Editor'due south note: This feature is part of BioPharma Swoop's new series, Unblinded, profiling individuals who play primal roles in the stories that matter to biotech and pharma. See the residual here.

In the risky globe of drug development, few biotechs successfully mold a molecule into a viable medicine. Fewer nonetheless are able to repeat that feat.

Information technology's a challenge that Incyte, a Delaware-based drugmaker founded equally biotech boomed in the early on 1990s, knows well.

"Nosotros have single asset syndrome," said Hervé​ Hoppenot, Incyte's CEO for the by five years, in an interview with BioPharma Swoop.

Jakafi, the company's offset production and principal source of acquirement, has fueled Incyte'southward ascent since its 2011 approval. Final twelvemonth, the drug reached $i.4 billion in sales.

Finding a reliable 2nd human action, yet, is proving a challenge.

"The next big step is even more complicated," said Hoppenot. "How practice you become a balanced, diversified company on a worldwide calibration?"

Incyte appeared to take its reply in a cancer immunotherapy called epacadostat. Merely last year a late-stage trial testing the drug in melanoma failed unequivocally, sending Incyte back to the drawing board.

Some other Incyte-developed drug, called Olumiant and licensed to Eli Lilly, faces crimped commercial prospects afterwards U.Southward. regulators approved only a lower, less effective dose.

Since and so, Incyte has shifted gears. Two Incyte drugs could exist filed this yr for U.Due south. approval, and the visitor is poised to receive regulatory clearance for a new use for Jakafi by May.

An Incyte scientist

Incyte

Even if successful in those efforts, Incyte remains a pace behind the adjacent tier of biotech companies. 1 blockbuster product notwithstanding, Incyte'southward almanac revenues are ane-fourth that of Regeneron, i-half Alexion's and three-fifths Vertex'south.

The market opportunities ahead of Incyte, meanwhile, are notably smaller than what the drugmaker might have had in its sights with epacadostat.

Echoes of epacadostat

Two years agone, at the 2017 almanac meeting of the American Society for Clinical Oncology, enthusiasm for Incyte's immunotherapy arroyo was running high.

Encouraged by alluring mid-stage findings, the biotech had forged ahead with an aggressive clinical development program that bet epacadostat would be an platonic partner for top-selling immunotherapies like Merck & Co.'s Keytruda.

"It was not a crazy or reckless approach."

Herve Hoppenot

CEO, Incyte

Annotator forecasts at the time called for almost $ii billion in peak annual sales, and the drug was seen to business relationship for as much as $10 billion of Incyte's then market value.

Instead, information from the outset of nine planned Phase 3 combination studies showed epacadostat to be essentially inactive, adding no benefit over Keytruda alone in metastatic melanoma.

In hindsight, the testify on which Incyte built its example appears a shaky foundation for a trial program that sought to enroll more than 6,000 patients beyond 5 cancer types.

While Stage ii results had suggested Keytruda plus epacadostat yielded improved response rates, that conclusion was based on single-arm information compared against separate studies Merck had previously conducted of Keytruda monotherapy.

Hoppenot admits the negative results were a setback but, a year on, defends the determination to quickly move epacadostat forward.

"It was not a crazy or reckless approach," the CEO said. "If that study had been positive instead of non, that would've opened a multi-billion [opportunity] for the visitor."

To Hoppenot's point, Incyte estimates it spent about $fifty million over two years for studies involving epacadostat and Keytruda, including that outset Phase iii trial. That'southward a significant investment, even so even so pocket-size compared to Incyte'south roughly $1.2 billion in annual R&D spending.

"Possibly people would say that'due south one strike, but he was correct to be excited," said Tyler Van Buren, an analyst at Piper Jaffray who covers Incyte.

A tree hiding the woods?

Hoppenot's background is in cancer. At Novartis, where he worked from 2003 up until his appointment as Incyte'due south CEO in 2014, Hoppenot rose to become head of Novartis Oncology, overseeing a portfolio that included rights to Jakafi in Europe.

Jumping over to Incyte, Hoppenot arrived but every bit the company began generating the early evidence that suggested epacadostat could help brand checkpoint inhibitors more than effective.

Because of that enthusiasm, much of Hoppenot'south first four years at Incyte were colored by the company's — and his — bet on epacadostat.

