Incyte (INCY) Beats On Q4 Revenues On Strong Jakafi Sales

Incyte Corporation (NASDAQ:INCY) reported a net loss of 71 cents compared to a net income of 5 cents in the year-ago quarter. The fourth-quarter saw a significant surge in R&D expenses. Excluding one-time charges and stock-based compensation expenses, earnings per share was $0.02.

The Zacks Consensus Estimate was a loss of 52 cents.

Quarterly revenues were $444.1 million, up 36.1% year over year and beat the Zacks Consensus Estimate of $418.4 million. The top line was driven by higher sales of Jakafi in the United States and Iclusig in Europe as well as royalties from sales of Jakavi and Olumiant outside the United States.

Incyte’s stock lost 29.6% over the past year, compared with the industry’s 1.9% decline.

Quarter in Detail

Jakafi sales grew 26.9%, year over year to $302 million driven by strong patient demand for both indications. Net product revenues of Iclusig amounted to $19.5 million, up from $12.9 million in the year-ago quarter. Product royalty revenues from Novartis AG (NYSE:NVS) for the commercialization of Jakafi in ex-U.S. markets grew 57.4% to $52.3 million.

R&D expenses were up to $447 million from $161.6 million in the year-ago quarter. SG&A expenses amounted to $98 million, up 1.8% year over year.

2018 Outlook

The company expects Jakafi revenues in the range of $1,350-$1,400 million. Iclusig revenues are expected in the range of $80-$85 million.

R&D expenses are expected in the range of $1,077-1,172 million. SG&A expenses are still expected in the range of $465-$480 million.

Pipeline Update

The phase II trial, REACH1 trial evaluating Jakafi in patients with steroid-refractory acute graft-versus-host disease (“GVHD”) has completed enrolment and results are expected in the first half of 2018. Assuming the success of the trial, Incyte expects to submit sNDA seeking approval of Jakafi for this indication.

The phase III trial, ECHO-301, evaluating epacadostat plus Keytruda in patients with unresectable or metastatic melanoma is now fully-recruited and initial data are expected in the first half of 2018.

Incyte has also opened eight new pivotal trials of epacadostat plus PD-1 antagonists in collaboration with Merck & Co. (NYSE:MRK) and Bristol-Myers Squibb (NYSE:BMY) .

In December 2017, the New Drug Application (NDA) for baricitinib was resubmitted to the FDA. This was classified as a Class II resubmission, which began a new six-month review cycle. A pivotal trial of baricitinib in patients with moderate-to-severe atopic dermatitis has also been initiated.

The European Commission has already approved baricitinib as Olumiant in February 2017 for the treatment of moderate to severe active rheumatoid arthritis in adult patients who have responded inadequately to or are intolerant to one or more disease-modifying anti-rheumatic drugs.

Our Take

Incyte beat on sales in the fourth quarter on strong Jakafi performance. Jakafi sales were driven by patient demand. The sales guidance for 2018 was also impressive.

The label expansion of Jakafi for GVHD will further boost sales. Meanwhile, the NDA for Olumiant was resubmitted and a potential approval will further boost the top line.

Zacks Rank

Incyte currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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