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On Tuesday, Incyte (NASDAQ:INCY) shares experienced a change in stock rating, as William Blair downgraded the company from Outperform to Market Perform. The stock has fallen nearly 9% over the past week, with InvestingPro data showing the shares are currently in oversold territory. The decision followed Incyte’s announcement on Monday of Phase III trial results for povorcitinib, a JAK1 inhibitor aimed at treating moderate to severe hidradenitis suppurativa (HS), which did not meet the expectations set by earlier Phase II results.
Incyte’s povorcitinib, also known as povo, was anticipated to be a significant treatment for HS. Despite maintaining strong financial health with an overall "Good" rating according to InvestingPro analysis and holding more cash than debt on its balance sheet, the recent trial outcomes have raised concerns over its potential market reach. Analysts at William Blair pointed out that the use of povo might be largely restricted to patients who have not responded to other treatments, such as Humira and IL-17 biologics, rather than being a first-line therapy post-Humira as initially hoped.
The results also suggested that Rinvoq, another JAK therapy, could dominate the market due to its broader use in various inflammation and immunology indications and better positioning on drug formularies. Phase III results for Rinvoq in HS are expected in 2026, and only time will tell if povo can outshine Rinvoq in certain aspects like pain reduction.
As a result of the disappointing trial data, William Blair has revised its sales forecasts for povo downward. While the probability of povo’s success in treating HS has increased, the net present value (NPV) for the drug has slightly decreased. This adjustment reflects the challenges Incyte faces in changing its key narrative and improving investor sentiment, particularly as the company approaches the expiration of exclusivity for its flagship product, Jakafi.
Incyte’s future revenue growth is now more uncertain, and the recent trial results have diminished the company’s ability to alter its trajectory in the eyes of investors. With further data on povo’s efficacy in prurigo nodularis and vitiligo not expected until 2026, the near-term commercial prospects for the drug in the HS market appear to be limited.
In other recent news, Incyte Corporation reported results from its Phase 3 STOP-HS clinical trials for povorcitinib, an oral treatment for hidradenitis suppurativa (HS). The trials met their primary endpoints, showing significant improvement in symptoms compared to placebo, and the company plans to use these data for regulatory submissions. Despite these results, RBC Capital analysts maintained a Sector Perform rating with a $68 price target, noting the drug’s performance was slightly below expectations. They highlighted potential market penetration of about 20% for povorcitinib in patients previously treated with biologics, predicting sales of approximately $600 million. Meanwhile, TD Cowen analysts retained a Buy rating on Incyte with an $88 price target, following positive outcomes from the TRuE-PN1 trial for Opzelura, a topical treatment for prurigo nodularis (PN). The trial achieved its primary and secondary endpoints, demonstrating significant improvements in itch and skin lesions. However, the subsequent TRuE-PN2 trial did not meet its primary endpoint, though it showed positive trends. JMP Securities maintained a Market Perform rating, emphasizing Incyte’s strong financial position and ongoing clinical programs.
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