Incyte investigates all batches of new eczema cream Opzelura after reports of 'texture problem'

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Incyte has informed the FDA of the Opzelura complaints, suspended the sample program and is recalling all the 5g sample tubes. (Getty Images)

Incyte has only taken the first step in its rollout of topical atopic dermatitis drug Opzelura, but it has already hit a manufacturing problem that threatens to derail the key launch.

Incyte is now investigating all its Opzelura batches after reports of a “texture problem” with both its samples and commercial products, Barry Flannelly, Incyte’s general manager of North America, told investors during a conference call Tuesday. The company has received three related complaints, it disclosed in a statement (PDF).

The company has informed the FDA and suspended the sample program, and it’s getting back the problematic tubes to understand the problem, Flannelly added. It’s also investigating the root cause to make sure the same issue doesn’t crop up again. The company has produced 140,000 sample tubes , he said.

As for the 60g commercial dose of Opzelura, the company has stopped distribution from the problematic batch. It doesn’t expect a recall now, Evercore ISI analyst Maneka Mirchandaney said in a Tuesday note after talking to Incyte management. In a statement, Incyte said it currently doesn’t have any supply issues, as additional batches of Opzelura continue to be manufactured.

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Early testing of the problematic batches didn’t show any efficacy or safety problems, Incyte said. “The texture issue is related to a very small quantity of active product ingredient (API) not being completely dissolved, which has, on occasion, produced a slightly gritty texture,” the company added.

Opzelura, a topical version of the JAK inhibitor Jakafi, has been billed as a key growth driver for Incyte. Although Flannelly acknowledged the company is facing some initial reimbursement hurdles, demand for Opzelura has been solid since its FDA nod in September. The company expects to ship 3,000 tubes in its first four weeks of launch, Flannelly said on the call.

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Opzelura was cleared by the FDA with a black box warning, which covers some JAK class-wide risks such as infections, heart-related events and cancer. The Wall Street consensus has Opzelura 2030 pulling in U.S. sales of about $1.1 billion, Mirchandaney noted. But bear-case investors are concerned that the drug would end up “Eucrisa like,” he said. Pfizer’s rival topical atopic dermatitis drug Eucrisa once bore a $2 billion peak sales estimate but never came near that number.

In a Tuesday note to clients, SVB Leerink analyst Andrew Berens said he still views Incyte as a “show-me” story with Opzelura as the main driver. But the newly disclosed manufacturing issues and high gross-to-net pricing “compound our concerns about the limited sales force and restrictive label,” he said.

Incyte expects Opzelura's gross-to-net ratio to stand at around 25% to 50% over the long term, Flannelly said during the call. But that number is higher now because of unfavorable formulary placements and the patient-assistance program.

Editor's note: An earlier version of the story showed Incyte is recalling all Opzelura sample tubes. The company is actually only getting back the problematic sample and commercial tubes.