Incyte Corp. has joined the prestigious Standard & Poor's 500, an index of the 500 most widely held stocks on the New York Stock Exchange and Nasdaq.
Incyte's addition to the S&P 500 is significant both as a status symbol and as an opportunity for the Alapocas-based biopharmaceutical company to attract more investors.
"The [S&P 500] index is an important threshold for us because it has put us into a bigger arena of life sciences companies," said Dave Gryska, Incyte's chief financial officer.
Since joining the S&P 500 Tuesday morning, Incyte's stock jumped to $132 per share, the highest price in company history. That's up nearly 8 percent from the $122.36 price the stock commanded last week and up 80 percent from its $73.50 per-share price on the same date last year. Typically, a company's stock grows about 5 percent after it is added to the S&P 500.
DuPont is the only other Delaware-based company on the S&P 500. Other stocks tracked by the S&P 500 include Microsoft, Exxon Mobil, Johnson & Johnson, General Electric, Wells Fargo, Berkshire Hathaway, JPMorgan Chase, Pfizer and Procter & Gamble.
"To have two of these companies physically headquartered in Delaware is good for the state," said Jim Butkiewicz, chair of the University of Delaware's economics department. "It might make other businesses look a little more closely at being headquartered here."
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By indexing the500 most-owned stocks on the two largest exchanges in the United States, the S&P 500 serves as a barometer of the economy by measuring the risk and return of those investments. Index funds, a type of mutual fund with a portfolio constructed to track the market, are required to follow S&P 500 stocks.
"We will get more interest from investors who want to be involved in this company," Gryska said.
A company cannot be added to the S&P 500 unless another one leaves. Incyte replaced Spectra Energy, a Houston oil and gaspipeline operator, that left the S&P 500 because it is being acquired by Enbridge, a Canadian-based natural gas distributor.
To be included in the S&P 500, a company must be U.S.-based with a market cap of at least $5.4 billion, and at least 50 percent of its stock must be available to the public. The stock price must be at least $1 per share and have four consecutive quarters of positive earnings.
Incyte's market cap, the price of its stock multiplied by the number of shares issued, is nearly $26 billion.
"This is something we ought to be really proud of in Delaware," said Rich Heffron, president of the Delaware State Chamber of Commerce. "It started as a smaller company and now it has really grown."
Gryska said the S&P 500 listing will help Incyte attract talent in the highly competitive life sciences market.
"Now that we are an S&P 500 companywhen someone wants to work here, that will differentiate us from our competitors," he said. "It's a validation that we are a different company"
Incyte joined the index roughly one week after it reported its 2016 annual revenue surpassed $1 billion for the first time in the company's 26-year history. The company's annual revenue of $1.1 billion represents a 47 percent increase from the $753 million it generated in 2015.
The company's growth was largely fueled by the success of Jakafi, a medicine approved in the United States and Europe to treat two rare blood cancers. Jakafi sales grew to nearly $853 million last year, up 42 percent from the $601 million in revenue it produced in 2015.
Incyte said it expects Jakafi to generate $1 billion in sales this year.
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Jakafi was not the company's only success in 2016. In May, the company purchased the rights to the leukemia medicine Iclusig. The product was not sold last year, but Incyte said Iclusig sales could reach $65 million this year.
Incyte has several medicines in development, including three pivotal trials scheduled for at least six different indications and four Phase II trials. If the Phase II trials are successful, they could become registration-enabling studies, meaning human tests would be involved.
Baricitinib, an oral arthritis drug, was approved in Europe as Olumiant. The approval triggered a $65 million milestone payment to Incyte from Eli Lilly & Co., which is marketing the drug overseas.
Heffron said Incyte joining the S&P 500 is a reflection of investors' confidence in Incyte's future more than its past success.
"Investors always buy based on what you have coming down the pike," he said. "This shows people have respect for their research capabilities."
Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ orjmordock@delawareonline.com.
