Leerink Reiterates Outperform rating on Incyte Corporation(NASDAQ:INCY) Here is Why

Equity Analysts Michael Schmidt, Ph.D.and Jonathan Chang, Ph.D.of Investment Research Firm Leerink Partners LLC issued a research report and reiterated their outperform rating on Incyte Corporation(NASDAQ:INCY) titled ”3rd Baricitinib Trial Positive, One to Go; Buy the Pullback” on September 29.

The report stated that ”Bottom Line: INCY and LLY (OP) announced positive top-line data for the RA-BEGIN study comparing baricitinib to methotrexate (MTX) in patients with early rheumatoid arthritis (RA). This is the third positive of four Phase III trials which are evaluating baricitinib across multiple treatment lines of rheumatoid arthritis (RA) and follows positive read-outs from RA-BUILD (refectory/intolerant to conventional disease-modifying anti-rheumatic drug (cDMARD)) and RA-BEACON (TNF-refractory pts).

LLY/INCY expect to release top-line results from the final RA-BEAM trial in TNF inhibitor candidates later this year which includes a structural assessment and Humira comparator arm. Baricitinib currently contributes only $8/share based on conservative assumptions. We reiterate our OP rating for INCY ahead of several key data readouts in 2016, including final baricitinib trial data, Jakafi Ph II and Ph III solid tumor data, and epacadostat PD1 combination data. Reiterate Outperform rating.”

Incyte Corporation(NASDAQ:INCY) is a Wilmington, Delaware-based biopharmaceutical company focused on the discovery, development and commercialization of proprietary therapeutics for oncology and inflammation.

The report concluded that ”We currently model $8/sh baricitinib NPV contribution for INCY which could be conservative. Recall, INCY has the right to receive a 20-29% royalty on WW baricitinib sales and we model launch in 2017 with $1.15Bn sales expected in 2025E. Recent competitive news by ABBV further validates the opportunity for novel oral disease modifying RA therapeutics in our view, but competition is still lagging several years behind. Recall, ABBV recently announced plans to enter Phase III development with ABT-494 by end of 2015 following positive Ph II data while opting out of a partnership with Galapagos on filgotinib, another JAK1 inhibitor.’’

Further Equity Analysts Michael Schmidt, Ph.D. and Jonathan Chang, Ph.D. noted that key news flow in 2016 includes: (1) addl. updates from Jakafi launch in PV, (2) Phase III JANUS-1 pancreatic cancer data and randomized-controlled Ph II colorectal and breast cancer data potentially validating the solid tumor opp’ty for Jakafi, (3) Phase II data for epacadostat + PD1/PDL1 combinations and potential start of Phase III trials giving insight into the potential magnitude of the IDO opp’ty, and (4) early stage clinical data from INCY’s oncology portfolio, including JAK, PI3K, FGFR, PIM kinase and BRD targeted small molecule inhibitors.

On September 29 INCY along with Eli Lilly and Company announced positive top-line results of RA-BEGIN, the third Phase 3 study evaluating the safety and efficacy of baricitinib, an investigational medicine for patients with moderately-to-severely active rheumatoid arthritis (RA). The study met its primary objective of demonstrating non-inferiority of baricitinib monotherapy to methotrexate monotherapy based on ACR20 response rate after 24 weeks of treatment. Additionally, baricitinib was superior to methotrexate based on ACR20 response.

The RA-BEGIN study included patients who had limited or no prior treatment with methotrexate, and were naïve to other conventional or biologic disease-modifying antirheumatic drugs (DMARDs). Part of a larger Phase 3 program of more than 3,000 RA patients at various points in the RA treatment continuum, RA-BEGIN enrolled nearly 600 patients who were randomized to one of the following treatment groups:

chief drug development officer of Incyte, Rich Levy, M.D.,  said “The superiority of baricitinib over methotrexate in the treatment of patients with early RA adds to the positive data already seen for baricitinib in RA patients with inadequate responses to traditional DMARDs (RA-BUILD) and biological therapies (RA-BEACON) The sum of these results further illustrates the therapeutic profile of baricitinib. If approved, we believe that baricitinib has the potential to be used across multiple lines of therapy in rheumatoid arthritis.”


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