On August 1, 2023 Incyte (Nasdaq:INCY) reported second quarter financial results, and provides a status update on the Company’s clinical development portfolio (Press release, Incyte, AUG 1, 2023, View Source [SID1234633586]).

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"We delivered a strong quarter with total net product revenues growing 25% year over year led by double-digit Jakafi (ruxolitinib) growth and continued momentum from Opzelura (ruxolitinib) cream in atopic dermatitis and vitiligo in the United States," said Hervé Hoppenot, Chief Executive Officer, Incyte. "We continue to advance multiple programs in our pipeline, and recently announced positive topline results for two high potential programs, ruxolitinib cream in pediatric atopic dermatitis and axatilimab in chronic graft-versus-host disease."

Key Product Sales Performance

Jakafi:
Net product revenues for the quarter of $682 million:
▪Net product revenues grew 14% compared with the second quarter of 2022, driven by strong underlying patient demand growth across all indications.
▪Channel inventory at the end of the second quarter of 2023 returned to normal levels.
Opzelura:
Net product revenues for the quarter of $80 million:
▪Net product revenues of $80 million grew 384% compared with the second quarter of 2022, driven by growth in patient demand and expansion in payer coverage as the launch in AD and vitiligo continues.
▪Opzelura was approved in Europe for the treatment of nonsegmental vitiligo with facial involvement and is now available in Germany and Austria.
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Pipeline Updates
MPNs and GVHD – key highlights
LIMBER (Leadership In MPNs and GVHD BEyond Ruxolitinib):
▪AGAVE-201, a global pivotal Phase 2 trial of axatilimab in patients with chronic GVHD met its primary endpoint across all cohorts with an overall response rate (ORR) of 74% at the dose of 0.3 mg/kg administered every two weeks. We plan to share the full dataset at a future medical meeting. A Phase 1/2 combination trial of axatilimab in combination with ruxolitinib is planned to initiate by year-end 2023.
▪Combination trials of ruxolitinib twice daily (BID) with zilurgisertib (ALK2) and INCB57643 (BET) are ongoing and progressing well. At this year’s American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) annual meeting, updated data for zilurgisertib in both monotherapy and in combination with ruxolitinib BID demonstrated early signals of clinical activity with hepcidin reduction and anemia improvement observed. Also at ASCO (Free ASCO Whitepaper), data for INCB57643 (BET) demonstrated improvements in spleen size and symptom burden at > 8mg monotherapy and 4mg in combination with ruxolitinib.
▪A Phase 1 study evaluating INCA033989 (mCALR) has been initiated. Additionally, a Phase 1 study evaluating ruxolitinib BID in combination with Cellenkos’ CK0804 in MF is continuing to recruit patients.
Indication and status
Ruxolitinib XR (QD)
(JAK1/JAK2) Myelofibrosis, polycythemia vera and GVHD
Ruxolitinib + zilurgisertib
(JAK1/JAK2 + ALK2) Myelofibrosis: Phase 2
Ruxolitinib + INCB57643
(JAK1/JAK2 + BET) Myelofibrosis: Phase 2
Ruxolitinib + CK08041
(JAK1/JAK2 + CB-Tregs)
Myelofibrosis: Phase 1 (LIMBER-TREG108)
Axatilimab (anti-CSF-1R)2
Chronic GVHD: Pivotal Phase 2 (third-line plus therapy) (AGAVE-201)
Ruxolitinib + axatilimab2
(JAK1/JAK2 + anti-CSF-1R)
Chronic GVHD: Phase 1/2 in preparation
INCA033989
(mCALR) Myelofibrosis, essential thrombocythemia: Phase 1 initiated

1 Development collaboration with Cellenkos, Inc.
2 Clinical development of axatilimab in GVHD conducted in collaboration with Syndax Pharmaceuticals.
Other Hematology/Oncology – key highlights
Oral small molecule PD-L1 program: Two studies evaluating INCB99280 in combination with axitinib (VEGF) and in combination with ipilimumab (CTLA-4) have been initiated. A Phase 2 study evaluating INCB99280 in patients with select solid tumors who are checkpoint inhibitor naive was also initiated. Additionally, a Phase 2 study evaluating INCB99280 in metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC was initiated.
Collaboration with Replimune Group, Inc. In July, Incyte and Replimune Group, Inc. announced a clinical trial collaboration and supply agreement to investigate the combination of INCB99280 and RP1 in patients with cutaneous squamous cell carcinoma. RP1 is Replimune’s lead oncolytic immunotherapy product candidate and is based on a proprietary new strain of herpes simplex virus engineered for robust tumor selective replication and genetically armed with a fusogenic protein (GALV-GP R-) and GM-CSF, intended to maximize tumor killing potency, the immunogenicity of tumor cell death, and the activation of a systemic anti-tumor immune response.
2

