Incyte (NASDAQ:INCY) has performed well since the beginning of the year. Year to date, the biotech company's shares are up by 19%, while the S&P 500 is down by 11% over the same period. However, Incyte's stock is now much more expensive than it was just a few months ago. The company is currently trading at 44.2 times future earnings. With the COVID-19 pandemic still wreaking havoc, should investors buy shares of Incyte now, or wait for a more attractive entry point? 

A one-trick pony?

Incyte's crown jewel is a drug called Jakafi, which treats several conditions, including myelofibrosis, which is a form of bone marrow cancer. Jakafi also treats steroid-refractory acute graft-versus-host disease (GVHD), which is a condition that sometimes manifests itself in a patient following a stem-cell transplant. Sales of Jakafi continue to grow at a good clip. During Incyte's latest reported quarter -- Q4 2019 -- the company's total revenue was $579 million, representing a 24% year-over-year increase. 

Nurse with her hand on her chin and a thoughtful expression on her face.

Image source: Getty Images.

Jakafi generated $466 million in revenue, increasing by 23% compared to the year-ago period. For the full fiscal year 2019, Jakafi recorded a revenue figure of $1.7 billion, representing 21% growth compared to the fiscal year 2018. However, Jakafi accounts for the majority of Incyte's total revenue -- during the fourth quarter, it made up about 80% of the total.

Sure, Incyte could continue growing Jakafi's sales.  The company expects that for the fiscal year 2020, revenue from Jakafi could be in the range of $1.88 billion to $1.95 billion, the midpoint of which would represent a 14% increase compared to the previous fiscal year. And while the ongoing COVID-19 outbreak could hinder Incyte's business, the company still sees room to grow for Jakafi across all its indications. Nonetheless, the fact that Incyte generates the bulk of its revenue from just one product is something investors should keep in mind. 

Incyte's pipeline 

Incyte recently announced that it was initiating a phase 3 clinical trial to study the safety and efficacy of Jakafi as a potential treatment for COVID-19 in patients 12 years and older. The study will target those with severe cases of COVID-19, and especially patients who have suffered from a cytokine storm -- a severe immune-system reaction that can be life-threatening -- as a result of the novel coronavirus. However, there are many other potential treatments (or vaccines) for COVID-19 currently being investigated. It seems unlikely at this point that Incyte will profit from this endeavor.

Thankfully, the company does have other products in its pipeline. Most notably, there's pemigatinib, a potential treatment for a form of cancer called cholangiocarcinoma. Incyte submitted pemigatinib to the U.S. Food and Drug Administration (FDA) for review in November of last year. The company expects an answer from the health agency later this year. According to Incyte, cholangiocarcinoma affects between 0.3 and 3.4 people per 100,000 in North America and Europe. Incyte has many more products in its pipeline (currently more than two dozen), which could help decrease its top-line reliance on Jakafi in the future. 

Should you buy?

Incyte's Jakafi still has room to grow, and the company will likely receive the green light for pemigatinib from the FDA. Also, thanks to its rich pipeline, Incyte could get other products on the market in the not-so-distant future. However, the company's overreliance on a single product, as well as its rich valuation metrics, make its stock significantly less attractive. Incyte might be worth considering, but in my view, investors should wait for a much more attractive entry point before buying shares of this biotech stock

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.