Facebook and Incyte fall despite Nasdaq’s good start on Wednesday

The stock market got off to a good start on Wednesday, and the Nasdaq composite (NASDAQINDEX: ^ IXIC) benefited from a more positive sentiment on Wall Street. As of 10 a.m. EDT, the Nasdaq was up more than half a percent, continuing to regain some of the ground lost in Monday’s sell-off.

However, not all Nasdaq actions contributed to the market’s recovery. The two Facebook (NASDAQ: FB) and Incyte (NASDAQ: INCY) fell on Wednesday morning, reacting to news that, for one of the companies, seemed more positive than problematic. Below, we’ll take a look at both stocks to see why they are missing the Nasdaq rally, and whether investors should expect more setbacks to come.

Image source: Getty Images.

No longer liking Facebook

Facebook shares fell more than 3% on Wednesday morning. The decline of the social media giant likely stems from news it has been named nominal defendant in shareholder derivative lawsuits against CEO Mark Zuckerberg, COO Sheryl Sandberg and various Facebook directors.

The lawsuits, filed last year by various public pension systems and pension funds but made public on Tuesday night, allege that Facebook’s settlements with the Federal Trade Commission that ultimately led the company to pay record-breaking fines to regulators did not take into account conflicts of interest. between Facebook and Zuckerberg. In essence, the plaintiffs appear to believe that the FTC agreed to accept a higher fine paid by the company in exchange for not personally pursuing the individual causes of action against Zuckerberg.

Shareholder-derived lawsuits allow investors to bring actions that a company has against other parties but chooses not to pursue. Here, the plaintiffs discuss the influence Zuckerberg has even over those who could potentially serve on independent committees. In doing so, they attempt to explain the rationale for allowing a derivative costume to move forward.

The backlash from the stock likely reflects investor concerns over Facebook’s inability to address privacy, antitrust and social media health impact issues. Whether the lawsuits ultimately succeed is less important than how Facebook aims to stay focused on competing effectively against a rising tide of rival companies.

Good news, bad results?

Elsewhere on the Nasdaq, Incyte shares fell more than 6%. The drop came despite what appeared to be good regulatory news for the biotech company.

Late Tuesday, Incyte announced that the U.S. Food and Drug Administration had approved Opzelura, its topical treatment for mild to moderate atopic dermatitis, in patients 12 years of age and older. The disease is often difficult for healthcare professionals to manage, as existing treatments are not effective for a wide range of patients.

The FDA approval appears to be an unqualified positive result for Incyte, but there was a catch. The approval was contingent on Opzelura having a so-called “boxed warning” – in this case, including warnings about JAK inhibitors and the risks of heart problems and serious infections. This should make healthcare professionals a bit more reluctant to prescribe Opzelura even with FDA approval, and in turn, this would hurt the potential revenue the treatment will generate.

With today’s drop, Incyte stock has fallen to its lowest level in over a year. That’s not a good reason to cheer, but it reflects how much investors wanted Opzelura to be approved without warning.