Incyte Reports 2018 Fourth Quarter and Year-End Financial Results, Provides 2019 Financial Guidance and Provides Updates on Key Clinical Programs

  • Total product-related revenues of $468 million (+25%) in 4Q 2018
    and $1.7 billion (+25%) for the full year 2018
  • Jakafi® (ruxolitinib) revenues of $380
    million (+26%) in 4Q
     2018 and $1.4 billion (+22%) for the
    full year 2018
  • Multiple late-stage product candidates provide additional
    opportunities to further accelerate revenue growth

Conference Call and Webcast Scheduled Today at 8:00 a.m. EST

WILMINGTON, Del.–(BUSINESS WIRE)–lt;a href=”https://twitter.com/search?q=%24INCY&src=ctag” target=”_blank”gt;$INCYlt;/agt;–Incyte Corporation (Nasdaq:INCY) today reports 2018 fourth quarter and
year-end financial results, announces 2019 guidance and provides a
status update on the Company’s development portfolio.

“Sales of Jakafi were strong in 2018, which is a testament to its
well-established efficacy and safety profile, and we continue to work
with the FDA to facilitate the review of the GVHD indication,” stated
Hervé Hoppenot, Chief Executive Officer, Incyte. “Our late-stage product
portfolio provides us with multiple additional opportunities to
accelerate revenue growth. Our submission to the FDA seeking marketing
approval of pemigatinib in patients FGFR2 translocated
cholangiocarcinoma is expected later this year, as is the submission, by
Novartis, for the approval of capmatinib in patients with MET exon-14
skipping non-small cell lung cancer. Results from the pivotal trial of
itacitinib in newly-diagnosed GVHD patients are expected later this
year, as are the results of two additional pivotal trials of ruxolitinib
in patients with steroid-refractory GVHD, as well as proof-of-concept
data from the trial of ruxolitinib cream in patients with vitiligo.
Success with these product candidates would not only serve to further
diversify our sources of revenue, but would also illustrate the
productivity of the research and development group at Incyte.”

Portfolio Update

Oncology – key highlights

The U.S. Food and Drug Administration (FDA) recently extended the review
of the supplemental New Drug Application (sNDA) seeking approval of
ruxolitinib (JAK1/JAK2) for the treatment of steroid-refractory acute
GVHD, assigning a new Prescription Drug User Fee Act (PDUFA) date of May
24, 2019. The sNDA is supported by data from REACH1, which were
presented at the American Society of Hematology (ASH) Annual Meeting in
December. Incyte is prepared for an immediate launch in the U.S. should
ruxolitinib be approved in this new indication.

Phase 3 trials of ruxolitinib in patients with steroid-refractory GVHD
(REACH2 [acute]; REACH3 [chronic]) are expected to deliver results in
the second half of 2019, as is the Phase 3 trial of itacitinib (JAK1) in
patients with steroid-naïve acute GVHD (GRAVITAS-301).

The FDA has recently granted pemigatinib (FGFR) Breakthrough Therapy
designation for the treatment of previously treated, advanced/metastatic
or unresectable FGFR2 translocated cholangiocarcinoma. The FDA’s
Breakthrough Therapy designation is designed to expedite the development
and review of drugs for serious conditions that have shown encouraging
early clinical results and may demonstrate substantial improvements over
available medicines.

The New Drug Application (NDA) seeking approval of pemigatinib for the
second-line treatment of patients with FGFR2 translocated
cholangiocarcinoma is expected to be submitted in the third quarter of
2019, and we are now recruiting patients into a pivotal trial of
pemigatinib for the first-line treatment of cholangiocarcinoma. A
pivotal program for the first-line treatment of patients with bladder
cancer is planned to launch this year. Based on data generated from
ongoing trials in patients with FGFR-driven cholangiocarcinoma, bladder
cancer and 8p11 MPN, Incyte is planning to initiate a pivotal
tumor-agnostic trial evaluating pemigatinib in patients with
driver-activations of FGF/FGFR later this year.

