Incyte Corporation (NASDAQ:INCY) has been able to achieve several key milestones over the past year, many of which, I believe, could drive shareholder growth. On one front, I believe that this company could be in a position to grow its Monjuvi drug franchise. Why is that? That’s because this CD19 targeting monoclonal antibody in combination with lenalidomide was given Accelerated Approval by the FDA and Conditional Marketing Authorization by the European Medicines Agency [EMA] to treat relapsed/refractory adults with Diffuse Large B-cell Lymphoma [DLBCL].
This included such patients who were unable to receive Autologous Stem Cell Transplant [ASCT] either. Having said that, the company had a recent win, in that it reported positive top-line results from the Phase 3 inMIND trial. This late-stage study used Monjuvi in combination with lenalidomide and rituximab for the treatment of patients with relapsed/refractory Follicular Lymphoma [FL]. It is expected that a supplemental Biologics License Application [BLA] to the FDA will be submitted by the end of 2024. This is one catalyst to look forward to, plus the fact that it would eventually help increase sales of Monjuvi. On another front, it has a JAK1 inhibitor it is developing known as povorcitinib. This drug has already been explored in a Phase 2 study for the treatment of patients with Prurigo Nodularis [PN].
A catalyst opportunity here, would be that a Phase 3 study using this drug to treat this patient population is expected to start in 2024. Besides this indication being moved forward with this JAK1 inhibitor, there is a chance to use it to target other inflammation and autoimmune disease disorders as expansion opportunities. A recent update on the regulatory front is that the company and its partner Syndax Pharmaceuticals (SNDX) received FDA approval of Niktimvo [axatilimab-csfr]. There may be a chance to move this towards the targeting of patients with idiopathic pulmonary fibrosis [IPF].
Monjuvi Expansion Opportunity Could Provide A Boost In Revenues
As I have stated above, Incyte was able to achieve positive results from the pivotal Phase 3 inMIND trial. This late-stage study used Monjuvi in combination with lenalidomide and rituximab for the treatment of patients with relapsed/refractory follicular lymphoma.
Before going over these positive results, plus any catalysts that may come out of this specific program, it is first important to go over what this disorder is and what the possible market opportunity for it could be.
Follicular Lymphoma [FL] is a type of disorder characterized by the building of malignant cells in the lymphatic system. This type of cancer can be found in the lymph nodes, bone marrow and other organs. However, it is noted to be a slow-growing type of cancer. Why is this cancer terrible? There are several ways to treat it, but a major problem that remains is that it keeps coming back. That is, there is a high recurrence with it. Thus, patients cannot ever have complete remission with such a relapse. It is expected that the 7 major follicular lymphoma markets are expected to reach a value of $2.2 billion by 2034.
In the case of Incyte, the main purpose of the Phase 3 study was to target relapsed/refractory FL patients. Thus, it is going to specifically focus on these patients who continue to relapse and/or not respond to currently available treatments. It is believed that about 20% of FL patients relapse within 2 years. Thus, this is an effective target market that it could go after.
To see if Monjuvi would be able to help these patients with relapsed/refractory FL, it had run the Phase 3 inMIND study. This late-stage trial recruited 654 adult r/r FL patients who were ages 18 and older and were split into two different arms as follows:
- Monjuvi + Rituximab + lenalidomide
- Placebo + Rituximab + lenalidomide.
The primary endpoint of this trial was Progression-Free Survival [PFS] by investigator assessment. It was announced that this primary endpoint was met for this trial and thus, this opens the door for the company to file a supplemental Biologics License Application [BLA] to the FDA by the end of 2024. Most importantly, what I noted above, FL patients who received 1st-line therapy tend to relapse. Thus, they need a more stringent 2nd-line option. As has been shown, adding Monjuvi to the Standard-of-Care [SOC] creates a solid option for them. Monjuvi has already been given an initial green light to be marketed in both the United States and Europe for the treatment of relapsed/refractory diffuse large B-cell lymphoma [DLBCL].
