Incyte Corporation's
(
INCY
) second-quarter 2012 earnings of 3 cents per share compared
favorably with the year-ago loss of 41 cents per share. Results
were boosted by higher revenues. The Zacks Consensus Estimate
hinted at breakeven earnings.
Total revenues in the reported quarter jumped to $86.5 million
from $16.8 million in the year-ago quarter. Revenues were boosted
by the presence of Jakafi sales and milestone payment received from
Novartis
(
NVS
). Jakafi, Incyte's sole marketed product, was launched in the US
in November 2011, for treating patients suffering from intermediate
or high-risk myelofibrosis. Revenues were above the Zacks Consensus
Estimate of $85 million.
Total revenues comprised net product revenues, contract revenues
and license and royalty revenues.
Incyte recorded net product revenues of approximately $29.7
million from Jakafi sales in the drug's second full quarter in the
market. Jakafi sales were up more than 53.9% sequentially.
Contract revenues climbed to $56.7 million from $16.7 million.
We note that contractual revenues include a $40 million milestone
payment from Novartis. This milestone payment was triggered by a
positive opinion issued by the Committee for Medicinal Products for
Human Use (CHMP) regarding the EU approval of Jakafi.
License and royalty revenues were $78 million, up 5.4% from the
year-ago quarter.
Both research and development (R&D) expenses (up 12.0% to
$51.6 million) and selling, general and administrative (SG&A)
expenses (up 66.3% to $19.7 million) were on the upswing during the
quarter. The company's efforts to develop its pipeline coupled with
higher stock-based compensation expenses pushed up the R&D
expenses in the second quarter of 2012. Higher costs related to the
marketing of Jakafi was primarily responsible for pushing the
SG&A costs up.
2012 Outlook
Apart from disclosing financial results, Incyte also provided
guidance for 2012. The company expects net sales of Jakafi in the
range of $120 - $135 million.
Our Recommendation
We believe that investor focus will be on the market performance
of Jakafi going forward. Currently, we have a Neutral stance on
Incyte in the long run. The stock carries a Zacks #2 Rank (Buy
rating) in the short run.
INCYTE CORP (INCY): Free Stock Analysis Report
NOVARTIS AG-ADR (NVS): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research