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Will Jakafi's Performance Fuel Incyte's (INCY) Q1 Earnings?

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Incyte Corporation (INCY - Free Report) is scheduled to release first-quarter 2021 results on May 4, before market open.

The company has a disappointing track record. It missed earnings expectations in the last four quarters by 917.15%, on average. In the last reported quarter, the company beat earnings estimates by 13.41%.

Incyte Corporation Price, Consensus and EPS Surprise

 

Incyte Corporation Price, Consensus and EPS Surprise

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

Why a Likely Positive Surprise

Our proven model predicts an earnings beat for Incyte this season. 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. You can uncover thebest stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Incyte is +8.48% as the Zacks Consensus Estimate is pegged at 65 cents while the Most Accurate Estimate is pegged at 70 cents.

Zacks Rank: It currently carries a Zacks Rank #3.

Factors to Note

Incyte primarily derives product revenues from sales of lead drug, Jakafi, in the United States and Iclusig. Patient demand for 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 11% in the previous quarter and the first quarter has most likely witnessed a sequential increase. The Zacks Consensus Estimate for Jakafi sales stands at $509 million.

The company also earns product royalty revenues from Novartis AG (NVS - Free Report) for the commercialization of Jakafi in ex-U.S. markets. Royalty revenues jumped 34% in the previous quarter and Incyte has most likely received higher royalties in the quarter under review.

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 $28.5 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 $26.59 million.

Olumiant product royalty revenues came in at $30.9 million in the previous quarter, up 31% year over year, and similar levels of growth are likely to have boosted the top line in the to-be-reported quarter.

Incremental sales from newly approved drugs are likely to have boosted sales. 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 $14.1 million and the first 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 first quarter.

However, operating expenses rose 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 first quarter too.

Key Pipeline Updates

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

In February, Incyte announced that the FDA has accepted for Priority Review the supplemental New Drug Application (sNDA) for Jakafi for the treatment of steroid-refractory chronic GVHD in adult and pediatric patients 12 years and older. The target action date is Jun 22, 2021.

Last month, Pemazyre was also approved in Europe as a treatment for adults with locally advanced or metastatic cholangiocarcinoma.

Share Price Performance

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

Other Stocks to Consider

Here are a few other stocks you may want to consider, as our model shows that these too have the right combination of elements to post earnings beats this season.

Gilead Sciences, Inc. (GILD - Free Report) has an Earnings ESP of +6.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AstraZeneca (AZN - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #3.

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