UESP describes the following possible causes:
- If you talk to Kesh while he is creating the incense, you may not get the next quest update.
- (PC Only) This bug is fixed by version 2.0.4 of the Unofficial Skyrim Patch.
- (PC) Use the console command
setstage da13 21 to bypass Kesh not creating the incense.
- Try killing Kesh and looting the four ingredients back from his body. Once Kesh is dead, you should be able to activate the cauldron yourself and continue the quest as normal.
- Cancelling while talking to Peryite may cause you to get stuck when he is finished, as you cannot move or select anything once you have inhaled the incense.
If you are using the PC version of Skyrim, you can bypass the entire interaction with
setstage da13 40. If you do this, then you won't receive any dialog from Peryite at all, and can go directly to killing Orchendor. If you have not yet received the "inhale the fumes" objective in your quest journal, then you should do
setstage da13 21 and try to finish the quest normally before skipping the rest of the scene. Otherwise, you might have problems with turning the quest in at the end.
For Special Edition users, I would recommend downloading the unofficial patch, as it is available for all platforms and will (probably) fix this problem. Unfortunately, some unofficial patch fixes require a new game, but I'm not sure whether this is one of them.