) reported a loss of 15 cents per share in the fourth quarter of
2013 wider than the Zacks Consensus Estimate of a loss of 9
cents. Incyte recorded earnings of 13 cents per share in the
year-ago quarter. The wider-than-expected loss during the quarter
was due to lower revenues.
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Total revenues in the quarter declined 14.7% to $97.1 million.
Revenues during the reported quarter were affected by lower
contract revenues. Revenues were also short of the Zacks
Consensus Estimate of $100 million.
Quarter in Detail
Total revenue comprised net product revenues, product royalty
revenues, contract revenues and others. Incyte recorded net
product revenue of approximately $72.9 million from Jakafi sales
in the fourth quarter of 2013, up 68.3% year over year. Jakafi,
Incyte's sole marketed product, was launched in the U.S. in Nov
2011, for treating patients suffering from intermediate or
high-risk myelofibrosis (MF).
Incyte has a collaborative agreement with
) to market Jakafi outside the U.S. The drug has also been
approved by the European Commission to treat adults suffering
from primary MF, post-polycythemia vera MF or post-essential
We note that Jakafi is being studied for additional indications
as well. Incyte, in collaboration with Novartis, is currently
evaluating Jakafi in two phase III clinical trials (RESPONSE and
RELIEF), for the treatment of patients suffering from
polycythemia vera (PV). The company intends to submit a
supplemental new drug application for Jakafi for the PV
indication in the first half of 2014 based on the positive
results from the RESPONSE trial. Results from the RELIEF trial
are expected in mid-2014. Incyte expects Jakafi's PV indication,
once approved, to contribute to the company's top line 2015
Incyte received product royalty revenues of $8.4 million from
Novartis during the reported quarter, compared with $3.7 million
in the year-ago quarter. Contract revenues declined to $15.8
million in the fourth quarter of 2013 from $66.7 million in the
fourth quarter of 2012. The massive decline in contract revenues
during the quarter was primarily due to milestone payments
received in the 2012 quarter. Other revenues accounted for the
Both research and development (R&D) expenses (up 25.5% to
$75.0 million) and selling, general and administrative (SG&A)
expenses (up 60.3% to $38.0 million) climbed during the quarter.
While Incyte's efforts to develop its pipeline were primarily
responsible for the rise in R&D expenses, higher
commercialization expenses related to Jakafi drove the company's
Incyte reported a loss of 36 cents per share in 2013 narrower
than the Zacks Consensus Estimate of a loss of 41 cents but wider
than the year-ago loss of 34 cents per share.
Total revenues in the year increased 19.5% to $354.9 million.
Revenues during the year were boosted by higher product revenues.
Revenues were however short of the Zacks Consensus Estimate of
Incyte provided its financial guidance for 2014. The company
expects 2014 Jakafi net product sales in the range of $315-$335
million. The net sales guidance excludes any product royalty
revenues received from Novartis on sales of Jakavi (EU trade name
Incyte is also expecting a $60 million milestone payment from
Novartis regarding the European pricing approval of Jakavi and
around $13 million upfront payments under Incyte's collaboration
Eli Lilly and Company
Meanwhile, R&D expenses are expected in the range of
$350−$370 million and SG&A expenses in the $145−$155 million
We are encouraged by the strong Jakafi sales during the fourth
quarter of 2013. However, the company's overall performance was
below expectations. Incyte has a robust pipeline. Successful
development and commercialization of these candidates should
drive growth. We expect investor focus to remain on Jakafi's
performance in the coming quarters.
Incyte, a biopharmaceutical company, currently carries a Zacks
Rank #3 (Hold). Some better-ranked stocks in the bio pharma
Alexion Pharmaceuticals, Inc.
). Alexion holds a Zacks Rank #1 (Strong Buy).