Unlock: Incyte (INCY) Gaps Higher on Good Data as Expected
It pays to do fundamental research. Note below was sent to clients last week on September 28, specifically discussing upcoming clinical data at ESMO with abstracts showing positive outcome. Got that good news today. To learn more about our approach and how you can become a successful trader, sign up for 2 week trial and test drive live chat room with some of the best traders: SUBSCRIBE
Merck (MRK) / Incyte (INCY) – Not seeing any pick up in option activity in INCY yet but in Merck massive buyer of 12,000 very long term Jan’18 62.5-strike calls paid $5.60 offer side. Approx $6.7 million bullish bet.
Very good news out this morning that should be sufficient to bring out bunch of analysts with positive notes that will likely keep a steady bid under the stock. Ahead of ESMO Conference on October 7-11, company is releasing abstracts of presentation that show durable response for epacadostat (produced by INCY) and keytruda (produced by MRK) combo in melanoma.
Previous data released at SITC Conference in 2015:
– 16 Patients
– Overall Response Rate (ORR) 53%
Current data released ahead of ESMO Conference:
– 19 Patients
– Overall Response Rate (ORR) 58%
Aside from very good improvement in response rate over the course of year, I think most notable part is ORR is now slightly better than BMY’s Yervoy and Opdivo combination in reported Phase 3 trial. Recall, previously Opdivo was seen as the leader in oncology space with highest ORR than anyone else. Looks like INCY/MRK are now taking the lead which really opens the door for substantial outperformance in INCY stock over years to come. INCY is now announcing enrollment of 600 patients to move forward with Phase 3 ECHO-301 study and today’s data is setting a very good precedent. Separately, while INCY moves progress in melanoma, company is still working with Eli Lilly to bring the best rheumatoid arthritis (RA) drug to market with fantastic data announced back in March 2016.
Bottom Line: After today’s data set I am moving Incyte which has $16.7 billion market cap to highest level on my biotech watch list as M&A target. Two major drugs partnered with two major pharmas, both showing significant progress.
