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The U.S. Food and Drug Administration rejects the approval of baricitinib, an arthritis medicine submitted by Alapocas-based Incyte and Indianapolis-based Eli Lilly.(Photo: SUCHAT PEDERSON/THE NEWS JOURNAL)Buy Photo

The U.S. Food and Drug Administration declined to approve baricitinib, a potential rheumatoid arthritis medicine developed byIncyte and Eli Lilly & Co.

Baricitinib was expected to win approval in the United States and generate more than $2 billion in peak sales for the companies, according to Incyte's regulatory filings. In fact, executives at both Indianapolis-based Eli Lilly and Alapocas-based Incytepredicted the medicine would challenge market leader Pfizer's Xeljanz.Worldwide, Xeljanz generated more than $927 million in sales in 2016, up 77 percent over 2015 numbers.

"This is certainly a blow," said Jim Butkiewicz, chair of the University of Delaware's economics department. "They are going to have to pay a team to work on this getting approved, and the drug's potential revenue will be delayed for at least another year. This is a setback, no question about it."

European regulatory authorities approved baricitinib last month.

In a letter to the companies, the FDA said it needed more clinical data to determine the most appropriate doses. The agency also requested additional information about risks mixing the drug with other treatments.

"The companies disagree with the agency's conclusions," both Lilly and Incyte said in a statement. "The timing of a resubmission will be based on further discussions with the FDA."

Catalina Loveman, a spokeswoman for Incyte, did not respond to requests for additional comments.

"We are disappointed with this action," said Christi Shaw, president of Lilly Bio-Medicines, in a statement. "We remain confident in the benefit/risk of baricitinib as a new treatment option for adults with moderate-to-severe rheumatoid arthritis."

The rejection will sting both companies. Incyte and Lilly had been working on the drug since December 2009. Under the partnership agreement, Incyte agreed to cover 30 percent of baricitinib'sPhase III trials, estimated to cost over $500 million, in exchange for as much as 29 percent of the drug's sales.

"Pharmaceutical companies invest so much in research and development, and if the drug doesn't succeed, those costs need to passed on elsewhere," Butkiewicz said. "That's always the justification given for why pharmaceutical prices are so high because they have to cover the cost of research."

Wall Street analysts said they expect the FDA's denial will impact Incyte's earnings. Piper Jaffray analyst Josh Schimmer downgraded Incyte in a note issued to investors, calling baricitinib "an important part of the valuation and outlook for us." Michael Schmidt, analyst with Leerink, said that baricitinib contributed $25 to estimated Incyte stock price of $141 per share. Schmidt estimated in a research note that a one-year approval delay would be "a best case scenario."

Incyte's stock was battered by the rejection. After hitting a high of $141.23 per share last week, the stock closed Tuesday at $125.90. Eli Lilly shares also reflected the bad news dropping from $86.15 per share on Thursday to $81.20 at Tuesday's closing.

Separately, Incyte increased the executive compensation for its chief executive officer, HerveHoppenot, that it announced in a Monday regulatory filing with the Securities and Exchange Commission. Hoppenot's base salary jumped to $937,738 last year from $898,800 in 2015. Incyte also increased its stock and option awards to $9.5 million in 2016 from $3.7 million in 2015. That brings his total compensation package to $11.8 million last year from $6 million.

Since leaving Novartis for Incyte in 2014, Hoppenot has guided the company into the prestigious Standard & Poor's 500, an index of the most widely held stocks on the New York Stock Exchange and Nasdaq.

Incyte joined the list nearly one week after it reported its 2016 revenue surpassed $1 billion for the first time in the company's 26-year history. The $1.1 billion revenue represented a 47 percent increase from the $753 million it generated in 2015.

The company's growth was largely fueled by the success of Jakafi, a medicine approved in the United States and Europe to treat two rare blood cancer. Jakafi sales hit nearly $853 million last year, and Incyte expects the drug to generate $1 billion in sales this year.

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ orjmordock@delawareonline.com.

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FDA rejects Incyte arthritis drug baricitinib - The News Journal

This entry was posted on April 19, 2017 at 2:47 pm and is filed under Arthritis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. |