Incyte Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotech Incyte (Nasdaq: INCY  ) surged as high as 17% on Wednesday after The U.S. Food and Drug Administration approved its Jakafi pill, a drug designed to treat the rare bone marrow disease myelofibrosis.  

So what: "The availability of Jakafi is a significant medical advancement for people living with myelofibrosis, a debilitating disease," said Incyte CEO Paul Friedman. However, only about 3,500 people in the U.S. are diagnosed with myelofibrosis every year, so today's late-day sell-off -- Incyte shares are now up only 4% -- might be a reflection of that limited market potential. 

Now what: Incyte intends to launch Jakafi with partner Novartis (NYSE: NVS  ) as soon as next week. Of course, when you couple the stock's drubbing over the past few months with today's not-so-explosive reaction, I'd be a little cautious about jumping for joy. After all, with a lofty price-to-sales multiple of 10.5, much of the good news might already be baked into the stock.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Novartis. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On November 17, 2011, at 11:41 AM, rrl121 wrote:

    they may only diagnose 3500 new cases per year, but there are between 16-18500 people with the disease in the US alone, which INCY retains as their own market. They will launch in the US alone this week/next week, followed later next year by Novartus' EU/Worldwide launch, whcih INCY gets double diget royalties on. So, when you factor in the pricing of 84k per year, they only need to get 25% of the MF market and they have 330 million. That does not count any off label use, and doesnt count any sales overseas that will soon folllow.

    So, explain to me again how youre not excited about the upside potential. Granted, it may take a few months, maybe a year, but get out of the way by the time this snowball gets to the bottom of the hill, because it could be huge!!!

  • Report this Comment On November 21, 2011, at 6:50 PM, barnett1959 wrote:

    I sold all my Incyte several months ago after hearing the results that were coming out the Mayo Clinic. Now you will get to read them in the New England Journal of Medicine. The drug has not been as effective as first through. In fact patients that discontinued the drug have died which Mayo Clinic believes was caused from the drug. There are so huge down sides to this drug. The bottom line is the drug is not a cure. Nor does it extend life.

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10/27/2016 4:00 PM
INCY $87.01 Down -0.24 -0.28%
Incyte CAPS Rating: **
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