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Incyte Tops Q3 Earnings & Sales, Extends AstraZeneca Deal

Incyte Corporation INCY reported strong results for the third quarter of 2017, wherein both earnings and sales topped estimates.

Incyte reported earnings of 17 cents per share beating the Zacks Consensus Estimate of 6 cents but lower than the year-ago quarter reported figure of 19 cents.

Quarterly revenues were $381.5 million, up 41.6% year over year and beat the Zacks Consensus Estimate of $360.2 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 shares have moved up 13% in the year so far, compared with the industry’s 4.8% gain.

Quarter in Detail

Jakafi sales grew 36%, year over year to $304 million driven by strong patient demand for both indications. Net product revenue of Iclusig amounted to $18 million, up from $13 million in the year-ago quarter. Product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in ex-U.S. markets grew 36.7% to $41 million.

Research and development (R&D) expenses were up to $270 million from $143 million in the year-ago quarter. The increase was primarily due to the expansion of the portfolio as well as upfront and milestone expenses of $209 million related to collaboration and license agreements. Selling, general and administration (SG&A) expenses amounted to $91 million, up 19.7% year over year.

2017 Outlook Updated

Based on strong performance so far in 2017, the company upped guidance for Jakafi and now expects revenues in the range of $1,125-$1,135 million, up from the earlier projected range of $1,090-$1,120 million. Iclusig revenues are still expected in the range of $60-$65 million.

R&D expenses are now expected in the range of $1,250-1,300 million, up from the earlier forecast of $1,050-1,150 billion due to the acceleration of the phase III plans for epacadostat. SG&A expenses are still expected in the range of $340-$360 million.

Incyte Corporation Price and EPS Surprise


Incyte Corporation Price and EPS Surprise | Incyte Corporation Quote

Pipeline Update

Results from a phase III trial, REACH3 evaluating Jakafi as a treatment for patients with steroid-refractory chronic graft-versus-host disease (GVHD) is expected in the first half of 2018. Assuming positive results, Incyte plans to submit a sNDA seeking accelerated approval of Jakafi in this indication in 2018. A phase III trial, GRAVITAS-301, on itacitinib, in patients with treatment-naïve acute GVHD, was initiated in July.

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

The European Commission approved 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. The drug was approved in Japan too. However, the company suffered a setback when the FDA issued a complete response letter for Olumiant seeking additional clinical data to determine appropriate dosage.

The FDA further stated that additional data are necessary to further characterize safety concerns across treatment arms. In August 2017, partner Eli Lilly LLY announced that the NDA will be submitted before January 2018, earlier than anticipated.

Concurrent with the third-quarter results, Incyte announced expansion of its collaboration agreement with AstraZeneca PLC’s AZN global biologics research and development arm, MedImmune. Both companies will evaluate the efficacy and safety of epacadostat in combination with AstraZeneca’s Imfinzi (durvalumab), a human monoclonal antibody directed against PD-L1, compared to Imfinzi alone.

The two companies will conduct a phase III trial in patients with locally-advanced (Stage III), unresectable non-small cell lung cancer (NSCLC) whose disease has not progressed following platinum-based chemotherapy concurrent with radiation therapy (CRT). The trial is expected to begin in the first half of 2018 and costs will be shared.

Our Take

Incyte beat both on earnings and sales in the third quarter on strong Jakafi performance. Jakafi sales were driven by patient demand. The increase in sales guidance was also encouraging. Inclusig also performed well and exceeded expectations.

Going forward, the label expansion of Jakafi for GVHD will further boost sales. Meanwhile, partner Lilly plans to resubmit NDA for Olumiant earlier than expected. 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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