Why Is Incyte (INCY) Down 0.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Incyte (INCY). Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Incyte due for a breakout? 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 drivers.
Beats on Q2 Earnings and Revenue Estimates
Incyte reported second-quarter 2023 adjusted earnings of 99 cents per share, which beat the Zacks Consensus Estimate of 87 cents. The company recorded earnings of $1.01 per share in the year-ago quarter.
Total revenues came in at $954.6 million, up 5% year over year. The figure beat the Zacks Consensus Estimate of $920 million owing to higher net product revenues from Jakafi and Opzelura.
Quarter in Detail
Jakafi’s (a first-in-class JAK1/JAK2 inhibitor approved for polycythemiavera, myelofibrosis and refractory acute graft-versus-host disease) revenues came in at almost $682.3 million, up 14% from the year-ago quarter’s number. This was primarily driven by growth in patient demand across all indications. Jakafi's sales beat the Zacks Consensus Estimate of $647 million.
Opzelura (ruxolitinib) cream generated $80 million in sales. The figure grew almost 384% year over year and beat the consensus estimate of $78 million. This was due to growth in patient demand and label expansion in the indication of atopic dermatitis (AD).
In July 2022, the FDA approved Opzelura cream 1.5% for the topical treatment of non-segmental vitiligo in adult and pediatric patients aged 12 years and older. Opzelura is also approved by the FDA for the topical short-term and non-continuous chronic treatment of mild to moderate AD.
The newly approved medicine, Zynyz (retifanlimab-dlwr), generated first-quarter sales of $0.57 million. The company obtained an accelerated approval of Zynyz earlier in March for treating metastatic or recurrent locally advanced merkel cell carcinoma.
Net product revenues of Iclusig were almost $29.09 million, up 11% year over year. The figure also beat the Zacks Consensus Estimate of $26.53 million.
Pemazyre generated $21.6 million in sales, indicating a year-over-year increase of 14%. However, the figure missed the Zacks Consensus Estimate of $24.05 million.
Minjuvi's revenues totaled $13.16 million, up 198% from the prior-year quarter’s number. The revenues significantly beat the Zacks Consensus Estimate of $6.89 million.
Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi outside the country. The drug’s royalty revenues from Novartis for commercialization in ex-U.S. markets surged 8% to $90.5 million. Jakavi royalties beat the Zacks Consensus Estimate of $89 million.
Incyte also receives royalties from sales of Tabrecta (capmatinib) for the treatment of adult patients with metastatic non-small-cell lung cancer. Its partner, Novartis, has exclusive worldwide development and commercialization rights for Tabrecta. The drug’s product royalty revenues amounted to $4.8 million, up 34% year over year.
Olumiant’s (baricitinib) product royalty revenues totaled $32.01 million, up 6% year over year. However, the figure missed the Zacks Consensus Estimate of $36.83 million.
Incyte has a collaboration agreement with Eli Lilly for Olumiant. The drug is a once-daily, oral JAK inhibitor discovered by Incyte and licensed to LLY. It is approved for several types of autoimmune diseases.
Adjusted research and development expenses totaled $367.9 million, up 15% from the year-ago quarter’s actual, owing to higher investments in late-stage pipeline development. Adjusted selling, general and administrative expenses amounted to $263 million, up 12% from the prior-year quarter’s number. This was due to expenses related to supporting the launch of Opzelura for the treatment of vitiligo.
Incyte’s cash and cash equivalents totaled $3.4 billion as of Jun 30, 2023 compared with $3.1 billion as of Mar 31, 2023.
2023 Guidance Updated
Based on its second-quarter performance, Incyte updated its previously issued guidance for 2023. The company now expects Jakafi revenues in the range of $2.58-$2.63 billion compared with the earlier projection of $2.55-$2.63 billion.
Pipeline and Regulatory Updates
Earlier yesterday, the company entered into a collaboration and supply agreement with Replimune Group, Inc. The agreement is aimed at advancing Replimune’s lead product candidate, RP1, in combination with INCB99280, Incyte’s small-molecule oral PD-L1 inhibitor, in patients with cutaneous squamous cell carcinoma.
The clinical study is expected to start in early 2024. Under the agreement, Incyte will initiate and sponsor the clinical study and Replimune will supply RP1 to Incyte for the same. The companies will equally share the costs of the study.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Incyte has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Incyte has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Incyte belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, BioMarin Pharmaceutical (BMRN), has gained 6.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
BioMarin reported revenues of $595.28 million in the last reported quarter, representing a year-over-year change of +11.5%. EPS of $0.54 for the same period compares with $0.59 a year ago.
For the current quarter, BioMarin is expected to post earnings of $0.45 per share, indicating no change from the year-ago quarter. The Zacks Consensus Estimate has changed +20.3% over the last 30 days.
BioMarin has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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