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Does Incyte have best cancer portfolio of midcap biotechs?

April 10, 2017

Incyte Corp. (INCY) is lower Monday, but Gabelli doesn’t think the stock will be down for long. 

Analyst Jing He initiated coverage of the biotech stock with a Buy recommendation and a $185 price target. She writes that Incyte has the best oncology portfolio among mid-cap biotech firms, with strong earnings growth potential. 

More detail from her note:

Incyte has two approved products, one late-stage Immuno-oncology (I/O) candidate and multiple pipeline drugs. Its revenue is expected to grow at a 20% CAGR through 2021, driven by continued growth of Jakafi as well as launches of Olumiant in 2017 and Epacadostat expected in 2019. Pipeline candidates in Phase II could also generate revenue by 2021.

We believe Epacadostat will become the next megablockbuster I/O drug due to its potential to be first-line therapy for multiple tumor types. In combination with PD- 1 inhibitors, the drug is in Phase III for first-line melanoma, lung, head and neck cancers, etc. The combo therapy has demonstrated superiority to other I/O combos in early-stage trials. We estimate its peak sales to be $5.1 billion. 

She also writes that while Incyte has already been rumored to be a takeout target, she only expects interest in the company—from bigger players like Gilead (GILD), Merck (MRK), Sanofi (SNY), and Amgen (AMGN) to intensify. 

Incyte is down 1.7% to $137.67 this morning. 

Last week, Barclays increased its price target Incyte, and was the best performer in the S&P 500

http://on.barrons.com/2oRDbmV

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