Morningstar | Incyte's Jakafi Franchise Remains Robust in 2Q; Shares Undervalued
Narrow-moat Incyte reported a strong second quarter, with Jakafi posting 25% year-over-year revenue growth in the U.S. and Iclusig royalties up 27%. Jakafi sales were slightly above of our expectations, but we are maintaining our full-year Jakafi outlook, which is on the lower end of management guidance, and reaffirming our fair value estimate of $97 per share. We continue to believe that the market is overreacting to first quarter disappointments, including the failed IDO inhibitor trials and tempered baricitinib outlook, and undervaluing Incyte's Jakafi and pipeline opportunities.The cash-generating Jakafi franchise underpins our narrow moat rating as we believe Incyte's entrenched position in the myeloproliferative neoplasm market and the future opportunities for expansion will allow the firm to continue earning excess returns. Incyte plans to file for Jakafi label expansion in steroid-refractory acute graft-versus-host-disease, or GVHD, next quarter, and the firm is mobilizing its salesforce in preparation for launch in the U.S., leaning on its existing relationships with both U.S. payers and physicians in transplant centers who treat myelofibrosis. We expect the launch in second-line acute GVHD to expand the eligible patient population for Jakafi by a couple thousand, and there are further opportunities in chronic GVHD and treatment-naïve patients on the horizon. Incyte boasts a healthy pipeline in oncology, inflammation, and autoimmune disease, with near-term catalysts including data readouts for ruxolitinib cream for atopic dermatitis and for FGFR inhibitor (pemigatinib) in cholangiocarcinoma and bladder cancer before the end of the year. The recent restrictions on the use of PD-1 inhibitors in bladder cancer patients with low PD-L1 expression carve out nice potential for Incyte's FGFR inhibitor, in our opinion. However, we expect the immuno-oncology market to remain highly competitive and highlight the importance of Incyte's broad pipeline.
Incyte is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutics. JAKAFI (ruxolitinib) has been approved for the treatment of patients with intermediate or high-risk myelofibrosis, for the treatment of patients with polycythemia vera, and for the treatment of steroid-refractory acute graft-versus-host disease in adult and pediatric patients 12 years and older. The company has also obtained a license to develop and commercialize ICLUSIG (ponatinib) in Europe and other select countries. In the European Union, ICLUSIG is approved for the treatment of adult patients with chronic phase, accelerated phase or blast phase chronic myeloid leukemia.
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