MannKind Corporation (MNKD), Incyte Corporation (INCY): Will This Large Biotech Pop Experience Analyst Backlash?

Clearly, this subgroup of patients did show an effect to treatment. According to analysts, the pancreatic cancer being tested in the company’s “overall” Phase 2 trial could create additional revenue of $500 million for Incyte. However, this leads us to the problems.

Like with MannKind, initial data for Incyte looks good. But as a biotech investor, it is essential that we look outside the box, and ask a lot of questions when assessing such data. For example, why wasn’t all data presented by MannKind? With questions being raised, why hasn’t the company addressed these concerns and released the details for that third group?

In regards to Incyte Corporation (NASDAQ:INCY), how many subgroups were tested? How many subgroups failed in reaching statistically significant overall survival? More importantly, why wasn’t progression-free survival disclosed (tracks the growth or development of the disease/tumor)? Progression-free survival was one of the secondary endpoints to the study, and often times the FDA wants to ensure that a drug/vaccine is stopping the growth of a tumor before approving it.

Preparing for analyst backlash?
My problem is that Incyte Corporation (NASDAQ:INCY) added nearly $1.4 billion to its market capitalization with news of this subgroup data. Now, I am not trying to downplay the importance of the noted data, as it was remarkably good. However, MannKind’s data looked solid as well, and then stock-moving questions arose in the days that followed its trial results. With that said, I am suggesting that Incyte Corporation (NASDAQ:INCY)’s stock may have gotten ahead of the news, and it’s possible that analysts will raise questions that I have mentioned, much like with MannKind.

With MannKind, the post-data questions have pushed its stock to below its pre-data announcement price of $6.80, causing it to lose all of its gains plus more. MannKind simply did not disclose details for one of its three treated groups. In the case of Incyte, its stock jumped despite their being no prior knowledge of a subgroup and with pertinent details including patient size being kept confidential. Therefore, this scenario has the makings of being problematic for Incyte investors, and I would monitor the rumors, whispers, and potential criticism of analysts over the next week. Lastly, I wouldn’t be surprised to see Incyte Corporation (NASDAQ:INCY)’s stock drop when these questions are raised.

The article Will This Large Biotech Pop Experience Analyst Backlash? originally appeared on Fool.com is written by Sherrie Stone.

Sherrie Stone has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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