On July 30, 2019 Incyte Corporation (Nasdaq:INCY) reported 2019 second quarter financial results and provides a status update on the Company’s development portfolio (Press release, Incyte, JUL 30, 2019, View Source [SID1234537892]).
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"Revenue growth continues to be strong, and we are pleased that Jakafi is also now available as an approved therapeutic option for patients with steroid-refractory acute GVHD," stated Hervé Hoppenot, Chief Executive Officer, Incyte. "In addition, we made good progress across our development portfolio during the quarter, including presenting data from the Phase 2 trial of ruxolitinib cream in patients with vitiligo at the World Congress of Dermatology (WCD) which drove our decision to advance the program into pivotal development. We remain on track to file a New Drug Application (NDA) seeking approval of pemigatinib in cholangiocarcinoma in the second half, and we look forward to announcing the results of multiple pivotal trials of ruxolitinib and itacitinib in GVHD by year-end. In summary, we continue to execute on our key strategic goals of further diversifying our revenue base and driving sustainable long-term growth."
Portfolio Update
Oncology – key highlights
The U.S. Food and Drug Administration (FDA) approved Jakafi for the treatment of steroid-refractory acute GVHD in May. Additionally, the results from the randomized Phase 3 trials of ruxolitinib versus best available therapy in steroid-refractory acute (REACH2) and steroid-refractory chronic (REACH3) GVHD, respectively, are currently expected to be available by the end of 2019.
GRAVITAS-301, the Phase 3 trial of itacitinib as a treatment for patients with newly-diagnosed acute GVHD, is also expected to readout before the end of 2019. GRAVITAS-309, a Phase 3 trial of itacitinib as a treatment for patients with newly-diagnosed chronic GVHD, was initiated in January of this year.
The Phase 1/2 trial evaluating the combination of itacitinib and osimertinib as a second-line treatment for patients with EGFR mutation-positive non-small cell lung cancer (NSCLC) has been completed; there are currently no plans for additional clinical evaluations of this combination.
Incyte is planning to submit an NDA seeking approval for pemigatinib as a second-line treatment for patients with FGFR2 translocated cholangiocarcinoma in the second half of 2019. The Phase 3 trial of pemigatinib for the first-line treatment of patients with FGFR2 translocated cholangiocarcinoma was initiated in June. Enrollment in the continuous dosing cohort of the Phase 2 trial of pemigatinib in patients with bladder cancer is expected to complete by the end of 2019, and a Phase 2 study of pemigatinib in patients with driver-activations of FGFR, that is agnostic to the tumor type, is expected to open in the coming months.
Indication and status
Ruxolitinib
Steroid-refractory acute GVHD: Phase 3 (REACH2)
(JAK1/JAK2)
Steroid-refractory chronic GVHD: Phase 3 (REACH3)
Essential thrombocythemia: Phase 2 (RESET)
Refractory myelofibrosis: Phase 2 with PI3Kδ, PIM or JAK1 inhibition
Itacitinib
Treatment-naïve acute GVHD: Phase 3 (GRAVITAS-301)
(JAK1)
Treatment-naïve chronic GVHD: Phase 3 (GRAVITAS-309)
Pemigatinib
Cholangiocarcinoma: Phase 2 (FIGHT-202), Phase 3 (FIGHT-302)
(FGFR1/2/3)
Bladder cancer: Phase 2 (FIGHT-201)
8p11 MPN: Phase 2 (FIGHT-203)
Tumor agnostic: Phase 2 (FIGHT-207) in preparation
Parsaclisib
Follicular lymphoma: Phase 2 (CITADEL-203)
(PI3Kδ)
Marginal zone lymphoma: Phase 2 (CITADEL-204)
Mantle cell lymphoma: Phase 2 (CITADEL-205)
INCMGA0012
MSI-high endometrial cancer: Phase 2 (POD1UM-101)
(PD-1)1
Merkel cell carcinoma: Phase 2 (POD1UM-201)
Anal cancer: Phase 2 (POD1UM-202)
Notes:
1) INCMGA0012 licensed from MacroGenics
Inflammation and autoimmunity (IAI) – key highlights
Data from the randomized Phase 2 trial of ruxolitinib cream in patients with vitiligo were presented at WCD. The study met its primary endpoint, demonstrating that significantly more patients treated with ruxolitinib cream for 24 weeks achieved a ≥50 percent improvement from baseline in the facial vitiligo area severity index (F-VASI50) score compared to patients treated with a vehicle control (non-medicated cream). Phase 3 development of ruxolitinib cream in patients with vitiligo is expected to begin by the end of 2019.
