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Incyte Corporation (INCY) Earnings Cruise on Jakafi Growth

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Incyte Corporation (NASDAQ:INCY)Budding biotech company Incyte Corporation (NASDAQ:INCY), which specializes in developing novel JAK inhibitors, released solid second-quarter earnings on Wednesday. The company grew revenue and added to its cash position thanks to strong demand for Jakafi — an oral JAK1 and JAK2 inhibitor developed with Novartis AG (ADR) (NYSE:NVS) that’s approved to treat myelofibrosis. Management even raised its revenue guidance for the treatment from $210 million-$225 million to $220 million-$230 million. It is great to see success for Incyte Corporation (NASDAQ:INCY)’s marketed therapy, but most of the potential for shareholders lies in the pipeline. Are investors any closer to gauging the success of mid- to late-stage trials?

Financially speaking…
First things first. Incyte Corporation (NASDAQ:INCY) notched some impressive growth last quarter compared to the prior-year period.

2Q13 2Q12 % Growth
Jakafi net sales $54.1 million $29.7 million 82.2%
Total revenue $101.7 million $86.5 million 17.6%
International royalties $5.8 million $0
Net income ($0.02) $0.03

Source: Company release.

The only noticeable blemish above is net income, which swung $6.6 million from last year. In my opinion, it is a marginal data point for a company that is still largely in development mode. For instance, consider that a large chunk of Incyte Corporation (NASDAQ:INCY)’s revenue came from research collaborations with Novartis AG (ADR) (NYSE:NVS). A total of $41.7 million exchanged hands from contract revenues in the second quarter this year — compared to $56.7 million last year. A profitable future surely awaits investors should the company be successful in expanding indications for Jakafi and gaining approval for compounds in the pipeline.

Clinical updates
It is still a bit early, but Incyte Corporation (NASDAQ:INCY) has one heck of a pipeline under development. In a few years the company could have nearly 10 phase 3 trials ongoing! Better yet, it probably wouldn’t take many approvals to boost the company’s valuation from a relatively lowly $3.3 billion today. Here’s how the pipeline stacks up as of Aug. 1.

With a pipeline like that, it should be no surprise that Incyte Corporation (NASDAQ:INCY) spent most of its conference call giving clinical trial updates. You can get the full list in the company’s press release, but here are some important highlights:

Jakafi

  • The phase 3 COMFORT-II trial demonstrated improved overall survival for myelofibrosis patients taking Jakafi compared to the next best treatment option.
  • The phase 3 RESPONSE trial evaluating the drug in patients with polycythemia vera (PV) is expecting data in early 2014 and a potential new drug application submission by the first half of 2014.
  • Top-line results for a phase 2 trial evaluating the drug in patients with pancreatic cancer are expected in the current quarter of this year.
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