On February 13, 2024 Incyte (Nasdaq:INCY) reported 2023 fourth quarter financial results, provides 2024 financial guidance and provides a status update on the Company’s research and development portfolio (Press release, Incyte, FEB 13, 2024, View Source [SID1234640030]).

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"We delivered a strong 2023 with total net product and royalty revenues of $3.7 billion, increasing 14% versus 2022. In the fourth quarter, we achieved for the first time, a new milestone of $1 billion in total quarterly revenues, driven by the continued growth of Jakafi (ruxolitinib) and the successful launch of Opzelura (ruxolitinib) cream," said Hervé Hoppenot, Chief Executive Officer, Incyte. "Throughout 2023, we focused our R&D efforts on high potential programs and believe we are positioned to deliver more than ten high impact launches by 2030."
Key Product Sales Performance
Jakafi:
Net product revenues for the fourth quarter of 2023 of $695 million; 2023 full year net product revenues of $2.59 billion
▪Fourth quarter 2023 net product revenues grew 7% compared with the fourth quarter of 2022 and grew 8% for the full year 2023 when compared to 2022.
▪Fourth quarter revenues were negatively impacted by an increase in the number of Medicare Part D patients receiving free product and were positively impacted by an increase in channel inventory.
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Opzelura:
Net product revenues for the fourth quarter of 2023 of $109 million; 2023 full year net product revenues of $338 million:
▪Net product revenues of $109 million grew 78% compared with the fourth quarter of 2022, driven by growth in patient demand, refills and expansion in payer coverage as the launch in atopic dermatitis (AD) and vitiligo continues. For the full-year, 2023 net product revenues grew 162% over the prior year to $338 million.
▪On January 31, 2024, Incyte received approval in France to promote and distribute Opzelura for vitiligo under a process called "Accès Direct." This process is intended to allow for early access to a therapy while a final price is negotiated, which is expected to take up to twelve months. Once price reimbursement is determined, Incyte will begin recognizing revenue in France.
Key Recent Updates
•In February 2024, Incyte entered into an asset purchase agreement with MorphoSys AG which gave Incyte exclusive global rights for tafasitamab, a humanized Fc-modified CD19-targeting immunotherapy marketed in the U.S. as Monjuvi (tafasitamab-cxix) and outside of the U.S. as Minjuvi (tafasitamab). Under the terms of the agreement, MorphoSys received a payment of $25 million from Incyte, and Incyte gained global development and commercialization rights for tafasitamab. Incyte will recognize revenue and cost for all U.S. commercialization and clinical development and MorphoSys will no longer be eligible to receive future milestone, profit split and royalty payments.
•In January 2024, Incyte announced the primary endpoint was met in its randomized, placebo-controlled, Phase 2 study evaluating the safety and efficacy of ruxolitinib cream (Opzelura) in adults with mild/moderate hidradenitis suppurativa (HS). At Week 16, patients receiving ruxolitinib cream 1.5% twice daily (BID) had significantly greater decreases from baseline versus placebo in total abscess and inflammatory nodule (AN) count, the primary endpoint of the study. The overall safety profile of ruxolitinib cream was consistent with previous data, and no new safety signals were observed. The Phase 2 data is anticipated to be presented at an upcoming scientific meeting in 2024. A Phase 3 study is currently being evaluated.
•In January 2024, Incyte highlighted promising early clinical efficacy data for its selective inhibitor of CDK2 (INCB123667), which demonstrated its potential use as monotherapy or combination therapy for late-stage cancers. In a Phase 1 study of INCB123667, early clinical activity was observed with several partial responses (PR) achieved in patients with amplification/over expression of CCNE1, a cell cycle regulator and potential predictive biomarker. Tumor shrinkage was observed across multiple tumor types, including CCNE1 patients with ovarian cancer. The safety profile of for INCB123667 aligns with the mechanism of action. Additional data is expected to be presented in 2024.
•In December 2023, in collaboration with Syndax Pharmaceuticals, the Biologics License Application (BLA) was submitted for axatilimab in chronic graft-versus-host disease (cGVHD) with approval anticipated in the second half of 2024. Plans are underway to initiate two combination trials with axatilimab in cGVHD in mid-2024, including a Phase 2 combination trial with ruxolitinib and a Phase 3 combination trial with steroids.
•JAK2V617Fi (INCB160058), a potent and selective JAK2 pseudokinase domain binder, cleared the Investigational New Drug (IND) process with the FDA and a Phase 1 study is anticipated to initiate in the first half of 2024. INCB160058 has the potential to be a disease modifying therapy and to address a significant patient population. The JAK2 mutation is found in 55% of primary myelofibrosis, 95% of polycythemia vera and 60% of essential thrombocythemia patients.
•A Phase 1 study of KRASG12D (INCB161734) in patients with advanced metastatic solid tumors with a KRAS G12D mutation was recently initiated and the first patient was dosed. KRAS mutations are one of the most common genetic abnormalities in cancer, especially pancreatic and colorectal cancers.
•In December 2023, Incyte received FDA feedback and agreed to the path forward for once daily (QD) ruxolitinib (XR). The potential approval of QD ruxolitinib (XR) is anticipated in approximately two years.
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Additional Pipeline Updates
Myeloproliferative Neoplasms (MPNs) and Graft-Versus-Host Disease (GVHD) – key highlights
▪In December 2023, Incyte presented more than 40 hematology and oncology abstracts including a Plenary Scientific Session at the 2023 ASH (Free ASH Whitepaper) Annual Meeting. The plenary presentation featured the full data from AGAVE-201 evaluating axatilimab, an anti-CSFR-1R monoclonal antibody, in patients with cGVHD. Other key highlights included additional data from the Phase 1/2 Study of zilurgisertib (INCB000928), Phase 1 data of BETi (INCB057643) and preclinical data of JAK2V617Fi (INCB160058).
▪Combination trials of ruxolitinib twice daily (BID) with zilurgisertib (INCB000928) and BETi (INCB057643) are ongoing and continue to enroll. Incyte anticipates initiating a Phase 3 study for BETi in the second half of 2024 and achieving clinical proof-of-concept for zilurgisertib by mid-2024.
▪The Phase 1 study evaluating the mCALR monoclonal antibody (INCA033989) is ongoing and enrolling patients.
MPN and GVHD Programs Indication and Phase
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); BLA under review in the U.S.
Ruxolitinib + axatilimab2
(JAK1/JAK2 + anti-CSF-1R)
Chronic GVHD: Phase 1/2 in preparation
INCA033989
(mCALR) Myelofibrosis, essential thrombocythemia: Phase 1
INCB160058
(JAK2V617Fi) Phase 1

