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

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Incyte Corporation (INCY - Free Report) is scheduled to report fourth-quarter 2019 results on Feb 13, before market open.

The company has a decent track record.  In the last reported quarter, the company beat earnings estimates by 26.15%. It beat earnings expectations thrice over the last four quarters and missed in one. The four-quarter positive surprise is 32.80%, on average.

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 Driving Growth

Incyte’s lead drug, Jakafi, a first-in-class JAK1/JAK2 inhibitor, which is approved for the treatment of polycythemia vera and intermediate or high-risk myelofibrosis, drove the third-quarter results on strong demand, a trend that most likely continued in the fourth quarter. Jakafi sales grew 25% in the third quarter. The Zacks Consensus Estimate for Jakafi sales stands at $454 million.

Moreover, the FDA approved a label expansion of Jakafi for the treatment of steroid-refractory acute graft-versus-host disease (GVHD) in adult and pediatric patients 12 years or older in May 2019. Hence, sales of the drug for this indication are likely to have boosted the top line in the fourth quarter.

The company also earns product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in ex-U.S. markets. Novartis recorded 17% growth in sales in the fourth quarter and hence, Incyte must have received higher royalties for the same.

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 LLY also contribute to the top line. Hence, these are likely to have contributed significantly to the company’s revenues in the fourth quarter.

Key Pipeline Updates

Apart from the regular top and bottom-line numbers, we expect investors to focus on the company’s updates on the label expansion of Jakafi into additional indications. The phase III TRuE-AD2 study, which is part of the TRuE-AD clinical program and evaluating the cream formulation of ruxolitinib for atopic dermatitis (AD), met its primary endpoint. The TRuE-AD2 study evaluated the safety and efficacy of ruxolitinib cream in adult and adolescent patients aged at least 12 years and above with AD. The FDA accepted Incyte’s new drug application (NDA) for its investigational FGFR inhibitor pemigatinib as a second-line treatment for locally advanced or metastatic cholangiocarcinoma, also known as bile-duct cancer. With the FDA granting priority review to the NDA, a decision from the regulatory body is expected on May 30, 2020. The European Medicines Agency (EMA) also validated its Marketing Authorization Application (MAA) for the same.

However, a late-stage study on pipeline candidate itacitinib, (INCB039110) a novel and selective JAK1 inhibitor, in combination with corticosteroids in patients with treatment-naïve (first-line) acute GVHD did not meet the primary endpoint. 

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Incyte this season. 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. Unfortunately, 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 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate stand at 0.00%.

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

Share Price Performance

Incyte’s stock has lost 6.2% in the past year, while the industry witnessed no movement in the said timeframe.


A Stock That Warrants a Look

Here is a stock worth considering as our model shows that this has the right mix of elements to beat estimates this time around.

Immunomedics, Inc. IMMU has an Earnings ESP of +3.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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