Status updates for Incyte’s later-stage clinical programs are provided
below.

             
     

Indication

   

Status Update

Ruxolitinib
(JAK1/JAK2)

    Steroid-refractory acute GVHD     sNDA accepted for Priority Review (based on REACH1), review period
extended by three months; Phase 3 (REACH2)

Ruxolitinib
(JAK1/JAK2)

Steroid-refractory chronic GVHD Phase 3 (REACH3)

Ruxolitinib
(JAK1/JAK2)

Essential thrombocythemia Phase 2 (RESET)

Ruxolitinib
(JAK1/JAK2)

Refractory myelofibrosis Phase 2 in combination with parsaclisib (PI3Kδ), INCB53914 (PIM) or
itacitinib (JAK1)

Itacitinib
(JAK1)

Treatment-naïve acute GVHD Phase 3 (GRAVITAS-301)

Itacitinib
(JAK1)

Treatment-naïve chronic GVHD Phase 3 (GRAVITAS-309)

Itacitinib
(JAK1)

NSCLC Phase 1/2 in combination with osimertinib (EGFR)

Pemigatinib
(FGFR1/2/3)

Bladder cancer Phase 2 (FIGHT-201)

Pemigatinib
(FGFR1/2/3)

Cholangiocarcinoma Phase 2 (FIGHT-202); Phase 3 (FIGHT-302) now recruiting

Pemigatinib
(FGFR1/2/3)

8p11 MPN Phase 2 (FIGHT-203)

Pemigatinib
(FGFR1/2/3)

Solid tumors with driver activations of FGF/FGFR

Pivotal program in preparation

INCMGA0012
(PD-1)
1

Solid tumors Phase 2 trials (MSI-high endometrial cancer, merkel cell carcinoma,
anal cancer)

Parsaclisib
(PI3Kδ)

    Non-Hodgkin lymphoma     Phase 2 (CITADEL-203, follicular lymphoma), (CITADEL-204, marginal
zone lymphoma), (CITADEL-205, mantle cell lymphoma)
 
Notes:
1) INCMGA0012 licensed from MacroGenics
 

Incyte also has a portfolio of compounds in proof-of-concept trials, as
detailed below.

             

Small molecules

   

Monoclonal antibodies

   

Bispecific antibodies

INCB53914 (PIM)     INCAGN1876 (GITR)2     MCLA-145 (PD-L1xCD137)3
INCB59872 (LSD1) INCAGN1949 (OX40)2
INCB62079 (FGFR4) INCAGN2390 (TIM-3)2
INCB81776 (AXL/MER) INCAGN2385 (LAG-3)2
INCB01158 (ARG)1
Epacadostat (IDO1)
INCB86550 (PD-L1)            
 
Notes:
    1)   INCB01158 development in collaboration with Calithera
2) Discovery collaboration with Agenus
3) MCLA-145 development in collaboration with Merus

Inflammation / autoimmunity (IAI) – key highlights

Further to randomized Phase 2 data presented in 2018, a Phase 3 program
of ruxolitinib cream in patients with atopic dermatitis was initiated in
December 2018. Data are expected to be available in 2020.

Data from the randomized Phase 2 trial of ruxolitinib cream in patients
with vitiligo are expected in 2019, and a Phase 3 program in the same
patient population is planned.

A Phase 2 trial of itacitinib in patients with ulcerative colitis has
recently been initiated, as have Phase 2 trials of parsaclisib for the
treatment of patients with pemphigus vulgaris, autoimmune hemolytic
anemia and Sjögren’s syndrome.

