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Incyte (INCY) to Report Q4 Earnings: What's in the Cards?

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Incyte Corporation (INCY - Free Report) is scheduled to release fourth-quarter 2020 and full-year results on Feb 9, before market open.

The company has a disappointing track record. In the last reported quarter, the company missed earnings estimates by 68.06%. It missed earnings expectations in the last four quarters by 917.49%, on average.

Incyte Corporation Price, Consensus and EPS Surprise

Incyte Corporation Price, Consensus and EPS Surprise

Incyte Corporation price-consensus-eps-surprise-chart | Incyte Corporation Quote

Factors to Note

Incyte primarily derives product revenues from sales of Jakafi in the United States and Iclusig. Patient demand for its lead drug, Jakafi, a first-in-class JAK1/JAK2 inhibitor, in all approved indications (polycythemiavera, myelofibrosis and refractory acute graft-versus-host disease [GVHD]) was strong in the previous quarter, a trend that most likely continued in the to-be-reported quarter. Jakafi sales grew 13% in the third quarter and the fourth quarter has most likely witnessed a sequential increase. The Zacks Consensus Estimate for Jakafi sales stands at $506 million.

The company also earns product royalty revenues from Novartis AG (NVS - Free Report) for the commercialization of Jakafi in ex-U.S. markets. Novartis recorded 24% growth in sales to $376 million in the fourth quarter and hence Incyte has most likely received higher royalties for the same.

We remind investors that while Jakafi sales and royalties are key catalysts for the company’s revenue growth, Iclusig sales and Olumiant royalties from Eli Lilly also contribute to the top line. Hence, these are likely to have aided the company’s revenues in the to-be-reported quarter. Net product revenues of Iclusig amounted to $26.3 million in the previous quarter and similar or higher levels of contribution are likely to have been witnessed in the to-be reported quarter. The Zacks Consensus Estimate for Iclusig sales stands at $25.5 million.

Olumiant product royalty revenues came in at $28.6 million in the previous quarter, up 32% year over year and similar levels of growth are likely to have boosted the top line in the to-be reported quarter.

Last April, the FDA approved Pemazyre (pemigatinib), a kinase inhibitor indicated for the treatment of adults with previously treated, unresectable, locally advanced or metastatic cholangiocarcinoma. Sales in the previous quarter came in at $8.1 million and the fourth quarter has most likely witnessed a sequential increase.

In May, the FDA approved 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. Its partner Novartis has exclusive worldwide development and commercialization rights to Tabrecta. Royalties from the same might have resulted in incremental sales in the fourth quarter.

However, operating expenses increased in the previous quarter due to an increase in R&D expenses and selling, general and administrative expenses, a trend that most likely continued in the fourth quarter.

Key Pipeline Updates

Apart from the regular top and bottom-line numbers, we expect investors to focus on the company’s pipeline updates.

In November 2020, Incyte and Eli Lilly announced that the FDA issued an Emergency Use Authorization (EUA) for the distribution and emergency use of baricitinib to be used in combination with Gilead’s remdesivir in hospitalized adult and pediatric patients two years of age or older with suspected or laboratory confirmed COVID-19 who require supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO). An update on the same is expected on the call.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Incyte this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Incyte is -11.73%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Share Price Performance

Incyte’s stock has gained 4.6% in the year so far compared with the industry’s 8.6% growth.


Stocks to Consider

Here are a few stocks you may want to consider, as our model shows that these have the right combination of an earnings beat.

Moderna (MRNA - Free Report) has an Earnings ESP of +0.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Seagen, Inc. (SGEN - Free Report) has an Earnings ESP of +4.81% and a Zacks Rank #3.

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Incyte Corporation (INCY) - free report >>

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Novartis AG (NVS) - free report >>

Seagen Inc. (SGEN) - free report >>