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How bullish are health care investors about the future success of Incyte’s (INCY) IDO inhibitor epacadostat? Depending on who you ask, the cancer immunotherapy accounts for $10 billion to $12 billion of Incyte’s current $27 billion market value. That’s a huge bet on a single drug not yet approved.

If epacadostat were a stand-alone company, it would be worth the same as Kite Pharma (KITE), which is being acquired by Gilead Sciences (GILD) for just under $12 billion. Investors value the drug more than Jazz Pharmaceuticals (JAZZ), Seattle Genetics (SGEN), and Exelixis (EXEL), all of which have approved, successfully marketed products.


This extreme market euphoria must be supported by reams of super-convincing clinical data, right? Um … no. Epacadostat isn’t particularly good at killing cancer on its own. The magic happens when epacadostat is combined with currently approved checkpoint inhibitors — or at least, that’s the story Incyte promotes based on a handful of single-arm phase 2 clinical trials.

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