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Incyte Corporation’s ( INCY - Analyst Report ) third quarter 2011 loss of $0.42 per share was wider than the year-ago loss by $0.16. The wider year-over-year loss was attributable to higher operating expenses and lower revenues. The loss incurred by the company in the reported quarter was however narrower than the Zacks Consensus loss estimate by $0.03.
Total revenues in the reported quarter were almost flat at $16.8 million in the third quarter of 2011. Revenues marginally missed the Zacks Consensus Estimate of $17 million. Total revenues at Incyte are composed of contract revenues, and license and royalty revenues. We note that Incyte boasts of collaborations with big companies such as Novartis ( NVS - Snapshot Report ) , Eli Lilly and Company ( LLY - Analyst Report ) and Pfizer ( PFE - Analyst Report ) .
Total cost and expenses in the reported quarter climbed approximately 51% to $58.9 million. Both research and development (R&D) expenses (up 45.8%) and selling general and administrative (SG&A) expenses (up 68.2%) were on the upswing during the quarter. Incyte’s efforts to develop its pipeline contributed to the rise in R&D expenses.
The jump in SG&A expenses was attributable to the expenses incurred by the company for the potential commercialization of INCB18424. The candidate is being developed to treat patients suffering from myelofibrosis (MF), a rare bone marrow disorder. The candidate is under priority review in the US with a decision expected from the Food and Drug Administration in December 2011.
Incyte maintained its 2011 outlook for R&D and SG&A expenses. R&D expenses for 2011 are expected in the range of $175 million - $185 million. SG&A expenses are expected in the range of $50 million-$55 million in 2011. Incyte also projects 2011 cash usage in the range of $185 million-$200 million.
Our Take & Recommendation
We believe that the earnings report is a non-event at Incyte. Investor focus will be on the approval process of MF candidate, INCB18424. Currently, we have a Neutral stance on Incyte in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run.
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