Indication and status
Pemigatinib (Pemazyre)
(FGFR1/2/3)
Myeloid/lymphoid neoplasms (MLN): approved in the U.S. and Japan
Cholangiocarcinoma (CCA): Phase 3 (FIGHT-302)
Glioblastoma: Phase 2 (FIGHT-209)
Tafasitamab (Monjuvi/Minjuvi)1
(CD19)
Relapsed or refractory diffuse large B-cell lymphoma (DLBCL): Phase 3 (B-MIND)
First-line DLBCL: Phase 3 (frontMIND)
Relapsed or refractory follicular lymphoma (FL) and relapsed or refractory marginal zone lymphoma (MZL): Phase 3 (inMIND)
Retifanlimab (Zynyz)2
(PD-1)
Merkel cell carcinoma: approved in the U.S.
Squamous cell anal cancer (SCAC): Phase 3 (POD1UM-303)
Non-small cell lung cancer (NSCLC): Phase 3 (POD1UM-304)
MSI-high endometrial cancer: Phase 2 (POD1UM-101, POD1UM-204)
INCB99280
(Oral PD-L1) Solid tumors (combination): Phase 1
Solid tumors (monotherapy): Phase 2
Cutaneous squamous cell carcinoma (cSCC): Phase 2 initiated
INCB99318
(Oral PD-L1) Solid tumors: Phase 1

1 Development of tafasitamab in collaboration with MorphoSys.
2 Retifanlimab licensed from MacroGenics.
3 Clinical trial collaboration and supply agreement with Mirati Therapeutics.
Inflammation and Autoimmunity (IAI) – key highlights
Dermatology
Opzelura
▪Ruxolitinib cream in pediatric AD: The Phase 3 trial of ruxolitinib cream in pediatric AD (TRuE-AD3) met its primary endpoint. The study demonstrated that significantly more patients treated with ruxolitinib cream 0.75% and 1.5% achieved Investigator’s Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control. There are an estimated 2-3 million pediatric AD patients (ages 2-11) in the United States.
▪Ruxolitinib cream in other indications: Three Phase 2 studies in lichen planus, lichen sclerosus and mild to moderate hidradenitis suppurativa (HS) have completed enrollment. Two Phase 3 trials evaluating ruxolitinib cream in prurigo nodularis (PN) are ongoing.
Povorcitinib
▪Asthma and chronic spontaneous urticaria: Two Phase 2 trials in asthma and chronic spontaneous urticaria have been initiated.
Auremolimab
•IND cleared: Auremolimab, an anti-IL-15Rβ monoclonal antibody, received IND clearance and is expected to enter the clinic later this year.
3

Indication and status
Ruxolitinib cream (Opzelura)1
(JAK1/JAK2)
AD: Phase 3 pediatric study (TRuE-AD3)
Vitiligo: Phase 3 (TRuE-V1, TRuE-V2); approved in the U.S. and Europe
Lichen planus: Phase 2
Lichen sclerosus: Phase 2
Hidradenitis suppurativa: Phase 2
Prurigo nodularis: Phase 3 initiated (TRuE-PN1, TRuE-PN2)
Ruxolitinib cream + UVB
(JAK1/JAK2 + phototherapy) Vitiligo: Phase 2
Povorcitinib
(JAK1) Hidradenitis suppurativa: Phase 2b; Phase 3 (STOP-HS1, STOP-HS2)
Vitiligo: Phase 2; Phase 3 planned
Prurigo nodularis: Phase 2
Asthma: Phase 2 initiated
Chronic spontaneous urticaria: Phase 2 initiated
Auremolimab
(anti-IL-15Rβ) Vitiligo: Phase 1 in preparation

1 Novartis’ rights to ruxolitinib outside of the United States under our Collaboration and License Agreement with Novartis do not include topical administration.
Discovery and other early development – key highlights
INCA33890 (TGFβR2xPD-1): A Phase 1 study evaluating INCA33890 in patients with select advanced solid tumors has been initiated.
Modality Candidates
Small molecules INCB123667 (CDK2)
Monoclonal antibodies
INCAGN2385 (LAG-3)1, INCAGN2390 (TIM-3)1
Bi-specific antibodies
INCA32459 (LAG-3xPD-1)2, INCA33890 (TGFβR2xPD-1)2

