On August 9, 2016 Incyte Corporation (Nasdaq: INCY) reported 2016 second-quarter financial results, including strong revenue growth driven by increased sales of Jakafi (ruxolitinib) in the U.S. as well as continued growth in the royalties from ex-U.S. sales of Jakavi (ruxolitinib) by Novartis (Press release, Incyte, AUG 9, 2016, View Source [SID:1234514389]). Schedule your 30 min Free 1stOncology Demo! The long-term clinical profile of Jakafi was reinforced by the presentation of five-year overall survival data from the COMFORT-I trial in patients with myelofibrosis at the recent American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) meeting and the successful results from the RESPONSE-2 Phase 3 trial in patients with uncontrolled polycythemia vera highlighted at the European Hematology Association (EHA) (Free EHA Whitepaper) congress. Additionally, ruxolitinib has been granted Breakthrough Therapy Designation by the U.S. Food and Drug Administration (FDA) for the treatment of patients with acute GVHD.
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Baricitinib, currently under global regulatory review for the treatment of patients with rheumatoid arthritis, may provide Incyte with a further valuable source of revenue, given the potential for milestones and royalties under the Company’s license agreement with Eli Lilly and Company. The first regulatory approval for baricitinib is anticipated in the first quarter of next year.
Incyte has a growing international footprint, which was accelerated by the recent ARIAD transaction in Europe, and now has a development, medical and commercial organization in Europe to complement its fully-integrated U.S. business. The expanded European team is fully operational, and will continue to grow the Iclusig (ponatinib) brand as well as contribute to the clinical development of Incyte’s portfolio of 14 product candidates.
Within the R&D group, and during the second quarter of 2016, Incyte initiated the first pivotal Phase 3 trial of epacadostat, added a new clinical program with the initiation of a first-in-man trial of INCAGN1876, an anti-GITR agonist antibody, and signed a drug discovery alliance with the Moffitt Cancer Center – collectively illustrating the depth and breadth of Incyte’s discovery and development programs.
"Incyte is in an excellent position both financially and operationally as we enter the second half of the year," stated Hervé Hoppenot, Incyte’s Chief Executive Officer. "Jakafi continues to grow rapidly in the U.S., and we have successfully incorporated our expanded European team. The recent initiation of the first Phase 3 trial of epacadostat was a significant milestone for Incyte, and we are preparing to launch the pivotal program for ruxolitinib in GVHD."
2016 Second-Quarter Financial Results
Revenues For the quarter ended June 30, 2016, net product revenues of Jakafi were $208 million as compared to $142 million for the same period in 2015, representing 46 percent growth. For the six months ended June 30, 2016, net product revenues of Jakafi were $391 million as compared to $258 million for the same period in 2015, representing 52 percent growth. For the quarter and six months ended June 30, 2016, net product revenues of Iclusig were $4 million. For the quarter and six months ended June 30, 2016, product royalties from sales of Jakavi outside of the United States received from Novartis were $26 million and $48 million, respectively, as compared to $17 million and $33 million, respectively, for the same periods in 2015. For the quarter and six months ended June 30, 2016, contract revenues were $8 million and $66 million, respectively, as compared to $3 million and $31 million, respectively, for the same periods in 2015. The increase in contract revenues relates to milestone payments earned. For the quarter ended June 30, 2016, total revenues were $246 million as compared to $163 million for the same period in 2015. For the six months ended June 30, 2016, total revenues were $510 million as compared to $322 million for the same period in 2015.
Year Over Year Revenue Growth
(in thousands, unaudited)
Three Months Ended Six Months Ended
June 30, % June 30, %
2016 2015 Change 2016 2015 Change
Revenues:
Jakafi net product revenue $ 208,126 $ 142,406 46% $ 391,393 $ 257,736 52%
Iclusig net product revenue 3,990 - - 3,990 - -
Product royalty revenues 25,958 17,364 49% 47,860 33,037 45%
Contract revenues 8,214 3,214 - 66,429 31,429 -
Other revenues - - - 80 58 -
Total revenues $ 246,288 $ 162,984 51% $ 509,752 $ 322,260 58%
Research and development expenses Research and development expenses for the quarter and six months ended June 30, 2016 were $120 million and $277 million, respectively, as compared to $112 million and $231 million, respectively, for the same periods in 2015. Included in research and development expenses for the quarter and six months ended June 30, 2016 were non-cash expenses related to equity awards to our employees of $14 million and $27 million, respectively. The increase in research and development expenses for the six months ended June 30, 2016 was primarily due to the previously announced $35 million upfront payment to acquire the rights from Lilly to develop ruxolitinib for the treatment of patients with GVHD and the expansion of the Company’s clinical portfolio.
