Incyte Corporation (NASDAQ:INCY) reports 2016 third-quarter financial results, including strong revenue growth driven by increased sales of Jakafi® (ruxolitinib) in the U.S., Iclusig® (ponatinib) in Europe and royalties from ex-U.S. sales of Jakavi® (ruxolitinib) by Novartis. In September, Jakafi was included as a recommended treatment for appropriate patients with myelofibrosis in the latest National Comprehensive Cancer Network® (NCCN®) Clinical Practice Guidelines in Oncology, underscoring the important and long-term clinical benefits seen in patients treated with Jakafi.

The Company also highlighted progress being made across its clinical portfolio. Within the targeted therapies segment, two Phase 2 trials of INCB54828, a selective FGFR inhibitor, are now open for recruitment in bladder cancer and cholangiocarcinoma, respectively. In immuno-oncology, updated Phase 1 data from ECHO-202 were recently presented at the ESMO Congress, supporting the therapeutic profile of epacadostat plus pembrolizumab for the first-line treatment of patients with advanced or metastatic melanoma.

“Incyte continues to deliver dynamic sales growth from Jakafi in the U.S. and now from Iclusig in Europe. With a potential additional future source of revenue from baricitinib, we are able to make significant investments in opportunities across our broad and diverse clinical portfolio,” stated Hervé Hoppenot, Incyte’s Chief Executive Officer. “Our commercial footprint has expanded to include Europe in addition to the U.S., and as our portfolio matures, we are in an excellent position to build Incyte into a world-class biopharmaceutical organization.”

2016 Third-Quarter Financial Results

Revenues For the quarter ended September 30, 2016, net product revenues of Jakafi were $224 million as compared to $161 million for the same period in 2015, representing 39 percent growth. For the nine months endedSeptember 30, 2016, net product revenues of Jakafi were $615 million as compared to $419 million for the same period in 2015, representing 47 percent growth. For the quarter and four month period ended September 30, 2016, net product revenues of Iclusig were $13 million and $17 million, respectively1. For the quarter and nine months ended September 30, 2016, product royalties from sales of Jakavi outside of the United States received from Novartis were $30 million and $77 million, respectively, as compared to $18 million and $51 million, respectively, for the same periods in 2015. For the quarter and nine months ended September 30, 2016, contract revenues were $3 million and $70 million, respectively, as compared to $8 million and $40 million, respectively, for the same periods in 2015. The increase in contract revenues for the nine months ended September 30, 2016relates to milestone payments earned. For the quarter ended September 30, 2016, total revenues were $269 million as compared to $188 million for the same period in 2015. For the nine months ended September 30, 2016, total revenues were $779 million as compared to $510 million for the same period in 2015.

In October 2016, the Company was notified by Novartis that a $40 million milestone payment obligation to Incyte related to reimbursement of Jakavi in Europe for polycythemia vera had been triggered. The Company expects to record this payment as contract revenue during the fourth quarter of 2016.

Research and development expenses Research and development expenses for the quarter and nine months ended September 30, 2016 were $143 million and $420 million, respectively, as compared to $132 million and $363 million, respectively, for the same periods in 2015. Included in research and development expenses for the quarter and nine months ended September 30, 2016 were non-cash expenses related to equity awards to our employees of $16 million and $43 million, respectively. The increase in research and development expenses for the nine months ended September 30, 2016 was primarily due to the expansion of the Company’s clinical portfolio.

Selling, general and administrative expenses Selling, general and administrative expenses for the quarter and nine months ended September 30, 2016 were $76 million and $207 million, respectively, as compared to $48 million and $144 million, respectively, for the same periods in 2015. Included in selling, general and administrative expenses for the quarter and nine months ended September 30, 2016 were non-cash expenses related to equity awards to our employees of $10 million and $26 million, respectively. Increased selling, general and administrative expenses are driven primarily by additional costs related to the commercialization of Jakafi.