1 Discovery collaboration with Agenus.
2 Development in collaboration with Merus.
Partnered – key highlights
Indication and status
Ruxolitinib1
(JAK1/JAK2)
Acute and chronic GVHD: approved in Europe; J-NDA under review
Baricitinib2
(JAK1/JAK2)
AD: approved in Europe and Japan
Severe AA: approved in the U.S., Europe and Japan
Capmatinib3
(MET)
NSCLC (with MET exon 14 skipping mutations): approved in the U.S., Europe and Japan

1 Ruxolitinib (Jakavi) licensed to Novartis ex-U.S. for use in hematology and oncology excluding topical administration.
2 Baricitinib (Olumiant) licensed to Lilly: approved as Olumiant in multiple territories globally for certain patients with moderate-to-severe rheumatoid arthritis; approved as Olumiant in EU and Japan for certain patients with atopic dermatitis.
3 Capmatinib (Tabrecta) licensed to Novartis.
Organizational Update
Dr. Dashyant Dhanak, who has served as Incyte’s Chief Scientific Officer since 2018, will be leaving the Organization effective August 2, 2023, in order to pursue other interests. Under his leadership, Incyte has filed more than fifteen Investigational New Drug (IND) applications, and has made great advancements in the biotherapeutics and small molecule pipeline.
4

2023 Second Quarter Financial Results
The financial measures presented in this press release for the three and six months ended June 30, 2023 and 2022 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.
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.
As changes in exchange rates are an important factor in understanding period-to-period comparisons, Management believes the presentation of certain revenue results on a constant currency basis in addition to reported results helps improve investors’ ability to understand its operating results and evaluate its performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period over period. The Company calculates constant currency by calculating current year results using prior year foreign currency exchange rates and generally refers to such amounts calculated on a constant currency basis as excluding the impact of foreign exchange or being on a constant currency basis. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as the Company presents them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Financial Highlights
Financial Highlights
(unaudited, in thousands, except per share amounts)
Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
Total GAAP revenues $ 954,610 $ 911,397 $ 1,763,283 $ 1,644,632
Total GAAP operating income 193,780 254,431 218,550 370,971
Total Non-GAAP operating income 262,058 309,624 351,787 481,771
GAAP net income 203,548 161,432 225,251 199,424
Non-GAAP net income 223,029 226,353 307,606 349,220
GAAP basic EPS $ 0.91 $ 0.73 $ 1.01 $ 0.90
Non-GAAP basic EPS $ 1.00 $ 1.02 $ 1.38 $ 1.58
GAAP diluted EPS $ 0.90 $ 0.72 $ 1.00 $ 0.89
Non-GAAP diluted EPS $ 0.99 $ 1.01 $ 1.36 $ 1.56

5

Revenue Details
Revenue Details
(unaudited, in thousands)
Three Months Ended
June 30, %
Change
(as reported)
%
Change
(constant currency)1
Six Months Ended
June 30, %
Change
(as reported)
%
Change
(constant currency)1
2023 2022 2023 2022
Net product revenues:
Jakafi $ 682,384 $ 597,673 14 % 14 % $ 1,262,353 $ 1,142,137 11 % 11 %
Opzelura 80,233 16,560 384 % 384 % 136,785 29,314 367 % 367 %
Iclusig 29,087 26,224 11 % 9 % 56,772 52,293 9 % 11 %
Pemazyre 21,572 18,983 14 % 14 % 44,047 37,015 19 % 21 %
Minjuvi 13,159 4,411 198 % 191 % 19,715 8,913 121 % 122 %
Zynyz 570 — NM NM 570 — NM NM
Total net product revenues 827,005 663,851 25 % 24 % 1,520,242 1,269,672 20 % 20 %
Royalty revenues:
Jakavi 90,448 83,711 8 % 10 % 167,140 154,578 8 % 12 %
Olumiant 32,009 30,254 6 % 10 % 66,164 78,318 (16 %) (10 %)
Tabrecta 4,799 3,581 34 % NA 8,976 7,064 27 % NA
Pemazyre 349 — NM NM 761 — NM NM
Total royalty revenues 127,605 117,546 9 % 243,041 239,960 1 %
Total net product and royalty revenues 954,610 781,397 22 % 1,763,283 1,509,632 17 %
Milestone and contract revenues — 130,000 (100 %) (100 %) — 135,000 (100 %) (100 %)
Total GAAP revenues $ 954,610 $ 911,397 5 % $ 1,763,283 $ 1,644,632 7 %