             
     

Indication

   

Status Update

Ruxolitinib cream
(JAK1/JAK2)

    Atopic dermatitis     Phase 3

Ruxolitinib cream
(JAK1/JAK2)

Vitiligo Phase 2; Phase 3 in preparation

INCB54707
(JAK1)

Hidradenitis suppurativa

Phase 2

Itacitinib
(JAK1)

Ulcerative colitis Phase 2

Parsaclisib
(PI3Kδ)

    Pemphigus vulgaris, autoimmune hemolytic anemia, Sjögren’s syndrome     Phase 2
 

Partnered – key highlights

Lilly and Incyte recently announced that the first two Phase 3 trials of
baricitinib as a treatment for moderate to severe atopic dermatitis,
BREEZE-AD1 and BREEZE-AD2, met the primary efficacy endpoint compared to
placebo. Lilly plans to share the full results from both studies at
future scientific venues, as well as the topline data from other ongoing
Phase 3 trials later this year.

Further to Phase 2 data presented in 2018, Novartis expects to submit an
NDA for capmatinib in patients with non-small cell lung cancer and MET
exon 14 skipping mutations this year.

             
     

Indication

   

Status Update

Baricitinib (JAK1/JAK2)1

    Atopic dermatitis     Phase 3

Baricitinib (JAK1/JAK2)1

Systemic lupus erythematosus Phase 3

Baricitinib (JAK1/JAK2)1

Psoriatic arthritis Phase 3 in preparation (at Lilly)

Baricitinib (JAK1/JAK2)1

Severe alopecia areata Phase 2/3

Capmatinib (MET)2

    Non-small cell lung cancer, liver cancer     NDA (NSCLC patients with MET exon 14 skipping mutations) expected
this year (by Novartis)
 
Notes:
    1)   Worldwide rights to baricitinib licensed to Lilly: approved as
Olumiant in multiple territories globally for certain patients with
moderate to severe rheumatoid arthritis
2) Worldwide rights to capmatinib licensed to Novartis
 

2018 Fourth-Quarter and Year-End Financial Results

The financial measures presented in this press release for the three and
twelve months ended December 31, 2018 and 2017 have been prepared by the
Company in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), unless otherwise identified as a Non-GAAP financial measure.
Management believes that Non-GAAP information is useful for investors,
when considered in conjunction with Incyte’s GAAP disclosures.
Management uses such information internally and externally for
establishing budgets, operating goals and financial planning purposes.
These metrics are also used to manage the Company’s business and monitor
performance. The Company adjusts, where appropriate, for both revenues
and expenses in order to reflect the Company’s core operations. The
Company believes these adjustments are useful to investors by providing
an enhanced understanding of the financial performance of the Company’s
core operations. The metrics have been adopted to align the Company with
disclosures provided by industry peers. Reconciliations of GAAP net
income (loss) to Non-GAAP net income for the three and twelve months
ended December 31, 2018 and 2017 have been included at the end of this
press release.

Guidance related to research and development and selling, general and
administrative expenses does not include estimates associated with any
potential future strategic transactions.

Non-GAAP information is not prepared under a comprehensive set of
accounting rules and should only be used in conjunction with and to
supplement Incyte’s operating results as reported under GAAP. Non-GAAP
measures may be defined and calculated differently by other companies in
our industry.

Revenues For the quarter ended December 31, 2018, GAAP net
product revenues of Jakafi were $380 million as compared to $302 million
for the same period in 2017, representing 26 percent growth. For the
twelve months ended December 31, 2018, GAAP net product revenues of
Jakafi were $1.4 billion as compared to $1.1 billion for the same period
in 2017, representing 22 percent growth. For the three months ended
December 31, 2018 and 2017, GAAP net product revenues of Iclusig®
(ponatinib) were $19 million. For the twelve months ended December 31,
2018, GAAP net product revenues of Iclusig were $80 million as compared
to $67 million for the same period in 2017.

For the quarter and twelve months ended December 31, 2018, GAAP product
royalties from sales of Jakavi® (ruxolitinib), which
has been out-licensed to Novartis outside of the United States, were $55
million and $195 million, respectively, as compared to $48 million and
$152 million, respectively, for the same periods in 2017. For the
quarter and twelve months ended December 31, 2018, GAAP product
royalties from sales of Olumiant, which has been out-licensed to Lilly
globally, were $14 million and $40 million, respectively, as compared to
$5 million and $9 million, respectively, for the same periods in 2017.

