Goldman Sachs Downgrades Incyte Amid Concerns Over Jakafi Studies, Competitiveness

Goldman Sachs downgraded Incyte Corp INCY, citing continued uncertainty around Jakafi (Ruxolitinib) lifecycle management ahead of the mid-27/late-28 EU/US losses-of-exclusivity (LOEs). 

Goldman Sachs seeks clarity on once-daily Jakafi that received an FDA complete response letter for certain types of myelofibrosis, polycythemia vera, and graft-versus-host disease.

Discussions with the FDA are ongoing, and INCY has noted that the most likely scenario would require a modified formulation and potentially a two-year delay with potential approval in 2026/2027.

The analyst downgraded the stock to Neutral from Buy, with the price target reduced from $98 to $65.

The analyst also awaits proof-of-concept data from Jakafi combination studies but notes the need for further dose optimization, noting competitive considerations. INCY intends to disclose the path to Phase 3 regarding this asset in 2024.

Goldman maintains that INCY isn't perceived as a probable candidate for merger and acquisition due to Jakafi meeting the criteria for a small biotech drug exemption. 

Consequently, Jakafi wouldn't qualify as a small biotech drug anymore if acquired, potentially making it less attractive as a revenue source for major biopharma companies aiming to address loss-of-exclusivities (LOEs) in the latter half of the 2030 decade.

The focus for Incyte highlighted by the analyst includes M&A and business development, primarily in cancer, immunology, inflammation (now including dermatology), and associated fields. Management is keen on exploring adjacent sectors and considering early-stage assets to drive growth beyond 2025. Incyte has underscored its capacity to conduct transactions, leveraging its significant cash reserves surpassing $3.5 billion and its debt-free status.

Price Action: INCY shares are down 2.14% at $53.54 on the last check Tuesday.