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How Was Incyte’s Revenue Stream in 3Q17?

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Incyte’s revenue

As we discussed earlier, Incyte (INCY) reported revenue of $381.5 million in 3Q17, a 41.6% rise over its revenue of $269.5 million in 3Q16. This revenue growth was driven by increased demand for the drug Jakafi.

The above graph shows a revenue breakup for Incyte over the last few quarters. Incyte’s business revenue includes revenue from four sources: Jakafi sales in the United States, Iclusig sales in Europe, royalty revenues for Jakavi and Olumiant, and contract revenues.

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Product sales

Incyte’s product portfolio includes two products: Jakafi and Iclusig.

Jakafi is marketed in US markets by Incyte’s team. In 3Q17, Jakafi’s revenue was $303.9 million, a rise of 35.7% compared to its revenue of $223.9 million in 3Q16. This revenue rise was the result of Jakafi’s strong performance in US markets. The drug’s overall revenue was $831 million for the first nine months of 2017 (which ended on September 30, 2017), and analysts expect its US sales to be over $1.0 billion for the entirety of 2017.

In 3Q17, Iclusig’s revenue was $18.1 million, a rise of 42.5% compared to its revenue of $12.7 million in 3Q16. Incyte acquired the commercialization rights for Iclusig from Ariad Pharmaceuticals (ARIA) in June 2016.

Royalty revenue

Novartis (NVS) holds the license for the development and commercialization of Jakafi outside US markets, and it’s marketing the drug under the brand name Jakavi. Incyte receives royalties for Jakavi sales outside US markets.

Incyte and Eli Lilly and Company (LLY) have a collaboration for the commercialization of Olumiant (baricitinib) worldwide, and Incyte receives royalties for Olumiant sales.

Incyte’s total product royalty revenue was $44.5 million in 3Q17, a rise compared to $29.6 million in 3Q16. This product royalty revenue included $29.6 million from Novartis toward royalties on Jakavi sales and ~$3.2 million from Eli Lilly toward royalties on Olumiant sales.

Contract revenue

Incyte has few collaborative research and license agreements with Novartis and Eli Lilly. Incyte’s contract revenue is related to milestone payments for the development of drugs under these agreements. In 3Q17, Incyte reported contract revenue of $15.0 million compared to $3.2 million in 3Q16.

The VanEck Vectors Biotech ETF (BBH) holds 4.6% of its total investments in Incyte and 4.2% in BioMarin Pharmaceutical (BMRN).

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