Incyte Corporation (NASDAQ:INCY) reported 2015 second-quarter financial results, including revenue from Jakafi.

The Company highlighted the continued momentum in the commercialization of Jakafi in the U.S., as well as progress being made across its clinical portfolio, including the results of two pivotal trials of baricitinib that were presented with Eli Lilly and Company(“Lilly”) at the 2015 European League Against Rheumatism (EULAR) meeting in June. In addition, positive proof-of-concept results from the novel:novel combination of Incyte’s PI3Kδ inhibitor INCB40093 and JAK1-selective inhibitor INCB39110 in B-cell malignancies were presented at both the 2015 American Society of Clinical Oncology(ASCO) and European Hematology Association (EHA) annual meetings in the second quarter of 2015.

“The commercial performance of Jakafi in Q2 2015 was very strong, confirming both underlying growth from the myelofibrosis indication and an acceleration in Jakafi growth from the launch in patients with uncontrolled polycythemia vera,” stated Hervé Hoppenot, Incyte’s President and Chief Executive Officer. “Recent data presented from our product candidates, and the progress we are making in recruiting multiple clinical trials, further illustrate the strength and diversity of our development portfolio.”

Jakafi is approved by the U.S. Food and Drug Administration for treatment of people with polycythemia vera (PV) who have had an inadequate response to or are intolerant of hydroxyurea. Jakafi is also indicated for treatment of people with intermediate or high-risk myelofibrosis (MF), including primary MF, post–polycythemia vera MF, and post–essential thrombocythemia MF.

2015 Second-Quarter Financial Results

Revenues For the quarter ended June 30, 2015, net product revenues of Jakafi were$142 million as compared to $84 million for the same period in 2014, representing 69 percent growth. For the six months ended June 30, 2015, net product revenues of Jakafi were $258 million as compared to $154 million for the same period in 2014, representing 68 percent growth. For the quarter and six months ended June 30, 2015, product royalties from sales of Jakavi® (ruxolitinib) outside of the United Statesreceived from Novartis, the Company’s collaborator, were $17 million and $33 million, respectively, as compared to $12 million and $22 million, respectively, for the same periods in 2014. For the quarter ended June 30, 2015, contract revenues were $3 millionas compared to $3 million for the same period in 2014. For the six months ended June 30, 2015, contract revenues were $31 million as compared to $13 million for the same period in 2014. The $18 million increase in contract revenues for the six months endedJune 30, 2015 compared to the same period in 2014 relates to an increase in milestone payments earned from Novartis. For the quarter ended June 30, 2015, total revenues were $163 million as compared to $100 million for the same period in 2014. For the six months ended June 30, 2015, total revenues were $322 million as compared to $189 million for the same period in 2014.

Year Over Year Revenue Growth
(in thousands, unaudited)
Three Months Ended Six Months Ended
June 30, % June 30, %
2015 2014 Change 2015 2014 Change
Revenues:
Jakafi net product revenue $142,406 $ 84,025 69% $257,736 $153,676 68%
Product royalty revenues 17,364 12,340 41% 33,037 22,166 49%
Contract revenues 3,214 3,214 31,429 13,429
Other revenues 3 58 103
Total revenues $162,984 $ 99,582 $322,260 $189,374

Research and development expenses Research and development expenses for the quarter and six months ended June 30, 2015 were $112 million and $231 million, respectively, as compared to $85 million and $160 million, respectively, for the same periods in 2014. Included in research and development expenses for the quarter and six months ended June 30, 2015 were non-cash expenses related to equity awards to our employees of $10 million and $20 million respectively. The increase in research and development expenses was primarily due to the expansion of the Company’s clinical portfolio. Also included in research and development expenses for the six months ended June 30, 2015 was the one-time upfront payment to Agenus related to our license, development and commercialization agreement.

Selling, general and administrative expenses Selling, general and administrative expenses for the quarter and six months ended June 30, 2015 were $52 million and $97 million, respectively, as compared to $41 million and $78 million, respectively, for the same periods in 2014. Included in selling, general and administrative expenses for the quarter and six months ended June 30, 2015 were non-cash expenses related to equity awards to our employees of $7 million and $15 million respectively. Increased selling, general and administrative expenses reflected additional costs related to the commercialization of Jakafi.

Unrealized gain on long term investment Unrealized gain on long term investment of$27 million for the quarter and six months ended June 30, 2015 represents the fair market value adjustment of the Company’s investment in Agenus.

Net income / (loss) Net income for the quarter ended June 30, 2015 was $9 million, or$0.05 per basic and diluted share, as compared to a net loss of $37 million, or $0.22per basic and diluted share, for the same period in 2014. Net loss for the six months ended June 30, 2015 was $9 million, or $0.05 per basic and diluted share as compared to a net loss of $71 million, or $0.43 per basic and diluted share, for the same period in 2014.

Cash, cash equivalents and marketable securities position As of June 30, 2015, cash, cash equivalents and marketable securities totaled $627 million, as compared to$600 million as of December 31, 2014.

