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Incyte (INCY) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

Zacks Equity Research

Incyte Corporation INCY reported strong results for the first quarter of 2019, wherein both earnings and sales beat expectations. Shares rose in pre-market trading.

Incyte’s stock has gained 21.9% in the past six months against the industry’s 3.6% decline.

The company reported earnings of 62 cents per share, which beat the Zacks Consensus Estimate of 40 cents. Incyte reported a loss of 7 cents in the year-ago quarter.

Including milestones and contracts, revenues came in at $497.8 million, which increased 30% year over year and beat the Zacks Consensus Estimate of $475.6 million.

Quarter in Detail

Total product-related revenues came in at $457.8 million, up 20% from the year-ago quarter. Of these, Jakafi revenues came in at $375.6 million, up 20% from the year-ago quarter. However, Jakafi revenues missed the Zacks Consensus Estimate of $379 million. Net product revenues of Iclusig amounted to $20.6 million, down from $20.8 million in the year-ago quarter.   

Product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in ex-U.S. markets grew 10% to $45.6 million. Olumiant’s product royalty revenues came in at $16 million.

R&D expenses were $243 million, down from $279 million in the year-ago quarter. SG&A expenses amounted to $124 million, up from $121 million in the prior-year quarter.

2019 Outlook Updated 

The company expects Jakafi revenues of $1,580-$1,650 million (same as before). Iclusig revenues are expected to be $90-$100 million. R&D expenses are expected to be $1,020-$1,070 million compared with the earlier estimate of $1060-$1,130 million. SG&A expenses are anticipated to be $420-$470 million.

Pipeline Update

Pipeline progress in the first quarter was impressive. The global phase III GRAVITAS-301 trial on itacitinib for the treatment of patients with steroid-naïve acute GVHD has completed enrollment. Results from the study are expected later in the year.

Incyte expects to submit the NDA for pemigatinib as a second-line treatment for patients with FGFR2 translocated cholangiocarcinoma in the second half of 2019. The company plans to initiate a phase III trial for the first-line treatment of patients with cholangiocarcinoma in the coming months.
The primary endpoint was met in the phase II trial of ruxolitinib cream in patients with vitiligo.

Incyte has elected to no longer co-fund the development of baricitiniband in order to reallocate the capital to develop its pipeline. However, Incyte will continue to receive royalties on global net sales of Olumiant (baricitinib), per the terms of its agreement with partner Eli Lilly LLY.

Our Take

Incyte’s performance in the first quarter was impressive. Label expansion of Jakafi will further boost sales. The FDA is reviewing the supplemental New Drug Application (sNDA) for Jakafi to treat patients with acute graft-versus-host disease (GVHD), who have had an inadequate response to corticosteroids. The Prescription Drug User Fee Act (PDUFA) target action date is May 24, 2019.

The company’s efforts to diversify its revenue base are encouraging, but pipeline setbacks are a concern.

Zacks Rank & Stock to Consider

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

A better-ranked stock in the same space is Gilead Sciences, Inc. GILD, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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