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Why Is Incyte (INCY) Up 5.5% 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 added about 5.5% 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 the most recent earnings report in order to get a better handle on the important drivers.

Q4 Earnings Miss, Sales Beat

Incyte missed on earnings in the fourth quarter of 2021. However, sales beat estimates driven by growth in patient demand for the lead drug, Jakafi (ruxolitinib), higher royalty revenues and encouraging uptake of other recently approved drugs.

The company reported adjusted earnings of 10 cents per share, missing the Zacks Consensus Estimate of 84 cents by a substantial margin. It reported earnings of 93 cents per share in the year-ago quarter.

INCY recorded a one-time non-cash benefit from income taxes of $568,988 related to the release of its valuation allowance on the majority of its U.S. deferred tax assets, which led to this massive year-over-year decline.

Total revenues came in at $862.8 million, increasing 9% year over year and surpassing the Zacks Consensus Estimate of $822 million.

Quarter in Detail

Total product and royalty revenues came in at $812.8 million, up 20% 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 $592.3 million. The figure increased 15% from the year-ago quarter and beat the Zacks Consensus Estimate of $589 million.
Net product revenues of Iclusig amounted to $27 million, down 5% in the year-ago quarter.

Pemazyre, which was approved in April 2020, generated $19.6 million in sales during the quarter.

Jakavi (name outside the United States) royalty revenues from Novartis for commercialization in ex-U.S. markets grew 10% to $95.7 million. We note that Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi outside the country.

Olumiant’s product royalty revenues from Eli Lilly came in at $66 million, up 113% as a result of the use of the drug for the treatment of COVID-19.

R&D expenses were $442.7 million, up 18% from the year-ago quarter. SG&A expenses amounted to $208.7 million, up 37% 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).

The FDA 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. The product was launched in October 2021.

Pipeline and Regulatory Update

In January, Incyte announced that it has withdrawn the new drug application (NDA) in the United States for parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma (FL), marginal zone lymphoma (MZL) and mantle cell lymphoma (MCL). The decision followed discussions with FDA regarding confirmatory studies that Incyte determined cannot be completed within a reasonable period to support an accelerated approval.

In December, Incyte announced the FDA accepted for Priority Review the supplemental new drug application (sNDA) for Opzelura as a potential treatment for adolescents and adults (age ≥12 years) with vitiligo. The agency has set a target action date of Apr 18, 2022.

In January, Incyte and Lilly announced that the FDA might issue a Complete Response Letter (CRL) for their sNDA seeking label expansion of Olumiant. LLY announced that alignment on the indicated population had not yet been reached based on ongoing discussions with the FDA.

2021 Results

Revenues came in at $2.9 billion, up from $2.7 billion in 2020. Earnings per share were $2.76 in 2021 against a loss of 42 cents in 2020.

2022 Guidance

Incyte expects Jakafi revenues of $2.3-$2.4 billion for 2022. Other Hematology/Oncology net product revenues are projected in the range of $210-$240 million.


How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

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