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Why Is Incyte (INCY) Down 2.7% 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 2.7% in that time frame, outperforming 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 Beat, Royalty Revenues Grow

Incyte reported adjusted earnings of $1.18 per share, comfortably beating the Zacks Consensus Estimate of 76 cents. The company had reported earnings of 23 cents per share in the year-ago quarter. Higher revenues and lower costs drove the upside.

Total revenues came in at $813 million, increasing 31% year over year and surpassing the Zacks Consensus Estimate of $748 million.

Quarter in Detail

Total product and royalty revenues came in at $778 million, up 25% from the year-ago quarter. Jakafi (a first-in-class JAK1/JAK2 inhibitor approved for polycythemiavera, myelofibrosis, and refractory acute graft-versus-host disease [GVHD]) revenues came in at $547 million. The figure increased 12% from the year-ago quarter but missed the Zacks Consensus Estimate of $558 million.

Net product revenues of Iclusig amounted to $28.5 million, up from $26.4 million in the year-ago quarter.

Pemazyre, which was approved in April 2020, generated $17.6 million in sales during the quarter.

Jakavi (name outside the United States) royalty revenues from Novartis for commercialization in ex-U.S. markets grew 39% to $94.6 million. Olumiant’s product royalty revenues from Eli Lilly came in at $86.6 million, up 202% due to an increase in net product sales as a result of the use of Olumiant for the treatment of COVID-19.

Incyte also earned royalties on Tabrecta sales from Novartis, amounting to $2.7 million in the quarter. The drug was approved in May 2020.

R&D expenses were $308.7 million, down 25% from the year-ago quarter. SG&A expenses amounted to $168 million, up 58% from the prior-year quarter due to expenses related to the establishment of its dermatology commercial organization and activities to support the potential launch of Opzelura for the treatment of atopic dermatitis (AD).

Pipeline and Regulatory Update

In September, the FDA expanded Jakafi’s label for the treatment of chronic GVHD after the failure of one or two lines of systemic therapy in adult and pediatric patients 12 years of age and older.

The regulatory body also approved Opzelura, a novel cream formulation of ruxolitinib, for the topical short-term and non-continuous chronic treatment of mild to moderate AD in non-immunocompromised patients 12 years of age and older whose disease is not adequately controlled with topical prescription therapies, or when those therapies are not advisable.

In August, Incyte and MorphoSys announced that the European Commission granted conditional marketing authorization for Minjuvi in combination with Revlimid, followed by Minjuvi monotherapy, for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT).

In October, Incyte withdrew the marketing authorization application (MAA) seeking approval of pipeline candidate retifanlimab in squamous cell carcinoma of the anal canal (SCAC) in Europe. The withdrawal was based on the provisional view of the European Medicines Agency’s Committee for Medicinal Products for Human Use that the available data to date, provided in the MAA, were not sufficient to permit approval for the proposed indication.

2021 Guidance Reiterated

Incyte reaffirmed its previously provided guidance. The company expects Jakafi revenues of $2.125-$2.170 billion for 2021. Other Hematology/Oncology net product revenues are projected in the range of $155-$170 million.



 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Incyte has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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