On Tuesday, Incyte Corporation (NASDAQ:INCY) reported second-quarter revenue of $1.04 billion, up from $954.6 million a year ago, beating the consensus of $1.03 billion.

The company reported an adjusted EPS loss of $(1.82), a turnaround from a profit of $0.99, missing the consensus estimate of $(1.55).

Jakafi (ruxolitinib) net product revenues increased $705.9 million, +3% year-over-year, driven by a 9% increase in paid demand.

Opzelura (ruxolitinib) net product revenues reached $121.7 million, up 52% on continued uptake in atopic dermatitis (AD) and vitiligo in the U.S. and the launch momentum and reimbursement expansion in vitiligo in Europe.

Guidance: Incyte forecasts 2024 Jakafi revenue of $2.71 billion-$2.75 billion versus prior guidance of $2.69 billion-$2.75 billion.

Pipeline Update: Incyte announces a strategic review of its pipeline:

• Inflammation and Autoimmunity (IAI)/Dermatology: povorcitinib and MRGPRX2 and MRGPRX4, which were recently acquired from Escient Pharmaceuticals.
• Myeloproliferative Neoplasms/Graft-Versus-Host Disease (MPNs/GVHD): mCALR, JAK2V617Fi, BETi, and ALK2i
• Oncology: CDK2i, KRASG12Di and TGFßR2×PD-1
• The company will discontinue further development of oral, small molecule PD-L1 inhibitors, LAG-3 monoclonal antibody, TIM-3 monoclonal antibody, and LAG-3xPD-1 bispecific.

Tucked in its second-quarter earnings release, Incyte released topline results from two Phase 3 clinical studies evaluating retifanlimab (Zynyz, in squamous cell anal carcinoma (SCAC) and non-small cell lung cancer (NSCLC).

The Phase 3 PODIUM-303 study in SCAC met its primary endpoint of progression-free survival, and the Phase 3 PODIUM-304 study in NSCLC met its primary endpoint of overall survival.

The safety analysis from both studies demonstrated that retifanlimab was generally well-tolerated, and no new safety signals were observed.

Incyte plans to share the Phase 3 data from both studies in the second half of 2024.

William Blair writes, "This marks a bounce back from first-quarter sales that saw greater seasonality than expectations and put the company back on track to achieve full-year Jakafi revenue guidance...We are encouraged to see Jakafi continuing to demonstrate steady growth, as this has been a major concern for investors with increased competition in the myelofibrosis space."

The analyst notes steady growth for Jakafi in its approved uses and suggests that ongoing lifecycle management studies could enhance its peak sales and extend franchise exclusivity. Opzelura is expected to create significant commercial opportunities for Incyte in the immune dermatology market.

Additionally, Povorcitinib, though currently underappreciated by investors, has the potential to become a major value driver by the decade's end.

William Blair maintains a $89 per share valuation and an Outperform rating.

Price Action: INCY stock is down 4.08% at $65.79 at the last check on Tuesday.

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