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Why Is Incyte (INCY) Down 7.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Incyte (INCY - Free Report) . Shares have lost about 7.1% in that time frame, underperforming 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 catalysts.

Incyte's Q1 Earnings and Revenues Fall Shy of Estimates

The company reported adjusted earnings of 55 cents per share in the first quarter of 2022, missing the Zacks Consensus Estimate of 57 cents. It had reported earnings of 67 cents per share in the year-ago quarter.

Incyte’s total revenues came in at $733.2 million in the first quarter of 2022, increasing 21% year over year. Sales missed the Zacks Consensus Estimate of $764 million as well.

Quarter in Detail

Total product and royalty revenues came in at $728.2 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 $544.5 million. The figure increased 17% from the year-ago quarter but missed the Zacks Consensus Estimate of $549 million.

Net product revenues of Iclusig amounted to $26.1 million, up 2% in the year-ago quarter.

Pemazyre, which was approved in April 2020, generated $18 million in sales during the first quarter, reflecting an increase of 34% year over year.

Jakavi (name outside the United States) royalty revenues from Novartis for commercialization in ex-U.S. markets grew 8% to $70.9 million.

Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi outside the country.

Incyte also receives royalties from sales of Tabrecta (capmatinib) for the treatment of adult patients with metastatic non-small-cell lung cancer. Its partner, Novartis, has exclusive worldwide development and commercialization rights to Tabrecta.

Tabrecta product royalty revenues came in at $3.5 million, up 70% year over year.

Olumiant’s product royalty revenues from Eli Lilly came in at $48.1 million, up 49% year over year, as a result of the use of the drug for the treatment of COVID-19.

R&D expenses were $327 million, up 18% from the year-ago quarter, owing to higher investments in late-stage pipeline development. SG&A expenses amounted to $192.7 million, up 56% 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 aged 12 years or older whose disease is not adequately controlled with topical prescription therapies, or when such therapies are not advisable. The product was launched in October 2021.

Pipeline and Regulatory Updates   

In March 2022, the FDA extended the review period for the supplemental New Drug Application (sNDA) for ruxolitinib cream.

The sNDA is seeking approval for the cream for the treatment of vitiligo. The regulatory body has extended the target action date by three months to Jul 18, 2022, which was previously set at Apr 18, 2022. Ruxolitinib cream is marketed under the brand name Opzelura.

Also, in March 2022, the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion on and recommended the approval of Jakavi to treat patients aged 12 years or older with acute graft versus host disease or chronic GvHD who have an inadequate response to corticosteroids or other systemic therapies.

Per the company, a potential approval will make Jakavi the first JAK1/2 inhibitor available for patients with GvHD in Europe.

Eli Lilly received a Complete Response Letter (“CRL”) from the FDA for the Olumiant AD indication as the company was not in alignment with the FDA on the indicated population.

Earlier, Incyte and LLY had announced that the FDA might issue a CRL for their sNDA, seeking label expansion of Olumiant for the treatment of adults with moderate-to-severe atopic dermatitis.

2022 Guidance

Incyte raised the bottom end of full-year Jakafi net product revenue guidance. The company now expects Jakafi revenues to be in the range of $2.33-$2.40 billion compared with the previous expectation of $2.3-$2.4 billion for 2022.

Other Hematology/Oncology net product revenues are projected in the range of $210-$240 million, unchanged from the previous expectation.


 

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 25.17% due to these changes.

VGM Scores

Currently, Incyte has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 looks promising. Notably, Incyte has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Incyte is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Alkermes (ALKS - Free Report) , a stock from the same industry, has gained 3.5%. The company reported its results for the quarter ended March 2022 more than a month ago.

Alkermes reported revenues of $278.55 million in the last reported quarter, representing a year-over-year change of +10.8%. EPS of $0.12 for the same period compares with $0.11 a year ago.

For the current quarter, Alkermes is expected to post earnings of $0.04 per share, indicating a change of -86.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Alkermes has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.


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