Incyte Corporation INCY reported a loss of 10 cents per share in the second quarter of 2015 (excluding unrealized gain on long term investment), narrower than the Zacks Consensus Estimate of a loss of 12 cents and the year-ago loss of 22 cents.
Revenues shot up 63.7% from the year-ago period to $163 million, beating the Zacks Consensus Estimate of $152 million. Revenues were driven by Jakafi’s performance.
The Quarter in Detail
Jakafi sales increased 69.5% from the year-ago period to $142 million. Label expansion into uncontrolled polycythemia vera (PV) earlier this year drove sales. Jakafi demand grew 19% sequentially. Utilization of 10 mg tablets of Jakafi, which is used as the starting dose, has increased from approximately 25% to approximately 43% during the first half of 2015 following the launch of the PV indication.
Product royalty revenues from Novartis NVS for the commercialization of Jakavi in ex-U.S. markets came in at $17 million, up 41.7% from the year ago period. Contract revenues remained flat at $3 million.
R&D expenses increased 32.8% to $112.4 million from the year-ago quarter. SG&A expenses were $51.7 million, up 26.4% from the year-ago quarter reflecting commercialization expenses related to Jakafi.
Pipeline Update
Incyte is evaluating Jakafi for multiple types of cancer including second-line metastatic pancreatic cancer, colorectal, breast and non-small cell lung cancers. Data from the phase III JANUS 1 study on Jakafi (pancreatic cancer) are expected in 2016.
Incyte and partner Eli Lilly and Company LLY expect to report data on baricitinib (rheumatoid arthritis) from two further phase III studies this year.
Jakafi Guidance Increased
Incyte has revised its 2015 financial guidance. The company now expects Jakafi revenues in the range of $560 million – $575 million, above the previous guidance of $525 million – $565 million.
Research and development expenses are now expected in the range of $475 million – $500 million, compared to the previous guidance range of $450 million – $500 million.
Selling, general and administrative expenses are expected in the range of $195 million – $210 million as compared to the previous guidance of $180 million – $200 million.
Our Take
Incyte’s second quarter results were strong with the company reporting a narrower loss and higher sales. We are pleased with Jakafi’s performance. The company raised its guidance for the product – continued uptake for the PV indication should drive growth. Longer-term, the company expects Jakavi peak sales of $1.5 billion in the U.S.
Incyte carries a Zacks Rank #2 (Buy). AMAG Pharmaceuticals, Inc. AMAG is a better-ranked stock in the healthcare sector sporting a Zacks Rank #1 (Strong Buy).
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