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Russian (RU) Incyte (INCY) stock tumbled Tuesday after the company scrapped one drug and paused enrollment in the study of another.
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Specifically, the company paused enrollment in a study of its drug, INCB000262, in patients with chronic spontaneous urticaria. In this disease, patients develop hives that usually last less than a day.
Incyte said it discovered toxicology problems in laboratory testing of INCB000262. Notably, Incyte is already testing this drug in people. There have been no signs of related side effects.
Incyte also discontinued development of INCB000547 in patients with cholestatic pruritus, an itching disorder caused by the buildup of bile salts in the blood.
Both drugs come from Incyte's $750 million acquisition of Escient Pharmaceuticals earlier this year.
"The update is clearly disappointing given '262 is the molecule at the center of the $750 million acquisition of Escient in April 2024, and proof-of-concept data across all three indications was anticipated in the first quarter of 2025," William Blair analyst Matt Phipps said in a report.
In early trades, Incyte stock skidded more than 12% to 67.34. Shares recently broke out of a flat base with a buy point at 70.36, MarketSurge shows. But shares opened well below their entry.
Incyte Stock: $1.8 Billion At Risk?
Incyte didn't disclose anything specific about the toxicology findings from INCB000262 lab testing. They reported the findings to the Food and Drug Administration. This could ultimately lead to a clinical hold, preventing the company from running its tests in people, Phipps said.
The company is also testing this drug in patients with another form of urticaria and eczema.
"While we do not currently include estimates for the molecule in our model, we previously assumed a potential launch of '262 in 2029, which could contribute significant sales for Incyte in the 2030s given the molecule is being evaluated in sizable market opportunities with blockbuster potential," William Blair's Phipps said.
RBC Capital Markets analyst Brian Abrahams models $1.8 billion in sales for '262. He lowered his probability of success on the drug to 15% from 30%. He also cut his price target on Incyte stock to 74 from 80, though he kept his sector perform rating.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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