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Why Is Incyte (INCY) Down 1.8% 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 1.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Incyte 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 for commercialization in ex-U.S. markets grew 17% to $68.3 million. Olumiant’s product royalty revenues from Eli Lilly 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 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Incyte has an average Growth Score of C, a grade with the same score on the momentum front. 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 C. 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 looks promising. It's no surprise Incyte has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Incyte (INCY) Down 1.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Incyte (INCY - Free Report) . Shares have lost about 1.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Incyte Q3 Earnings & Sales Miss, Jakafi Demand Strong
Incyte 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 for commercialization in ex-U.S. markets grew 17% to $68.3 million. Olumiant’s product royalty revenues from Eli Lilly 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 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Incyte has an average Growth Score of C, a grade with the same score on the momentum front. 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 C. 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 looks promising. It's no surprise Incyte has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.