1 Development collaboration with Cellenkos, Inc.
2 Clinical development of axatilimab in GVHD conducted in collaboration with Syndax Pharmaceuticals.
Other Hematology/Oncology – key highlights
CDK2i (INCB123667)
•In January 2024, Incyte highlighted promising early clinical efficacy data for its selective small molecule inhibitor of CDK2 (INCB123667), which demonstrated its potential use as monotherapy or combination therapy for late-stage cancers. In a Phase 1 study of INCB123667, early clinical activity was observed with several partial responses (PR) achieved in patients with amplification/over expression of CCNE1, a cell cycle regulator and potential predictive biomarker. Tumor shrinkage was observed across multiple tumor types, including CCNE1+ patients with ovarian cancer. The safety profile of for INCB123667 aligns with the mechanism of action. Additional data is expected to be presented in 2024.
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Oncology Programs Indication and Phase
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)
(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)1
(PD-1)
Merkel cell carcinoma (MCC): 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
INCB99318
(Oral PD-L1) Solid tumors: Phase 1
INCB123667
(CDK2i) Solid tumors with Amplification/ Overexpression of CCNE1: Phase 1
INCB161734
(KRASG12D) Advanced metastatic solid tumors with a KRAS G12D mutation: Phase 1

1 Retifanlimab licensed from MacroGenics.
Inflammation and Autoimmunity (IAI) – key highlights
Dermatology
Ruxolitinib Cream
▪Incyte announced the primary endpoint was met in its randomized, placebo-controlled, Phase 2 study evaluating the safety and efficacy of ruxolitinib cream (Opzelura) in adults with mild/moderate HS. At Week 16, patients receiving ruxolitinib cream 1.5% twice daily (BID) had significantly greater decreases from baseline versus placebo in total abscess and inflammatory nodule (AN) count, the primary endpoint of the study. The overall safety profile of ruxolitinib cream is consistent with previous data, and no new safety signals were observed. The Phase 2 data is anticipated to be presented at an upcoming scientific meeting in 2024. A Phase 3 study is currently being evaluated.
▪Two Phase 2 studies in lichen planus and lichen sclerosus have completed enrollment. Two Phase 3 trials evaluating ruxolitinib cream in prurigo nodularis (PN) are ongoing.
Povorcitinib (INCB54707)
▪The Phase 2, randomized, double-blind, placebo-controlled, dose ranging study evaluating the efficacy and safety of povorcitinib in participants with PN met its primary endpoint. A Phase 3 study in PN is being planned.
▪Asthma and chronic spontaneous urticaria: Two Phase 2 trials in asthma and chronic spontaneous urticaria are enrolling.
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IAI and Dermatology Programs Indication and Phase
Ruxolitinib cream (Opzelura)1
(JAK1/JAK2)
AD: Phase 3 pediatric study (TRuE-AD3)
Vitiligo: Approved in the U.S. and Europe
Lichen planus: Phase 2
Lichen sclerosus: Phase 2
Hidradenitis suppurativa: Phase 2; Phase 3 being evaluated
Prurigo nodularis: Phase 3 (TRuE-PN1, TRuE-PN2)
Ruxolitinib cream + UVB
(JAK1/JAK2 + phototherapy) Vitiligo: Phase 2
Povorcitinib
(JAK1) Hidradenitis suppurativa: Phase 3 (STOP-HS1, STOP-HS2)
Vitiligo: Phase 3 (STOP-V1, STOP-V2)
Prurigo nodularis: Phase 2; Phase 3 in planning
Asthma: Phase 2
Chronic spontaneous urticaria: Phase 2
INCA034460
(anti-IL-15Rβ) Vitiligo: Phase 1 initiated

