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Incyte Pharmaceuticals Is Primed For A Run

Bay Area Biotech profile picture
Bay Area Biotech

By Paul Jaschke, Ph.D., Ju Lu Ph.D., Widya Mulyasasmita and Luke J. Lee

Incyte Corporation (NASDAQ:INCY) is focused on discovering, developing, and commercializing novel small molecule drugs for serious, unmet oncology and inflammatory diseases and needs.

The company won approval for its lead product drug, Jakafi (ruxolitinib), a JAK1 and JAK2 inhibitor, on November 16, 2011 for treatment of intermediate or high-risk myelofibrosis (MF). This drug is part of its 'oncology' pipeline, where the majority of clinical trials in place revolve around its main drug: ruxolitinib (Jakafi). In addition, INCY has made significant headway into treating Rheumatoid Arthritis with its other main candidate drug, barcitinib.

Ongoing collaborations with Novartis (NVS) and Eli Lilly (LLY), a strong cash position of $243.6M, multiple sources of cash flow ($92.7M 9-month revenue as of 09/30/2012), and no competition for Jakafi for another two years, are factors that prime INCY for success. Despite the slow launch of Jakafi, INCY is still doing well, expecting to generate $135M revenue for 2012. Although possessing $400M in convertible notes (4.75%) set to expire at 2015 and Pfizer's (PFE) convertible subordinated notes due in 2013 and 2014 totaling $20M, revenues for Jakafi are expected to double in the upcoming 2 years, making INCY a solid bet.

Jakafi for Myelofibrosis

MF is classified as a myeloproliferative neoplasm (MPN) and often, a JAK2 V617F mutation, that presents itself as three distinct types: primary myelofibrosis (PMF), post polycythemia vera myelofibrosis (PPV-MF), and post essential thrombocythemia myelofibrosis (PET-MF). In short, it is the proliferation of an abnormal type of bone marrow stem cells. This results in fibrosis, where connective tissue grows in the place of the bone marrow. A major factor for this disease is the quality of life, as symptoms read as follows: anemia, bone pain, increased infections, fatigue, and an abdominal fullness due to an enlarged spleen and liver. The median life expectancy is 5 years from onset of disease, but severity of the

This article was written by

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The Stanford Biotechnology Business & Finance Group is an organization for life science graduate students and postdoctoral scholars who are interested in exploring careers in biotechnology business, management, and investment. This member driven group will host invited speakers from local firms/companies, provide relevant online material, and facilitate discussion and networking opportunities to allow members to survey the biotechnology business landscape and prepare for potential careers in these fields. The article has been written by Alpha Cardinal, comprised of Stanford School of Medicine doctoral students and postdocs. Alpha Cardinal is not receiving compensation for it (other than from Seeking Alpha). Alpha Cardinal has no business relationship with any company whose stock is mentioned in this article. http://sbbfg.weebly.com

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Comments (6)

RogerAH profile picture
Nice call! I am a little late catching up on SA articles. I just now got to this one ;(
Bay Area Biotech profile picture
Thanks! Talk about great timing!
Bay Area Biotech profile picture
Yes, thanks for pointing that out!
Thanks for an informative article. Based on your excellent analysis I am long INCY in time for the nice bounce on the share price after their earnings report. Can you clarify an acronym in your article for the uninformed: NR. I couldn't find the 'translation' but may have missed it. Again, thanks to your great Stanford team.
Bay Area Biotech profile picture
Thanks for your comments. I can't seem to find the 'NR' acronym you mention. Could you copy/paste the sentence?
rufusthrat profile picture
Good article. But you missed Arava(Leflunomide) which is a DMARD, approved in 1998 and is dosed orally for moderate to severe rheumatoid arthritis is a pyrimidine synthesis inhibitor.

Other old drugs for RA methotreate, sulfasalazine, plaquinil, minocycline, cyclosorin,imuran, gold etc. But with a new drug for RA every few months it seems, only an expert can keep track of all the drugs.
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