"It was very hard to communicate anything about the rest of the pipeline," Hoppenot said, calling epacadostat a "tree hiding the forest."

Some of that was due to Incyte itself, likewise every bit Wall Street. The visitor, for instance, had touted epacadostat as a potential "cornerstone" of immunotherapy combinations.

Now, with the drug written off, Incyte's remaining pipeline is the sole focus of company researchers, Wall Street analysts and investors akin.

Rather than immunotherapy, however, it'due south Incyte's piece of work in graft-versus-host affliction — a potentially fatal complication of allogeneic stem cell transplants — that now commands the well-nigh attention.

Incyte'south first headquarters in Wilmington, Delaware

Incyte

In GvHD, equally the condition is usually abbreviated, transplanted donor stem cells set on the healthy tissues and organs of the recipient patient. And, as more and more cancer patients receive stalk jail cell transplants, the prevalence of GvHD has grown.

4 years ago, a grouping of mostly German clinicians sought to ostend a hunch that ruxolitinib, the compound Incyte sells as Jakafi for ii bone marrow cancers, could besides piece of work in GvHD. Results of that survey written report, published in the periodical Leukemia, showed impressive response rates, spurring Incyte to investigate on its own.

A decision from the FDA on ruxolitinib's use in chronic GvHD that'south resistant to steroids is due by May 24, and Incyte expects information from two larger Stage 3 studies of the drug this year as well.

"What Jakafi tells us is that if y'all develop drugs, yous should be very careful not to anticipate too much where the drug might pb you," Hoppenot said. "You may finish up going in directions that nobody was anticipating at the kickoff."

Around seven,000 new cases of steroid-refractory GvHD, both acute and chronic, are diagnosed in the U.S. each year. Steroid-naive GvHD is an fifty-fifty larger marketplace past Incyte's estimates and, there, the visitor has developed a JAK1 inhibitor called itacitinib.

Unlike ruxolitinib, which is licensed to Novartis in Europe, itactinib is wholly owned by Incyte. Information from two late-phase studies of the drug are also due this twelvemonth and, if positive, could support an application for approval.

"If you take ruxolitinib and itacitinib, and you combine all of their indications, I recall there's billion dollar potential there," Van Buren said. "The matter is, Incyte will take to develop these indications separately and layer them on over fourth dimension."

Catching a running horse

Incyte spends a lot on R&D, and not anybody is pleased nigh that.

Last year, the visitor counted $one.2 billion in R&D expenses, or nigh 2-thirds of what Incyte earned in revenues. That effigy is down from 2017'southward marker of 86%, just still well above ratios posted by Regeneron, Alexion, and Vertex.

R&D expense as percent of revenues amid top biotechs
R&D equally % of revenues (2018) R&D as % of revenues (2017) Ran operating loss in 2018?
Regeneron 33% 35% No
Alexion 18% 25% No
Vertex 46% 53% No
Incyte 64% 86% No
BioMarin 47% 46% Yes
Seattle Genetics 86% 95% Yep
Ionis 69% 73% Yes

SOURCE: Companies

Like most other biotechs, Incyte posted yearly internet losses for decades before turning its get-go annual profit in 2015. Sharply increased spending on R&D, however, dragged the company back to a loss in 2017.

Now that Jakafi is earning well above $i billion annually, Hoppenot has faced increasing pressure from investors eager to see Incyte plow steady profits.

R&D is Incyte's business concern, of course. But after epacadostat's failure, investors and analysts accept more than reason to enquire how well Incyte is spending all that coin.

"I'g asked why are y'all investing as much every bit yous practise in R&D?" Hoppenot said. "The opportunity volition exist gone tomorrow. If y'all don't have it when you see it, it's a running horse."

Hoppenot aims for Incyte to get a large, global biopharma in the side by side decade. For that to happen, a lot will need to go correct, starting with the slate of drugs Incyte believes represent its hereafter.

An approval for Jakafi in GvHD would aid, every bit would regulatory OKs for pemigatinib, a targeted therapy for a rare blazon of bile duct cancer, and capmatinib, a lung cancer drug out-licensed to Novartis.

Whether together these drugs tin solve Incyte's single-asset syndrome remains an open question. Convincing investors it's possible will crave the company and Hoppenot to dispel some of the shadows left past epacadostat'due south failure.