Selling, general and administrative expenses Selling, general and administrative expenses for the quarter and six months ended June 30, 2016 were $67 million and $131 million, respectively, as compared to $52 million and $97 million, respectively, for the same periods in 2015. Included in selling, general and administrative expenses for the quarter and six months ended June 30, 2016 were non-cash expenses related to equity awards to our employees of $8 million and $16 million, respectively. Increased selling, general and administrative expenses are driven primarily by additional costs related to the commercialization of Jakafi.
Unrealized loss on long term investment Unrealized loss on long term investment of $1 million and $4 million for the quarter and six months ended June 30, 2016 represents the fair market value adjustments of the Company’s investment in Agenus.
Net income / (loss) Net income for the quarter ended June 30, 2016 was $34 million, or $0.18 per basic and diluted share, as compared to net income of $9 million, or $0.05 per basic and diluted share for the same period in 2015. Net income for the six months ended June 30, 2016 was $58 million, or $0.31 per basic and $0.30 per diluted share, as compared to net loss of $9 million, or $0.05 per basic and diluted share for the same period in 2015.
Cash, cash equivalents and marketable securities position As of June 30, 2016, cash, cash equivalents and marketable securities totaled $629 million, as compared to $708 million as of December 31, 2015.
2016 Financial Guidance
The Company has updated its full year 2016 financial guidance, as detailed below.
Current Previous
Jakafi net product revenues $825-$835 million $815-$830 million
Iclusig net product revenues $25-$30 million Unchanged
Research and development expenses $620-$630 million $635-$660 million
Selling, general and administrative expenses $285-$310 million Unchanged
Corporate Update
In June 2016, Jonathan Dickinson joined the Executive Management team as Senior Vice President and General Manager, Europe, leading the commercial and medical affairs functions for Incyte in Europe. He joined Incyte from ARIAD Pharmaceuticals (Europe) Sàrl where he held the position of General Manager, Europe. Prior to his tenure at ARIAD, Jonathan worked at Bristol-Myers Squibb as the European oncology brand lead and at Hoffmann-La Roche where he had assignments both in the U.S. and Switzerland.
Portfolio Update
Cancer – Targeted Therapies
In April 2016, Incyte announced an agreement with Lilly, enabling Incyte to develop and commercialize ruxolitinib in the U.S. for the treatment of GVHD, and an agreement granting Novartis exclusive research, development and commercialization rights for ruxolitinib in GVHD ex-U.S. Incyte recently announced that the FDA has granted Breakthrough Therapy Designation for ruxolitinib in patients with acute GVHD.
A proof-of-concept trial of INCB39110, a selective JAK1 inhibitor, in patients with GVHD has completed recruitment and initial data is expected before the end of 2016.
In April 2016, preliminary data from an open-label Phase 1 dose escalation trial of INCB50465, Incyte’s second-generation, highly selective PI3K delta inhibitor, was presented at AACR (Free AACR Whitepaper) 2016. INCB50465 showed promising efficacy in B-cell malignancies and was generally well tolerated at all doses tested.
A Phase 2 trial of INCB54828, a selective FGFR inhibitor, in patients with bladder cancer harboring FGFR pathway alterations is expected to start in the second half of 2016.
