BMY Bristol Myers Squibb Co

By Peter Loftus 

WILMINGTON, Del. -- In the race to develop the next wave of drugs that use the immune system to fight cancer, scientists scurry up and down escalators in an old department store here.

Their biotechnology company, Incyte Corp., set up shop in a former John Wanamaker store on the outskirts of Wilmington in 2014. Escalators that once ushered shoppers to home furnishings now take researchers to labs that are among the most closely watched in drug development, as Incyte attempts to develop a new generation of cancer immunotherapies.

Existing immunotherapies including Merck & Co.'s Keytruda and Bristol-Myers Squibb Co.'s Opdivo have transformed cancer treatment, boosting average survival rates in lung and skin cancers.

But the current immunotherapies don't benefit all patients -- a limitation spurring the industry to hunt for new ways to push immune cells to destroy tumors. Companies big and small are racing to develop these new medicines, which analysts say could help boost global cancer immunotherapy sales to more than $40 billion a year by the middle of the next decade, from more than $6 billion in 2016. The field is so hot, activist investors including Carl Icahn recently bought shares in Bristol-Myers out of interest in the company's immunotherapies and other drugs.

Researchers are now studying more than 1,100 immunotherapy drugs, up from about 500 two years ago, according to the Cancer Research Institute, a nonprofit that funds immunotherapy research.

Analysts say Incyte is one of the closest to market with the new immunotherapies. Credit Suisse estimates Incyte's experimental drug, epacadostat, could generate global sales of at least $3.4 billion in 2025 if regulators approve it for sale, an expectation that has helped more than double Incyte's market value to over $25 billion in the past year. Incyte, which already sells a separate drug called Jakafi for blood cancers, reported global revenue of $1.1 billion last year.

"We are at the beginning of an entire field where we can see applications in every type of cancer," Herve Hoppenot, a former head of Novartis AG's oncology unit who became Incyte's CEO in 2014, said in an interview.

Analysts caution that the promising data in early studies of epacadostat may not translate into positive results in the larger trials now under way. And Incyte faces intense competition from other companies developing new immunotherapies.

Incyte scientists discovered epacadostat based partly on fetal-development research at the Medical College of Georgia in the 1990s. That research showed that the immune systems of pregnant women don't reject fetuses because the placenta harbors an enzyme called IDO1. Subsequent research at Université Catholique de Louvain in Belgium found that tumor cells exploit the same enzyme to prevent the immune system from destroying them.

Epacadostat, taken as a pill, is designed to block IDO1 on and around tumor cells to allow the immune system to shrink tumors.

Incyte's research on the IDO1 program began in 2005, at a time when few people thought immunotherapy could effectively fight cancer. Peggy Scherle, Incyte's vice president of preclinical pharmacology, recalls showing a slide presentation that year to the company's top executives listing the pros and cons of targeting IDO1. One con she included in her slides: "Immunotherapy has never been shown to work."

The company screened tens of thousands of chemical compounds, finding one that seemed to block the effects of IDO1, Ms. Scherle said.

Early studies showed that when used as a stand-alone drug it had a limited effect. But the drug showed promise in subsequent studies when used in combination with Merck's Keytruda, which works on the immune system in a different way. A closely watched study of that combination in melanoma patients is due to be completed in 2018.

Incyte also is testing epacadostat in combination with other immunotherapy drugs developed by Bristol-Myers, AstraZeneca PLC and Roche Holding AG. Incyte got a boost in January when it agreed with Merck to test the epacadostat-Keytruda combination in several additional tumor types beyond melanoma, including lung cancer.

Incyte started as a California biotech focused on DNA sequencing in the 1990s but shifted to drug discovery after hiring a new CEO, Paul Friedman, who previously led the pharmaceutical unit of chemical giant DuPont Co. He moved Incyte to Delaware and hired a batch of former DuPont scientists after DuPont sold its pharmaceutical unit; Dr. Friedman retired as CEO in 2014.

Incyte initially rented lab space from DuPont, but as it grew executives wanted a home of their own. The old Wanamaker store, known to area shoppers for having a stuffed teddy bear on a swing, had closed in the early 1990s and was later converted to office space.

Incyte Chief Scientific Officer Reid Huber says the old store's high ceilings turned out to be ideal for labs because there was plenty of room to run pipes above drop ceilings. Incyte has received economic incentives from the Delaware state government to remain in state, and is currently constructing a second building on the site.

Write to Peter Loftus at peter.loftus@wsj.com

(END) Dow Jones Newswires

March 06, 2017 09:32 ET (14:32 GMT)

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