Incyte stock toppled Friday after the Food and Drug Administration unexpectedly rejected an extended-release version of its blockbuster drug, Jakafi.
The letter simply states the FDA can't approve the application in its current form, Incyte said in a news release. But RBC Capital Markets analyst Brian Abrahams says the FDA wanted to see additional data, which could mean Incyte has to run additional studies.
Incyte had hoped to win approval for extended-release tablets of ruxolitinib, which it sells under the brand name Jakafi for two forms of cancer and graft-versus-host disease. The latter is a complication of marrow or stem cell transplants.
Abrahams acknowledged the FDA decision is a setback. But it's unclear if Incyte planned to launch the extended-release tablets before testing new combinations of using Jakafi. Further, twice-a-day dosing isn't a huge patient burden, though the new dosage could help Incyte extend Jakafi sales beyond the 2028 patent cliff.
"Overall, we believe a fixed dose would be a convenience, but not a game-changer," he said. in a report.
On today's stock market, Incyte stock skidded 2.8% and ended the regular session at 70.23.
Incyte Stock: Jakafi Is Big Business
Jakafi is already Incyte's biggest drug. Last year, it brought in $2.41 billion in sales, accounting for nearly 71% of total revenue. Incyte also sells a cream version of ruxolitinib for patients with skin conditions.
Incyte based its request for approval on two studies showing the extended-release ruxolitinib tablets are dosage strength proportional and bioequivalent to Jakafi, the company said. The second study in 63 healthy adults showed a 50-milligram dose of the extended-release tablet once a day is equivalent to the highest strength of Jakafi, 25 milligrams, twice a day.
RBC's Abrahams noted extended-release tablets won't extend Jakafi's patent life meaningfully. He kept his outperform rating and 86 price target on Incyte stock.
The rejection comes on the heels of an approval for Incyte, though. On Thursday, the FDA approved Incyte's drug, Zynyz, for patients with a rare form of skin cancer. Incyte stock didn't move on the approval, though, and shares are below their key moving averages.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