1 Novartis’ rights to ruxolitinib outside of the United States under our Collaboration and License Agreement with Novartis do not include topical administration.
Other
Other Program Indication and Phase
Zilurgisertib
(ALK2) Fibrodysplasia ossificans progressiva: Pivotal Phase 2

Discovery and other early development
Modality Candidates
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
Partnered Programs Indication and Phase
Ruxolitinib (Jakavi)1
(JAK1/JAK2)
Acute and chronic GVHD: Approved in Europe and Japan
Baricitinib (Olumiant)2
(JAK1/JAK2)
AD: Approved in Europe and Japan
Severe alopecia areata (AA): Approved in the U.S., Europe and Japan
Capmatinib (Tabrecta)3
(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.
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2023 Fourth Quarter and Year-end Financial Results
The financial measures presented in this press release for the quarter and year ended December 31, 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 December 31, Twelve Months Ended December 31,
2023 2022 2023 2022
Total GAAP revenues $ 1,013,341 $ 926,700 $ 3,695,649 $ 3,394,635
Total GAAP operating income 187,270 70,093 620,525 579,440
Total Non-GAAP operating income 267,702 152,503 892,783 801,545
GAAP provision for income taxes 69,877 52,154 236,616 188,456
GAAP net income 201,079 28,461 597,599 340,660
Non-GAAP net income 239,124 139,661 795,449 622,676
GAAP basic EPS $ 0.90 $ 0.13 $ 2.67 $ 1.53
Non-GAAP basic EPS $ 1.07 $ 0.63 $ 3.56 $ 2.80
GAAP diluted EPS $ 0.89 $ 0.13 $ 2.65 $ 1.52
Non-GAAP diluted EPS $ 1.06 $ 0.62 $ 3.52 $ 2.78

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Revenue Details
Revenue Details
(unaudited, in thousands)
Three Months Ended December 31, %
Change
(as reported)
%
Change
(constant currency)1
Twelve Months Ended December 31, %
Change
(as reported)
%
Change
(constant currency)1
2023 2022 2023 2022
Net product revenues:
Jakafi $ 695,127 $ 647,493 7 % 7 % $ 2,593,732 $ 2,409,225 8 % 8 %
Opzelura 109,243 61,281 78 % 78 % 337,864 128,735 162 % 162 %
Iclusig 27,130 27,616 (2 %) (6 %) 111,623 105,838 5 % 3 %
Pemazyre 20,653 23,016 (10 %) (11 %) 83,642 83,445 — % 1 %
Minjuvi 8,994 4,809 87 % 79 % 37,057 19,654 89 % 87 %
Zynyz 582 — NM NM 1,250 — NM NM
Total net product revenues 861,729 764,215 13 % 13 % 3,165,168 2,746,897 15 % 15 %
Royalty revenues:
Jakavi 103,892 91,189 14 % 14 % 367,583 331,575 11 % 12 %
Olumiant 40,359 35,858 13 % 12 % 136,138 134,547 1 % 4 %
Tabrecta 4,678 4,233 11 % NA 17,793 15,411 15 % NA
Pemazyre 683 1,205 NM NM 1,967 1,205 NM NM
Total royalty revenues 149,612 132,485 13 % 523,481 482,738 8 %
Total net product and royalty revenues 1,011,341 896,700 13 % 3,688,649 3,229,635 14 %
Milestone and contract revenues 2,000 30,000 (93 %) (93 %) 7,000 165,000 (96 %) (96 %)
Total GAAP revenues $ 1,013,341 $ 926,700 9 % $ 3,695,649 $ 3,394,635 9 %

