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Will Jakafi Sales Drive a Beat For Incyte (INCY) Q1 Earnings?

Incyte Corporation INCY is scheduled to release first-quarter 2023 results on May 2, before market open.

The company's earnings beat estimates in two of the trailing four quarters and missed the same in the other two, the average surprise being 3.19%. In the last reported quarter, Incyte beat on earnings by 5.08%.

Shares of the company have declined 9.7% in the year-to-date period compared with the industry's 5.4% decline.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Let's see how things might have shaped up for the quarter to be reported.

Factors to Consider

Incyte primarily derives product revenues from sales of its lead drug, Jakafi (ruxolitinib), in the United States, and its other marketed drugs.

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Demand for Jakafi, a first-in-class JAK1/JAK2 inhibitor, in all approved indications (polycythemia vera, myelofibrosis and refractory acute graft-versus-host disease [GvHD]), increased 9% year over year in the fourth quarter of 2022. The trend is likely to have continued in the to-be-reported quarter. The Zacks Consensus Estimate for Jakafi's sales stands at $614 million.

Incyte also earns product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in non-U.S. markets. Novartis licensed ruxolitinib for development and commercialization outside the United States.

Jakafi is marketed by Incyte in the United States. Novartis markets the same drug as Jakavi outside the country. Incyte is expected to have received higher royalties from NVS in the first quarter on higher Jakavi sales. The Zacks Consensus Estimate for the same is pegged at $81 million.

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

While Jakafi’s sales and royalties are key catalysts for the company’s revenue growth, Iclusig’s sales and Olumiant’s royalties from Eli Lilly are likely to have contributed to INCY’s revenues in the to-be-reported quarter.

Incremental sales from newly approved drugs like Opzelura are expected to have boosted sales. The adoption of other newly approved drugs like Monjuvi and Pemazyre is also likely to have bolstered the company’s top line performance.

Earlier this month, Incyte received the European Commission’s (EC) approval for the novel cream formulation of JAK1/JAK2 inhibitor ruxolitinib (15 mg/g), Opzelura. The drug is intended to treat non-segmental vitiligo with facial involvement in adults and adolescents.

Total costs and expenses increased year over year in the fourth quarter of 2022. The trend is likely to have continued in the first quarter owing to a rise in research and development expenses, selling, and general and administrative costs.

Pipeline Updates

Incyte suffered a setback in March after it announced that the FDA issued a complete response letter for ruxolitinib extended-release (XR) tablets for once-daily use in the treatment of certain types of myelofibrosis, polycythemia vera and graft-versus-host disease.

On a positive note, last month, the company obtained an accelerated approval of Zynyz (retifanlimab-dlwr) for treating metastatic or recurrent locally advanced merkel cell carcinoma.

Earnings Whispers

Our proven model predicts an earnings beat for Incyte this time around. 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. That is 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: Incyte has an Earnings ESP of +1.10% as the Most Accurate Estimate and Zacks Consensus Estimate for the company’s first-quarter earnings are pegged at 77 cents per share and 76 cents per share, respectively.

Zacks Rank: Incyte has a Zacks Rank #3 at present.

Incyte Corporation Price and EPS Surprise

 

Incyte Corporation Price and EPS Surprise
Incyte Corporation Price and EPS Surprise

Incyte Corporation price-eps-surprise | Incyte Corporation Quote

 

Other Stocks to Consider

Here are a few other stocks worth considering from the overall healthcare space, as these too have the right combination of elements to come up with an earnings beat this reporting cycle.

Allogene Therapeutics (ALLOhas an Earnings ESP of +3.43% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

Allogene's shares have plunged 12.3% in the year-to-date period. ALLO's earnings beat estimates in each of the trailing four quarters, delivering an average earnings surprise of 8.33%.

Seagen (SGEN) has an Earnings ESP of +5.09% and a Zacks Rank #2. SGEN will report first-quarter earnings on April 27, after market close.

Seagen's shares have surged 57.5% in the year-to-date period. The company's earnings beat estimates in three of the last four quarters and missed the mark in one, delivering an average earnings surprise of 11.27%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Novartis AG (NVS) : Free Stock Analysis Report

Incyte Corporation (INCY) : Free Stock Analysis Report

Seagen Inc. (SGEN) : Free Stock Analysis Report

Allogene Therapeutics, Inc. (ALLO) : Free Stock Analysis Report

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Zacks Investment Research