NM = not meaningful
NA = not available
1.Percentage change in constant currency is calculated using 2022 foreign exchange rates to recalculate 2023 results.
Product and Royalty Revenues Product revenues and product and royalty revenues for the quarter ended June 30, 2023 increased 25% and 22%, respectively, over the prior year comparative period, primarily driven by increases in Jakafi and Opzelura net product revenues. The increase in Jakafi net product revenues was primarily driven by growth in patient demand across all indications and inventory level normalizing at the end of the second quarter of 2023. Total Opzelura net product revenues for the quarter were $80 million, representing a 384% increase year-over-year driven by increased patient demand and expanded coverage. Among other Hematology and Oncology, Minjuvi net product revenues grew 198% driven in part by the recognition of $6 million of previously deferred revenue related to the Early Access Program in France, which ended in June 2023. Jakavi and Olumiant royalties for the quarter were impacted by unfavorable changes in foreign currency exchange rates.
6

Operating Expenses
Operating Expense Summary
(unaudited, in thousands)
Three Months Ended
June 30, %
Change Six Months Ended
June 30, %
Change
2023 2022 2023 2022
GAAP cost of product revenues $ 68,326 $ 50,636 35 % $ 125,148 $ 93,250 34 %
Non-GAAP cost of product revenues1
62,150 44,575 39 % 112,819 81,194 39 %
GAAP research and development 400,750 347,196 15 % 807,391 700,569 15 %
Non-GAAP research and development2
367,921 319,059 15 % 743,541 646,104 15 %
GAAP selling, general and administrative 283,929 253,277 12 % 599,535 462,861 30 %
Non-GAAP selling, general and administrative3
263,030 235,595 12 % 557,047 428,277 30 %
GAAP loss on change in fair value of acquisition-related contingent consideration 8,374 3,313 153 % 14,570 9,695 50 %
Non-GAAP loss on change in fair value of acquisition-related contingent consideration4
— — — % — — — %
GAAP (profit) and loss sharing under collaboration agreements5
(549) 2,544 (122 %) (1,911) 7,286 (126 %)

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 loss on change in fair value of acquisition-related contingent consideration is null.
5 Growth rate in GAAP (profit) and loss sharing under collaboration agreements represents a decrease in loss position for the three and six months ended June 30, 2023.
Cost of product revenues GAAP and Non-GAAP cost of product revenues for the quarter ended June 30, 2023 increased 35% and 39%, respectively, compared to the same period in 2022 primarily due to growth in net product revenues.
Research and development expenses GAAP and Non-GAAP research and development expense for the quarter ended June 30, 2023 increased 15%, compared to the same period in 2022 primarily due to continued investment in our late stage development assets.
Selling, general and administrative expenses GAAP and Non-GAAP selling, general and administrative expenses for the quarter ended June 30, 2023 increased 12% compared to the same period in 2022, primarily due to expenses related to promotional activities to support the launch of Opzelura for the treatment of vitiligo.
Other Financial Information
Operating income GAAP and Non-GAAP operating income for the three months ended June 30, 2023 decreased 24% and 15%, respectively, compared to the same period in 2022, primarily due to lower milestone and contract revenue for the quarter ended June 30, 2023 compared to the same period in 2022, and increased investment in our late stage development assets and in supporting the launch of Opzelura for the treatment of vitiligo.
Cash, cash equivalents and marketable securities position As of June 30, 2023 and December 31, 2022, cash, cash equivalents and marketable securities totaled $3.4 billion and $3.2 billion, respectively.
7

2023 Financial Guidance
Incyte is tightening its full year 2023 guidance for Jakafi net product revenues as a result of its strong second quarter performance. Incyte’s guidance is summarized below. Guidance does not include revenue from any potential new product launches or the impact of any potential future strategic transactions.
Current Previous
Jakafi net product revenues $2.58 – $2.63 billion $2.55 – $2.63 billion
Other Hematology/Oncology net product revenues(1)
Unchanged $215 – $225 million
GAAP Cost of product revenues Unchanged 7 – 8% of net product revenues
Non-GAAP Cost of product revenues(2)
Unchanged 6 – 7% of net product revenues
GAAP Research and development expenses Unchanged $1,610 – $1,650 million
Non-GAAP Research and development expenses(3)
Unchanged $1,485 – $1,520 million
GAAP Selling, general and administrative expenses Unchanged $1,050 – $1,150 million
Non-GAAP Selling, general and administrative expenses(3)
Unchanged $965 – $1,060 million

1Pemazyre in the U.S., EU and Japan; Zynyz in the U.S.; and Iclusig and Minjuvi in the EU.
2Adjusted 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.
3 Adjusted to exclude the estimated cost of stock-based compensation.
Conference Call and Webcast Information
Incyte will hold a conference call and webcast this morning at 8:00 a.m. ET. 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, 13739925.
If you are unable to participate, a replay of the conference call will be available for 90 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, 13739925.
The conference call will also be webcast live and can be accessed at investor.incyte.com.