Incyte Presents Investors with Unique Dilemmas

A drug with an almost certain approval and immediate sales potential of hundreds of millions of dollars is an asset very few biotech companies possess. In that sense, Incyte (INCY), which is developing a breakthrough drug for blood disorders, represents a unique opportunity in an industry plagued by risk and uncertainty. Incyte is also unique in its problematic capital structure, which makes an otherwise simple investment decision a tricky one.

Incyte’s lead drug is INCB18424 (aka 424), currently in two registration trials in myelofibrosis (MF). Myelofibrosis is a blood disorder in which the bone marrow becomes dysfunctional. MF Patients, who often have enlarged spleen and anemia, suffer from a myriad of symptoms including infections, chronic fatigue, fever and weight loss. On average, patients survive five years from diagnosis as a result of infection, bleeding and organ failure. There are currently no approved drugs for MF and most patients are treated with drugs that alleviate symptoms, but typically have little impact on the course of the disease.