IBD Stock Of The Day Incyte just won U.S. approval for a new skin treatment, leading Incyte stock closer to a breakout.
The Food and Drug Administration approved Incyte's drug Opzelura for vitiligo treatment. Vitiligo is an autoimmune condition in which the skin loses pigment. Opzelura is a cream patients can use to treat depigmentation on up to 10% of their skin. The drug is also approved in eczema treatment.
Incyte estimates up to 3 million people in the U.S. have vitiligo. Of those, about 1.5 million have an official diagnosis and 150,000-200,000 are actively seeking treatment, Chief Medical Officer Steven Stein told Investor's Business Daily. Sometimes, patients can receive insurance reimbursement for phototherapy. But this is the first FDA-approved treatment for vitiligo.
Vitiligo isn't just a cosmetic condition, Stein says. Patients often report social anxiety or depression.
"The one superficial view is that this is cosmetic, but there's a much more real situation for people living with it," he said. "It's much more complicated and involves a psychosocial aspect to the condition."
On today's stock market, Incyte stock jumped 3.2% to 81.36.
Incyte Stock: Opzelura Safety Pans Out
Opzelura belongs to a class of drugs known as Janus kinase inhibitors, or JAK inhibitors. The FDA recently added an additional warning label to some drugs in this class. Xeljanz, Olumiant and Rinvoq can increase the risk of cardiovascular-related events, cancer, blood clots and death.
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But that doesn't appear to be the case for Opzelura, RBC Capital Markets analyst Brian Abrahams said.
Incyte stock investors may have worried the "FDA might be overly cautious in a more cosmetically oriented (use) given their historical scrutiny of drugs in the JAK inhibitor class, despite Opzelura itself looking safe and effective in this (use)," he said.
Incyte noted it could take up to 24 weeks for Opzelura to work for some vitiligo patients. The firm tested Opzelura in more than 600 people for roughly six months. The treatment led to significant improvements in skin pigmentation, Incyte said in a news release. About 30% of patients had a 75% improvement in facial vitiligo symptoms. That compared to 8%-13% of placebo recipients.
Shares Near A Buy Point
Incyte stock has generally trended higher this year. On the FDA approval, shares approached a buy point at 81.63 out of a cup-with-handle base, according to MarketSmith.com.
Promisingly, the company noted it has already secured coverage for Opzelura from the top three primary benefit managers. This means 80% of vitiligo patients could receive insurance coverage for treatment with Opzelura, said RBC analyst Abrahams.
"With what we believe are relatively conservative assumptions for about 25,000 patients treated and the company's reiterated expectation for an average of 10 tubes per year (per patient), we see a $300 million per year U.S. contribution to sales, something we believe could have upside if more patients seek therapy and they stay on the agent through the gradual re-pigmentation process," he said.
Abrahams has an outperform rating and 86 price target on Incyte stock.
Highly Rated Biotech Stock
Incyte is on deck to report its second-quarter earnings on Aug. 2. Analysts polled by FactSet call for adjusted earnings of 56 cents per share on $815 million in sales. On a year-over-year basis, earnings would fall more than 16% while sales rise about 15%.
Bullishly, Incyte stock has a strong Relative Strength Rating of 92 out of a best-possible 99, according to IBD Digital. This puts shares in the leading 8% of all stocks in terms of 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
