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Incyte Reports 2019 Fourth Quarter and Year-End Financial Results and Provides 2020 Financial Guidance and Updates on Key Clinical Programs

February 13, 2020 at 8:00 AM EST
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  • Total product and royalty revenues of $579 million (+24%) in 4Q 2019 and $2.1 billion (+22%) for the full year 2019; Jakafi® (ruxolitinib) revenues of $466 million (+23%) in 4Q 2019 and $1.7 billion (+21%) for the full year 2019
  • Full year 2020 Jakafi net product revenue guidance $1.88-$1.95 billion
  • Successful outcome of TRuE-AD2 Phase 3 trial of ruxolitinib cream in patients with mild-to-moderate atopic dermatitis; TRuE-AD1 results expected in the first quarter of 2020

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

WILMINGTON, Del.--(BUSINESS WIRE)--Feb. 13, 2020-- Incyte (Nasdaq:INCY) today reports 2019 fourth quarter and year-end financial results, announces 2020 guidance and provides a status update on the Company’s development portfolio.

“Revenue growth continues to be very strong, driven by robust demand across all three indications for Jakafi,” stated Hervé Hoppenot, Chief Executive Officer, Incyte. “As we enter 2020, we have multiple opportunities for additional growth. We recently announced successful initial results from the Phase 3 TRuE-AD program, which we plan to include as part of the NDA in the fourth quarter of 2020 seeking approval of ruxolitinib cream for the treatment of patients with mild-to-moderate atopic dermatitis. We also look forward to the FDA decisions on the potential approvals of pemigatinib and capmatinib later this year. The recent progress made within both oncology and dermatology, as well as the recently announced MorphoSys collaboration for tafasitamab, positions Incyte very well as we deliver on our objectives for diversification and growth.”

Portfolio Update

LIMBER – key highlights

The LIMBER program, a key development priority designed to maintain our Leadership In MPNs BEyond Ruxolitinib, is evaluating multiple monotherapy and combination strategies to deliver improved therapies for patients with myeloproliferative neoplasms (MPNs). The program has three key areas of focus: new formulations of ruxolitinib; JAK inhibitor-based combinations; and new targets beyond JAK inhibition.

A once-a-day formulation of ruxolitinib is being developed and is currently being evaluated in clinical pharmacology studies. Following positive proof-of-concept data of ruxolitinib plus parsaclisib in myelofibrosis (MF) patients with a suboptimal response to ruxolitinib monotherapy, a randomized pivotal trial is being prepared in this setting. Additional JAK-based combinations are either ongoing or in preparation.

 

Indication and status

 

Once-a-day ruxolitinib
(JAK1/JAK2)

Myelofibrosis and polycythemia vera: clinical pharmacology studies

Ruxolitinib + parsaclisib
(JAK1/JAK2 + PI3Kδ)

Refractory myelofibrosis: Phase 3 in preparation

Ruxolitinib + INCB53914
(JAK1/JAK2 + PIM)

Refractory myelofibrosis: Phase 2

Ruxolitinib + INCB57643
(JAK1/JAK2 + BET)

Refractory myelofibrosis: Phase 2 in preparation

Ruxolitinib + INCB00928
(JAK1/JAK2 + ALK2)

Myelofibrosis: Phase 2 in preparation

Recruitment has been discontinued in the RESET trial evaluating ruxolitinib as a potential treatment for patients with essential thrombocythemia.

Oncology beyond MPNs – key highlights

Data from the randomized Phase 3 REACH2 trial of ruxolitinib versus best available therapy (BAT) in patients with steroid-refractory acute graft-versus-host disease (GVHD) have been accepted for presentation within the Presidential Symposium of the 46th annual meeting of the European Society for Blood and Marrow Transplantation (EBMT, March 22-25). As previously announced, the trial, which was conducted in collaboration with Novartis, met its primary endpoint of improving overall response rate (ORR) at Day 28 with ruxolitinib treatment compared to BAT.

REACH3, the Phase 3 trial of ruxolitinib in patients with steroid-refractory chronic GVHD being run in collaboration with Novartis, is ongoing and results are expected in the second half of 2020. If successful, and if approved, steroid-refractory chronic GVHD would be the fourth Jakafi indication available to patients in the US.

