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Incyte (NASDAQ:INCY) has had a good run so far this year. It is one of the few biotech stocks that has outperformed the industry in this time frame.
Shares have gained 9.6% year to date against the industry's decline of 19%.
Incyte's lead drug Jakafi's has been performing well, and its label expansion in additional indications is anticipated to further drive sales. Sales of the drug came in at $544 million in the first quarter, up 17% year over year.
Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the FDA for treating chronic GVHD after the failure of one or two lines of systemic therapy in adult and pediatric patients 12 years and older. It is also indicated for the treatment of polycythemia vera (PV) in adults who have had an inadequate response to or are intolerant of hydroxyurea, in adults with intermediate or high-risk myelofibrosis (MF), including primary MF, post-polycythemia vera MF and post-essential thrombocythemia MF and for treatment of steroid-refractory acute GVHD in adult and pediatric patients 12 years and older.
Jakafi is marketed by Incyte in the United States and by Novartis (NYSE:NVS) as Jakavi (ruxolitinib) outside the United States.
Incyte also earns product royalty revenues from Novartis for the commercialization of Jakafi in ex-U.S. markets.
The European Commission recently approved Jakavi for the treatment of patients with acute or chronic GVHD who have an inadequate response to corticosteroids or other systemic therapies.
The company also receives product royalty revenues from Eli Lilly (NYSE:LLY) for Olumiant (baricitinib). The drug is a once-daily, oral JAK inhibitor discovered by Incyte and licensed to Lilly. It is also approved for the treatment of adults with moderate to severe rheumatoid arthritis. Recent label expansions will propel the top line further. The FDA has recently approved Olumiant, a once-daily pill, as a first-in-disease systemic treatment for adults with severe alopecia areata (NYSE:AA), available as 4-mg, 2-mg and 1-mg tablets.
Incyte's pipeline is highly encouraging, and approval of new drugs diversifies the company's pipeline. The approval of pemigatinib, a kinase inhibitor indicated for the treatment of adults with previously-treated, unresectable, locally-advanced or metastatic cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or other rearrangements as detected by an FDA-approved test, has broadened the portfolio. The drug has been approved under the brand name, Pemazyre, and the initial uptake of the drug has been strong.
The adoption of other newly approved drugs like Monjuvi is also a positive and should boost sales in the upcoming quarters.
The FDA earlier approved Opzelura, a novel cream formulation of ruxolitinib, for the topical short-term and non-continuous chronic treatment of mild to moderate AD in non-immunocompromised patients aged 12 years or older whose disease is not adequately controlled with topical prescription therapies, or when such therapies are not advisable. The product was launched in October 2021.
However, pipeline setbacks and increased competition for Jakafi are concerns. The company is highly dependent on its lead drug Jakafi for a major chunk of its revenues, and a slowdown will adversely impact sales.
Incyte currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Alkermes (NASDAQ:ALKS), which carries a Zacks Rank #2 (Buy).
Loss estimates for ALKS for 2022 have narrowed to 3 cents from a loss of 14 cents in the past 60 days. Alkermes surpassed estimates in all of the trailing four quarters, the average surprise being 350.48%.
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