Playing the Field

Incyte Is Smart to Date Around

It's leveraging a competitive market to get the most for its IO drug.
At Closing, April 24th
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At Closing, April 24th
51.58 USD

When it comes to cancer drugs, monogamy is overrated. 

Incyte Corp. recently announced an expanded collaboration with Merck & Co. on late-stage studies of combinations of immune-oncology (IO) drugs, which use a patient's immune system to fight cancer. Two days later, Incyte said it would also run similar late-stage trials with Merck's bitter IO rival Bristol-Myers Squibb Co. It already had earlier-stage trials ongoing with similar medicines from Roche Holding AG and AstraZeneca PLC. 

Though many of these trials overlap, this is a smart approach for Incyte. It's leveraging the increasingly competitive IO market to get other companies to help pay for expensive clinical trials for its IO candidate epacadostat, and to insure the widest possible use of the drug. 

Variety Is the Spice

Incyte shares jumped on the news it is running a wide number of late-stage trials for its leading pipeline drug

Source: Bloomberg

Intraday times are displayed in ET.

The IO market is split broadly into two different drug categories: PD1/L1 inhibitors such as Bristol's Opdivo and Merck's Keytruda, and drugs like Incyte's that are being tried in combination with them. PD1/L1s only work for some patients; the hope is that combinations will extend their reach. Early results released in the fall of 2016 suggested Incyte's drug may do just that. And this massively expanded roster of late-stage trials suggests confidence in upcoming data, as well. 

It's a good time to have a promising combo candidate; the market for PD1/L1s is getting mighty crowded. There are currently four drugs in the category on the market -- Opdivo, Keytruda, Roche's Tecentriq and Pfizer Inc.'s recently approved Bavencio. AstraZeneca's Durvalumab is coming soon.


The market for IO drugs is growing more and more competitive

Source: Bloomberg Intelligence

These companies are fighting for future market relevance by running dozens of combination trials. That gives Incyte's drug many shots on goal, with big companies helping cover the research costs. Partner firms will also will likely put their marketing muscle behind any successful combinations. If the drug succeeds with multiple partners, then that just means more opportunity for Incyte, which will keep full ownership of its drug.

Epacadostat's success is critical for Incyte. Bloomberg Intelligence estimates that about $11 billion of the company's $28 billion market cap comes from the firm's marketed medicines; the pipeline, including epacadostat, carries the rest. 

High Hopes

Analysts have big expectations for Incyte's leading pipeline drug that could balloon further with good clinical trial data next year

Source: Bloomberg

If there's a lesson from the IO market to date, it's that life comes at you fast. Bristol-Myers was the consensus leader in the field less than a year ago, but Merck is catching up rapidly after Opdivo failed in an aggressively designed trial intended to expand its reach in lung cancer.

Epacadostat itself is looking to upstage an earlier combination approach from Bristol-Myers and AstraZeneca. Other approaches may upstage Incyte's drug in the future. Incyte has a two-year or so lead on competitors 1 . But then again, so did Bristol-Myers. 

Incyte has to seize on its head start to justify a sky-high valuation and sales expectations. Taking advantage of its current status as the belle of the ball with multiple trials gives it the best chance to do that. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
  1. Bristol-Myers and Roche have earlier stage drugs in this class and NewLink Genetics Corp. reported early stage results of a trial of its own similar drug candidate in combination with Keytruda Tuesday morning. 

To contact the author of this story:
Max Nisen in New York at

To contact the editor responsible for this story:
Mark Gongloff at

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