Incyte (INCY) Down 5.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Incyte (NASDAQ:INCY). Shares have lost about 5.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Incyte Q4 Earnings Top Estimates on Solid Jakafi Sales

The company reported earnings of 65 cents per share, which easily surpassed the Zacks Consensus Estimate of 58 cents but declined from 66 cents in the year-ago quarter.

Including milestones and contracts, revenues came in at $579.4 million, which grew 10% year over year and beat the Zacks Consensus Estimate of $570.1 million.

Quarter in Detail

Total product-related revenues came in at $490.8 million, up 22.9% from the year-ago quarter. Jakafi revenues came in at $466.5 million, increasing 23% from the year-ago quarter and beating the Zacks Consensus Estimate of $454 million. Robust demand for Jakafi in all three approved indications drove revenues.

Net product revenues of Iclusig amounted to $24.3 million, up from $19.1 million in the year-ago quarter.

Jakavi (name outside the United States) royalty revenues from Novartis AG or commercialization in ex-U.S. markets grew 17% to $65 million. Olumiant’s product royalty revenues from Eli Lilly (NYSE:LLY) came in at $23.6 million.

R&D expenses were $312.9 million, up from $304 million in the year-ago quarter. SG&A expenses amounted to $136.2 million, up from $108.4 million in the prior-year quarter.

2019 Results

Revenues in 2019 came in at $2.16 billion, up 15% from 2018. Earnings per share came in at $2.83 in 2019, up from $1.63 in 2018.

2020 Outlook

The company expects Jakafi revenues of $1,880 -$1,950 million for 2020. Iclusig revenues are projected around $100-$105 million.

Pipeline Update

REACH2, the phase III study in patients with steroid-refractory acute graft-versus-host disease (GVHD), met its primary endpoint of superior overall response rate at day 28 with Jakafi treatment compared with best available therapy. The REACH2 and REACH3 trials, evaluating steroid-refractory acute and steroid-refractory chronic GVHD, respectively, are being conducted in collaboration with Novartis.

However, GRAVITAS-301, the phase III study of itacitinib as a treatment for patients with newly-diagnosed acute GVHD, did not meet the primary endpoint.
In November 2019, 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 Marketing Authorization Application (MAA) seeking approval in Europe for pemigatinib as a second-line treatment for cholangiocarcinoma patients with FGFR2 fusions or rearrangements was validated by the EMA.

TRuE-AD2, the first of the two phase III studies in the TRuE-AD development program of ruxolitinib cream in patients with mild-to-moderate atopic dermatitis, met its primary endpoint.

Incyte expects the results of TRuE-AD1, the second of the two phase III studies required for regulatory submission, to be available in the first quarter of 2020.

Incyte entered into a global collaboration with MorphoSys for the development and commercialization of tafasitamab, an anti-CD19 monoclonal antibody. Pending clearance by antitrust authorities, the collaboration agreement is expected to become effective in the first half of 2020.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.