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 December 31, 2023 both increased 13%, and product revenues and product and royalty revenues for the year ended December 31, 2023 increased 15% and 14%, respectively, over the prior year comparative periods, primarily driven by increases in Jakafi and Opzelura net product revenues. Jakafi fourth quarter revenues were negatively impacted by an increase in the number of Medicare Part D patients receiving free product and were positively impacted by an increase in channel inventory. Opzelura net product revenues for the quarter were $109 million, representing a 78% increase year-over-year driven by growth in new patient starts and refills. Olumiant royalties for the quarter were impacted by favorable changes in foreign currency exchange rates.
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Operating Expenses
Operating Expense Summary
(unaudited, in thousands)
Three Months Ended December 31, %
Change Twelve Months Ended December 31, %
Change
2023 2022 2023 2022
GAAP cost of product revenues $ 69,751 $ 59,163 18 % $ 254,990 $ 206,997 23 %
Non-GAAP cost of product revenues1
63,575 53,022 20 % 230,308 182,737 26 %
GAAP research and development 444,494 501,360 (11 %) 1,627,594 1,585,936 3 %
Non-GAAP research and development2
408,488 469,048 (13 %) 1,500,897 1,473,420 2 %
GAAP selling, general and administrative 293,865 272,819 8 % 1,161,293 1,002,140 16 %
Non-GAAP selling, general and administrative3
270,673 253,209 7 % 1,069,616 928,960 15 %
GAAP loss on change in fair value of acquisition-related contingent consideration 15,058 24,347 (38 %) 29,202 12,149 140 %
Non-GAAP loss on change in fair value of acquisition-related contingent consideration4
— — — % — — — %
GAAP (profit) and loss sharing under collaboration agreements 2,903 (1,082) (368 %) 2,045 7,973 (74 %)

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 and asset impairments.
4 Non-GAAP loss on change in fair value of acquisition-related contingent consideration is null.
Cost of product revenues GAAP and Non-GAAP cost of product revenues for the quarter ended December 31, 2023 increased 18% and 20%, respectively, and for the year ended December 31, 2023 increased 23% and 26% compared to the same periods in 2022 due to growth in net product revenues and inventory reserves for obsolescence.
Research and development expenses GAAP and Non-GAAP research and development expense for the quarter ended December 31, 2023 decreased 11% and 13%, respectively, and for the year ended December 31, 2023 increased 3% and 2%, respectively, compared to the same periods in 2022. The decrease for the quarter was primarily due to the $70 million upfront payment made as part of the Villaris asset acquisition during the fourth quarter of 2022, offset in part by the $20 million development milestone payment to former Villaris stockholders in the fourth quarter of 2023. The increase for the full year was 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 December 31, 2023 increased 8% and 7%, respectively, and for the year ended December 31, 2023 increased 16% and 15%, respectively, compared to the same periods in 2022, primarily due to expenses related to promotional activities to support the launch of Opzelura for the treatment of vitiligo.
Other Financial Information
Change in fair value of acquisition-related contingent consideration The change in fair value of contingent consideration during the quarter and year ended December 31, 2023, compared to the same periods in 2022, was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of Iclusig.

Operating income GAAP and Non-GAAP operating income for the year ended December 31, 2023 increased 7% and 11%, respectively, compared to the same period in 2022, primarily driven by growth in product revenues.
Cash, cash equivalents and marketable securities position As of December 31, 2023 and 2022, cash, cash equivalents and marketable securities totaled $3.7 billion and $3.2 billion, respectively.
2024 Financial Guidance
Incyte’s guidance includes revenues and expenses related to the recently announced acquisition of exclusive global rights to tafasitamab and excludes any potential impact related to the accounting treatment of the $25 million purchase price paid. Guidance does not include revenue from any potential new product launches or the impact of any potential future strategic transactions. Incyte’s guidance is summarized below.
Current
Jakafi net product revenues $2,690 – $2,750 million
Other Hematology/Oncology net product revenues(1)
$325 – $360 million
GAAP Cost of product revenues 7 – 8% of net product revenues
Non-GAAP Cost of product revenues(2)
6 – 7% of net product revenues
GAAP Research and development expenses $1,720 – $1,760 million
Non-GAAP Research and development expenses(3)
$1,580 – $1,615 million
GAAP Selling, general and administrative expenses $1,210 – $1,240 million
Non-GAAP Selling, general and administrative expenses(3)
$1,115 – $1,140 million

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, 13744020.
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, 13744020.
The conference call will also be webcast live and can be accessed at investor.incyte.com.