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Why Cancer Drug Maker Incyte’s Stock Plunged—And Took Others Down With It

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Incyte stock dropped 20%.Bryan R. Smith—AFP/Getty Images

Shares of biotech Incyte tumbled following a clinical trial setback for one of the company’s marquee experimental cancer drugs. Incyte stock dropped nearly 20% in Friday trading, wiping billions off of the firm’s market value. But the disappointing results rippled across a significant segment of the cancer drug development industry, including pharmaceutical giants Merck and Bristol-Myers Squibb (BMS).

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Incyte’s experimental treatment, epacadostat, was being tested in combination with Keytruda—Merck’s flagship, multi-billion dollar cancer immunotherapy. The former drug is a so-called “IDO1” treatment; the latter is a “PD-1” checkpoint inhibitor. The hope, particularly in the case of these two drugs, was that a two-pronged combo approach would help cancer patients live longer.

But the late-stage clinical trial results for melanoma patients reported Friday put a big dent in those plans. It also raised questions for other biopharma companies pursuing similar cancer drug combinations (and there’s a fair number of them around). Merck stock fell 1.9% in Friday afternoon trading, for instance, while Bristol-Myers sank more than 3%; the much smaller biotech NewLink Genetics dropped more than 45%.

The disappointing results were fairly unexpected—but they do highlight the deep uncertainty that surrounds drug development, even for treatments that show early promise.