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

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Incyte Corporation (INCY - Free Report) is scheduled to release fourth-quarter 2021 results on Feb 8, before market open.

The company has an excellent track record, having beat earnings expectations in all of the last four quarters, with the average surprise being 20.68%. In the last reported quarter, the company beat earnings estimates by 55.26%.

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 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]) increased sequentially in the third quarter. The trend most likely continued in the to-be-reported quarter as patient visits normalized.

Jakafi sales were up 12% year over year in the previous quarter, and the fourth quarter is likely to have witnessed similar levels of growth. The Zacks Consensus Estimate for Jakafi sales stands at $589 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 a 12% increase in Jakavi sales in the fourth quarter driven by strong demand in the myelofibrosis and polycythemia vera indications. Hence, Incyte is likely to have received higher royalties in the final quarter.

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 levels of contribution are likely to have been witnessed by INCY in the to-be-reported quarter. The Zacks Consensus Estimate for Iclusig sales stands at $26.9 million.

Olumiant product royalty revenues came in at $86.5 million in the third quarter, up 202% year over year due to an increase in net product sales as a result of the use of Olumiant for the treatment of COVID-19. 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 in the fourth quarter as well. Sales of Pemazyre (pemigatinib), a kinase inhibitor indicated for the treatment of adults with previously treated, unresectable, locally advanced or metastatic cholangiocarcinoma, came in at $17.6 million in the third quarter. The fourth quarter is likely to have witnessed a sequential increase.

Incyte also receives royalties from sales of Tabrecta (capmatinib) for the treatment of adult patients with metastatic non-small cell lung cancer (NSCLC). Its partner Novartis has exclusive worldwide development and commercialization rights to Tabrecta. Royalties from the same came in at $2.7 million in the third quarter.

Operating expenses are likely to have increased due to a rise in R&D expenses and selling, general and administrative expenses.

Key Pipeline Updates

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

Incyte has withdrawn its new drug application (NDA) for parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma (FL), marginal zone lymphoma (MZL) and mantle cell lymphoma (MCL). Incyte was in discussions with the FDA. Following the same, it determined that confirmatory studies to support accelerated approval of the candidate cannot be completed within a period that would support the investment. Hence, the company decided to withdraw it.  The decision impacts only the FL, MZL and MCL indications in the United States and does not affect other ongoing clinical trials in the country or other regions.

Incyte has also decided to opt out of the continued development of MCLA-145 under a global collaboration and license agreement with Merus as part of its ongoing portfolio prioritization and capital allocation review.

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. 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 -3.81% as the Zacks Consensus Estimate is pegged at 83 cents while the Most Accurate Estimate is 80 cents.

Zacks Rank: It currently carries a Zacks Rank #4 (Sell).

Share Price Performance

Incyte’s stock has lost 18.2% in the year so far compared with the industry’s 36.4% decline.


Zacks Investment ResearchImage Source: Zacks Investment Research

Stocks to Consider

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

Pfizer (PFE - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer has a decent track record with the company exceeding earnings expectations in three of the last four quarters while missing in one. PFE delivered a four-quarter earnings surprise of 10.85%, on average. Earnings estimates for 2022 have gone up from $4.59 to $6.14 over the past 60 days. Pfizer’s stock has risen 54.6% in the past year.

Amgen (AMGN - Free Report) has an Earnings ESP of +2.53% and a Zacks Rank #3. Amgen has topped earnings estimates in three of the last four quarters. Amgen delivered a four-quarter earnings surprise of 5.65%, on average.


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