In January, it was announced that GRAVITAS-301, the Phase 3 trial of itacitinib as a treatment for patients with newly diagnosed acute GVHD, did not meet the primary endpoint.

Clinical development of itacitinib also includes GRAVITAS-309, a Phase 3 trial of itacitinib as a treatment for patients with newly diagnosed chronic GVHD.

In November, the FDA accepted the New Drug Application (NDA) for pemigatinib in second-line cholangiocarcinoma for Priority Review. The Prescription Drug User Fee Act (PDUFA) target action date is May 30, 2020. In early January, Incyte announced that the Marketing Authorization Application (MAA) seeking approval in Europe for pemigatinib as a second-line treatment for cholangiocarcinoma patients with FGFR2 fusions or rearrangements was validated by the EMA.

The CITADEL program is evaluating parsaclisib as a monotherapy across three types of non-Hodgkin lymphoma: follicular lymphoma; marginal zone lymphoma; and mantle cell lymphoma.

Clinical development of INCMGA0012 includes ongoing evaluation as a monotherapy in niche cancer opportunities as well as a planned program for the first-line treatment of patients with non-small cell lung cancer (NSCLC).

Incyte recently announced a global collaboration with MorphoSys for the development and commercialization of tafasitamab, an anti-CD19 monoclonal antibody. Pending clearance by antitrust authorities, the collaboration agreement is expected to become effective in the first half of 2020.

 

Indication and status

 

Ruxolitinib
(JAK1/JAK2)

Steroid-refractory chronic GVHD: Phase 3 (REACH3)1

Itacitinib
(JAK1)

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

 

Pemigatinib
(FGFR1/2/3)

Cholangiocarcinoma: Phase 3 (FIGHT-302); NDA and MAA under review

Bladder cancer: Phase 2 (FIGHT-201, FIGHT-205)

8p11 MPN: Phase 2 (FIGHT-203)

Tumor agnostic: Phase 2 (FIGHT-207)

 

Parsaclisib
(PI3Kδ)

Follicular lymphoma: Phase 2 (CITADEL-203)

Marginal zone lymphoma: Phase 2 (CITADEL-204)

Mantle cell lymphoma: Phase 2 (CITADEL-205)

 

INCMGA0012
(PD-1)2

MSI-high endometrial cancer: Phase 2 (POD1UM-101)

Merkel cell carcinoma: Phase 2 (POD1UM-201)

Anal cancer: Phase 2 (POD1UM-202)

NSCLC: Phase 3 (POD1UM-301, POD1UM-304) in preparation

1)

  

Clinical development of ruxolitinib in GVHD conducted in collaboration with Novartis

2)

  

INCMGA0012 licensed from MacroGenics

Inflammation and Autoimmunity (IAI) – key highlights

TRuE-AD2, the first of two Phase 3 trials in the TRuE-AD development program of ruxolitinib cream in patients with mild-to-moderate atopic dermatitis, met its primary endpoint. The overall efficacy and safety profile observed in TRuE-AD2 was consistent with previous data, and no new safety signals were observed.

The results of TRuE-AD1, the second of two Phase 3 trials required for regulatory submission, are anticipated to be available in the first quarter of 2020. The NDA submission, seeking approval of ruxolitinib cream in atopic dermatitis, is expected in the fourth quarter of 2020 following long-term safety and efficacy data from both pivotal trials.

The two Phase 3 trials in the TRuE-V pivotal program evaluating ruxolitinib cream in patients with vitiligo are recruiting well and results are expected in 2021.

Phase 2 trials of INCB54707 in hidradenitis suppurativa and parsaclisib in autoimmune hemolytic anemia are progressing as planned.

The clinical program of INCB00928, Incyte’s ALK2 inhibitor, is in preparation in patients with fibrodysplasia ossificans progressiva, a disorder in which muscle tissue and connective tissue such as tendons and ligaments are gradually replaced by bone.

The Phase 2 trial of low-dose itacitinib in patients with ulcerative colitis has been discontinued, and initial data from the clinical evaluation of parsaclisib in patients with Sjögren’s syndrome did not warrant continuation of the trial.

