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Incyte (INCY) Earnings Miss, Revenues Beat Estimates in Q2

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Incyte Corporation (INCY - Free Report) reported mixed results for the second quarter of 2018, wherein earnings missed estimates, while revenues topped the same. The company reported a net income of 26 cents in the second quarter of 2018, which missed the Zacks Consensus Estimate of 30 cents and was a penny down from 27 cents reported in the year-ago quarter.

Incyte Corporation Price, Consensus and EPS Surprise

 

Incyte Corporation Price, Consensus and EPS Surprise | Incyte Corporation Quote

Quarterly revenues were $521.5 million, up 59.7% year over year. The surge in revenues was primarily due to a milestone payment of $100 million. The reported figure also beat the Zacks Consensus Estimate of $464.77 million.

Quarter in Detail

Total product-related revenues came in at $421.5 million, up 29% from the year-ago quarter. Of these, Jakafi’s revenues came in at $345.6 million, up 25% from the year-ago quarter, driven by strong patient demand. Net product revenues of Iclusig amounted to $19.9 million, up from $15.6 million in the year-ago quarter.

Product royalty revenues from Novartis AG (NVS - Free Report) for the commercialization of Jakafi in ex-U.S. markets grew 39% to $47.1 million. Olumiant’s product royalty revenues came in at $8.8 million.

R&D expenses were $253 million, up from $179 million in the year-ago quarter. SG&A expenses amounted to $96 million, up 21.5% year over year.

2018 Outlook Updated

The company continues to expect Jakafi’s revenues in the range of $1,350-$1,400 million. Iclusig’s revenues are expected in the range of $80-$85 million.

R&D expenses are now expected in the range of $1,008-$1,103 million, down from 1,013-$1,108 million projected earlier. SG&A expenses are expected in the range of $340-$355 million.

Pipeline Update

Incyte reported positive results from the phase II trial, REACH1, evaluating Jakafi in combination with corticosteroids for the treatment of patients with steroid-refractory acute graft-versus-host disease (GVHD). The study met its primary endpoint. Propelled by positive data from the REACH 1 study, Incyte now plans to file a Supplemental New Drug Application (sNDA) with the FDA for the label expansion of Jakafi, for the treatment of steroid-refractory acute GVHD, during the third quarter of 2018.

The FDA had previously granted Breakthrough Therapy Designation to Jakafi in this indication, which is expected to provide an accelerated review period.

Data from the phase II trial on the cream formulation of Jakafi in adult patients with atopic dermatitis were encouraging. Hence, Incyte is planning to initiate a global, pivotal phase III trial in this indication.

The trial evaluating pemigatinib (formerly INCB54828) show promising efficacy in advanced cholangiocarcinoma patients with FGFR2 translocations. Incyte expects to submit an NDA for pemigatinib as a treatment for patients with advanced cholangiocarcinoma in 2019.

In June 2018, Incyte and partner Eli Lilly and Company (LLY - Free Report) announced that the FDA has approved the 2 mg dose of Olumiant (baricitinib), a once-daily oral medication for the treatment of adults with moderately-to-severely active rheumatoid arthritis (RA) who have had an inadequate response to one or more tumor necrosis factor (TNF) inhibitor therapies. Consequently, Incyte obtained a $100 million milestone payment from Eli Lilly. However, the 4 mg dose of the drug was not approved.

Our Take

Incyte’s performance in the second quarter is pretty ho-hum. While Jakafi’s performance continues to be impressive and the company’s efforts to expand the drug’s label is encouraging, the recent pipeline setbacks continue to weigh on the stock’s performance.

Incyte’s stock has lost 27.6% in the year so far compared with the industry’s 5.6% decline.

 

The company suffered a huge setback with the failure of the phase III study, ECHO-301, as it was one of the most promising candidates for Incyte, evaluating epacadostat in combination with Merck’s (MRK - Free Report) Keytruda. Further, the approval of the 4mg dose of baricitinib is also doubtful.

Nevertheless, shares are trading up in pre-market trading.

Zacks Rank

Incyte currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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