Bernstein: Incyte’s third-quarter Opzelura results beat expectations, but a trough remains ahead after pipeline changes

Why did third-quarter revenue beat expectations?

Incyte’s third-quarter revenue was 1.557 billion dollars, up 14% year over year and 7% above market consensus; Opzelura was the main driver. The product generated revenue of 255 million dollars, up 36% year over year and 14% above consensus, supported by 24% growth in US prescription demand and growth in new patients.
Revenue from its largest product, Jakafi, and its extended-release formulation was 827 million dollars, up 4% year over year and broadly in line with consensus. Underlying demand rose 12%, but pricing pressure offset some of the growth.
While revenue beat expectations, the non-GAAP diluted loss per share was 3.60 dollars, larger than the market consensus loss of 3.22 dollars per share.

The company raised its 2026 Opzelura net product revenue guidance from 1.05 billion–1.1 billion dollars to 1.1 billion–1.2 billion dollars and its hematology and oncology product revenue guidance from 860 million–890 million dollars to 890 million–910 million dollars; Jakafi guidance remained at 3.22 billion–3.27 billion dollars.
Bernstein accordingly raised its revenue forecasts for the relevant products and slightly increased its expense forecasts, lifting its price target from 104 dollars to 108 dollars while maintaining its market-perform rating. The target is about 10% below the 30 October closing price of 120.39 dollars.
The firm still expects the company to go through a trough: its model forecasts 2026 revenue rising 18% year over year to 6.088 billion dollars, but GAAP net income falling 67% to 430 million dollars; research and development expenses are expected to rise from 2.05 billion dollars in 2025 to 3.47 billion dollars.

The company stopped the phase III MAESTRA-2 trial of INCB123667 in platinum-resistant ovarian cancer, but continues to develop the drug for first-line maintenance treatment of ovarian cancer.
Bernstein had previously questioned whether the efficacy of this drug class would be sufficient to drive testing adoption and treatment decisions. It therefore supports the company’s portfolio adjustment and has removed the drug’s value in platinum-resistant ovarian cancer from its valuation.
For the first-line maintenance treatment still in development, the firm believes the population of patients with Cyclin E1 overexpression is narrow, limiting the commercial opportunity.

Bernstein will watch for updates at the ASH meeting on INCA033989 in first-line myelofibrosis, including more mature data on monotherapy and combination treatment with ruxolitinib, to assess whether it can provide a meaningful improvement over Jakafi in patients with CALR mutations.
Regulatory discussions on surrogate endpoints remain ongoing. Bernstein believes the non-Jakafi pipeline has made progress, but remains on the sidelines pending further data.