 

Indication and status

 

Ruxolitinib cream
(JAK1/JAK2)

Atopic dermatitis: Phase 3 (TRuE-AD1 ongoing, TRuE-AD2 primary endpoint met)

Vitiligo: Phase 3 (TRuE-V1, TRuE-V2)

INCB54707
(JAK1)

Hidradenitis suppurativa: Phase 2

 

Parsaclisib
(PI3Kδ)

Autoimmune hemolytic anemia: Phase 2

 

INCB00928
(ALK2)

Fibrodysplasia ossificans progressiva: Phase 2 in preparation

Discovery and early development – key highlights

Incyte’s portfolio of earlier-stage clinical candidates is summarized below.

Modality

Candidates

Small molecules

INCB01158 (ARG)1, INCB81776 (AXL/MER), INCB62079 (FGFR4), epacadostat (IDO1), INCB59872 (LSD1), INCB86550 (PD-L1)

 

Monoclonal antibodies2

INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40), INCAGN2390 (TIM-3)

 

Bispecific antibodies

MCLA-145 (PD-L1xCD137)3

 

1)

  

INCB01158 development in collaboration with Calithera

2)

  

Discovery collaboration with Agenus

3)

  

MCLA-145 development in collaboration with Merus

Partnered – key highlights

In January, Incyte and Lilly announced initial results of BREEZE-AD4 and BREEZE-AD5, the final two trials in the pivotal program evaluating baricitinib in patients with moderate-to-severe atopic dermatitis. Lilly recently submitted baricitinib for regulatory review in Europe as a treatment for patients with moderate-to-severe atopic dermatitis, and has announced plans to submit for approval in the U.S. and Japan in 2020.

In February, Incyte and Novartis announced that the NDA for capmatinib was accepted for Priority Review by the FDA, seeking approval in patients with NSCLC and MET exon 14 skipping mutations.

 

Indication and status

 

Baricitinib
(JAK1/JAK2)1

Atopic dermatitis: Phase 3 (BREEZE-AD)

Systemic lupus erythematosus: Phase 3

Severe alopecia areata: Phase 3

Capmatinib (MET)2

NSCLC (with MET exon 14 skipping mutations): NDA submitted (by Novartis)

 

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

2019 Fourth Quarter and Year-End Financial Results

The financial measures presented in this press release for the quarter and year ended December 31, 2019 and 2018 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 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.

Beginning in the first quarter of 2019, after reviewing our Reconciliation of GAAP Net Income to Selected Non-GAAP Adjusted Information with the U.S. Securities & Exchange Commission, we no longer adjust for upfront consideration and milestones that are part of collaboration agreements with new or existing partners. This revised methodology is reflected in this press release for the quarter and year ended December 31, 2019 and 2018.

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.

Financial Highlights

Financial Highlights

(unaudited, in thousands, except per share amounts)
   

 

 
   

Three Months Ended

  

Twelve Months Ended
   

December 31,

 

December 31,
   

2019

 

2018

  

2019

  

2018

Total GAAP revenue

  

$

579,389

  

$

528,402

  

$

2,158,759

  

$

1,881,883

 

  

 

 

 

 

 

 

 

Total GAAP operating income

  

 

95,008

  

 

81,975

  

 

402,006

  

 

129,223

Total Non-GAAP operating income

  

 

145,538

  

 

132,192

  

 

609,812

  

 

325,083

GAAP net income

  

 

111,005

  

 

69,063

  

 

446,906

  

 

109,493

Non-GAAP net income

  

 

141,936

  

 

142,117

  

 

615,459

  

 

350,603

 

  

 

 

 

 

 

 

 

GAAP basic EPS

  

$

0.51

  

$

0.32

  

$

2.08

  

$

0.52

Non-GAAP basic EPS

  

$

0.66

  

$

0.67

  

$

2.86

  

$

1.65

GAAP diluted EPS

  

$

0.51

  

$

0.32

  

$

2.05

  

$

0.51

Non-GAAP diluted EPS

  

$

0.65

  

$

0.66

  

$

2.83

  

$

1.63
                     

Revenue Details

Revenue Summary

(unaudited, in thousands)
                         
   

Three Months Ended

     

Twelve Months Ended

   
   

December 31,

 

%

 

December 31,

 

%

   

2019

 

2018

  

Change

 

2019

  

2018

  

Change

Revenues:

                        

Jakafi net product revenue

  

$

 

466,464

  

$

 

380,053

  

23%

  

$

 

1,684,968

  

$

 

1,386,964

  