Indication Status Update
Ruxolitinib (JAK1/JAK2) Graft versus host disease Pivotal program expected to begin in the second half of 2016
INCB39110 (JAK1) Graft versus host disease Phase 1/2 fully recruited, data expected before the end of 2016
INCB39110 (JAK1) Lung cancer Phase 1/2 in combination with osimertinib (EGFR) expected to initiate in the second half of 2016
INCB52793 (JAK1) Advanced malignancies Phase 1/2 dose-escalation
INCB50465 (PI3Kδ) B-cell malignancies Phase 1/2 as monotherapy and in combination with INCB39110 (JAK1)
INCB54828 (FGFR) Bladder cancer Phase 2 expected to initiate in the second half of 2016
INCB54329 (BRD) Advanced malignancies Phase 1/2 dose-escalation
INCB53914 (PIM) Advanced malignancies Phase 1/2 dose-escalation
INCB59872 (LSD1) Acute myeloid leukemia, small cell lung cancer Phase 1/2 dose-escalation
Cancer – Immune Therapies
The Phase 3 ECHO-301 study evaluating epacadostat in combination with the anti-PD-1 antibody, pembrolizumab, for the first-line treatment of patients with advanced or metastatic melanoma is now recruiting patients. The randomized, double-blind and placebo controlled trial, is planned to enroll 600 patients and to have dual-primary endpoints of progression-free survival and overall survival.
Updated data from the Phase 1 portion of ECHO-202, which was initially presented at SITC (Free SITC Whitepaper) 2015 and drove the decision to initiate the Phase 3 trial, have been accepted for presentation at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) congress taking place in Copenhagen in October 2016.
In June 2016, the proof-of-concept trial of INCAGN1876, an anti-GITR agonist antibody being co-developed with Agenus, began dosing patients with solid tumors.
Indication Status Update
Epacadostat First line, advanced melanoma Phase 3 (ECHO-301) in combination with pembrolizumab (PD-1)
Multiple tumor types Phase 2 (ECHO-202) expansion cohorts in combination with pembrolizumab (PD-1)
Multiple tumor types Phase 2 (ECHO-204) expansion cohorts in combination with nivolumab (PD-1)
Multiple tumor types Phase 2 (ECHO-203) expansion cohorts in combination with durvalumab (PD-L1)
Non-small cell lung cancer Phase 1/2 (ECHO-110) dose-escalation in combination with atezolizumab (PD-L1)
INCSHR1210 (PD-1, licensed from Hengrui)
Solid tumors Phase 1/2 dose-escalation
INCAGN1876 (GITR, co-developed with Agenus)
Solid tumors Phase 1/2 dose-escalation
INCAGN1949 (OX40, co-developed with Agenus)
Solid tumors Phase 1/2 expected to initiate in the second half of 2016
PD-1 platform study Solid tumors Phase 1/2, pembrolizumab (PD-1) in combination with INCB39110 (JAK1) or INCB50465 (PI3Kδ)
JAK1 platform study Solid tumors Phase 1/2, INCB39110 (JAK1) in combination with epacadostat (IDO1) or INCB50465 (PI3Kδ)
Non Oncology
In October 2015, Incyte initiated a Phase 2 trial of topical ruxolitinib for the treatment of alopecia areata. This study builds on published data showing the efficacy of oral JAK inhibitors, including ruxolitinib, in alopecia areata.
Indication Status Update
Topical ruxolitinib (JAK1/JAK2) Alopecia areata Phase 2
Partnered
Baricitinib, a JAK1/JAK2 inhibitor licensed to Lilly, is under global regulatory review for the treatment of patients with rheumatoid arthritis. If approved, Incyte will become eligible to earn regulatory and commercial milestones as well as royalties on global net sales. Baricitinib is also in Phase 2 trials for the treatment of patients with atopic dermatitis and systemic lupus erythematosus.
In June 2016, safety and efficacy data from several Phase 1 and Phase 2 trials of capmatinib, Incyte’s potent and selective c-MET inhibitor licensed to Novartis, as single agent and in combination with gefitinib in patients with c-MET positive non-small cell lung cancer and liver cancer, were presented at ASCO (Free ASCO Whitepaper). Novartis anticipates submitting an NDA for capmatinib in 2018.
Indication Status Update
Baricitinib (JAK1/JAK2, licensed to Lilly) Rheumatoid arthritis NDA & MAA submitted
Atopic dermatitis, systemic lupus erythematosus Phase 2
Capmatinib (c-MET, licensed to Novartis) Non-small cell lung cancer, glioblastoma, liver cancer Phase 2 in EGFR wild-type ALK negative NSCLC patients with c-MET amplification and mutation