Change in fair value of acquisition-related contingent consideration The change in fair value of acquisition-related contingent consideration of $8 million and $10 million for the quarter and nine months ended September 30, 2016 represents the fair market value adjustments of the Company’s contingent liability related to the acquisition of the European business of ARIAD Pharmaceuticals, Inc.

Unrealized gain on long term investment Unrealized gain on long term investment of $24 million and $20 million for the quarter and nine months ended September 30, 2016represents the fair market value adjustments of the Company’s investment in Agenus.

Net income / (loss) Net income for the quarter ended September 30, 2016 was $37 million, or $0.20 per basic and $0.19 per diluted share, as compared to net loss of $40 million, or $0.22 per basic and diluted share for the same period in 2015. Net income for the nine months ended September 30, 2016 was $95 million, or $0.51 per basic and $0.49 per diluted share, as compared to net loss of $49 million, or $0.27 per basic and diluted share for the same period in 2015.

Cash, cash equivalents and marketable securities position As of September 30, 2016, cash, cash equivalents and marketable securities totaled $717 million, as compared to $708 million as of December 31, 2015.

2016 Financial Guidance

The Company has updated its full year 2016 financial guidance, as detailed below.

Portfolio Update

Cancer – Targeted Therapies

Two trials of INCB54828, a selective FGFR inhibitor, in patients with bladder cancer and cholangiocarcinoma, respectively, harboring FGFR alterations are now open for recruitment.

Incyte has two BRD inhibitors in clinical trials, INCB54329 and INCB57643. Having two distinct compounds allows the Company to evaluate the clinical safety and tolerability of different pharmacokinetic and pharmacodynamic profiles within a therapeutic class.

Cancer – Immune Therapies

Updated Phase 1 data from the ECHO-202 trial of epacadostat plus pembrolizumab was recently presented at ESMO, showing durable responses in patients with advanced or metastatic melanoma, and a well-tolerated safety profile. These data reinforce Incyte’s confidence in the decision to move this immunotherapy combination into the ongoing ECHO-301 Phase 3 trial for the first-line treatment of patients with advanced or metastatic melanoma.

Non Oncology

Data from Incyte’s Phase 2 trial of topical ruxolitinib for the treatment of patients with alopecia areata have been accepted for presentation at the National Alopecia Areata Foundation’s Alopecia Areata Research Summit on November 14, 2016.

Partnered

Baricitinib, a JAK1/JAK2 inhibitor licensed to Lilly, is under global regulatory review for the treatment of patients with rheumatoid arthritis. If approved, Incyte will become eligible to earn regulatory and commercial milestones as well as royalties on global net sales.

Novartis anticipates submitting an NDA for capmatinib, Incyte’s potent and selective c-MET inhibitor, in 2018. (Original Source)

Shares of Incyte are up over 5% to $91.50 in pre-market trading Tuesday. INCY has a 1-year high of $124.98 and a 1-year low of $55. The stock’s 50-day moving average is $88.94 and its 200-day moving average is $82.34.

On the ratings front, Incyte has been the subject of a number of recent research reports. In a report issued on October 24, RBC analyst Simos Simeonidis maintained a Buy rating on INCY, with a price target of $113, which implies an upside of 30% from current levels. Separately, on October 10, BMO’s Ian Somaiya maintained a Buy rating on the stock and has a price target of $121.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Simos Simeonidis and Ian Somaiya have a yearly average loss of 30% and a return of 9.9% respectively. Simeonidis has a success rate of 20% and is ranked #4022 out of 4178 analysts, while Somaiya has a success rate of 44% and is ranked #355.

The street is mostly Bullish on INCY stock. Out of 13 analysts who cover the stock, 13 suggest a Buy rating . The 12-month average price target assigned to the stock is $108.67, which implies an upside of 25% from current levels.

Incyte Corp. is a biopharmaceutical company, which focuses on the discovery, development, development, formulation, manufacturing and commercialization of proprietary therapeutics to treat serious unmet medical needs, primarily in oncology. Its product, Jakafi, a JAK1 and JAK2 inhibitor, is currently approved in the U.S. for the treatment of intermediate or high-risk myelofibrosis and is in development as a potential treatment for other cancers.