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Is Incyte Hurt by Having Only One FDA-Approved Drug?

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Incyte’s revenues

Incyte (INCY) is a biopharmaceutical company focused on the discovery, development, and commercialization of oncology drugs. The company’s consolidated revenues increased by more than 51% to $246.3 million in 2Q16 compared to $163 million in 2Q15. Its reported adjusted EPS (earnings per share) was $0.19 for 2Q16. Analysts expect EPS of $0.38 for 2016.

The above graph shows Incyte’s revenue trend over the last few quarters and estimates for the coming quarters. We’ll look at details about royalty revenues, contract revenues, and collaborations in the following parts of this series.

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Existing product portfolio

Jakafi (ruxolitinib) is Incyte’s only product. It’s the only FDA-approved drug for the treatment of myelofibrosis and polycythemia vera, rare types of blood cancer. Incyte sells Jakafi in US markets and has collaborations with other companies for Jakafi sales outside the United States. Other products are presently in development stages.

Iclusig (ponatinib), another Incyte product, was acquired from Ariad Pharmaceuticals (ARIA) in June 2016. It’s approved for the treatment of chronic myeloid leukemia as well as Philadelphia chromosome-positive acute lymphoblastic leukemia for patients who can’t be treated with other tyrosine kinase inhibitors. The drug is already approved in the United States, the European Union, Canada, Australia, and a few other countries.

Iclusig competes with Bristol-Myers Squibb’s (BMY) Sprycel, Pfizer’s (PFE) Bosulif, and Novartis’s (NVS) Tasigna and Gleevec.

Acquisition of Ariad’s European operations

In May 2016, Incyte announced the acquisition of Ariad Pharmaceuticals’ (ARIA) European operations. It completed the acquisition in June 2016. The company also acquired an exclusive developing and commercialization license for Iclusig in Europe and a few other countries.

Future revenues

Analysts are estimating that Incyte’s 3Q16 revenues will be more than $260 million, an increase of more than 38% compared to $187 million in 3Q15. This is due to the increasing demand for Jakafi and increased revenues from royalties.

Revenues are also expected to increase by 13% to $277 million in 4Q16 over 4Q15. For 2016, revenues are estimated at $1.1 billion, an increase of more than 38% compared to $753.8 million for 2015.

To divest the risk, you can consider ETFs such as the Vanguard Health Care ETF (VHT), which holds ~0.4% of its total assets in Incyte.

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