Technology

Why Is Incyte (INCY) Up 12.5% Since Last Earnings Report?

It has been about a month since the last earnings report for Incyte (INCY). Shares have added about 12.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Incyte due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Incyte Beats on Q3 Earnings & Sales, Ups Jakafi View

Incyte reported earnings of 82 cents per share, which easily surpassed the Zacks Consensus Estimate of 65 cents and 41 cents in the year-ago quarter.
Including milestones and contracts, revenues came in at $551.6 million, which grew 22.6% year over year and beat the Zacks Consensus Estimate of $538.95 million.

Quarter in Detail

Total product-related revenues came in at $453.9 million, up 23.4% from the year-ago quarter. Jakafi revenues came in at $433.4 million, increasing 25% from the year-ago quarter and beating the Zacks Consensus Estimate of $417 million. Robust demand for Jakafi in all three approved indications drove revenues.

Net product revenues of Iclusig amounted to $20.6 million, up from $20.1 million in the year-ago quarter.

Jakavi (name outside the United States) royalty revenues from Novartis AG for commercialization in ex-U.S. markets grew 15% to $58.4 million. Olumiant’s product royalty revenues from Eli Lilly came in at $21.6 million.

R&D expenses were $281.3 million, down from $292.5 million in the year-ago quarter. SG&A expenses amounted to $102.6 million, up from $96.5 million in the prior-year quarter.

2019 Outlook Updated

Based on a strong performance of Jakafi in the first nine months of 2019, the company raised its revenue guidance for the same.

The company expects Jakafi revenues of $1,650-$1,680 million for 2019 (previous guidance: $1,610-$1,650 million). Iclusig revenues are still expected to be $90-$100 million. R&D expenses are expected to be $1,020-$1,070 million. SG&A expenses are anticipated to be $420-$470 million.

Pipeline Update

Pipeline progress in the third quarter was impressive. REACH2, the phase III study evaluating Jakafi in patients with steroid-refractory acute graft-versus-host disease (GVHD), met its primary endpoint of superior overall response rate at day 28 with Jakafi treatment compared to best available therapy. The REACH2 and REACH3 trials, evaluating steroid-refractory acute and steroid-refractory chronic GVHD, respectively, are being conducted in collaboration with Novartis.

An Independent Data Monitoring Committee (IDMC) recommended that the phase III REACH3 trial should continue without modification following an interim efficacy and safety analysis.

Results from the global phase III GRAVITAS-301 trial on itacitinib for the treatment of patients with newly-diagnosed acute GVHD are expected before the end of 2019.

Incyte submitted the NDA for pemigatinib as a second-line treatment for cholangiocarcinoma patients with FGFR2 fusions or rearrangements to the FDA under Breakthrough Therapy designation.

The phase III TRuE-V development program of ruxolitinib cream in patients with vitiligo was initiated in September, with initial results expected in 2021. The phase III TRuE-AD development program of ruxolitinib cream in patients with atopic dermatitis is ongoing, with initial results expected in the first half of 2020.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 11.34% due to these changes.

VGM Scores

At this time, Incyte has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Incyte has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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