Sales of this drug are still growing very well. How so? Well, for the 3 months ending June 30th of 2023 Monjuvi [known as Minjuvi in Europe], revenues came in at $13.15 million. However, for the 3-months ending June 30th of 2024, revenues came in at $31.16 million. Thus, in terms of growth, this is a 136% increase year over year in sales of Monjuvi. Should the FDA eventually grant approval for the sBLA of this drug for FL, then sales should start to accelerate even more.
Povorcitinib As A JAK Inhibitor For Inflammatory And Autoimmune Disorders
The company is developing another JAK inhibitor in its pipeline. This is a JAK1 inhibitor by the name of povorcitinib, which is being advanced for the treatment of patients with Prurigo Nodularis [PN]. The importance of this is that positive Phase 2 results from a study targeting this patient population were released at the 2024 AAD Annual Meeting. With 16-weeks of treatment, patients were able to achieve both the primary and secondary endpoints of this mid-stage trial. Having said that, there is a chance to advance this program forward towards late-stage testing. Having said that, a Phase 3 study using povorcitinib for the treatment of patients with PN, is expected to begin by the end of 2024.
Prurigo Nodularis [PN], also known as Nodular Prurigo, is characterized as a skin disorder with pruritic and nodular lesions on a patient. They can be found on several parts of the body, such as the arms, legs, and trunk of a patient. The problem with this disorder is that it just doesn’t cause bumps or nodules to form. The issue is that they lead to persistent itching, which, as you can imagine, would be very uncomfortable to have to deal with. That is, it is not just itching that is mild, but a type where bleeding occurs. Plus, the fact that a person may not even be able to sleep because of the intense itching the nodules cause. The global Prurigo Nodularis treatment market is expected to reach $3.17 billion by 2033. This is a considerable market opportunity for sure, but it remains to be seen if late-stage testing matches what has been shown thus far in mid-stage testing. Speaking of which, Incyte reported positive results from this Phase 2 study at the 2024 AAD Annual Meeting. This trial enrolled a total of 146 patients who were randomized to receive one of the following doses:
- 15 mg of povorcitinib
- 45 mg of povorcitinib
- 75 mg of povorcitinib.
The primary endpoint of this study was the percentage of patients achieving a ≥ 4-point improvement in Itch Numerical Rating Scale [NRS] score over a 16-week period of one of the three doses of drug versus placebo. This NRS score records how bad of an itch a patient has. It is an 11 numerical rating scale where “0” indicates that no itch is present all the way up to “10” where there is the worst itch imaginable for patients. The result was that all three doses of 15 mg, 45 mg and 75 mg of povorcitinib were statistically significant compared to placebo with p-values of p=0.0066, p=0.0006 and p<0.0001 respectively. Another way to look at this is that 36.1%, 44.4% and 54.1% of patients achieved a ≥4-point improvement in itch NRS score. Whereas, only 8.1% of patients who received placebo achieved such an endpoint efficacy measure outcome.
A good thing about the povorcitinib program is that it is being advanced in several other studies targeting other disorders. That is, there are two ongoing Phase 2 trial using this drug for the treatment of patients with asthma and chronic spontaneous urticaria [CSU]. The significance of this is the ability to target two other large target market indications. For instance, the global asthma market is estimated to reach $37.8 billion by 2032. The other indication, CSU is another good target market for it to go after as well. It is expected that the global chronic spontaneous urticaria market could reach $1.19 billion by 2029. Investors won’t have long to wait to see any data from either of these ongoing mid-stage studies. That’s because the topline results from both of these studies are expected to be released in 2025.
The problem for Incyte in targeting PN and other skin disorders, would be that it must go up against a major player. That is, a drug known as Dupixent from Sanofi (SNY) and Regeneron Pharmaceuticals (REGN), has been approved to treat PN and other inflammatory skin disorders. How does Incyte hope to compete against these companies with their big blockbuster drug, which generated $11.6 billion in 2023 sales? It could not only be in the terms of comparability in terms of efficacy, but more so possibly with convenience. For instance, povorcitinib is an oral drug that must be taken daily. Whereas, Dupixent must be given at sites as a subcutaneous injection. Thus, should povorcitinib be approved for marketing, this is one competitive advantage that can be touted.
