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Lilly (LLY), Incyte's Decision on Olumiant sNDA Delayed by FDA

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Lilly (LLY - Free Report) along with partner Incyte (INCY - Free Report) announced that that the FDA has delayed the PDUFA action date for the supplemental new drug application (“sNDA”) for its oral JAK inhibitor, Olumiant (baricitinib). The sNDA filed with the FDA seeks approval for the drug to treat adult patients with moderate to severe atopic dermatitis (“AD”), also called Eczema.

The FDA was expected to give its decision on the sNDA for the AD indication in third-quarter 2021. The delay in the PDUFA action date is attributable to the ongoing assessment of JAK inhibitors by the FDA.

Shares of Lilly have rallied 37.6% so far this year in comparison with the industry’s 9.8% increase.

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Shares of Incyte have declined 9.9% so far this year in comparison with the industry’s 2.9% decrease.

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Baricitinib was discovered by Incyte and out-licensed to Lilly in 2009 as part of an exclusive license and collaboration agreement for development and commercialization of the drug. Olumiant is presently approved to treat rheumatoid arthritis in several countries.

Olumiant is approved in more than 40 countries to treat AD in adults who are candidates for systemic therapy. The drug has also been approved in Japan to treat AD in certain hospitalized patients with COVID-19. A potential FDA approval will expand the drug’s label and drive good revenues for both the companies.

Olumiant is also being studied to treat multiple other indications such as alopecia areata, systemic lupus erythematosus and juvenile idiopathic arthritis.

We inform investors that AbbVie (ABBV - Free Report) has also received a similar decision on the PDUFA action date for its JAK inhibitor drug, Rinvoq (upadacitinib). Rinvoq is presently approved for treating moderate-to-severe RA and seeks expanded approval for the drug to treat moderate to severe AD.

This is the second time that the FDA has delayed its decision on expanded use of arthritis drugs, Olumiant and Rinvoq, for the AD indication. The extension of PDUFA action dates for sNDAs and other negative updates for JAK inhibitor drugs has raised concerns regarding safety issues of this class of drugs.

Zacks Rank & Stocks to Consider

Both Lilly and Incyte currently carry a Zacks Rank #4 (Sell).

A better-ranked stock in the biotech/drug sector is Bayer (BAYRY - Free Report) which sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bayer’s earnings estimates for 2021 have increased from $1.78 to $1.81 per share in the past 60 days while that of 2022 have increased from $1.93 to $2.00 over the same period. The stock has risen 1.1% in the year so far.

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