Please ensure Javascript is enabled for purposes of website accessibility

Incyte's Q4 Loss Widens Despite Improved Jakafi Sales

By Sean Williams – Feb 12, 2014 at 1:37PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Weaker contract revenue and higher expenses offset a 68% increase in sales of myelofibrosis drug Jakafi and push Incyte to a loss in the fourth-quarter.

Oncology and inflammation-focused biopharmaceutical company Incyte (INCY -0.04%) 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 (NVS -0.36%), 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. 


Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any companies mentioned in this article. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Incyte Stock Quote
$77.80 (-0.04%) $0.03
Novartis Stock Quote
$87.36 (-0.36%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.