Incyte rides wave after Pfizer's FDA panel nod

Pfizer ($PFE) scored the endorsement of an FDA panel for its arthritis pill tofacitinib this week, and the win could put some wind in the sails of drug developer Incyte ($INCY). Incyte's shares jumped this week after agency advisers backed approval of Pfizer's potential blockbuster JAK inhibitor for rheumatoid arthritis.

Wilmington, DE-based Incyte has been developing a rival JAK inhibitor in partnership with drug giant Eli Lilly ($LLY). And the interim data from a mid-stage trial data on the drug, known as LY3009104, are due out next month at the European League Against Rheumatism's Annual European Congress of Rheumatology, according to Incyte. Lilly has already wrapped the Phase IIb study of the drug for treating RA and is expected to reveal the results later this year.

This week Goldman Sachs elevated shares of Incyte from "neutral" to "buy," noting that the company has successfully launched the cancer drug Jakafi and has momentum. "[LY3009104's] potential was validated with the positive FDA panel vote on May 9 on Pfizer's tofacitinib," the firm said, as quoted by StreetInsider. With an approved cancer drug and a potential blockbuster RA pill in the pipeline, Incyte fits the profile to be gobbled up by a larger company.

Lilly, which has lost major products such as the cancer drug Gemzar to generic competition, could benefit from buying partner Incyte, Jason Chew, a biotech analyst and co-founder of Chimera Research, told FierceBiotech. "A deal for Incyte would provide a marketed drug and another one that could potentially enter pivotal trials in two indications by 2013--RA and psoriasis," Chew said. "Jakafi could help Lilly regain strength in oncology with the loss of Gemzar."

Both Pfizer's tofacitinib and Incyte's LY3009104 offer new oral remedies to treat RA, an autoimmune disease that attacks the joints and affects more than 1 million patients in the U.S. The treatments could become a new alternative for patients who don't respond to injected meds for the disease. Chew notes that Incyte's drug has dosing advantages over tofacitinib and could present lower risks of side effects to patients.

Incyte's shares were up 2.3% to $23.55 per share as of noon ET today, trading close to the 52-week peak of $24.30 hit earlier this week.

- see the StreetInsider article

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