Incyte's Q3 Results Show Strengthening Opzelura Launch; Maintaining Our $105 Fair Value Estimate

Incyte reported solid third-quarter results driven by continued growth of hematology drug Jakafi as well as accelerating growth for new dermatology drug Opzelura, and we're maintaining our $105 fair value estimate. Product sales grew 20% in the quarter, with 13% growth in U.S. Jakafi sales and $38 million in sales of topical drug Opzelura in its new atopic dermatitis and vitiligo indications in the U.S. While sales of the drug are still transitioning from free drug and discount programs, we think demand looks strong (Opzelura is already topping new prescriptions in atopic dermatitis), and we continue to model peak annual sales approaching $2 billion for the drug. Incyte is also continuing to build a larger dermatology pipeline. First, oral JAK1 drug povorcitinib is poised to start phase 3 in hidradenitis suppurativa by the end of the year and is in phase 2 testing in other skin conditions, including prurigo nodularis and the 30% of vitiligo patients who have more extensive disease (Opzelura focuses on patients with body surface area of less than 10%). Second, Incyte is in the process of acquiring Villaris Therapeutics and IL-15 receptor beta antibody auremolimab, which could be complementary to other vitiligo programs and is poised to enter clinical trials in 2023.