Incyte Beats, Raises Guidance - Analyst Blog

Incyte Corporation’s (INCY) first quarter fiscal 2010 loss per share came in at 30 cents compared to a loss of 41 cents reported in the year-ago period. However, excluding non-cash charge related to notes redemption, the company reported a loss of 27 cents per share, better than the Zacks Consensus Estimate of a loss of 31 cents. 

Incyte reported revenues of $17.3 million compared to $0.7 million in the first quarter of 2009. The collaboration agreement with Novartis (NVS) and Eli Lilly (LLY) primarily led to the increase in revenues.
 
In addition to releasing quarterly results, Incyte provided an update on its pipeline candidates. In 2009, the company entered into a collaboration and license agreement with Novartis for two of its pipeline candidates – INCB18424, an oral JAK1/JAK2 inhibitor and INCB28060, an oral cMET inhibitor. 

While INCB18424 is currently being studied in a phase III clinical trial for myelofibrosis (MF), the phase I/II trial of INCB28060 in patients with solid tumors has been initiated. Along with MF, INCB18424 is also being studied for patients with advanced polycythemia vera (PV) and essential thrombocythemia (ET). For all the three indications, Incyte has received orphan drug status for INCB18424. 

While patient enrollment in the phase III trial for INCB18424 in MF patients was completed in Europe in 2009, the US enrollment process was completed in the first quarter of 2010. Incyte has initiated discussions with the US Food and Drug Administration (FDA) to discuss the required regulatory requirements for the drug’s approval in patients with advanced PV, who are not responding to hydroxyurea.
 
In 2009, Incyte also entered into a deal with Eli Lilly regarding the development and commercialization of INCB28050 and certain other follow-on drugs for inflammatory and auto-immune diseases. The company received positive results from the phase II trial of INCB28050 to treat rheumatoid arthritis (RA) patients. 

Enrollment is currently in progress for a phase I/II trial of INCB7839 in combination with Herceptin (trastuzumab) in HER2 positive breast cancer patients. In another development, under the collaboration agreement with Pfizer (PFE), Incyte received a $3 million milestone payment for the initiation of the phase I trial of the CCR2 antagonist program.
 
Operating expenses during the reported quarter increased 8.2% year-over-year to $37.23 million based upon the advancement of its pipeline. While research and development expenses increased by 6.3%, selling, general and administrative expenses were up by 20.8%. 

At the end of the quarter, Incyte had $422.2 million of cash and marketable securities, down from $473.9 million as at December-end 2009. 

Based on future payments to be received from collaborating partners, Incyte has raised its guidance for 2010. The company expects revenues in the range of $99-$101 million, up from the previous guidance of $66-$68 million. We have a “Neutral" recommendation on the stock.
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