2015 Financial Guidance

The Company has updated its full year 2015 financial guidance, as detailed below.

Previous Guidance Updated Guidance
Jakafi net product revenues $525-$565 million $560-$575 million
Research and development expenses $450-$500 million, includes non-cash stock compensation expense of $40-$45 million $475-$500 million, includes non-cash stock compensation expense of $40-$45 million
Selling, general and administrative expenses $180-200 million, includes non-cash stock compensation expense of $30-$35 million $195-$210 million, includes non-cash compensation expense of $30-$35 million

Product Update

Jakafi (ruxolitinib) – JAK1 and JAK2 Inhibitor

Follow-up results from the pivotal RESPONSE trial of ruxolitinib in patients with uncontrolled polycythemia vera were presented at the 2015 ASCO meeting, showing 83% of patients were still receiving ruxolitinib at a median exposure of 111 weeks.

The pivotal Phase III JANUS 1 and JANUS 2 studies of ruxolitinib in second line metastatic pancreatic cancer are ongoing. Three Phase II trials of ruxolitinib are ongoing in colorectal, breast and non-small cell lung cancer (NSCLC) patients.

baricitinib – JAK1 and JAK2 Inhibitor

In June 2015, the Company and Lilly presented five abstracts for baricitinib, including oral presentations of data from the pivotal RA-BEACON and RA-BUILD studies, at the 2015 EULAR meeting. The Company and Lilly expect to share results of two further Phase III studies in various disclosures in late 2015.

In April 2015, positive proof-of-concept data for baricitinib for the treatment of patients with diabetic nephropathy (diabetic kidney disease) were presented by Lilly at the scientific sessions of the American Diabetes Association.

epacadostat (INCB24360) – IDO1 Inhibitor

Four clinical trials to evaluate epacadostat in combination with immune checkpoint inhibitors are all recruiting patients. These trials are evaluating epacadostat in combination with Merck & Co’s PD-1 inhibitor Keytruda® (pembrolizumab),AstraZeneca/MedImmune’s investigational PD-L1 inhibitor, MEDI4736, Bristol-Myers Squibb’s PD-1 inhibitor, Opdivo® (nivolumab), and Roche/Genentech’s investigational PD-L1 inhibitor, MPDL3280A.

INCB39110 & INCB52793 – JAK1-Selective Inhibitors

In May 2015, initial results of the combination of INCB39110 plus INCB40093, Incyte’s PI3Kδ inhibitor, in patients with B-cell malignancies were presented at the 2015 ASCOmeeting. INCB39110 is also in a Phase II trial in NSCLC patients, in combination with erlotinib, and in a Phase II trial, in combination with gemcitabine and nab-paclitaxel, in patients with pancreatic cancer.

The Company’s second JAK1-selective inhibitor, INCB52793, is in a Phase I/II monotherapy dose-escalation trial in advanced malignancies.

INCB40093 & INCB50465 – PI3Kδ Inhibitors

Initial results of the combination of INCB40093 and the JAK1-selective inhibitor INCB39110 in B-cell malignancies were presented at the 2015 ASCO meeting.

INCB50465 is a highly-potent PI3Kδ inhibitor, and an open-label, dose-escalation study of INCB50465 in subjects with previously treated B-cell malignancies has been initiated.

capmatinib (INC280) – c-MET Inhibitor

Capmatinib is being investigated by Novartis in a variety of solid tumors, including advanced c-MET positive hepatocellular carcinoma and c-MET positive/EGFR-TKI-resistant NSCLC, as well as in combination, including with Bristol-Myers Squibb’s PD-1 immune checkpoint inhibitor, Opdivo (nivolumab), in a Phase II trial of patients with NSCLC.

INCB54828 – FGFR Inhibitor

INCB54828 is in an open-label, dose-escalation study in subjects with advanced malignancies.

INCB54329 – BRD Inhibitor

In the second quarter of 2015, the Company initiated an open-label, dose-escalation study of INCB54329 in subjects with advanced malignancies. (Original Source)

Shares of Incyte closed yesterday at $103.98. INCY has a 1-year high of $121.70 and a 1-year low of $43.86. The stock’s 50-day moving average is $108.26 and its 200-day moving average is $97.43.

On the ratings front, Incyte has been the subject of a number of recent research reports. In a report issued on July 24, Piper Jaffray analyst Joshua Schimmer reiterated a Buy rating on INCY, with a price target of $130, which implies an upside of 25.0% from current levels. Separately, on June 16, Oppenheimer’s Christopher Marai reiterated 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, Joshua Schimmer and Christopher Marai have a total average return of 11.2% and 43.4% respectively. Schimmer has a success rate of 63.3% and is ranked #253 out of 3724 analysts, while Marai has a success rate of 72.0% and is ranked #8.

Overall, 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $113.00 which is 8.7% above where the stock closed yesterday.

Incyte Corpis a biopharmaceutical company. It discovers, develops and commercializes proprietary small molecule drugs to treat serious unmet medical needs, mainlyin oncology.