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Incyte's Epacadostat Fails in Melanoma Study, Shares Plunge

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Incyte Corporation (INCY - Free Report) and partner Merck (MRK - Free Report) announced the failure of a combination therapy — Incyte’s epacadostat and Merck’s Keytruda — in achieving improved progression free survival over Keytruda alone in phase III study ECHO-301/KEYNOTE-252. The study was evaluating the combination drugs for the treatment of unresectable or metastatic melanoma.

An external data monitoring committee recommended the termination of the study following the review of the data from the pivotal study.

Data from the phase III study demonstrated that a combination of IDO1 inhibitor and PD-1 antagonists may not hold potential in treatment of melanoma.

Shares of the company tumbled nearly 23% on Apr 6 following the disappointing news. Incyte’s stock has been down 32.4% so far this year compared to the industry’s loss of 11.8% in the period.

Epacadostat, an IDO1 inhibitor immunotherapy, is a late stage pipeline candidate of Incyte which is being developed in combination with other immunotherapies, which include Merck’s anti-PD-1 therapy, Keytruda, and Bristol-Myers Squibb’s (BMY - Free Report) PD-1 inhibitor, Opdivo, and CTLA-4 inhibitor, Yervoy. Incyte is developing the combination therapies in several other indications which includes non-small cell lung cancer, renal cell carcinoma, squamous cell carcinoma of the head and neck, and bladder cancer.

Epacadostat combination therapies have achieved improved response rates in mid-stage studies. However, failure in the pivotal melanoma study with larger patient population increases the risk of setback in other late-stage studies for other indications.

Following the news of this failure, shares of NewLink Genetics Corporation (NLNK - Free Report) , a small IA-based biotech company, sank nearly 43% on Friday. Newlink is also developing an IDO pathway inhibitor, indoximod, in combination with anti-PD-1/PD-L1 agents in several cancer indications, including melanoma.

Zacks Rank

Incyte currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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