Indication and status
Ruxolitinib cream
Atopic dermatitis: Phase 3 (TRuE-AD)
(JAK1/JAK2)
Vitiligo: Phase 3 in preparation (TRuE-V)
INCB54707
Hidradenitis suppurativa: Phase 2
(JAK1)
Itacitinib
(JAK1)
Ulcerative colitis: Phase 2
Parsaclisib
Autoimmune hemolytic anemia: Phase 2
(PI3Kδ)
Sjögren’s syndrome: Phase 2
Discovery and early development – key highlights
Incyte’s portfolio of earlier-stage clinical candidates is detailed below.
Modality
Candidates
Small molecules
INCB01158 (ARG)1, INCB81776 (AXL/MER), INCB62079 (FGFR4), epacadostat (IDO1),
INCB59872 (LSD1), INCB53914 (PIM), INCB86550 (PD-L1)
Monoclonal antibodies2
INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40),
INCAGN2390 (TIM-3)
Bispecific antibodies
MCLA-145 (PD-L1xCD137)3
Notes:
1) INCB01158 development in collaboration with Calithera
2) Discovery collaboration with Agenus
3) MCLA-145 development in collaboration with Merus
Partnered – key highlights
Phase 3 data from BREEZE-AD1 and BREEZE-AD2, two Phase 3 trials of baricitinib in patients with moderate-to-severe atopic dermatitis, were presented at WCD. Lilly expects topline results from additional ongoing Phase 3 trials in this indication to be available later in 2019.
Data from the GEOMETRY mono-1 Phase 2 clinical trial illustrate the promise of the investigational MET inhibitor capmatinib as a potential first- and second/third-line treatment option for patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) that harbor the MET exon-14 skipping mutation. These data were presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June. In addition, Novartis announced in June that the FDA granted Breakthrough Therapy designation for capmatinib as a treatment for patients with metastatic NSCLC harboring MET exon-14 skipping mutation with disease progression on or after platinum-based chemotherapy.
Novartis continues to expect to submit an NDA seeking approval of capmatinib in the second half of 2019.
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 expected in H2 2019 (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
2019 Second-Quarter Financial Results
The financial measures presented in this press release for the three and six months ended June 30, 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 three and six months ended June 30, 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.
The Company’s 2019 financial guidance related to research and development and selling, general and administrative expenses does not include estimates associated with any potential future strategic transactions.
Revenues For the quarter ended June 30, 2019, net product revenues of Jakafi were $410 million as compared to $346 million for the same period in 2018, representing 18 percent growth. For the six months ended June 30, 2019, net product revenues of Jakafi were $785 million as compared to $659 million for the same period in 2018, representing 19 percent growth. For the quarter ended June 30, 2019, net product revenues of Iclusig (ponatinib) were $24 million as compared to $20 million for the same period in 2018. For the six months ended June 30, 2019, net product revenues of Iclusig were $45 million as compared to $41 million for the same period in 2018.
For the quarter and six months ended June 30, 2019, product royalties from sales of Jakavi (ruxolitinib), which has been out-licensed to Novartis outside of the United States, were $57 million and $102 million, respectively, as compared to $47 million and $88 million, respectively, for the same periods in 2018. For the quarter and six months ended June 30, 2019, product royalties from sales of Olumiant (baricitinib), which has been out-licensed to Lilly globally, were $19 million and $35 million, respectively, as compared to $9 million and $15 million, respectively, for the same periods in 2018.
