We are maintaining our Neutral recommendation on Incyte Corporation (INCY) with a target price of $15.00.
Incyte is a Wilmington, Delaware based drug discovery and development company with a focus on oral compounds to treat HIV, inflammation, cancer and diabetes. The company’s lead compound is INCB18424, an oral janus-associated kinase (JAK) antagonist.
Incyte expects to submit a new drug application (NDA) for the candidate for the treatment of myelofibrosis (MF) to the US Food and Dug Administration (FDA) in the second quarter of 2011.
The company expects to launch INCB18424 for MF, a rare bone marrow disorder, in the US later in the year (assuming a six-month review period). If approved, INCB18424 will the first FDA approved medicine for the treatment of this life threatening disease.
Incyte has a broad pipeline, with most of the compounds in early-to-mid stages of development. However, in 2009, Incyte decided to focus its resources on the programs with the greatest near-term value due to the challenging economic environment.
Incyte Corporation’s fourth quarter 2010 earnings of $0.24 per share surpassed the Zacks Consensus Estimate by $0.05. Earnings in the final quarter of 2010 were helped by a surge in revenues and a fall in total cost and expenses. Total revenues in the reported quarter jumped to $85.9 million from $6.9 million in the year-ago quarter.
Revenues were boosted by the amortization of the upfront payments received by Incyte from partners Novartis (NVS) and Eli Lilly (LLY). Moreover, the $69 million received as milestone payments under the above agreements also contributed to the huge rise in revenues.
We are also impressed by its collaborations with big pharma players such as Pfizer (PFE), Novartis and Eli Lilly to develop its pipeline. We believe the association of big pharmaceutical companies will bolster the company with much needed financial strength as well as rich experience.
Even though we are impressed by the diversified pipeline at Incyte, which has huge potential, the early-to-mid stage status of the pipeline is a concern. A majority of the candidates are several years away from hitting the market. The debt burden of the company is another area of concern.
These concerns have caused us to increase the loss per share estimate for 2011. We prefer to remain on the sidelines till further visibility is obtained on the pipeline development at Incyte and retain our Neutral view on the stock.
INCYTE CORP (INCY): Free Stock Analysis Report
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