UPDATE 2-Incyte gets FDA nod on trial design, shares rise

* Reaches SPA agreement with FDA on myelofibrosis drug

* Sees filing for approval in late 2010 or early 2011

* Shares up 17 pct

By Esha Dey

BANGALORE, July 21 (Reuters) - Incyte Corp (INCY.O) said it agreed with the U.S. health regulators, through a special protocol assessment (SPA), on the design of a late-stage trial of its experimental treatment for myelofibrosis, a bone marrow disorder.

Analysts said the agreement was a positive for the company as the drug was very likely to hit the trial goals that have been agreed upon by the company and the regulators.

The trial, named COMFORT-I, will compare the efficacy and safety of the drug, INCB18424, with a dummy drug in about 240 patients with different kinds of myelofibrosis.

Myelofibrosis is a disorder in which the bone marrow develops scar tissue and causes swelling of the liver and spleen.

The main goal of the trial, which is expected to begin in August, is the proportion of patients achieving a 35 percent or greater reduction in spleen volume as compared to patients receiving a dummy drug.

"A single primary endpoint evaluating comparative spleen reduction is deemed sufficient under the SPA is a decided positive, as this is the one measure which we know the drug substantially impacts and for which there is considerable data," J.P. Morgan analyst Cory Kasimov said in a note.

Kasimov reiterated his "overweight" rating on the stock and said the company remained a top small cap pick.

The company said that it expects to file for regulatory approval of the drug in myelofibrosis in late 2010 or early 2011.

"The FDA's concurrence on a single primary endpoint should shorten the overall duration of the COMFORT I study driven by easier statistical powering and a shorter follow-up period," Cowen and Co analyst Eric Schmidt said.

However, Schmidt kept his "neutral" rating on the stock, citing the company's substantial debt position and a requirement to access funding.

As of March 31, the company's total consolidated debt was $421.8 million, with cash and cash equivalents of $139.1 million.

Robert W. Baird & Co analyst Thomas Russo said the SPA should help Incyte secure a partner for the drug, which could be key to resolving the financial overhang.

Russo also said that the drug has the potential to drive a breakthrough to profitability by 2012, while Morgan Stanley analyst Sapna Srivastava said it could be a $500 million drug.

The special protocol assessment (SPA) provides the company with a written agreement that the design and analysis of the trial are adequate to support a marketing application submission.

Shares of the company were up 11 percent at $4.44 in midday trade on Nasdaq. They had earlier touched a high of $4.66. (Editing by Aradhana Aravindan)