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Top Picks 2017: Incyte

01/06/2017 6:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

This Top Pick for 2017 may very well have the best and broadest early-stage oncology pipeline with 12 drug development candidates, suggests John McCamant, editor The Medical Technology Stock Letter.

Incyte (INCY) is poised for a strong performance in 2017 that will be driven by three major catalysts.

The first is that the firm's drug Jakafi will continue to be a compelling and sustainable high margin long-term growth driver for myeloproliferative disorders myelofibrosis (MF) and polycythemia vera (PV). 

The recent failure from a competitor’s Phase III studies of momelotinib has removed a major uncertainty on the revenue front for INCY’s key commercial product.  The potential upside of Jakafi sales in both MF and PV represents a significant growth opportunity. 

Partner Eli Lilly (LLY) will sell INCY’s baricitinib in rheumatoid arthritis and we expect a strong commercial launch that will be driven by the potential to be another “Best in Class” drug. 

Baricitinib has an excellent profile that includes once-a-day oral dosing versus the injectable biologics.  In our view, baricitinib in rheumatoid arthritis represents a significant source of upside following its expected launch in early 2017, in both the U.S. and Europe. 

Incyte’s novel cancer compound –- the IDO1 inhibitor epacadostat –- represents another growth opportunity. Its broad Phase II development program has maximized the opportunity in combination with PD1/PDL1 inhibitors. 

To date we have only seen the IDO Phase I data in combination with Merck (MRK) for its drug Keytruda in melanoma. 

INCY is currently enrolling a broad Phase II Program with all the major PD-1 players evaluating IDO/PD-1 combos in at least 14 tumor types in over 900 patients.

Jakafi growth, baricitinib approval, and Phase II IDO/PD-1 data -- in our view -- make INCY a catalyst rich stock in 2017, as well as a compelling M&A candidate. INCY is a buy under $100. 

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