Incyte (INCY) develops small molecule drugs to treat cancer and inflammatory diseases, explains Mike Cintolo, a leading growth stock expert and editor of Cabot Top Ten Trader.
Most of the company’s current value derives from sales of its commercial drug, Jakafi, which is the standard-of-care drug in myelofibrosis and is also approved for patients with polycythemia vera, a condition in which the bone marrow makes too many red blood cells.
This blockbuster treatment is also being evaluated for acute graft-versus-host disease (GvHD), and has a key data readout due in the second half of 2019.
Jakafi has helped Incyte achieve a relatively stable revenue base and reach profitability, and with estimated forward growth of around 10% to 15% a year (estimated 2025 revenue of almost $3 billion), it’s also a critical generator of cash flow to fund Incyte’s growing pipeline.
Baricitinib is the most advanced pipeline drug and was recently fast tracked by the FDA for the treatment of systemic lupus erythematosus (SLE). Then there is itacitinib, which is also being evaluated for GvHD, with a data readout due this year.
Incyte reported Q4 2018 results last week (revenue up 25%, EPS of $0.40 way ahead of last year’s tally) that pleased Wall Street, so investor attention continues to be centered on the pipeline.
There’s obviously some risk going forward with the numerous data readouts, but Incyte has a combination of solid current growth and profitability, as well as a few big potential hitters in the pipeline.
The stock continues to act like it has a new lease on life since the market’s December low. Before that was a year-long plunge and a long bottoming process, with support appearing near $60 numerous times from last April through the market bottom.
But now Incyte is in a solid uptrend, with basically zero selling pressure showing up despite its move up to the mid $80s. With earnings out of the way and the 25-day line (near $80) offering support, we’re OK taking a position here or on dips.
