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Why Is Incyte (INCY) Down 4.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Incyte (INCY - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Incyte due for a breakout? 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 drivers.

Incyte Q2 Earnings Beat Estimates, Revenues Up Y/Y

Incyte reported strong results for the second quarter of 2019, wherein both earnings and sales comprehensively beat expectations.

The company reported earnings of 75 cents per share, which easily surpassed the Zacks Consensus Estimate of 49 cents and 63 cents in the year-ago quarter.

Including milestones and contracts, revenues came in at $529.9 million, which increased 2% year over year and beat the Zacks Consensus Estimate of $501 million.

Quarter in Detail

Total product-related revenues came in at $433.9 million, up 18.7% from the year-ago quarter. Jakafi revenues came in at $409.5 million, increasing 18% from the year-ago quarter and beating the Zacks Consensus Estimate of $397 million. Net product revenues of Iclusig amounted to $24.4 million, up from $19.9 million in the year-ago quarter. 

Product royalty revenues from Novartis for the commercialization of Jakafi in ex-U.S. markets grew 21% to $56.9 million. Olumiant’s product royalty revenues came in at $19.1 million.

R&D expenses were $262 million, down from $273 million in the year-ago quarter. SG&A expenses amounted to $93 million, down from $96 million in the prior-year quarter.

2019 Outlook Updated

The company expects Jakafi revenues of $1,610-$1,650 million in 2019 (previous guidance: $1,580-$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 second quarter was impressive. In May 2019, the FDA approved a label expansion of Jakafi for the treatment of steroid-refractory acute graft-versus-host disease (GVHD) in adult and pediatric patients aged 12 years or older. This is the third indication, for which the drug has been approved in the United States.

The REACH2 and REACH3 trials, evaluating steroid-refractory acute and steroid-refractory chronic GVHD, respectively, are ongoing in collaboration with Novartis. Results are expected before the end of this year.

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 as well.

Incyte expects to submit the NDA for pemigatinib as a second-line treatment for patients with FGFR2 translocated cholangiocarcinoma in the second half of 2019. The company initiated a phase III trial for the first-line treatment of patients with cholangiocarcinoma in June.

Enrollment in the continuous dosing cohort of the phase II trial of pemigatinib in patients with bladder cancer is expected to complete by the end of 2019. A phase II study of pemigatinib in patients with driver-activations of FGFR is expected to open in the coming months.

The primary endpoint was met in the phase II trial of ruxolitinib cream in patients with vitiligo. The phase III development of ruxolitinib cream in patients with vitiligo is expected to begin by the end of the year.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Incyte has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. Notably, Incyte has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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