Incyte (INCY) Misses Q1 Earnings Estimates, Beats on Revenues

Incyte Corporation INCY reported lower-than-expected bottom-line numbers for the first quarter of 2020, while sales beat expectations.

Shares of the company have gained 15.7% so far this year compared with the industry’s 1.7% increase.

The company reported adjusted loss of $2.86 per share in contrast to the Zacks Consensus Estimate of earnings of 8 cents. The company had reported adjusted earnings of 62 cents in the year-ago quarter.

Including milestones and contracts, revenues came in at $568.5 million, which grew 14.2% year over year and beat the Zacks Consensus Estimate of $546.49 million.

Quarter in Detail

Total product-related revenues came in at $486.7 million, up 22.8% from the year-ago quarter. Jakafi revenues came in at $459.5 million, increasing 22% from the year-ago quarter and beating the Zacks Consensus Estimate of $443 million. Robust demand for Jakafi in all three approved indications drove revenues.

Net product revenues of Iclusig amounted to $27.2 million, up from $20.6 million in the year-ago quarter.

Jakavi (name outside the United States) royalty revenues from Novartis AG NVS for commercialization in ex-U.S. markets grew 24% to $56.3 million. Olumiant’s product royalty revenues from Eli Lilly LLY came in at $25.4 million, up 59%.

R&D expenses were $1.06 billion, significantly up from $304 million in the year-ago quarter. The significant increase in R&D expenses was due to consideration of an upfront payment of $805 million, related to a collaborative agreement with Germany-based biopharmaceutical company, MorphoSys. SG&A expenses amounted to $97.6 million, down from $111 million in the prior-year quarter.

2020 Guidance

Incyte stated on its first-quarter earnings call that although it is currently not possible to predict the overall long-term impact of the COVID-19 pandemic, there has been no impact on the commercial side of the business. The company maintained its guidance for 2020 provided on the fourth-quarter earnings call.

The company expects Jakafi revenues in the range of $1,880 -$1,950 million for 2020. Iclusig revenues are projected around $100-$105 million.

Pipeline Update

In April, the FDA approved Incyte’s selective FGFR inhibitor, Pemazyre (pemigatinib) for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test. This is the first of the three pipeline candidates lined up to receive approval in 2020. The drug is under review in Europe. Other two candidates lined up for potential approval in 2020 are — capmatinib for lung cancer and tafasitamab for large B-cell lymphoma.

The company also plans to file a new drug application seeking approval for ruxolitinib cream, a new formulation of its key drug Jakafi, as a treatment for mild-to-moderate atopic dermatitis by the end of 2020. It is also evaluating ruxolitinib cream in two phase III studies in patients with vitiligo, with top-line data expected in 2021.

The company is evaluating Jakafi in combination with standard-of-care in patients with COVID-19 associated cytokine storm and in COVID-19 patients on mechanical ventilation with acute respiratory distress syndrome in two separate phase III studies.

Please note that Incyte entered into a global collaboration with MorphoSys MOR for the development and commercialization of tafasitamab, an anti-CD19 monoclonal antibody. The companies received the pending clearance by antitrust authorities in March.

Our Take

Incyte’s performance in the first quarter was impressive as demand for Jakafi in all three approved indications (polycythemiavera, myelofibrosis and the recent label expansion in acute GVHD) continues to grow. The company’s efforts to diversify its revenue base are encouraging as well and the label expansion of Jakafi in additional indications will further boost sales. Moreover, approval of new drugs in 2020 will also bring additional sales.

However, pipeline setbacks remain a concern.

Incyte Corporation Price, Consensus and EPS Surprise

 

Incyte Corporation Price, Consensus and EPS Surprise

Incyte Corporation price-consensus-eps-surprise-chart | Incyte Corporation Quote

Zacks Rank

Incyte currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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