Incyte (INCY) Announces Positive Data On Enzyme Inhibitor

Incyte Corporation (NASDAQ:INCY) recently announced that new data was published online from the ongoing trial, ECHO-202 by the American Society of Clinical Oncology (ASCO) in advance of its annual meeting in Chicago, IL, June 2–6, 2017.

The trial is evaluating Incyte’s selective IDO1 enzyme inhibitor, epacadostat, in combination with Merck’s (NYSE:MRK) anti-PD-1 therapy, Keytruda (pembrolizumab).

Patients previously treated with anti-PD-1 or anti-CTLA-4 therapies were excluded from this trial.

The data from the trial includes phase I/II efficacy and safety data from the following cohorts: non-small cell lung cancer (NSCLC), renal cell carcinoma (RCC), bladder cancer, squamous cell carcinoma of the head and neck (SCCHN), triple-negative breast cancer (TNBC), and ovarian cancer (OVC). The results from new data showed that epacadostat in combination with Keytruda was well-tolerated and preliminary efficacy outcomes for these cohorts demonstrate encouraging clinical activity, both within and across tumor types, which compares favorably with contemporary data in the second-line setting.

Concurrently, data from the ECHO-204 trial evaluated the safety and efficacy of epacadostat, in combination with Bristol-Myers Squibb’s (NYSE:BMY) PD-1 immune checkpoint inhibitor Opdivo. The results show that the combination was well-tolerated across the studied patients and demonstrates promising clinical responses, particularly in melanoma and with squamous cell carcinoma of the head and neck (SCCHN). The combination is also being evaluated ovarian cancer (OVC), and colorectal cancer (CRC).

Following the news Incyte’s shares gained 2.3%. Notably, in the past one year the company’s shares have rallied 68.8%, while the Zacks classified Medical - Biomedical and Genetics industry fell 5.8%.

The successful development of epacadostat will reduce the company’s dependence on Jakafi. Incyte’s dependence on a single product, Jakafi, for growth is concerning. Lower-than-expected sales would be a huge setback for the company.

While we are positive on the company’s efforts to expand Jakafi’s label, any development/regulatory setback could pull down the stock significantly. In Feb 2016, Incyte received a notice letter regarding an abbreviated new drug application seeking approval to market a generic version of Jakafi. Earlier-than-expected entry of generic versions of Jakafi would be a big blow for the company.

Zacks Rank & Key Pick

Incyte Corporation currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the health care sector is VIVUS, Inc. (NASDAQ:VVUS) which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’s loss per share estimates narrowed from 50 cents to 39 cents for 2017, over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters with an average beat of 233.69%.

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