Incyte's Q4 Loss Widens Despite Improved Jakafi Sales

Oncology and inflammation-focused biopharmaceutical company Incyte (NASDAQ: INCY  ) reported its fourth-quarter results before the opening bell today. Incyte's results point toward growing sales of its lead drug, but also growing losses.

For the quarter, Incyte reported total revenue -- which includes product revenue, royalty revenue, and contract revenue -- of $97.1 million, a 14.7% decline from this period last year. The company also reversed a year-ago profit of $18.8 million, or $0.14 per share, and reported a loss of $42.9 million, or $0.26 per share. Adjusting for a one-time charge related to the repurchase of $117.3 million in convertible senior notes executed during the quarter, Incyte lost $0.15 per share.

The big story for Incyte continues to be the growth of myelofibrosis drug Jakafi. Sales for the quarter grew 68% over the previous year to $72.9 million. Outside of the United States, where Jakafi is known under the brand name Jakavi and is licensed to partner Novartis (NYSE: NVS  ) , Incyte recognized $8.4 million in royalty revenue, which is more than double the $3.7 million recognized during the fourth quarter last year.

Where Incyte's top line lost traction was with its contract revenue, which totaled just $15.8 million this quarter compared to $66.7 million in the year-ago period. This figure, which is merely an amortization of milestone payments received, included a $40 million milestone for Jakavi's European approval in 2012, and a $50 million payment from Eli Lilly with regard to bacritinib.

As you might suspect with the rollout of Jakafi, operating expenses were up across the board. Research and development costs climbed to $75 million from $59.8 million, and selling, general, and administrative expenses rose to $38 million from $23.7 million. Incyte attributed these higher costs to expanded pipeline activity and a growing marketing salesforce for Jakafi in the U.S.

Looking ahead, Incyte is forecasting full-year net product revenue for Jakafi of $315 million to $335 million, representing 38% year-over-year organic growth at the midpoint. Furthermore, Incyte is projecting $60 million in contract revenue in fiscal 2014. Losses appear likely to continue, however, with R&D expenses expected to range from $350 million to $370 million, and SG&A expenses rising to $145 million to $155 million in 2014, a jump of roughly $100 million and $40 million from fiscal 2013. 

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