Incyte (INCY) Down 2.2% Since Last Earnings Report: Can It Recover?

It’s been a month since Incyte (INCY) last reported earnings. Shares have lost about 2.2% in that time, 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 the most recent earnings report in order to better understand the important catalysts.

Incyte beats second-quarter earnings and sales on strong Jakafi

Incyte reported adjusted earnings per share of $1.24, which easily beat the Zacks Consensus Estimate of 77 cents. In the same quarter last year, the company saw adjusted earnings of 75 cents.

Including milestones and deals, revenue was $688.04 million, up 30% year-over-year and surpassing the Zacks Consensus Estimate of $599.45 million.

Quarter in detail

Total product-related revenue was $593 million, an increase of 16% compared to the same quarter last year. Jakafi’s revenues were $473.7 million, up 16% from the year-ago quarter and surpassing the Zacks Consensus Estimate of $471 million. Strong demand for Jakafi across all three approved indications supported revenues.

Net revenue from Iclusig products was $22.8 million, compared to $24.4 million in the year-ago quarter.

Jakavi (non-U.S. name) royalty revenue from Novartis AG from commercialization in non-U.S. markets increased 16% to $66.2 million. Olumiant’s product licensing revenue from Eli Lilly was $25.8 million, an increase of 35%.

Research and development expenses were $254.1 million, compared to $261.7 million in the same quarter last year. Selling, general and administrative expenses were $104.4 million, compared to $93.1 million in the prior-year quarter.

Guidelines for 2020 confirmed

The company maintained its previously provided guidance for 2020. The company expects Jakafi’s revenue in 2020 to be between $1,880 and $1,950 million. Iclusig’s revenue is expected to be around $100 million to $105 million.

Pipeline update

In July, the FDA approved Monjuvi (tafasitamab-cxix), an Fc-modified anti-CD19 antibody, in combination with Revlimid, for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are ineligible for autologous stem cell transplant (ASCT). Please note that Incyte has entered into a global collaboration with MorphoSys to develop and commercialize tafasitamab. Incyte and MorphoSys are jointly commercializing Monjuvi in ​​the United States.

In May 2020, Incyte and partner Novartis received FDA approval for Tabrecta (capmatinib) for the treatment of adult patients with metastatic non-small cell lung cancer (NSCLC) whose tumors harbor a mutation leading to a detected skipping of MET exon 14 (METex14) in FDA approved test.

In April, the FDA approved Incyte’s selective FGFR inhibitor, Pemazyre (pemigatinib), for the treatment of adult patients with previously treated, unresectable, locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement detected by an FDA-approved test.

The REACH3 study evaluating ruxolitinib in patients with steroid-refractory chronic graft-versus-host disease (GVHD) achieved the primary endpoint of overall response rate (ORR) at month 6 and both key secondary endpoints (modified Lee Symptom Score and free survival). The company also plans to submit an application for new drug approval by the end of 2020 for ruxolitinib cream – a new formulation of its key drug Jakafi – for the treatment of mild to moderate atopic dermatitis.

How have estimates changed since then?

It turns out that estimate revisions have been on a downward trend over the past month. As a result of these changes, the consensus estimate moved by -32.85%.

VGM results

Incyte currently has a Strong Growth Score of A, although well behind its Momentum Score of C. Following the exact same trajectory, the stock is rated a C on the value side, placing it in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Incyte carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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