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Incyte (INCY) Up 1.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Incyte (INCY - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Incyte due for a pullback? 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 Q1 Earnings Beat, Sales Miss on Soft Jakafi

The company reported adjusted earnings of 67 cents per share, beating the Zacks Consensus Estimate of earnings of 65 cents. The company had reported a loss of 2.86 per share in the year-ago quarter.

Total revenues came in at $604.7 million, increasing 6% year over year but falling short of the Zacks Consensus Estimate of $656 million.

Quarter in Detail

Total product revenues came in at $504.8 million, up from $486.7 million in the year-ago quarter. Jakafi revenues came in at $465.7 million, growing only 1% from the year-ago quarter but missing the Zacks Consensus Estimate of $509 million.  The year-over-year growth rate in Jakafi net product revenues was affected by a decline in new patient starts due to the COVID-19 pandemic.

Net product revenues of Iclusig amounted to $25.6 million, down from $27.2 million in the year-ago quarter.

Pemazyre, which was approved in April 2020, generated $13.5 million in sales during the quarter compared with $14 million in the previous quarter.

Jakavi (name outside the United States) royalty revenues from Novartis for commercialization in ex-U.S. markets grew 16% to $65.6 million. Olumiant’s product royalty revenues from Eli Lilly came in at $32.2 million, up 27%.

Incyte also earned royalties on Novartis’ Tabrecta sales, amounting to $2 million in the quarter. The drug was approved in May 2020.

R&D expenses were $277 million, down 74% from  the year-ago quarter. The decline was due to an upfront consideration of $805 million related to its collaborative agreement with MorphoSys incurred during the year-ago quarter. Excluding the impact of the upfront consideration and milestones, research and development expenses increased approximately 5%, driven by pipeline development costs.

SG&A expenses amounted to $123.3 million, up from $97.5 million in the prior-year quarter.

2021 Guidance Reiterated

The company expects Jakafi revenues of $2.1-$2.2 billion for 2021. Other Hematology/Oncology net product revenues (currently include Iclusig in Europe and Pemazyre in the United States) are projected in the range of $145-$160 million.

Pipeline and Regulatory Update

The supplemental new drug application (sNDA) seeking approval of Jakafi for the treatment of steroid-refractory chronic GVHD has been accepted for Priority Review by the FDA. The agency has set a target action date of Jun 22, 2021.

In March, the Marketing Authorization Application (MAA) seeking approval of retifanlimab in squamous cell carcinoma of the anal canal (SCAC) was validated by the European Medicines Agency (EMA). The FDA had earlier accepted the biologics license application (BLA) for the same indication.

The NDA seeking approval of ruxolitinib cream for the treatment of atopic dermatitis (AD) has been accepted for Priority Review by the FDA, with a target action date of Jun 21, 2021.

In April, Incyte and Lilly announced that the FDA extended the review period for the sNDA for baricitinib for the treatment of moderate-to-severe atopic dermatitis by three months to allow time for additional data analyses.




 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -15.2% due to these changes.

VGM Scores

Currently, Incyte has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 D. 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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