Incyte (INCY) Stock Up as Q3 Earnings & Revenues Rise Y/Y

Incyte Corporation INCY reported third-quarter earnings of 11 cents (including the impact of a change in fair value of acquisition-related contingent consideration and unrealized gain on long term investment). The Zacks Consensus Estimate was of breakeven results. Incyte had reported a loss of 5 cents per share in the year-ago quarter.

Incyte’s shares were up 3.5% on the news.

Quarterly revenues came in at $269.5 million, up 44% year over year, and beat the Zacks Consensus Estimate of $262.6 million. The strong top-line growth was driven by higher sales of Jakafi in the U.S. and Iclusig in Europe as well as royalties from ex-U.S. sales of Jakavi. We note that while Incyte markets the drug in the U.S., it is marketed by Novartis AG NVS as Jakavi outside the U.S.

Quarter in Detail

Jakafi sales surged 39%, year over year to $223.9 million. Net product revenues of Iclusig amounted to $12.7 million. Product royalty revenues from Novartis for the commercialization of Jakafi in ex-U.S. markets surged 63% to $29.6 million.

However, contract revenues plunged approximately 60.9% to $3.2 million.
Research and development (R&D) expenses were up 8.4% to $143.2 million. Selling, general and administration (SG&A) expenses amounted to $75.8 million, up 59.2% year over year.

2016 Outlook Updated

Incyte has revised its outlook for 2016. Based on its third quarter performance of Jakafi in the reported quarter, the company now expects Jakafi revenues in the range of $850–$855 million (previous expectation: $825–$835 million).

Iclusig revenues are, however, still expected in the range of $25–$30 million. We note that Incyte gained rights to develop and commercialize Iclusig in the EU and 22 other countries, including Switzerland, Norway, Turkey, Israel and Russia from ARIAD Pharmaceuticals, Inc. ARIA in Jun 2016.

R&D expenses are now expected in the range of $570–$580 million, compared to the earlier guidance of $620–$630 million. The reduction mainly reflects slower-than-anticipated growth in the headcount, and phasing certain expenses from the company’s programs and pipeline development into the next year. SG&A expenses are still expected in the range of $285–$310 million.

Pipeline Update

Incyte continues to progress with its pipeline. Epacadostat is currently being evaluated in a phase III study (ECHO-301) in combination with Keytruda for the first-line treatment of patients with advanced or metastatic melanoma. Epacadostat is also being evaluated in several phase I/II combination studies across multiple tumor types.

Baricitinib, a JAK1/JAK2 inhibitor is under regulatory review globally for the treatment of patients with rheumatoid arthritis. If approved (anticipated in early 2017), Incyte will become eligible to earn regulatory and commercial milestones as well as royalties on its global net sales.

We note that Incyte is co-developing baricitinib with Eli Lilly and Company LLY.

INCYTE CORP Price, Consensus and EPS Surprise

 

INCYTE CORP Price, Consensus and EPS Surprise | INCYTE CORP Quote

Zacks Rank

Incyte currently has Zacks Rank #2 (Buy). Another equally ranked stock in the healthcare sector is ARIAD Pharmaceuticals. You can see the complete list of today’s Zacks #1 Rank stocks here.

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