For the quarter and six months ended June 30, 2019, milestone and contract revenues earned from our collaborative partners were $20 million and $60 million, respectively, as compared to $100 million for the same periods in 2018.
For the quarter and six months ended June 30, 2019, total revenues were $530 million and $1 billion, respectively, as compared to $522 million and $904 million, respectively, for the same periods in 2018.
Cost of product revenues GAAP cost of product revenues for the quarter and six months ended June 30, 2019 was $29 million and $52 million, respectively, as compared to $25 million and $43 million, respectively, for the same periods in 2018. Non-GAAP cost of product revenues for the quarter and six months ended June 30, 2019 was $24 million and $41 million, respectively, as compared to $19 million and $32 million, respectively, for the same periods in 2018. 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.
Research and development expenses GAAP research and development expenses for the quarter and six months ended June 30, 2019 were $289 million and $560 million, respectively, as compared to $298 million and $601 million, respectively, for the same periods in 2018. The decrease in GAAP research and development expenses over the prior year quarter and prior year six month period was driven primarily by our decision to no longer co-fund the development of baricitinib with Lilly.
Non-GAAP research and development expenses for the quarter and six months ended June 30, 2019 were $262 million and $505 million, respectively, including upfront and milestone expenses related to collaborative agreements of $25 million. Non-GAAP research and development expenses for the quarter and six months ended June 30, 2018 were $273 million and $552 million, respectively, including upfront and milestone expenses related to collaborative agreements of $20 million and $32 million, respectively. Non-GAAP research and development expenses exclude the cost of stock-based compensation.
Selling, general and administrative expenses GAAP selling, general and administrative expenses for the quarter and six months ended June 30, 2019 were $106 million and $230 million, respectively, as compared to $108 million and $230 million, respectively, for the same periods in 2018.
Non-GAAP selling, general and administrative expenses for the quarter and six months ended June 30, 2019 were $93 million and $204 million, respectively, as compared to $96 million and $206 million, respectively, for the same periods in 2018. 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 six months ended June 30, 2019 was $7 million and $13 million, respectively, as compared to $7 million and $14 million, respectively, for the same periods in 2018.
Unrealized gain (loss) on long term investments GAAP unrealized loss on long-term investments for the quarter ended June 30, 2019 was $5 million and the GAAP unrealized gain for the six months ended June 30, 2019 was $16 million. GAAP unrealized loss on long-term investments for the quarter and six months ended June 30, 2018 was $35 million and $12 million, respectively. The unrealized gain (loss) on long-term investments represents the fair market value adjustments of the Company’s investments in Agenus, Calithera, Merus and Syros.
Net income GAAP net income for the quarter ended June 30, 2019 was $105 million, or $0.49 per basic and $0.48 per diluted share, as compared to net income of $52 million, or $0.25 per basic and $0.24 per diluted share for the same period in 2018. GAAP net income for the six months ended June 30, 2019 was $208 million, or $0.97 per basic and $0.96 per diluted share, as compared to net income of $11 million, or $0.05 per basic and diluted share for the same period in 2018.
Non-GAAP net income for the quarter ended June 30, 2019 was $162 million, or $0.76 per basic and $0.75 per diluted share, as compared to Non-GAAP net income of $136 million, or $0.64 per basic and $0.63 per diluted share for the same period in 2018. Non-GAAP net income for the six months ended June 30, 2019 was $297 million, or $1.39 per basic and $1.37 per diluted share, as compared to Non-GAAP net income of $121 million, or $0.57 per basic and $0.56 per diluted share for the same period in 2018.
Cash, cash equivalents and marketable securities position As of June 30, 2019 and December 31, 2018, cash, cash equivalents and marketable securities totaled $1.7 billion and $1.4 billion, respectively.
2019 Financial Guidance
The Company has updated its full year 2019 financial guidance, as detailed below.
Unchanged
(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. EDT. 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, 13692111.
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, 13692111.
The conference call will also be webcast live and can be accessed at www.incyte.com in the Investors section under "Events and Presentations".