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Incyte's (INCY) Going Gets Tough Due to Pipeline Setbacks

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Incyte Corporation (INCY - Free Report) has been sailing in rough waters of late. While it won two back-to-back FDA approvals in 2021, the recent pipeline setbacks continue to weigh on shares.

The FDA recently extended the review period for the supplemental New Drug Application (sNDA) for ruxolitinib cream, which was seeking approval of the cream for the treatment of vitiligo. The regulatory body has extended the target action date by three months to Jul 18, 2022. The sNDA was originally accepted and granted priority review by the FDA in December 2021 and granted a target action date of Apr 18, 2022. The FDA extended the target action date to review additional data from the ongoing phase III studies submitted by Incyte in response to the FDA’s information request. The FDA has determined the submission of the additional information to constitute a major amendment to the sNDA, resulting in an extension of the target action date.

In January, Incyte announced that it had withdrawn the new drug application (NDA) in the United States for parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma (FL), marginal zone lymphoma (MZL) and mantle cell lymphoma (MCL). The decision followed discussions with the FDA regarding confirmatory studies that Incyte determined cannot be completed within a reasonable period to support accelerated approval.

Incyte also decided to opt-out of the continued development of MCLA-145, its CD137/PD-L1 bispecific antibody co-developed under a global collaboration and license agreement with Merus (MRUS - Free Report) . Incyte will continue to collaborate with Merus and leverage its platform to develop a pipeline of novel agents.

Incyte and partner Eli Lilly (LLY - Free Report) also announced that the FDA might issue a Complete Response Letter (CRL) for their sNDA seeking label expansion of Olumiant for the treatment of adults with moderate-to-severe atopic dermatitis. LLY announced that alignment on the indicated population had not yet been reached based on ongoing discussions with the FDA.

Lilly has decided to discontinue the phase III development program for Olumiant in lupus. Incyte receives royalty revenues from Lilly on sales of Olumiant.

The FDA has earlier issued a CRL for the biologics license application (BLA) for its intravenous PD-1 inhibitor, retifanlimab, for the treatment of adult patients with locally advanced or metastatic squamous cell carcinoma of the anal canal (SCAC) who have progressed on or are intolerant of platinum-based chemotherapy.

The recent pipeline setbacks will weigh on Incyte’s growth trajectory and jeopardize its plans to diversify its revenue base.

Nevertheless, Incyte’s performance in the fourth quarter was mixed as earnings lagged estimates.  Sales beat on the same driven by growth in patient demand for Jakafi and continued uptake of both Pemazyre and Monjuvi/Minjuvi. 

Incyte has a collaboration with Novartis (NVS - Free Report) for Jakafi.  We note that Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi outside the country. However, the agreement with Novartis does not include topical administration.


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