Why Incyte Stock Was Tanking This Week

A less-than-encouraging clinical trial for an investigative medicine was the news driving down Incyte (NASDAQ: INCY) stock over the past few days. The gloom this produced was pushing the biotech's share price down by nearly 11% week to date as of Friday before market open.

Clinical trials for investigational skin disorder drug fell short

On Monday, Incyte published the top-line results from two phase 3 trials of its povorcitinib, a treatment aimed at combating moderate to severe hidradenitis suppurativa (HS), also known as acne inversa. This is a chronic and inflammatory skin condition that can result in scarring, among other complications.

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In each of the trials, the drug met its primary endpoint of a significant (50%-plus) reduction from baseline in abscess and inflammatory nodule count versus a placebo, with no advances in abscess or draining tunnel count. Both of the tested doses achieved similar results.

Although the biotech touted this as a success, some analysts were expecting better, given the drug's encouraging performance in phase 2 trials. If eventually approved and commercialized, povorcitinib will have competition, particularly with UCB's well-established and Food and Drug Administration-approved Bimzelx.

Nevertheless, Incyte asserted that the phase 3 trials support its planned regulatory submission of its investigational drug.

The future for this program might not be bright

Biotechs are always heavily dependent on their pipeline, even commercial-stage ones like Incyte that already have approved medicines on the market. Povorcitinib still might be approved, given its performance against the placebo; however, at the moment, it isn't looking like much of a breakthrough medication.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Incyte. The Motley Fool has a disclosure policy.