21%

Iclusig net product revenue

  

 

24,314

  

 

19,103

  

27%

  

 

89,954

  

 

79,936

  

13%

Jakavi product royalty revenues

  

 

65,007

  

 

55,333

  

17%

  

 

225,913

  

 

194,694

  

16%

Olumiant product royalty revenues

  

 

23,604

  

 

13,855

  

70%

  

 

80,424

  

 

40,086

  

101%

Product and royalty revenues

  

 

579,389

  

 

468,344

  

24%

  

 

2,081,259

  

 

1,701,680

  

22%

Milestone and contract revenues

  

 

-

  

 

60,000

      

 

77,500

  

 

180,000

    

Other revenues

  

 

-

  

 

58

      

 

-

  

 

203

    

Total GAAP revenues

  

$

 

579,389

  

$

 

528,402

  

10%

  

$

 

2,158,759

  

$

 

1,881,883

  

15%

Product and Royalty Revenues Product and royalty revenues for the quarter and year ended December 31, 2019 increased 24% and 22%, respectively, over the prior year comparative periods as a result of increases in Jakafi and Iclusig net product revenues and higher product royalty revenues from Jakavi and Olumiant. Jakafi net product revenues for the quarter and year ended December 31, 2019 increased 23% and 21%, respectively, over the prior year comparative periods, primarily driven by growth in patient demand across all indications.

Operating Expenses

Operating Expense Summary

(unaudited, in thousands)
                         
   

Three Months Ended

     

Twelve Months Ended

   
   

December 31,

 

%

 

December 31,

 

%

   

2019

  

2018

  

Change

 

2019

  

2018

  

Change

GAAP cost of product revenues

  

$

32,215

  

$

26,366

  

22%

  

$

114,249

  

$

94,123

  

21%

Non GAAP cost of product revenues1

  

 

26,658

  

 

20,982

  

27%

  

 

92,015

  

 

72,587

  

27%

 

  

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development

  

 

312,867

  

 

304,238

  

3%

  

 

1,154,111

  

 

1,197,957

  

(4%)

Non GAAP research and development2

  

 

284,389

  

 

278,508

  

2%

  

 

1,040,169

  

 

1,096,944

  

(5%)

 

  

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative

  

 

136,177

  

 

108,358

  

26%

  

 

468,711

  

 

434,407

  

8%

Non GAAP selling, general and administrative3

  

 

122,804

  

 

96,720

  

27%

  

 

416,763

  

 

387,269

  

8%

 

  

 

 

 

 

 

 

 

 

 

 

 

GAAP change in fair value of acquisition-related contingent consideration

  

 

3,122

  

 

7,465

  

(58%)

  

 

19,682

  

 

26,173

  

(25%)

Non GAAP change in fair value of acquisition-related contingent consideration4

  

 

-

  

 

-

      

 

-

  

 

-

    

1.

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. and the cost of stock-based compensation.

2.

Non-GAAP research and development expenses exclude the cost of stock-based compensation.

3.

Non-GAAP selling, general and administrative expenses exclude the cost of stock-based compensation.

4.

Non-GAAP change in fair value of acquisition-related contingent consideration is null.

Research and development expenses GAAP and Non-GAAP research and development expense for the quarter ended December 31, 2019 increased 3% and 2%, respectively, compared to the same periods in 2018. This increase was primarily due to our existing pipeline programs progressing to later stages of development and was partially offset by our election to end additional co-funding of development of baricitinib with Lilly effective as of January 1, 2019. GAAP and Non-GAAP research and development expense for the year ended December 31, 2019 decreased 4% and 5%, respectively, compared to the same periods in 2018, primarily due to our election to end additional co-funding of the development of baricitinib and a decrease in upfront and milestone expenses related to collaborative agreements.

Selling, general and administrative expenses GAAP and Non-GAAP selling, general and administrative expenses for the quarter ended December 31, 2019 increased 26% and 27%, respectively, and for the year ended December 31, 2019 increased 8% compared to the same period in 2018, primarily due to the growth in commercialization efforts related to Jakafi.

Other Financial Information

Operating income GAAP and Non-GAAP operating income increased for the quarter and year ended December 31, 2019 compared to the same periods in 2018 due to the growth in total revenues exceeding the growth in operating expenses.