For the quarter and twelve months ended December 31, 2018, GAAP
milestone and contract revenues earned from our collaborative partners
were $60 million and $180 million, as compared to $70 million and $175
million, respectively, for the same periods in 2017. Non-GAAP revenues
exclude milestone revenues.

For the quarter and twelve months ended December 31, 2018, total GAAP
revenues were $528 million and $1.9 billion, respectively, as compared
to $444 million and $1.5 billion, respectively, for the same periods in
2017. Total Non-GAAP revenues for the quarter and twelve months ended
December 31, 2018 were $468 million and $1.7 billion, respectively, as
compared to $374 million and $1.4 billion, respectively, for the same
periods in 2017.

 
Year Over Year Revenue Growth
(in thousands, unaudited)
           
Three Months Ended Twelve Months Ended
December 31, % December 31, %
2018 2017 Change 2018 2017 Change
Revenues:
Jakafi net product revenue $ 380,053 $ 302,348 26% $ 1,386,964 $ 1,133,392 22%
Iclusig net product revenue 19,103 19,461 -2% 79,936 66,920 19%
Jakavi product royalty revenues 55,333 47,712 16% 194,694 151,684 28%
Olumiant product royalty revenues   13,855   4,602   40,086   9,107
Product-related revenues   468,344   374,123 25%   1,701,680   1,361,103 25%
Milestone and contract revenues 60,000 70,000 180,000 175,000
Other revenues   58   33   203   113
Total GAAP revenues $ 528,402 $ 444,156 $ 1,881,883 $ 1,536,216
Milestone and contract revenues   (60,000)   (70,000)   (180,000)   (175,000)
Total Non-GAAP revenues $ 468,402 $ 374,156 $ 1,701,883 $ 1,361,216
 

Cost of product revenues GAAP cost of product revenues for the
quarter and twelve months ended December 31, 2018 was $26 million and
$94 million, respectively, as compared to $22 million and $79 million,
respectively, for the same periods in 2017. Non-GAAP cost of product
revenues for the quarter and twelve months ended December 31, 2018 was
$21 million and $73 million, respectively, as compared to $17 million
and $58 million, respectively, for the same periods in 2017. Non-GAAP
cost of product revenues excludes the amortization of licensed
intellectual property for Iclusig relating to the acquisition of the
European business of ARIAD Pharmaceuticals, Inc.

Research and development expenses GAAP research and development
expenses for the quarter and twelve months ended December 31, 2018 were
$304 million and $1.2 billion, respectively, as compared to $447 million
and $1.3 billion, respectively, for the same periods in 2017. The
decrease in GAAP research and development expenses over the prior year
quarter and twelve month period was driven primarily by a decrease in
upfront consideration and milestone expenses related to our
collaboration agreements.

Non-GAAP research and development expenses for the quarter and twelve
months ended December 31, 2018 were $274 million and $1.0 billion,
respectively, as compared to $274 million and $865 million,
respectively, for the same periods in 2017. Non-GAAP research and
development expenses for the quarter and twelve months ended December
31, 2018 exclude the cost of stock-based compensation of $26 million and
$101 million, respectively, and upfront consideration and milestones to
our collaborative partners of $5 million and $52 million, respectively.
Non-GAAP research and development expenses for the quarter and twelve
months ended December 31, 2017 exclude the cost of stock-based
compensation of $23 million and $90 million, respectively, upfront
consideration and milestones paid to our collaborative partners of $150
million and $359 million, respectively, and an asset impairment charge
of $12 million.

Selling, general and administrative expenses GAAP selling,
general and administrative expenses for the quarter and twelve months
ended December 31, 2018 were $108 million and $434 million,
respectively, as compared to $98 million and $366 million, respectively,
for the same periods in 2017. The increase in GAAP selling, general and
administrative expenses from the prior year quarter and twelve month
periods were driven by an increase in donations to independent
non-profit patient assistance organizations in the United States and
additional costs related to the commercialization of Jakafi.

