Incyte's experimental skin disease treatment looks "viable, but not competitive with biologics," an analyst said Monday as Incyte stock crashed on disappointing study results.
The biotech company tested its drug, povorcitinib, in adults with severe hidradenitis suppurativa. In this condition, patients experience chronic boils and abscesses deep under the skin. After 12 weeks, 40.2% to 42.3% of patients who received the lower dose had a 50% decrease in boils and abscesses. In the high-dose group, 40.6% to 42.3% of patients met the same mark.
But the results missed investors' expectations. In midstage testing, 48% to 50% of patients met the same bar, William Blair analyst Matt Phipps said in a report. RBC Capital Markets analyst Brian Abrahams had forecast 45%.
"The drug did hit on statistical significance and could be a viable entrant," RBC's Abrahams said in a client note. "Though as we anticipated, we believe it will likely be relegated to later-line, post-biologics setting given lesser efficacy and safety baggage."
Incyte stock tumbled 8.6%, closing at 62.01. Shares undercut the lower side of a consolidation.
Incyte Stock: 50% Reduction In Boils
Povorcitinib works by blocking JAK1, a protein kinase involved in growth factors. It differs from the more common biologics that treat inflammatory conditions by blocking cytokines called TNF and IL-17.
Incyte believes the data support potential approval. But Abrahams of RBC analyst says sales of povorcitinib will probably be lower than current forecasts for $1 billion-plus. He reiterated his neutral rating on Incyte stock.
Notably, the drug's performance over the placebo also lagged expectations. Povorcitinib topped the placebo by 10.5% to 13.7% in the lower dose and 10.9% to 13.7% in the higher dose. In earlier testing, povorcitinib outperformed the placebo by 18% to 28%, William Blair's Phipps said.
"While the trial achieved statistical significance and will support regulatory submissions, investors will likely question the potential role for povorcitinib given multiple biologics with higher levels of activity," he said in a report.
Phipps has an outperform rating on Incyte stock.
It's important to note, povorcitinib showed promise in patients who previously received, but didn't respond to, biologic drugs. Depending on the dosage, roughly 34% to 45% of recipients had at least a 50% reduction in boils and abscesses.
This supports "a potential later-line limited role for povo in the (previously biologic) exposed population who we believe will primarily drive the (around) 20% market penetration in HS, leading to (worldwide) sales to $600 (million)," RBC's Abrahams said.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
