Truist Securities has downgraded Incyte Corporation (NASDAQ:INCY), noting Jakafi's (ruxolitinib) patent loss approaching in 2028.

Jakafi is Incyte's top-selling drug. It is indicated for polycythemia vera in adults, intermediate or high-risk myelofibrosis in adults, and steroid-refractory acute graft versus host disease in adult and pediatric patients.

In second quarter 2024, the drug generated sales of $705.9 million, +3% year-over-year, driven by a 9% increase in paid demand.

The analyst downgraded the stock from Buy to Hold, with a price target of $74, down from $83.

Also Read: Incyte Seeks Expanded FDA Approval For Lymphoma Drug After Releasing Promising Topline Data From Late-Stage Study.

With Jakafi's loss of exclusivity approaching, a key concern is whether Incyte's pipeline in immunology, inflammation (I&I), and oncology can compensate for the revenue decline expected from generic competition. While there is long-term growth potential in the company's pipeline—supported by strong Phase 2 data and opportunities for expansion into new indications or combination therapies—the challenge of mitigating the patent cliff remains significant.

Additionally, Incyte faces intense competition, particularly in larger markets where it aims to establish a foothold, such as I&I and solid tumors.

Truist emphasizes the significance of the late-stage results for Povorcitinib in hidradenitis suppurativa (HS), expected in the first half of 2025, as a key factor likely to influence stock performance over the next 12 months.

Additionally, the analyst draws attention to the earlier-stage results expected in the second half of 2024 for Zilurgisertib in myelofibrosis. However, due to Novartis AG's (NYSE:NVS) delays and the challenges, combined with the early development stage of Incyte's programs, Truist is adopting a more cautious stance.

Price Action: INCY stock is down 0.93% at $65.81 at last check Wednesday.

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