Non-GAAP selling, general and administrative expenses for the quarter
and twelve months ended December 31, 2018 were $97 million and $387
million, respectively, as compared to $87 million and $324 million,
respectively, for the same periods in 2017. Non-GAAP selling, general
and administrative expenses exclude the cost of stock-based compensation.

Change in fair value of acquisition-related contingent consideration GAAP
change in fair value of acquisition-related contingent consideration for
the quarter and twelve months ended December 31, 2018 was expense of $7
million and $26 million, respectively, as compared to $10 million and $8
million, respectively, for the same periods in 2017.

Unrealized loss on long term investments GAAP unrealized loss on
long-term investments for the quarter and twelve months ended December
31, 2018 was $22 million and $44 million, respectively, as compared to
$22 million and $24 million, respectively, for the same periods in
2017. The unrealized loss on long-term investments for the quarter and
twelve months ended December 31, 2018 represents the fair market value
adjustments of the Company’s investments in Agenus, Calithera, Merus and
Syros.

Expense related to senior note conversions GAAP expense related
to senior note conversions for the twelve months ended December 31, 2018
and December 31, 2017 was $0 million and $55 million, respectively,
related to the conversions of certain of our 2018 and 2020 convertible
senior notes.

Net income (loss) GAAP net income for the quarter ended December
31, 2018 was $69 million, or $0.32 per basic and diluted share, as
compared to net loss of $150 million, or $0.71 per basic and diluted
share for the same period in 2017. GAAP net income for the twelve months
ended December 31, 2018 was $109 million, or $0.52 per basic and $0.51
per diluted share, as compared to net loss of $313 million, or $1.53 per
basic and diluted share for the same period in 2017.

Non-GAAP net income for the quarter ended December 31, 2018 was $87
million, or $0.41 per basic and $0.40 per diluted share, as compared to
Non-GAAP net income of $4 million, or $0.02 per basic and diluted share
for the same period in 2017. Non-GAAP net income for the twelve months
ended December 31, 2018 was $224 million, or $1.06 per basic and $1.04
per diluted share, as compared to Non-GAAP net income of $131 million,
or $0.64 per basic and $0.62 per diluted share for the same period in
2017.

Cash, cash equivalents and marketable securities position As of
December 31, 2018, cash, cash equivalents and marketable securities
totaled $1.4 billion as compared to $1.2 billion as of December 31, 2017.

2019 Financial Guidance

The Company has provided full year 2019 financial guidance, as detailed
below.

       
     

2019

GAAP and Non-GAAP Jakafi net product revenues     $1,580 – $1,650 million
GAAP and Non-GAAP Iclusig net product revenues $90 – $100 million
 
GAAP Cost of product revenues $112 – $117 million
Non-GAAP Cost of product revenues(1) $90 – $95 million
 
GAAP Research and development expenses $1,185 – $1,255 million
Non-GAAP Research and development expenses(2) $1,030 – $1,100 million
 
GAAP Selling, general and administrative expenses $471 – $521 million
Non-GAAP Selling, general and administrative expenses(3) $420 – $470 million
 
GAAP Change in fair value of acquisition-related contingent
consideration
$30 million
Non-GAAP Change in fair value of acquisition-related contingent
consideration(4)
    $0 million
 
   

(1)

  Adjusted to exclude the amortization of licensed intellectual
property for Iclusig relating to the acquisition of the European
business of ARIAD Pharmaceuticals, Inc.

(2)

Adjusted to exclude the estimated cost of stock-based compensation
and milestones.

(3)

Adjusted to exclude the estimated cost of stock-based compensation.

(4)

Adjusted to exclude the change in fair value of estimated future
royalties relating to sales of Iclusig in the licensed territory
relating to the acquisition of the European business of ARIAD
Pharmaceuticals, Inc.
 

