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Incyte Corporation (INCY - Free Report) reported lower-than-expected bottom-line and top-line numbers for the third quarter of 2020.
Shares of the company have gained 4.5% so far this year against the industry’s 6.3% decline.
The company reported adjusted earnings of 23 cents per share, missing the Zacks Consensus Estimate of earnings of 72 cents. The company had reported adjusted earnings of 82 cents in the year-ago quarter.
Including milestones and contracts, revenues came in at $620.6 million, which grew 16.2% year over year but missed the Zacks Consensus Estimate of $626.83 million.
Quarter in Detail
Total product-related revenues came in at $522.3 million, up 15% from the year-ago quarter. Jakafi revenues came in at $487.8 million, increasing 13% from the year-ago quarter and beating the Zacks Consensus Estimate of $483 million. Robust demand for Jakafi in all approved indications drove revenues.
Net product revenues of Iclusig amounted to $26.4 million, up from $20.6 million in the year-ago quarter.
Jakavi (name outside the United States) royalty revenues from Novartis (NVS - Free Report) for commercialization in ex-U.S. markets grew 17% to $68.3 million. Olumiant’s product royalty revenues from Eli Lilly (LLY - Free Report) came in at $28.6 million, up 32%.
Pemazyre, which was approved in April 2020, generated $8.1 million in sales during the quarter, compared with $3.8 million in the second quarter of 2020.
Incyte also earned royalties on Novartis’ Tabrecta sales amounting to $1.4 million in the third quarter, compared with $0.7 million in the previous quarter. The drug was approved in May 2020.
R&D expenses were $409.1 million, up from $250.9 million in the year-ago quarter. The significant increase was driven by the purchase of an FDA priority review voucher from a third party for $120 million along with higher milestone expenses related to collaborative agreements. The company plans to use the voucher to gain priority review for the new drug application for ruxolitinib cream for the treatment of atopic dermatitis, which will be filed before year-end.
SG&A expenses amounted to $106.2 million, up from $89.9 million in the prior-year quarter.
2020 Guidance Updated
The company tightened its previously-provided guidance for 2020 for Jakafi sales. The company expects Jakafi revenues of $1,910-$1,940 million for 2020, compared with the previous range of $1,880-$1,950 million. Iclusig revenues guidance was kept unchanged at $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”). The combination regimen was added to the National Comprehensive Cancer Network (“NCCN”) Clinical Practice Guidelines in Oncology for B-cell Lymphomas with a Category 2A designation in August. Please note that Incyte entered into a global collaboration with MorphoSys (MOR - Free Report) for the development and commercialization of tafasitamab. Incyte and MorphoSys will co-commercialize Monjuvi in the United States. A regulatory application is under review in Europe for similar indication.
Enrollment in the phase III RUXCOVID study evaluating ruxolitinib versus standard-of-care in hospitalized patients with COVID-19 associated cytokine storm is complete. Top-line data from the study is expected by 2020-end.
Our Take
Although Incyte’s performance in the third quarter was dismal, demand for Jakafi in all three approved indications (polycythemiavera, myelofibrosis and the recent label expansion in acute GVHD) continues to boost sales. Moreover, earnings missed estimates due to purchase of a priority voucher, which significantly increased R&D expenses.
Meanwhile, the company’s efforts to diversify its revenue base are encouraging as well and the label expansion of Jakafi in additional indications will further boost sales. Moreover, the recent approval of Pemazyre, Monjuvi (with MorphoSys) and Tabrecta (with Novartis) will bring additional sales and diversify its revenue base. However, pipeline setbacks remain a concern.
Incyte Corporation Price, Consensus and EPS Surprise
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Incyte (INCY) Q3 Earnings & Sales Miss, Jakafi Demand Strong
Incyte Corporation (INCY - Free Report) reported lower-than-expected bottom-line and top-line numbers for the third quarter of 2020.
Shares of the company have gained 4.5% so far this year against the industry’s 6.3% decline.
The company reported adjusted earnings of 23 cents per share, missing the Zacks Consensus Estimate of earnings of 72 cents. The company had reported adjusted earnings of 82 cents in the year-ago quarter.
Including milestones and contracts, revenues came in at $620.6 million, which grew 16.2% year over year but missed the Zacks Consensus Estimate of $626.83 million.
Quarter in Detail
Total product-related revenues came in at $522.3 million, up 15% from the year-ago quarter. Jakafi revenues came in at $487.8 million, increasing 13% from the year-ago quarter and beating the Zacks Consensus Estimate of $483 million. Robust demand for Jakafi in all approved indications drove revenues.
Net product revenues of Iclusig amounted to $26.4 million, up from $20.6 million in the year-ago quarter.
Jakavi (name outside the United States) royalty revenues from Novartis (NVS - Free Report) for commercialization in ex-U.S. markets grew 17% to $68.3 million. Olumiant’s product royalty revenues from Eli Lilly (LLY - Free Report) came in at $28.6 million, up 32%.
Pemazyre, which was approved in April 2020, generated $8.1 million in sales during the quarter, compared with $3.8 million in the second quarter of 2020.
Incyte also earned royalties on Novartis’ Tabrecta sales amounting to $1.4 million in the third quarter, compared with $0.7 million in the previous quarter. The drug was approved in May 2020.
R&D expenses were $409.1 million, up from $250.9 million in the year-ago quarter. The significant increase was driven by the purchase of an FDA priority review voucher from a third party for $120 million along with higher milestone expenses related to collaborative agreements. The company plans to use the voucher to gain priority review for the new drug application for ruxolitinib cream for the treatment of atopic dermatitis, which will be filed before year-end.
SG&A expenses amounted to $106.2 million, up from $89.9 million in the prior-year quarter.
2020 Guidance Updated
The company tightened its previously-provided guidance for 2020 for Jakafi sales. The company expects Jakafi revenues of $1,910-$1,940 million for 2020, compared with the previous range of $1,880-$1,950 million. Iclusig revenues guidance was kept unchanged at $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”). The combination regimen was added to the National Comprehensive Cancer Network (“NCCN”) Clinical Practice Guidelines in Oncology for B-cell Lymphomas with a Category 2A designation in August. Please note that Incyte entered into a global collaboration with MorphoSys (MOR - Free Report) for the development and commercialization of tafasitamab. Incyte and MorphoSys will co-commercialize Monjuvi in the United States. A regulatory application is under review in Europe for similar indication.
Enrollment in the phase III RUXCOVID study evaluating ruxolitinib versus standard-of-care in hospitalized patients with COVID-19 associated cytokine storm is complete. Top-line data from the study is expected by 2020-end.
Our Take
Although Incyte’s performance in the third quarter was dismal, demand for Jakafi in all three approved indications (polycythemiavera, myelofibrosis and the recent label expansion in acute GVHD) continues to boost sales. Moreover, earnings missed estimates due to purchase of a priority voucher, which significantly increased R&D expenses.
Meanwhile, the company’s efforts to diversify its revenue base are encouraging as well and the label expansion of Jakafi in additional indications will further boost sales. Moreover, the recent approval of Pemazyre, Monjuvi (with MorphoSys) and Tabrecta (with Novartis) will bring additional sales and diversify its revenue base. However, pipeline setbacks remain a concern.
Incyte Corporation Price, Consensus and EPS Surprise
Incyte Corporation price-consensus-eps-surprise-chart | Incyte Corporation Quote
Zacks Rank
Incyte currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>