Incyte Corporation (INCY) is facing a significant challenge as its top-selling drug, Jakafi (ruxolitinib), nears patent expiration in 2028. This has prompted Truist Securities to downgrade the company’s stock from Buy to Hold, lowering their price target from $83 to $74.
Jakafi, a key revenue driver for Incyte, generated $705.9 million in sales during the second quarter of 2024, representing a 3% year-over-year increase. This growth was fueled by a 9% increase in paid demand. However, the looming patent loss raises concerns about whether Incyte’s pipeline in immunology, inflammation (I&I), and oncology can compensate for the expected revenue decline from generic competition.
While Incyte’s pipeline boasts promising long-term growth potential, supported by strong Phase 2 data and opportunities for expansion into new indications or combination therapies, the challenge of mitigating the patent cliff remains a major hurdle. The company also faces intense competition, particularly in larger markets like I&I and solid tumors, where it is striving to gain a foothold.
Truist emphasizes the significance of late-stage results for Povorcitinib in hidradenitis suppurativa (HS), anticipated in the first half of 2025, as a key factor that could influence Incyte’s stock performance over the next 12 months. The analyst also draws attention to the earlier-stage results expected in the second half of 2024 for Zilurgisertib in myelofibrosis. However, due to delays and challenges faced by Novartis AG (NVS) and the early development stage of Incyte’s programs, Truist is adopting a more cautious approach.
Incyte’s stock price declined by 0.93% to $65.81 at the close of trading on Wednesday. As Incyte navigates the patent cliff and strives to establish its pipeline drugs, investors will closely watch the progress of its key programs and the company’s ability to compete in a crowded market.
