Incyte (INCY) to Report Q1 Earnings: What's in the Cards?

Incyte Corporation INCY is scheduled to release first-quarter 2020 results on May 5, before market open.

The company has an impressive track record. It beat earnings expectations in the last four quarters by 37.56%, on average. In the last reported quarter, the company beat earnings estimates by 12.07%.

Factors Driving Growth

Patient demand for Incyte’s lead drug, Jakafi, a first-in-class JAK1/JAK2 inhibitor, in all three approved indications (polycythemiavera, myelofibrosis and the recent label expansion in steroid-refractory acute graft-versus-host disease [GVHD]) was strong in the last quarter, a trend that most likely continued in the to-be-reported quarter. Jakafi sales grew 23% in the fourth quarter. The Zacks Consensus Estimate for Jakafi sales stands at $443 million.

The company also earns product royalty revenues from Novartis AG NVS for the commercialization of Jakafi in ex-U.S. markets. Novartis recorded 23% growth in Jakafi sales in the first quarter and hence, Incyte might have received higher royalties for the same.

We remind investors that while Jakafi sales and royalties are key catalysts for the company’s revenue growth, Iclusig sales and Olumiant royalties from Eli Lilly also contribute to the top line. Hence, these are likely to have contributed significantly to the company’s revenues in the to-be-reported quarter.

However, operating expenses have most likely increased in the first quarter with existing pipeline programs progressing to later stages of development.

Key Pipeline Updates

Earlier in April, the FDA approved Incyte’s Pemazyre (pemigatinib), a kinase inhibitor indicated for the treatment of adults with previously treated, unresectable, locally advanced or metastatic cholangiocarcinoma. Investors will focus on commercialization plans for the drug.

On the call, apart from the regular top and bottom-line numbers, investors are likely to focus on any update that the company provides on the label expansion of Jakafi into additional indications.

The company initiated RUXCOVID, which is a global, randomized, double-blind, placebo-controlled phase III study evaluating the efficacy and safety of Jakafi plus standard-of-care (SoC) in patients aged 12 years and above with COVID-19-associated cytokine storm. The collaborative study is sponsored by Incyte in the United States and Novartis outside of the country.

The phase III TRuE-AD2 study, which is part of the TRuE-AD clinical program and evaluating the cream formulation of ruxolitinib for atopic dermatitis (AD), met its primary endpoint. The TRuE-AD2 study evaluated the safety and efficacy of ruxolitinib cream in adult and adolescent patients aged at least 12 years and above with AD.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Incyte this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Incyte is +539.66%, as the Zacks Consensus Estimate stands at 8 cents and the Most Accurate Estimate stands at 53 cents.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Share Price Performance

Incyte’s stock has gained  11.2% in the year so far compared with the industry’s 2.7% growth.

 

Stocks to Consider

Here are a few stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings in their upcoming releases.

Sage Therapeutics SAGE has an Earnings ESP of +1.67% and a Zacks Rank #2. The company is scheduled to release results on May 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals ALXN has an Earnings ESP of +1.08% and a Zacks Rank #3. The company is scheduled to release results on May 6.

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