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Incyte (INCY) Down 2.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Incyte (INCY - Free Report) . Shares have lost about 2.2% 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 catalysts.

Incyte Beats on Q2 Earnings and Sales on Strong Jakafi

Incyte reported an adjusted earnings of $1.24 per share, easily beating the Zacks Consensus Estimate of earnings of 77 cents. The company had reported adjusted earnings of 75 cents in the year-ago quarter.

Including milestones and contracts, revenues came in at $688.04 million, which grew 30% year over year and beat the Zacks Consensus Estimate of $599.45 million.

Quarter in Detail

Total product-related revenues came in at $593 million, up 16% from the year-ago quarter. Jakafi revenues came in at $473.7 million, increasing 16% from the year-ago quarter and beating the Zacks Consensus Estimate of $471 million. Robust demand for Jakafi in all three approved indications drove revenues.

Net product revenues of Iclusig amounted to $22.8 million, down from $24.4 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 16% to $66.2 million. Olumiant’s product royalty revenues from Eli Lilly came in at $25.8 million, up 35%.

R&D expenses were $254.1 million, down from $261.7 million in the year-ago quarter. SG&A expenses amounted to $104.4 million, up from $93.1 million in the prior-year quarter.

2020 Guidance Reaffirmed

The company maintained its previously-provided guidance for 2020.  The company expects Jakafi revenues of $1,880-$1,950 million for 2020. Iclusig revenues are projected around $100-$105 million.

Pipeline Update

In July, the FDA granted approval to Monjuvi (tafasitamab-cxix), an Fc-engineered anti-CD19 antibody, in combination with Revlimid for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) and who are not eligible for autologous stem cell transplant (ASCT). Please note that Incyte entered into a global collaboration with MorphoSys for the development and commercialization of tafasitamab.  Incyte and MorphoSys will co-commercialize Monjuvi in the United States.

In May 2020, Incyte and partner Novartis obtained FDA approval of Tabrecta (capmatinib) for the treatment of adult patients with metastatic non-small cell lung cancer (NSCLC) whose tumors have a mutation that leads to MET exon 14 skipping (METex14) as detected by an FDA-approved test.

In April, the FDA approved Incyte’s selective FGFR inhibitor, Pemazyre (pemigatinib), for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test.

The REACH3 study, evaluating ruxolitinib in patients with steroid-refractory chronic graft-versus-host disease (GVHD), met its primary endpoint of overall response rate (ORR) at month 6 and both key secondary endpoints (modified Lee symptom scale and failure-free survival).  The company also plans to file a new drug application seeking approval for ruxolitinib cream, a new formulation of its key drug Jakafi, as a treatment for mild-to-moderate atopic dermatitis by the end of 2020.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -32.85% due to these changes.

VGM Scores

Currently, Incyte has a strong 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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