Incyte Sinks On Setback For 2 Drugs Acquired In $750M Buyout: Retail Chatter Hits One-Year High

Incyte Corp.'s ($INCY) stock plunged over 13% on Tuesday after the biopharma company announced setbacks with two drugs acquired in its $750 million buyout of Escient Pharmaceuticals earlier this year. 

The stock ranks as the worst-performing in the S&P 500 ($SPY) following the news that it has abandoned the development of one drug entirely and halted enrollment in a study of another.

After the bell on Monday, the company announced it will halt enrollment in a Phase 2 trial evaluating the investigational drug INCB000262 for the treatment of chronic urticaria, or hives. 

The company suspended the study due to new toxicology data from animal studies, though it did not disclose the specific findings. 

Incyte stated it has shared the toxicology results with the Food and Drug Administration (FDA) and will collaborate with the regulatory agency to determine the next steps for the drug program.

Incyte also revealed it’s scrapping another drug, INCB000547, due to Phase 2 results in a type of itching associated with liver disease that “don’t support further development.”

Incyte Sentiment and Message Volume on Nov 19 as of 12:35 p.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment for Incyte remains ‘bearish’. However, retail chatter is at a one-year high in the ‘extremely high’ (93/100) zone.

The company has been seeking to expand beyond its core myelofibrosis drug Jakafi, which accounted for approximately 77% of Incyte's $963 million in third-quarter net revenue. 

However, Jakafi is facing growing competition and could lose patent protection in the coming years.

RBC Capital lowered its price target on Incyte to $74 from $80 while maintaining a ‘Sector Perform’ rating on the shares citing the “disappointing” trial pause. 

While the drug was high-risk, its potential in treating recurring hives made it a notable pipeline asset, according to the brokerage. 

Meanwhile, Bank of America (BofA) said that these two drugs were “not a big driver” of the company’s pipeline value since they were still in the proof-of-concept stage. 

It has lowered its price target on Incyte to $86 from $90 while maintaining a ‘Buy’ rating on the shares. 

Incyte’s stock has only gained 2% so far this year.