Please ensure Javascript is enabled for purposes of website accessibility

Why Incyte's Shares Crashed 12% Today

By Todd Campbell - Jan 28, 2016 at 2:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company has decided to halt a study of Jakafi in colorectal cancer.

Image source: Incyte Corporation.

What: After reporting that it is pulling the plug on a key trial for its cancer drug Jakafi, shares in Incyte Corporation (INCY 0.35%) tumbled by 12.4% at 1:30 p.m. ET. 

So what: Jakafi is Incyte's only FDA-approved drug on the market and it's used to treat myelofibrosis and polycthemia vera.

In Q3, Incyte reported that Jakafi's net product sales totaled $161 million, up 65% from a year ago, and that it had received an additional $18 million in royalties from co-marketer Novartis (NVS 0.40%) thanks to Jakafi's international sales.

Investors have been hoping that Jakafi's success in these other indications would carry over in ongoing trials designed to expand its use to more patients and, in turn, drive additional future sales growth. Therefore, shuttering the midstage combination trial of Jakafi in relapsed/refractory metastatic colorectal cancer patients with high C-reactive protein is disappointing. 

The company's decision to abandon the study came after an interim look at trial data showed that Jakafi didn't work as well as management hoped.

Now what: Today's decision puts pressure on Jakafi's remaining cancer trials, including those exploring its use in pancreatic cancer, lung cancer, and breast cancer. It also increases the focus on other needle-moving drugs at Incyte, including baricitinib, a JAK1/JAK2 inhibitor targeting rheumatoid arthritis patients.

Last year, Incyte and co-developer Eli Lilly & Co. (LLY -1.46%) reported positive late-stage trial results showing that baricitinib works better than AbbVie's (ABBV -0.63%) Humira in RA patients that don't respond to disease-modifying drugs, and earlier this month, Eli Lilly & Co. filed for FDA approval of baricitinib.

Despite Jakafi coming up short in this one trial, the potential to earn meaningful royalties and milestones from Eli Lilly & Co. makes shares in this company intriguing on the sell-off, and for that reason, I think investors ought to add this one to their wish list. 

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$301.32 (-1.46%) $-4.47
Novartis AG Stock Quote
Novartis AG
NVS
$85.57 (0.40%) $0.34
Incyte Corporation Stock Quote
Incyte Corporation
INCY
$72.16 (0.35%) $0.25
AbbVie Inc. Stock Quote
AbbVie Inc.
ABBV
$138.04 (-0.63%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.