StemCell Therapy

By Teresa Rivas

Incyte Corp. (INCY) and Eli Lilly (LLY) are both falling Monday, on news that the FDA issued a complete response letter concerning its rheumatoid arthritis treatment baricitinib, delaying approval.

The FDA didnt kill the drug, but it didnt approve it either, saying that more clinical trials would be needed to determine the correct dosage. Of course, more trials will increase the time and money that the companies will have to spend on baricitinib before its approval. Incyte and Lilly both said they are committed to working with the agency to get approval.

Plenty of analysts are weighing in on the stocks today.BMO Capital Markets M. Ian Somaiya reiterated an Outperform rating but cut his price target on Incyte to $144 from $170:

We are pushing out U.S. launch timelines for baricitinib by three years following CRL where FDA cited need for additional dosing and safety data, implying need for new trials. In our conversation, management suggested that the issue in the CRL was not raised previously by the FDA, nor was it the reason for the recent data submission. Our review of published data suggests that the issue could be related to increase in creatinine phosphokinase (CPK), which can be causing drug-induced myopathy (i.e., alectinib) and addressed via a REMS.

SunTrust Robinson Humphreys Peter Lawson reiterated a Buy rating but cut his price target from $160 to $145:

On Friday the FDA issued a complete response letter (CRL) for the NDA for baricitinib in moderate-to-severe rheumatoid arthritis (RA). This was unexpected considering the strength of the data which was published in highly respected medical journals, and the recent EU approval. The FDA is seeking additional clinical data to determine dose, and to further characterize safety. While still early, we have re-assessed our model, we have assumed a conservative 2 year delay in filing, lowered the probability of success in the U.S, and removed milestone payments.

Raymond Jamess Reni Benjamin reiterated a Market Perform rating on Incyte:

While the timing of the FDAs decision was on the PDUFA date, the CRL certainly came as a surprise to us and, we expect, many other investors given the recent approval of the drug by the European agency as well as the multiple positive phase III results generated during clinical development. Whats more surprising and concerning to us is the agencys request for additional clinical data to determine the appropriate doses and further address the safety concerns associated with the drug, a decision that both companies plan to appeal.

As for Eli Lilly, Credit Suisses Vamil Divan reiterated an Outperform rating but lowered his price target by $1 to $87:

While we like LLY for its diversified new product story, baricitinib is a key component of the story and the press release reads ominously to us. The FDA is requesting additional clinical data to determine the most appropriate doses and also to characterize safety concerns across various treatment arms. The timing of a resubmission is still to be determined but for now we assume it will take at least 12 months, pushing back a US launch to potentially 2019 or later. It will likely also limit the peak potential of the product given the competitive nature of the rheumatoid arthritis market and the fact that we expect PFEs Xeljanz will lose it US patent exclusivity by 2025, opening the door for generic oral JAK inhibitors to enter the US marketOur updated baricitinib estimates, including a 2019 US launch and peak 2025 sales of $1.2Bn in the US and $2.1Bn globally, led to our LLY target price reduction to $87 (from $88).

Incyte is down 11.2% to $125.03 in recent trading, while Eli Lilly is down 3.9% to $82.52.

See the original post:
Incyte, Eli Lilly Tumble As FDA Delays Arthritis Drug Approval - Barron's (blog)

This entry was posted on April 18, 2017 at 7:44 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. |