Future Non-GAAP financial measures may also exclude upfront and ongoing
milestones relating to third-party collaboration partners, impairment of
goodwill or other assets, changes in the fair value of equity
investments in our collaboration partners, non-cash interest expense
related to the amortization of the initial discount on our 2020 Senior
Notes and the impact on our tax provision of discrete changes in our
valuation allowance position on deferred tax assets.

Conference Call and Webcast Information

Incyte will hold a conference call and webcast this morning at 8:00 a.m.
EST. To access the conference call, please dial 877-407-3042 for
domestic callers or 201-389-0864 for international callers. When
prompted, provide the conference identification number, 13686537.

If you are unable to participate, a replay of the conference call will
be available for 30 days. The replay dial-in number for the United
States is 877-660-6853 and the dial-in number for international callers
is 201-612-7415. To access the replay you will need the conference
identification number, 13686537.

The conference call will also be webcast live and can be accessed at www.incyte.com
in the Investors section under “Events and Presentations.”

About Incyte

Incyte Corporation is a Wilmington, Delaware-based biopharmaceutical
company focused on the discovery, development and commercialization of
proprietary therapeutics. For additional information on Incyte, please
visit the Company’s website at www.incyte.com.

Follow @Incyte on Twitter at https://twitter.com/Incyte.

About Jakafi® (ruxolitinib)

Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the U.S. Food
and Drug Administration for treatment of people with polycythemia vera
(PV) who have had an inadequate response to or are intolerant of
hydroxyurea. Jakafi is also indicated for treatment of people with
intermediate or high-risk myelofibrosis (MF), including primary MF,
post–polycythemia vera MF, and post–essential thrombocythemia MF.

Jakafi is marketed by Incyte in the United States and by Novartis as
Jakavi® (ruxolitinib) outside the United States.

About Iclusig® (ponatinib) tablets

Iclusig targets not only native BCR-ABL but also its isoforms that carry
mutations that confer resistance to treatment, including the T315I
mutation, which has been associated with resistance to other approved
TKIs.

In the EU, Iclusig is approved for the treatment of adult patients with
chronic phase, accelerated phase or blast phase chronic myeloid leukemia
(CML) who are resistant to dasatinib or nilotinib; who are intolerant to
dasatinib or nilotinib and for whom subsequent treatment with imatinib
is not clinically appropriate; or who have the T315I mutation, or the
treatment of adult patients with Philadelphia-chromosome positive acute
lymphoblastic leukemia (Ph+ ALL) who are resistant to dasatinib; who are
intolerant to dasatinib and for whom subsequent treatment with imatinib
is not clinically appropriate; or who have the T315I mutation.

Incyte has an exclusive license from ARIAD Pharmaceuticals, Inc., since
acquired by Takeda Pharmaceutical Company Limited, to develop and
commercialize Iclusig in the European Union and 22 other countries,
including Switzerland, Norway, Turkey, Israel and Russia.

Forward-Looking Statements

Except for the historical information set forth herein, the matters set
forth in this release contain predictions, estimates and other
forward-looking statements, including without limitation statements
regarding: our late-stage product portfolio providing us with multiple
opportunities to accelerate revenue growth; the expected timing of
submission of NDAs for pemigatinib and capmatinib; the expected timing
of data from the trials evaluating itacitinib and ruxolitinib in GVHD
and ruxolitinib cream in vitiligo; the expected timing of a trial
evaluating pemigatinib as a first-line treatment in patients with
bladder cancer; plans to initiate a pivotal tumor-agnostic trial
evaluating pemigatinib in patients with driver-activations of FGF/FGFR;
the expected timing of data from the Phase 3 program of ruxolitinib
cream in patients with atopic dermatitis; expectations of the Company’s
collaboration partners for the submission of NDAs and the sharing of
data from clinical trials; and the Company’s financial guidance for 2019
and the expectations underlying such guidance.

Contacts

Media
Catalina Loveman
+1 302 498 6171
[email protected]

Investors
Michael Booth, DPhil
+1 302 498 5914
[email protected]

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