Incyte (INCY) reported strong second-quarter results, with Jakafi posting 25% year-over-year revenue growth in the United States and Iclusig royalties up 27%. Jakafi sales were slightly above our expectations, but we are maintaining our full-year outlook for the drug, on the lower end of management guidance, and reaffirming our fair value estimate of $97 per share. We continue to believe that the market is overreacting to first-quarter disappointments, including the failed IDO inhibitor trials and tempered baricitinib outlook, and undervaluing Incyte’s Jakafi and pipeline opportunities.
The cash-generating Jakafi franchise underpins our narrow economic moat rating, as we believe Incyte’s entrenched position in the myeloproliferative neoplasm market and the future opportunities for expansion will allow the company to continue earning excess returns. Incyte plans to file for Jakafi label expansion in steroid-refractory acute graft-versus-host disease next quarter, and it is mobilizing its salesforce in preparation for launch in the U.S., leaning on its existing relationships with U.S. payers and physicians in transplant centers who treat myelofibrosis. We expect the launch in second-line acute GVHD to expand the eligible patient population for Jakafi by a couple thousand, and there are further opportunities in chronic GVHD and treatment-naive patients on the horizon.
Karen Andersen, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.