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Why Is Incyte (INCY) Up 12.9% 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 added about 12.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Incyte Earnings Miss, Revenues Beat Estimates in Q2

Incyte 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.

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 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 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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -24.49% due to these changes.

VGM Scores

Currently, Incyte has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

The company's stock is suitable solely for growth based on our style scores.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision 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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