Will the FDA Shoot Down Eli Lilly and Incyte Again?

Incyte Corp. (NASDAQ: INCY) and Eli Lilly and Co. (NYSE: LLY) will be under the microscope next week as the U.S. Food and Drug Administration (FDA) will decide the fate of their rheumatoid arthritis (RA) treatment.

The FDA’s arthritis advisory committee will review the experimental drug baricitinib to treat RA on Monday, April 23. Baricitinib was resubmitted to the FDA after having been rejected in 2017 due to concerns over safety and optimal dosing.

It’s worth pointing out that analysts have been cautious due to significant regulatory risks for baricitinib.

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Here’s what had analysts concerned in the FDA briefing document:

The baricitinib RA clinical development program does not show an increased risk for serious infections with baricitinib in comparison to placebo. The incidence rate for malignancies observed with baricitinib is consistent with background rates in patients with RA, and there is no evidence of an increase in major adverse cardiovascular events (MACE) relative to the expected rate in RA patients. The rates of serious infections, malignancies, and MACE do not increase with extended baricitinib exposure. venous thromboembolic (VTE) events were noted with baricitinib (but not placebo) during the controlled phase of integrated studies; however, the overall incidence rate is stable over time and within the incidence rates for the disease state as a whole, including for other approved RA therapies, published literature, and observational data. While not able to establish a clear association between venous thromboembolic events and baricitinib, VTEs are considered an important potential risk addressed with a warning in proposed labeling …

The potential risks identified in the baricitinib program are generally consistent with risks identified for other approved RA therapies, while the common adverse reactions are routinely encountered and managed by practitioners in the clinical setting. Proposed labeling for baricitinib will describe these risks, including appropriate warnings and precautions, in a similar way to applicable US labeling for approved therapies

Shares of Incyte were last seen down about 1% at $68.31, with a consensus analyst price target of $91.47 and a 52-week trading range of $61.30 to $140.11.

Eli Lilly recently traded at $79.55 a share, with a consensus price target of $90.80 and a 52-week range of $73.69 to $89.09.

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