Cash, cash equivalents and marketable securities position As of December 31, 2019 and 2018, cash, cash equivalents and marketable securities totaled $2.1 billion and $1.4 billion, respectively.

2020 Financial Guidance

The Company’s 2020 financial guidance as detailed below excludes the financial impact of the recently announced collaboration with MorphoSys, which is pending clearance by antitrust authorities. In addition, the 2020 financial guidance does not include the impact of any potential future strategic transactions.

 

 

 

 

Jakafi net product revenues

 

 

$1,880 - $1,950 million

Iclusig net product revenues

  

 

$100 - $105 million

GAAP Cost of product revenues

 

 

$130 - $135 million

Non-GAAP Cost of product revenues(1)

 

 

$107 - $112 million

GAAP Research and development expenses

 

 

$1,210 - $1,280 million

Non-GAAP Research and development expenses(2)

 

 

$1,079 - $1,149 million

GAAP Selling, general and administrative expenses

  

 

$505 - $535 million

Non-GAAP Selling, general and administrative expenses(2)

 

 

$447 - $477 million

GAAP Change in fair value of acquisition-related contingent consideration

 

 

$25 million - $27 million

Non-GAAP Change in fair value of acquisition-related contingent consideration(3)

 

 

$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. and the estimated cost of stock-based compensation.
(2)  

Adjusted to exclude the estimated cost of stock-based compensation.
(3)  

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 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, 13698234.

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, 13698234.

The conference call will also be webcast live and can be accessed at investor.incyte.com.

About Incyte

Incyte is a Wilmington, Delaware-based, global biopharmaceutical company focused on finding solutions for serious unmet medical needs through the discovery, development and commercialization of proprietary therapeutics. For additional information on Incyte, please visit Incyte.com and follow @Incyte.

About Jakafi® (ruxolitinib)

Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the U.S. FDA for treatment of steroid-refractory acute GVHD in adult and pediatric patients 12 years and older.

Jakafi is also indicated for treatment of polycythemia vera (PV) in adults who have had an inadequate response to or are intolerant of hydroxyurea as well as adults 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. Jakafi is a registered trademark of Incyte Corporation. Jakavi is a registered trademark of Novartis AG in countries 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: the Company having multiple opportunities for additional growth and diversification; the expected timing for submission of an NDA for ruxolitinib cream for atopic dermatitis; the expected timing of decisions from the FDA on pemigatinib and capmatinib; the expected timing of the receipt of data from the Phase 3 trial evaluating ruxolitinib in GVHD; the expected timing of effectiveness of the MorphoSys collaboration agreement; the expected timing of the receipt and presentation of data from the Phase 3 trials of ruxolitinib cream in vitiligo and atopic dermatitis; expectations of the Company’s collaboration partner for the submission for approval in the U.S. and Japan of baricitinib for atopic dermatitis; plans and expectations for the rest of the Company’s development portfolio, including without limitation its LIMBER program; and the Company’s financial guidance for 2020 and the expectations underlying such guidance.

These forward-looking statements are based on the Company’s current expectations and subject to risks and uncertainties that may cause actual results to differ materially, including unanticipated developments in and risks related to: unanticipated delays; delays and other issues in obtaining regulatory approval for the MorphoSys collaboration and the ability to satisfy conditions to effectiveness of the MorphoSys agreement; further research and development and the results of clinical trials possibly being unsuccessful or insufficient to meet applicable regulatory standards or warrant continued development; the ability to enroll sufficient numbers of subjects in clinical trials; determinations made by the FDA; the Company's dependence on its relationships with and changes in the plans of its collaboration partners; the efficacy or safety of the Company’s products and the products of the Company’s collaboration partners; the acceptance of the Company’s products and the products of the Company’s collaboration partners in the marketplace; market competition; unexpected variations in the demand for the Company’s products; unexpected price regulation or limitations on reimbursement or coverage for the Company’s products; sales, marketing, manufacturing and distribution requirements, including the Company’s ability to successfully commercialize and build commercial infrastructure for any new products that become approved; greater than expected expenses, including expenses relating to litigation or strategic activities; and other risks detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including its quarterly report on Form 10-Q for the quarter ended September 30, 2019. The Company disclaims any intent or obligation to update these forward-looking statements.

