Great Opportunity for Incyte

Incyte Corporation (INCY - Analyst Report) entered into a collaboration and license agreement with Novartis AG (NVS - Snapshot Report) regarding two of its pipeline candidates – INCB18424, an oral JAK1/JAK2 inhibitor and INCB28060, an oral cMET inhibitor. While the former is currently being studied in a phase III clinical trial for myelofibrosis (MF), the latter is yet to enter phase I trial as a potential treatment for multiple cancers. Along with MF, INCB18424 is in phase II trial for patients with advanced polycythemia vera (PV) and essential thrombocythemia (ET)

As per the terms of the agreement, Incyte will retain exclusive rights for the development and potential commercialization of INCB18424 in the US whereas outside the US, Novartis will have responsibility for its future development and commercialization in all indications. In addition, Novartis will also be responsible for the future worldwide development of INCB28060.

Following the agreement, Incyte will receive an upfront payment of $150 million and an immediate $60 million milestone payment for the initiation of the European phase III trial of INCB18424 (COMFORT-II) that began in July 2009. In addition, Incyte has the potential to receive additional payments of up to approximately $1.1 billion on the successful achievement of future development and commercialization milestones. Incyte is also eligible to receive tiered, double-digit royalty payments on future ex-US sales of INCB18424.

As for the other candidate INCB28060, Novartis will be responsible for all its costs after the phase I trial. In addition to receiving royalties on future sales of INCB28060, Incyte has retained an option to co-develop and co-promote it.

We believe a successful commercialization of the MF drug will be a path-breaking achievement for the company since it is a rare bone marrow disorder. Moreover, there are currently no approved specific therapies for MF, PV or ET, which collectively constitute the major myloproliferative diseases. These disorders are estimated to affect more than 200,000 patients in the US and over twice the number worldwide. Treatment options for the disease are limited. They include blood transfusion to cure anemia, radiation and chemotherapy. There is another option of stem cell transplantation, but this approach involves significant risks. We are Neutral on Incyte.

Read the full analyst report on INCY

Read the full analyst report on NVS