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Incyte: Strong Pipeline in Cancer

03/06/2014 8:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

John McCamant, biotech expert and editor of The Medical Technology Stock Letter, believes this company offers one of the most intriguing pipelines in the cancer treatment sector.

Incyte Pharmaceuticals (INCY) recently held their quarterly conference call. Importantly, sales for Jakafi—an advanced compound used for the treatment of patients with intermediate or high-risk myelofibrosis (MF)—met or exceeded Wall Street's expectations.

The company provided solid guidance for Jakafi in 2014 of $315-$335 million, which reflects year-over-year growth of 34%-42%, driven by new patient starts, continued improvement in physician education, and persistency.

Of interest, INCY's guidance assumes no meaningful contribution from a Jakafi approval in polycythemia vera (PV), which could occur before yearend. PV is a type of blood cancer.

We remain excited about the PV opportunity for Jakafi, as market research shows an addressable PV patient population that is larger than MF, and PV patients are expected to stay on the drug longer than MF patients.

Data from the first Phase III PV trip is expected in Q2 of 2014, leading to a Supplemental New Drug Application (SNDA) filing with the FDA by June, with a final approval expected by yearend.

The conference call featured a slew of questions on INCY's IDO 1 inhibitor, INCB 24360, as the cancer immune therapy sector remains red hot in biotech investing.

While PDs and PD-1s continue to dominate the news flow in cancer immune therapy, in our view, '360 may have the largest potential given its excellent safety profile, oral availability, and minimal competition, as they are the clear leader in IDO 1 development.

Another sign that '360 may be more compelling than other immune therapy candidates is the read-through from the recent Novartis acquisition of CoStim, an immuno-oncology firm.

INCY's new CEO just left Novartis and obviously would have known this acquisition was coming, and yet he still chose to hang his hat at INCY's headquarters.

In our view, INCY has one of the most intriguing cancer pipelines in the world, and INCY's new CEO clearly shares this vision for success. INCY is a buy under $68 with a target price of $85.

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