Worries about a trade war with China were front and center again for Wall Street on Friday, and stocks made a big move down. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) both lost more than 2%.
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All the major sectors sold off today, but industrials and financial stocks were hit especially hard. The Industrial Select SPDR ETF (NYSEMKT:XLI) fell 2.8% and the Financial Select Sector SPDR ETF (NYSEMKT:XLF) lost 2.4%.
As for individual stocks, Incyte Corporation (NASDAQ:INCY) fell after one of the most important drugs in the company's pipeline failed a trial, and PriceSmart (NASDAQ:PSMT) investors embraced its second-quarter report.
Incyte tumbles on failure of a critical drug trial
Shares of Incyte crashed 22.9% after the company (along with Merck) announced the failure of a pivotal trial of what was considered one of its most promising anti-cancer drugs.
The phase 3 study combined epacadostat, which targets the IDO1 enzyme on tumor cells, with Merck's Keytruda to harness the body's immune system to fight unresectable or metastatic melanoma. The study missed the primary endpoint of progression-free survival compared with Keytruda alone, and since it was not likely that the other primary endpoint of overall survival would be met, either, the study was terminated.
The trial failure was a major blow to Incyte's hopes for epacadostat. The company has six other pivotal trials underway for the drug in combination with Keytruda and Bristol-Myers Squibb's Opdivo and AstraZeneca's Imfinzi to combat non-small cell lung cancer, renal cancer, bladder cancer, and head and neck cancer. Beyond these studies, Incyte has ambitions for the IDO1 inhibitor in a broad range of tumor types.
The surprisingly negative trial results may well cause Incyte to reassess its investment in epacadostat. Meanwhile, the company has been growing revenue rapidly -- up 36% in the most recent quarter -- thanks to the success of its blockbuster drug Jakafi. It also has several other drugs in its pipeline with big potential and an upcoming decision by the Food and Drug Administration on baricitinib for rheumatoid arthritis. But epacadostat's failure had Incyte investors running for the exits today, and pessimism spilled over to other biotech stocks as well.
PriceSmart grows sales
Shares of PriceSmart, operator of wholesale club stores in Latin America and the Caribbean, rose 5.5% after the company reported fiscal second-quarter results. Revenue increased 5.8% to $839.6 million and net income fell from $27.2 million in the quarter last year to $14.1 million. That income number was impacted by a $13.4 million charge due to the new tax law, so adding that back in, company earnings rose slightly to $27.5 million, or $0.89 per share. According to Yahoo! Finance, the three analysts who follow the stock were expecting EPS of $0.74.
Overall, comparable-store sales rose 4.1%, compared with an increase of 2.1% in the quarter a year ago. The company's biggest segment -- Central America, at 59.4% of sales -- had comps growth of 1.1%. The Caribbean, at 28.3% of sales, grew comps 7.2%, and comps in Colombia increased 12%.
Total membership income jumped 7.4% and the number of accounts increased 2.8% from the year-ago quarter. The renewal rate was 85%.
PriceSmart was founded in 1996 by the same father-and-son team that founded Price Club, which merged with Costco Wholesale in 1993. The company is replicating a similar member-based warehouse model, but with smaller stores, in Latin America and the Caribbean, and investors today cheered its progress in the latest quarter.