against the industry’s decline of 19.7%.
In fact, Incyte is one of the handful of stocks that has been outperforming the biotech industry in 2022.
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Incyte’s lead drug Jakafi continues to drive 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 in adult and pediatric patients aged 12 years or older.
Demand for the drug has witnessed a steady increase over the last few quarters due to continued label expansions.
Jakafi is marketed by Incyte in the United States and by Novartis NVS as Jakavi (ruxolitinib) outside the United States. Incyte also earns product royalty revenues from Novartis for the commercialization of Jakafi in non-U.S. markets.
Incyte’s pipeline is highly encouraging and the approval of new drugs diversifies the company’s pipeline. The approval of 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 as detected by an FDA-approved test, has broadened the portfolio. The drug has been approved under the brand name, Pemazyre, and the initial uptake of the drug has been encouraging.
Earlier in the year, the FDA approved a label expansion of Pemazyre for the treatment of adults with relapsed or refractory myeloid/lymphoid neoplasms with FGFR1 rearrangement.
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 whose disease is not adequately controlled with topical prescription therapies or when such therapies are not advisable, has strengthened the 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 continues to expand the development of ruxolitinib cream into new indications, which should fuel the growth potential of the drug. Two phase II trials evaluating ruxolitinib cream in lichen planus and lichen sclerosus are in preparation.
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 $2.59 from $2.68. Syndax also surpassed estimates in each of the trailing four quarters, with the average being 95.39%.
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