Shares of Incyte INCY have risen 15.3% in the past twelve months against the industry’s decline of 14.3%. The stock has outperformed the sector but lagged S&P 500 during this time frame.

The outperformance can be attributed to new drug approvals and recent pipeline progress. Lead drug Jakafi (ruxolitinib) also maintains momentum.

At the recently held J.P. Morgan Healthcare Conference, management highlighted that 2025 will be a transformational year for INCY with four potential launches.

INCY Outperforms Industry & Sector

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INCY’s Lead Drug Jakafi Maintains Momentum

Incyte’s lead drug, Jakafi, is a JAK1/JAK2 inhibitor approved for the treatment of polycythemia vera (PV) in adults who have had an inadequate response to or are intolerant of hydroxyurea; intermediate or high-risk myelofibrosis (MF), including primary MF, post-polycythemia vera MF and post-essential thrombocythemia MF in adults; steroid-refractory acute graft-versus-host disease (GVHD) in adult and pediatric patients 12 years and older; and chronic GVHD after failure of one or two lines of systemic therapy in adult and pediatric patients aged 12 years and older.

Sales in all indications continue to be strong and should maintain momentum going forward.

Jakafi is marketed by Incyte in the United States and by Novartis NVS as Jakavi in ex-U.S. markets. Incyte earns royalties from NVS on sales outside the country.

Approval of New Drugs Boosts INCY

The FDA’s approval of the cream formulation of ruxolitinib for the treatment of mild to moderate atopic dermatitis (under the brand name Opzelura) has been a significant boost for the company. The drug has also been approved for the topical treatment of nonsegmental vitiligo in adult and pediatric patients aged 12 years and above. The approval makes Opzelura the first and only topical formulation of a JAK inhibitor approved in the United States. The uptake of Opzelura has been strong.

INCY has also submitted a supplemental new drug application to the FDA for the approval of Opzelura for the indication of atopic dermatitis in pediatric patients. A potential approval is expected in the second half of 2025.

The uptake of Pemazyre and other newly approved drugs like Monjuvi and Tabrecta is also impressive. A supplemental biologics license application (sBLA) has been submitted seeking label expansion of Monjuvi for follicular lymphoma. A potential approval is expected in the second half of 2025.

The approval of Zynyz (retifanlimab-dlwr) for the treatment of adults with metastatic or recurrent locally advanced merkel cell carcinoma had diversified INCY’s portfolio. A sBLA seeking label expansion of the drug for squamous cell anal carcinoma has been submitted and an approval is expected in the second half of 2025.

Incyte and partner Syndax Pharmaceuticals obtained FDA approval for axatilimab-csfr, an anti-CSF-1R antibody, for the treatment of GVHD after the failure of at least two prior lines of systemic therapy in adult and pediatric patients weighing at least 40 kg. The candidate was approved under the brand name Niktimvo. The drug is Incyte’s second approved treatment for chronic GVHD (third-line) and will be launched in the ongoing quarter.

Per Incyte, the launch of Niktimvo and a potential label expansion of these drugs in 2025 could generate approximately $1 billion of incremental revenues by 2029.

Incyte is also looking to expand its pipeline through strategic acquisitions. In May 2024, INCY acquired Escient Pharmaceuticals and added EP262, a first-in-class, potent, highly selective, once-daily small molecule antagonist of Mas-related G protein-coupled receptor (MRGPRX2) and EP547, a first-in-class oral MRGPRX4 antagonist to its pipeline.

INCY’s Impressive Pipeline Progress

Incyte is also evaluating the above-mentioned drugs in additional indications. Opzelura is being evaluated in hidradenitis suppurativa (HS), Niktimvo in first-line chronic GVHD and Monjuvi in first-line DLBC. These represent additional revenue opportunities if developed successfully.

Other promising candidates in the pipeline include povorcitinib (HS, vitiligo and prurigo nodularis), mCALR (MF) and CDK2 inhibitors (solid tumors).

INCY’s Dependence on Jakafi

While the uptake of recently approved drugs has been good and a potential approval of the additional drugs should diversify its portfolio, INCY is heavily dependent on Jakafi for its top-line growth.

Moreover, competition has increased for some of Jakafi’s approved indications. The FDA’s approval of GSK plc’s GSK Ojjaara for the treatment of intermediate or high-risk MF, including primary MF or secondary MF (post-polycythemia vera and post-essential thrombocythaemia), in adults with anemia, poses a concern. 

Jakafi is also expected to lose patent protection in a few years.

Valuation & Estimates

Going by the price/sales ratio, INCY’s shares currently trade at 2.97x forward sales, lower than its mean of 4.49x but higher than 1.69 for the biotech industry.

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The Zacks Consensus Estimate for 2024 earnings per share (EPS) has remained stable at $1.31 over the past 60 days. During the same timeframe, the EPS estimate for 2025 has moved north 1 cent to $6.27.

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Conclusion

Large biotech companies are generally considered safe havens for investors interested in this sector. Incyte’s recent rally has been positive and potential label expansion of existing drugs and launch of new drugs should boost revenues and drive share price gain. Lead drug Jakafi, too, maintains momentum.

Incyte is a good stock to buy at current levels. Given the current levels, staying invested would be prudent for investors already owning the stock.

INCY currently carries a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


 

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