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Eli Lilly & Co. (LLY) and Incyte (INCY) chose to disclose the FDA rejection of their rheumatoid arthritis pill baricitinib on Friday, a market holiday, so the repercussions from the regulatory setback are hittingboth stocks Monday.

Lilly shares were down just over 4% to $ 82.33through mid-morningtrading, while Incyte shares were down just over 11% to $125.09

Baricitinib was expected to secure U.S. approval and deliver $2 billion or more in peak sales as the most effective, once-daily oral JAK inhibitor for rheumatoid arthritis, supplanting Pfizer's (PFE) Xeljanz.

Those plans are now on hold indefinitely. In a statement, Lilly said the FDA's complete response letter included a request for additional clinical data to determine appropriate doses of baricitinib. The FDA also asked for more safety data.

Lilly and Incyte said they disagree with the FDA's conclusions and plan to resubmit baricitinib for another shot at approval. A timeline for resubmission was not provided.

The European Medicines Agency approved baricitinib for the treatment of rheumatoid arthritis in February. The drug is marketed there under the brand name Olumiant.

Piper Jaffray analyst Josh Schimmer downgraded Incyte to neutral and cut his price target to $124 from $140. "Incyte has a differentiated flagship product in Jakafi, a leading management team, a strong R&D engine and strategic sense, and still strong growth prospects. But baricitinib in the U.S. was an important part of the valuation and outlook for us," Schimmer wrote, in his downgrade note.

Leerink analyst Michael Schmidt said baricitinib contributes 18%, or $25, to his Incyte $141 price target. "We expect Incyte shares to be weak on Monday given that approximately one-year U.S. approval delay now seems likely in our view, in a best case scenario," Schmidt said in a research note.

Lilly licensed baricitinib from Incyte in 2009. The pharma giant took the lead on the drug's development, conducting all the clinical trials and handling regulatory duties. Lilly retains the bulk of baricitinib's sales under the Incyte licensing deal, so the FDA rejection hits the pharma giant -- desperate for new blockbuster drugs -- particularly hard.

Lilly reiterated 2017 earnings guidance but has not said how the baricitinib setback will impact its 2018 financial outlook.

Why FDA turned away baricitinib is not entirely clear, although analysts speculate regulators picked up a concerning safety signal with the higher 4 mg dose. Pfizer faced the same problem with Xeljanz before FDA ultimately approved a lower dose.

Excerpt from:
Lilly and Incyte Fall After FDA Rejects Potential Blockbuster for ... - TheStreet.com

This entry was posted on April 17, 2017 at 11:42 am 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. |