INCYTE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)
               
 

Three Months Ended

 

Twelve Months Ended

 

December 31,

  

December 31,

 

2019

  

2018

  

2019

 

2018

 

GAAP

  

GAAP

Revenues:

              

Product revenues, net

$

490,778

  

$

399,156

  

$

1,774,922

  

$

1,466,900

Product royalty revenues

 

88,611

  

 

69,188

  

 

306,337

  

 

234,780

Milestone and contract revenues

 

-

  

 

60,000

  

 

77,500

  

 

180,000

Other revenues

 

-

  

 

58

  

 

-

  

 

203

Total revenues

 

579,389

  

 

528,402

  

 

2,158,759

  

 

1,881,883
               

Costs and expenses:

              

Cost of product revenues (including definite-lived intangible amortization)

 

32,215

  

 

26,366

  

 

114,249

  

 

94,123

Research and development

 

312,867

  

 

304,238

  

 

1,154,111

  

 

1,197,957

Selling, general and administrative

 

136,177

  

 

108,358

  

 

468,711

  

 

434,407

Change in fair value of acquisition-related contingent consideration

 

3,122

  

 

7,465

  

 

19,682

  

 

26,173

Total costs and expenses

 

484,381

  

 

446,427

  

 

1,756,753

  

 

1,752,660
               

Income from operations

 

95,008

  

 

81,975

  

 

402,006

  

 

129,223

Other income (expense), net

 

15,848

  

 

11,279

  

 

52,182

  

 

31,760
                       

Interest expense

 

(607)

  

 

(355)

  

 

(1,855)

  

 

(1,543)
                       

Unrealized gain (loss) on long term investments

 

15,755

  

 

(22,182)

  

 

34,458

  

 

(44,093)

Income before provision for income taxes

 

126,004

  

 

70,717

  

 

486,791

  

 

115,347

Provision for income taxes

 

14,999

  

 

1,654

  

 

39,885

  

 

5,854

Net income

$

111,005

  

$

69,063

  

$

446,906

  

$

109,493
               

Net income per share:

              

Basic

$

0.51

  

$

0.32

  

$

2.08

  

$

0.52

Diluted

$

0.51

  

$

0.32

  

$

2.05

  

$

0.51
               

Shares used in computing net income per share:

              

Basic

 

215,770

  

 

213,013

  

 

214,913

  

 

212,383

Diluted

 

218,542

  

 

216,042

  

 

217,657

  

 

215,635

INCYTE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)
         
   

December 31,

 

December 31,

   

2019

  

2018

ASSETS

        

Cash, cash equivalents and marketable securities

  

$

2,117,554

  

$

1,438,323

Accounts receivable

  

 

308,809

  

 

307,598

Property and equipment, net

  

 

377,567

  

 

319,751

Finance lease right-of use assets, net

  

 

29,058

  

 

-

Inventory

  

 

16,505

  

 

10,405

Prepaid expenses and other assets

  

 

94,179

  

 

99,529

Long term investments

  

 

133,657

  

 

99,199

Other intangible assets, net

  

 

193,828

  

 

215,364

Goodwill

  

 

155,593

  

 

155,593

Total assets

  

$

3,426,750

  

$

2,645,762
         

LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Accounts payable, accrued expenses and other liabilities

  

$

500,462

  

$

415,360

Finance lease liabilities

  

 

32,582

  

 

-

Convertible senior notes

  

 

18,300

  

 

17,434

Acquisition-related contingent consideration

  

 

277,000

  

 

287,001

Stockholders’ equity

  

 

2,598,406

  

 

1,925,967

Total liabilities and stockholders’ equity

  

$

3,426,750

  

$

2,645,762

INCYTE CORPORATION

  

RECONCILIATION OF GAAP NET INCOME TO SELECTED NON-GAAP ADJUSTED INFORMATION

  

(unaudited, in thousands, except per share amounts)

  
                 
 

Three Months Ended

  

Twelve Months Ended

 
 

December 31,

  

December 31,

  
 

2019

  

2018

  

2019

  

2018

  
                 

GAAP Net Income

$

111,005

  

$

69,063

  

$

446,906

  

$

109,493

  

Adjustments1:

                

Non-cash stock compensation from equity awards (R&D)2

 

28,478

  

 

25,730

  

 

113,942

  

 

101,013

  

