Is Incyte at a Strategic Buy Point Before the 2028 Patent Cliff?

Incyte Corporation (INCY) stands at a pivotal juncture as it navigates the looming patent expiration of its flagship drug, Jakafi, in 2028. While the biopharma giant faces a potential $3 billion annual revenue drop from this event, its Q3 2025 results and strategic pipeline advancements suggest a compelling case for investors to consider a long-term buy. By analyzing Incyte's financial performance, R&D reinvestment, and proactive mitigation strategies, this article argues that the company is positioned to weather the patent cliff while unlocking value through high-margin innovation.

Q3 2025: Strong Financials and Margin Expansion

Incyte's third-quarter 2025 results underscore its resilience and operational discipline. Total revenue reached $1.37 billion, a 20% year-over-year increase, driven by robust performance across its product portfolio according to the earnings call. Jakafi, the company's JAK inhibitor for myeloproliferative neoplasms, generated $791 million in net product revenue-a 7% rise-while Opzelura sales surged 35% to $188 million. Niktimvo added $46 million in net revenue, reflecting 27% sequential growth.

Equally impressive is Incyte's margin expansion. Operating margin for the quarter hit 32.5%, up sharply from 12.8% in Q3 2024. This improvement reflects disciplined cost management and pricing power in its core markets. With Jakafi alone contributing over 70% of total revenue, Incyte's ability to maintain high margins despite patent risks highlights its structural advantages in niche, high-barrier therapeutic areas.

Pipeline Progress: Diversification and Innovation

Incyte's pipeline is a critical catalyst for long-term value creation. The company's mCALR antibody program (989), targeting essential thrombocythemia and myelofibrosis, is advancing toward pivotal trials in 2026. This asset, if successful, could address unmet needs in myeloproliferative disorders and reduce reliance on Jakafi. Meanwhile, Niktimvo's growth trajectory-bolstered by its approval in chronic graft-versus-host disease-positions it as a mid-tier revenue driver.

Another standout is the TGF-beta by PD-1 bispecific antibody (INCA 33890), which demonstrated a 15% response rate in microsatellite stable (MSS) colorectal cancer, a notoriously difficult-to-treat indication. With phase 3 trials slated for 2026, this program could carve out a niche in oncology's evolving immuno-oncology landscape. Incyte's willingness to terminate underperforming assets, such as the povorcitinib program in chronic spontaneous urticaria, further underscores its focus on capital efficiency.

R&D Reinvestment: Building a Post-Jakafi Future

Incyte's $507 million in Q3 R&D expenses-a 7% year-over-year increase-reflects its commitment to reinventing its revenue base. The company is prioritizing late-stage programs with high commercial potential, including extended-release formulations of ruxolitinib (Jakafi's active ingredient) and novel combinations with ALK2 and BET inhibitors. While the FDA rejected the extended-release application in 2025, Incyte's collaboration with regulators to address concerns signals a path to differentiation in the myelofibrosis market.

Strategic leadership under CEO Bill Meury has also emphasized diversification through partnerships and acquisitions. Incyte's global collaboration with Novartis for Jakavi (Jakafi's international counterpart) and its pursuit of expanded indications for Opzelura-such as pediatric atopic dermatitis-further buffer against patent risks. These moves align with a broader industry trend toward multi-therapy approaches, where Incyte's expertise in JAK inhibition could serve as a foundation for combination regimens.

Patent Cliff Mitigation: A Realistic Outlook

The 2028 patent cliff remains a legitimate concern, but Incyte's proactive strategy mitigates its impact. By 2029, the company aims to generate over $800 million from late-stage assets like Monjuvi (for follicular lymphoma) and Zynyz (for squamous cell anal carcinoma). Opzelura's $164.5 million Q2 2025 sales and its potential in hidradenitis suppurativa suggest a scalable dermatology franchise.

Moreover, Incyte's financial strength-$1.6 billion in R&D investment in 2025-provides flexibility to navigate competitive pressures. While rivals like GSK (Ojjaara) and BMS (Inrebic) are developing alternative JAK inhibitors, Jakafi retains a clinical edge in myelofibrosis, with superior overall survival data. Incyte's deep relationships with key opinion leaders and its focus on real-world evidence further solidify its market position.

Conclusion: A Strategic Buy for Long-Term Growth

Incyte's Q3 2025 results and pipeline progress demonstrate that the company is not merely preparing for the 2028 patent cliff-it is actively transforming its business model. With a 32.5% operating margin, a $1.37 billion revenue run rate, and a diversified pipeline of high-margin assets, Incyte offers a rare combination of near-term stability and long-term innovation. While the patent cliff poses a tail risk, the company's R&D reinvestment, strategic partnerships, and leadership in niche markets create a compelling value inflection point.

For investors seeking exposure to a biopharma innovator with a clear path to post-patent growth, Incyte represents a strategic buy. The current valuation, discounted by patent uncertainty, offers an attractive entry point ahead of pivotal data reads in 2026 and the maturation of its next-generation pipeline.