Beyond that, the company isn’t only targeting skin inflammatory disorders with povorcitinib. That is, it has received regulatory approval with its ruxolitinib cream Opzelura for the treatment of nonsegmental vitiligo and mild to moderate Atopic Dermatitis [AD] patients. This specific drug, for these two patient populations, was able to help the company generate revenues of $338 million in 2023. There is a plan to obtain approval in AD for pediatric patients in 2024 as well for the United States. Even more importantly, Opzelura is a topical cream that could be used to help patients with PN. That is, this drug is currently being tested in a Phase 3 study targeting this patient population. Data from this late-stage study is expected to be released in 2025.
Thus, Opzelura is another drug that the company could use to go up against Dupixent with. Opzelura is also being explored in several other mid-stage studies, targeting patients with hidradenitis suppurativa [HS], Lichen Planus [LN] and Lichen Sclerosus [LS]. These are other expansion opportunities for this particular drug. Regarding the PN indication, there are no topical RX treatments for these patients. Thus, if Opzelura is eventually approved for this, it would be a first.
Financials
According to the 10-Q SEC Filing, Incyte had cash, cash equivalents and marketable securities of $1.4 billion as of June 30th of 2024. The thing is that this company had an even larger cash pile back on December 31st of 2023 of $3.7 billion. The reason for the large decrease over this period is because there were two transactions that were done. One was to enact a $2 billion share repurchase program, which was completed in June 2024. The second one was to pay Escient shareholders $783 million in cash.
The reason for this second financial transaction was because Incyte had completed the acquisition of Escient Pharmaceuticals so that it could add two new drugs to its pipeline. That is, to build upon its inflammation and autoimmunity portfolio. Besides Monjuvi and Opzelura, which I have covered above, it is already generating revenues with its lead drug Jakafi. Net product revenues of this drug in Q2 of 2024 were $706 million, which was a 3% increase year-over-year. Not only that, but the guidance for it has been noted to be higher. The bottom end of full-year 2024 guidance of Jakafi was brought to a new range of $2,710 – $2,750 million.
Risks To Business
There are several risks that investors should be aware of before investing in Incyte. The first risk to consider would be in terms of Jakafi revenues generated. As I have just stated above, the growth for this drug franchise was 3% year over year. While this is a steady rate of revenue growth, there is no assurance that it will continue to grow at this percentage in the coming quarters.
The second risk to consider would be regarding the advancement of Monjuvi. That’s because the goal is to submit a supplemental Biologics License Application [BLA] of it to the FDA for the treatment of patients with relapsed/refractory follicular lymphoma [FL]. The risk here is that there is no guarantee that the FDA will grant U.S. marketing approval of this drug for the treatment of this patient population. In that case, this could end up resulting in a considerable delay to reach the market.
The third risk to consider would be in terms of the development of povorcitinib for the treatment of patients with PN. That’s because the goal is to initiate a Phase 3 study in 2024 using this drug to treat this patient population. There is no assurance that upon completion of this late-stage study that the primary endpoint will be met with statistical significance. Nor, that the data will be enough to warrant the company the ability to be in a position to file a BLA for U.S. marketing approval.
The fourth and final risk to consider would be in terms of competing against other skin/inflammatory drugmakers like Sanofi and Regeneron Pharmaceuticals with Dupixent. Even though Incyte might gain a competitive advantage, such as oral/topical dosing versus subcutaneous dosing, doesn’t guarantee that it will be able to dethrone the market leader in this space.
Conclusion
Incyte has been able to do well to advance several of its marketed drugs. In terms of Monjuvi it could seek to expand the label for it to target patients with relapsed/refractory FL. Such a BLA submission to do so is expected to happen by the end of 2024. Besides this, it has made transactions in sales of its other drugs, such as Opzelura. Q2 of 2024 net sales for this drug were $122 million, which was a year-over-year increase of 54%. Lastly, povorcitinib might have the ability to differentiate itself in PN and other skin/inflammatory disorders, with the fact being that it is given via an oral route of administration. Such a competitive edge could also be established with Opzelura, which could end up being the first topical treatment specifically for PN. With the ability for label expansion of Monjuvi, plus sales continuing to build well with other drugs in its pipeline, I believe that investors could benefit with any potential gains made.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Read the full article here