Non-cash stock compensation from equity awards (SG&A)2

 

13,373

  

 

11,638

  

 

51,948

  

 

47,138

  

Non-cash stock compensation from equity awards (COGS)2

 

173

  

 

-

  

 

698

  

 

-

  

Non-cash interest expense related to convertible notes3

 

221

  

 

255

  

 

867

  

 

1,157

  

Changes in fair value of equity investments4

 

(15,755)

  

 

22,182

  

 

(34,458)

  

 

44,093

  

Amortization of acquired product rights5

 

5,384

  

 

5,384

  

 

21,536

  

 

21,536

  

Change in fair value of contingent consideration6

 

3,122

  

 

7,465

  

 

19,682

  

 

26,173

  

Tax effect of Non-GAAP adjustments7

 

(4,065)

  

 

400

  

 

(5,662)

  

 

-

  

Non-GAAP Net Income

$

141,936

  

$

142,117

  

$

615,459

  

$

350,603

  
                 

Non-GAAP net income per share:

                

Basic

$

0.66

  

$

0.67

  

$

2.86

  

$

1.65

  

Diluted

$

0.65

  

$

0.66

  

$

2.83

  

$

1.63

  
                 

Shares used in computing Non-GAAP net income per share:

                

Basic

 

215,770

  

 

213,013

  

 

214,913

  

 

212,383

  

Diluted

 

218,542

  

 

216,042

  

 

217,657

  

 

215,635

  
1

Beginning in the first quarter of 2019, after reviewing our Reconciliation of GAAP Net Income to Selected Non-GAAP Adjusted Information with the U.S. Securities & Exchange Commission, we no longer adjust for milestones received from new or existing partners and upfront consideration and milestones paid to new or existing partners, which is reflected above for the three and twelve months ended December 31, 2019 and 2018. Included within the Milestone and contract revenues line item in the Consolidated Statements of Operations (in thousands) for the twelve months ended December 31, 2019 are upfront consideration and milestones of $77,500 earned from our collaborative partners. Also included within the Milestone and contract revenues line item in the Consolidated Statements of Operations (in thousands) for the three and twelve months ended December 31, 2018 are milestones of $60,000 and $180,000, respectively, earned from our collaborative partners. Included within the Research and development expenses line item in the Consolidated Statements of Operations (in thousands) for the three and twelve months ended December 31, 2019 are upfront and milestone expenses of $2,500 and $27,500, respectively, related to our collaborative agreements. Also included within the Research and development expenses line item in the Consolidated Statements of Operations (in thousands) for the three and twelve months ended December 31, 2018 are upfront and milestone expenses of $5,000 and $52,444, respectively, related to our collaborative agreements.
2

As included within the Cost of product revenues (including definite-lived intangible amortization) line item; the Research and development expenses line item; and the Selling, general and administrative expenses line item in the Consolidated Statements of Operations.
3

As included within the Interest expense line item in the Consolidated Statements of Operations.
4

As included within the Unrealized gain (loss) on long term investments line item in the Consolidated Statements of Operations.
5

As included within the Cost of product revenues (including definite-lived intangible amortization) line item in the Consolidated Statements of Operations. Acquired product rights of licensed intellectual property for Iclusig is amortized utilizing a straight-line method over the estimated useful life of 12.5 years.
6

As included within the Change in fair value of acquisition-related contingent consideration line item in the Consolidated Statements of Operations.
7

As included within the Provision for income taxes line item in the Consolidated Statements of Operations. Income tax effects of Non-GAAP adjustments are calculated using the applicable statutory tax rate for the jurisdictions in which the charges are incurred, while taking into consideration any valuation allowances. Beginning in the fourth quarter of 2019, due to the Company’s higher cash tax rate in 2019, the tax effect of Non-GAAP adjustments now includes the tax impact of GAAP stock compensation expense. This change had no impact on previously reported Selected Non-GAAP Adjusted Information except for a $2,507 reduction to the tax effect of Non-GAAP adjustments and a revised Non-GAAP net income of $176,512 and $473,523, respectively, for the three and nine-months ended September 30, 2019.

 

Source: Incyte

Incyte Contacts
Media
Catalina Loveman
+1 302 498 6171
cloveman@incyte.com

Investors
Michael Booth, DPhil
+1 302 498 5914
mbooth@incyte.com