Jakafi And The Beanstalk

I’ve always had a soft spot for Jack and the Beanstalk. It’s a story about a kid everyone underestimates, who turns out to be sitting on a ladder to a kingdom no one else bothered to climb.

Incyte (INCY) reminds me of Jack – not because it’s reckless, but because its most valuable assets are sprouting quietly in the background while the market gawks at the wrong things, namely a 2028 cliff that looks smaller the higher you climb.

If you skim only the headlines – the Jakafi LOE, the $3 billion revenue hole, the somber analyst notes – you’d assume the company was bracing for an inevitable comeuppance.

But look a layer deeper, at the earnings tables of the attached reports: revenue up about 20%, hematology/oncology sales more than doubling, Opzelura jumping 35% to $188 million, and operating margins jumping from 13% to well over 32%.

I’ve watched four decades’ worth of biotechs reinvent themselves, and changes like these signal a company shifting form while the market is still pricing in the old one.

Jakafi may be the veteran star, but it’s no longer the gravitational center. The revenue-mix charts show non-Jakafi sales scaling fast enough to rival the flagship in just a few years. And management’s long-term strategy is far more ambitious than a post-LOE survival plan.

They’re assembling a precision-medicine grid across CALR, JAK2, and 617F mutations, essentially mapping the future of myeloproliferative neoplasm treatment into the 2030s. It’s not defensive positioning; it’s territorial expansion.

The jewel in that crown is the CALR antibody 989, a molecule that has quietly earned a level of respect you don’t usually see this early in development. What makes 989 interesting isn’t just that doctors are talking about it but it’s why they’re talking about it.

Think about the typical patient with these bone-marrow diseases: someone who spends years managing high platelet counts or living with swollen organs that make it hard to eat, sleep, or even sit comfortably. Their treatments often take the edge off but rarely make them feel like themselves again.

Early signs with 989 suggest something that goes beyond incremental relief, but the possibility of putting the disease back in its place.

Doctors are seeing tangible changes: patients whose numbers drift back toward normal, people reporting less of that constant internal pressure that’s been part of their lives for years. When you see that kind of shift early on, you don’t need a PhD to know the drug has potential.

And if the big trials starting in 2026 confirm this trajectory, Incyte could end up with a second anchor franchise – one aimed at patients who desperately need better options and at a corner of medicine that has long been underserved.

That alone would be impressive, but then you meet povorcitinib – a drug that speaks directly to a patient population that’s been waiting far too long for something simpler.

Patients suffering from hidradenitis suppurativa deal with painful, recurring skin lesions that make basic movement uncomfortable and treatments that often require injections, appointments, and routines that slowly take over their lives. Dermatologists see it every day, and patients feel it even more.

An oral therapy changes all of that. Suddenly, the disease becomes something you manage at home, not something that disrupts your week. And with two positive Phase 3 trials and encouraging long-term data, povorcitinib is walking into a market already lined up at the door.

Then there are the early sparks from Incyte’s oncology programs – the assets targeting some of the toughest cancers out there, including MSS colorectal and KRAS G12D pancreatic cancer.

KRAS G12D is a locked vault in oncology; even the faintest hint of a key gets clinicians leaning in early. These aren’t full-blown results yet, but they’re the sort of early glimmers that tend to matter later.

None of this erases the reality that Jakafi revenue won’t be replaced on day one. Investors will feel those nerves as 2027–28 approaches. But Incyte is already showing it has the strength to navigate the transition.

The Q3 tables – net income quadrupling and EPS soaring – demonstrate operating leverage taking hold before the next wave of approvals even arrives.

And when you’re sitting on roughly $3 billion in cash with almost no debt, you’re not bracing for a cliff; you’re deciding how you’d like to cross it. Companies with fragile balance sheets fear LOEs. Companies with Incyte’s balance sheet treat them as a chance to write a new chapter.

Jack got roasted for trading a cow for beans because everyone assumed they understood the fair value of everything in the story. Incyte gets similar treatment for Jakafi’s 2028 LOE.

But like Jack, the company seems to know something the crowd hasn’t quite grasped yet – and if the beanstalk keeps climbing, investors may soon find themselves looking down from a very different vantage point.

After all, the real trick in this business isn’t avoiding giants. It’s climbing high enough that they stop looking like giants at all.