Recently, Incyte Corporation (INCY) presented impressive data from a mid-stage trial for its pipeline candidate INCB18424 for psoriasis treatment.

The phase IIb trial, carried out on 200 patients over a period of three months, compared three once-daily doses of the drug compared to the placebo. It was observed that patients treated with INCB18424 had a statistically significant improvement over the placebo in reducing total lesion score (erythema + scaling + thickness), which was also the primary endpoint of the trial.

In addition, the trial met its secondary endpoint which was the Physician Global Assessment score and the Psoriasis Area and Severity Index score. Apart from psoriasis, Incyte is conducting trials of INCB18424 for several other indications which include myelofibrosis, polycythemia vera/essential thrombocythemia, rheumatoid arthritis, refractory prostate cancer and multiple myeloma.

Incyte has other potential candidates targeting treatment for diabetes, breast cancer and HIV. However, the company’s liquidity crunch has forced it to focus on the candidates with greatest near term value and accordingly has prioritized the pipeline.

Although we are pleased to see the advancement in the company’s pipeline, we remain concerned about its cash position. At the end of the second quarter, the company had $148 million of cash and cash equivalents along with marketable securities, down from $218 million at the end of last year.

This situation led the company to tap the capital market. Following the liquidity crisis, Incyte announced its intention to offer 18 million shares, the proceeds from which will be used for general corporate purposes, including research and development activities.

The company is so hard pressed for cash that in addition to the share offering, it is issuing $250 million of Convertible Senior Notes due 2015 in a private placement so that it can retire its outstanding debt, which was $402 million at the end of the last quarter.
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