Incyte Corporation (INCY – Analyst Report) is a $12 billion pharmaceutical company that is expected to finally turn a profit next year on the success of its drug Jakafi, the only FDA-approved treatment for myelofibrosis (MF).

Incyte was formerly called Incyte Genomics in the 1990s when it was a pioneer in that groundbreaking research and a key provider of database information on the human genome to the world's top pharmaceutical companies.

Jakafi (ruxolitinib) has been used to treat more than 9,800 patients with MF worldwide and will represent over $350 million of the company's $500 million in revenues for 2014.

As physician uptake and approval in other countries accelerates, analysts have been raising estimates for INCY with FY14 EPS climbing from a loss of $0.36 to a loss of $0.18 in the last 90 days while 2015's EPS projections swing from a profit of $0.23 to a profit of $0.32.

How Jakafi Works

Myelofibrosis is a complex condition, and researchers are still trying to discover its exact cause. Researchers now think one cause is that JAK proteins, which communicate within blood cells, send too many signals. When JAKs send too many signals, they cause the body to make the wrong number of blood cells. This chain of events is called overactive JAK signaling.

JAK signaling may become overactive in many ways. One way is by a JAK mutation. A mutation is a small change in the DNA that causes proteins to act differently than normally intended. All people with myelofibrosis are believed to have overactive JAK signaling even if they do not have a JAK mutation.

Jakafi works by targeting JAKs, which control the production of blood cells. In doing so, Jakafi reduces overactive JAK signaling. In early December, the Jakafi label was expanded for polycythemia vera (PV), a disorder of the bone marrow which causes too many red blood cells to be produced. This approval is expected to open up meaningful new indications for revenue growth.