Incyte’s $750M Acquisition Shaken by Key Trial Pause and Asset Cuts

Incyte faced severe difficulties just a few months after purchasing Escient Pharmaceuticals for $750M. The biotech company has put on hold a key clinical trial due to preclinical toxicology issues and has also scrapped another program from the acquisition.
Among them, the most noteworthy was the product of the acquisition: EP262, or as it is now known, INCB000262 – an MRGPRX2 inhibitor. This candidate demonstrated proof of concept (POC) in CIndU (chronic inducible urticaria) and was developing Phase 2 results for CSU.

Nonetheless, Incyte has stopped the enrollment of patients in its CSU trial after adverse toxicology results were noted in facilitating animal tests. It is working with the FDA to identify a path forward while maintaining as little communication with the public as possible. Incyte’s management cited the positive OS data and asserted that there are no clinical safety issues with obinutuzumab, according to physicians overseeing their clinic patients.
Management recognized that there is always some level of risk associated with buying early-stage assets, especially since most of these transactions happen before the availability of confirmatory clinical data, resulting in higher acquisition costs. While Incyte admitted that the results of the toxicity test were disappointing, the company continued to believe in the drug’s mode of action and unveiled plans to use the data from the positive Phase 1 results to steer the future growth of both INC273 and INCB000262, as well as related backup compounds. This means the safety problem might be singular to the molecule and not the entire group of MRGPRX2 inhibitors.
Even if the safety issues are confined to INCB000262, it is possible that Incyte will get good returns on the Escient investment. This outcome might also help other firms involved in the development of X2 inhibitors because this class of drugs has recently been a subject of significant investment. For example, Septerna reported $288M in an IPO, while Evommune closed its Series C funding round at $115M.
Previously, Incyte had only conducted Phase 2 trials with the X2 inhibitor for CIndU and atopic dermatitis. Continuing the CSU study, thought to be the most significant of the three, has primarily recruited participants, but only a second trial has yet to start. Experts also said that the data from the delayed trial may still exist since the trial focuses only on the six-week efficacy endpoint. Nonetheless, it depends on further talks with the FDA and the outcomes of backup compounds, which may postpone updates beyond the first quarter.

Despite problems with INCB000262, Incyte reported plans to discontinue another Escient-acquired drug, EP547 (now INCB000547), which targets cholestatic pruritus through inhibition of MRGPRX4. This program was terminated after the assessment of Phase 2 yielded insufficient efficacy outcomes. Thus, it was less surprising that analysts treated EP547 as a lower-probability success candidate from the start.
Discussions of these issues caused the price of Incyte’s stock to decrease by 9% to under $70 in premarket trading. The company’s current goal remains focused on resolving problems with the X2 program while continuing to explore the possibilities for the backup molecules as it tries to salvage value from the costly Escient acquisition.

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