Incyte Reports 2020 Second Quarter Financial Results and Provides Updates on Key Clinical Programs

• Total product and royalty revenues of $593 million (+16% vs Q2 2019) for the quarter ended June 30, 2020; Jakafi^® (ruxolitinib) revenues of $474 million in Q2 2020 (+16% vs Q2 2019)
• Monjuvi^® (tafasitamab-cxix; collaboration with MorphoSys) approved by U.S. FDA; launch preparations already underway
• Tabrecta^TM (capmatinib; licensed to Novartis) approved by U.S. FDA and Japanese MHLW; Incyte eligible for milestones and royalties on global net sales
• Primary and both key secondary endpoints met in Phase 3 REACH3 trial of Jakafi in patients with steroid-refractory chronic graft-versus-host disease

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

WILMINGTON, Del.–(BUSINESS WIRE)–$INCY #earnings–Incyte (Nasdaq: INCY) today reports 2020 second quarter financial results, and provides a status update on the Company’s development portfolio.

“We continue to execute successfully across all aspects of our business,” stated Hervé Hoppenot, Chief Executive Officer, Incyte. “Demand for Jakafi^® (ruxolitinib) is robust and the recent approval of Pemazyre^® (pemigatinib), as well as those of Monjuvi^® (tafasitamab-cxix) with MorphoSys and Tabrecta^TM (capmatinib) with Novartis, add to our momentum. In addition, clinical updates from the tafasitamab and LIMBER programs at the recent EHA congress, the successful outcome of REACH3, and our plan to submit an NDA seeking approval for ruxolitinib cream at the end of this year, further illustrate the opportunities within our portfolio to drive additional diversification and growth.”

Portfolio Update

LIMBER – key highlights

Positive proof-of-concept data for parsaclisib in combination with ruxolitinib in myelofibrosis (MF) patients with an inadequate response to ruxolitinib monotherapy were presented at the virtual 25^th Congress of the European Hematology Association (EHA). Incyte plans to initiate pivotal trials of the combination of ruxolitinib and parsaclisib as both first-line therapy for MF patients and in MF patients with an inadequate response to ruxolitinib monotherapy.

Monotherapy treatment cohorts in the trials of INCB57643 (BET) and INCB00928 (ALK2) in patients with myelofibrosis are being opened for recruitment, and these are expected to be followed by the initiation of ruxolitinib combination trials with both agents. Further development of the combination of INCB53914 (PIM) plus ruxolitinib has been discontinued.

		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 First-line myelofibrosis: Phase 3 in preparation
ruxolitinib + INCB57643 (JAK1/JAK2 + BET)		Refractory myelofibrosis: Phase 2 in preparation
ruxolitinib + INCB00928 (JAK1/JAK2 + ALK2)		Myelofibrosis: Phase 2 in preparation

Oncology beyond MPNs – key highlights

In July, the FDA granted approval for Monjuvi^® (tafasitamab-cxix), an Fc-engineered anti-CD19 antibody, in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) and who are not eligible for autologous stem cell transplant (ASCT). Monjuvi was reviewed under Priority Review and granted accelerated approval based on overall response rate data from the L-MIND trial of tafasitamab in combination with lenalidomide.

Incyte and MorphoSys will co-commercialize Monjuvi in the U.S. Medical and commercial teams from both companies were ready for the early approval and launch activities are already underway, including engagements with prescribing physicians and payors.

In May, Incyte and MorphoSys announced the validation of the European Marketing Authorization Application (MAA) for tafasitamab. Incyte has exclusive development and commercialization rights to tafasitamab outside of the U.S.

Updated results from the ongoing Phase 2 L-MIND study investigating the combination of tafasitamab and lenalidomide in patients with relapsed or refractory DLBCL (r/r DLBCL) were reported at EHA. The results were consistent with the primary analysis and those included in the U.S. prescribing information, and confirmed the durability of the response and measurements of overall survival of tafasitamab in combination with lenalidomide followed by tafasitamab monotherapy in ASCT-ineligible patients with r/r DLBCL.

In July, Incyte and Novartis announced that the REACH3 study, evaluating ruxolitinib in patients with steroid-refractory chronic graft-versus-host disease (GVHD), met its primary endpoint of overall response rate (ORR) at Month 6 and both key secondary endpoints (modified Lee symptom scale and failure-free survival). No new safety signals were observed, and the ruxolitinib safety profile in REACH3 was consistent with that seen in previously reported studies. REACH3 is the largest randomized trial ever conducted in the steroid-refractory chronic GVHD setting. Data are being prepared for presentation at an upcoming medical meeting and for regulatory submission.

		Indication and status
ruxolitinib (JAK1/JAK2)		Steroid-refractory chronic GVHD: Phase 3 (REACH3)1 Primary endpoint met
itacitinib (JAK1)		Treatment-naïve chronic GVHD: Phase 3 (GRAVITAS-309)
pemigatinib (FGFR1/2/3)		Cholangiocarcinoma: Phase 2 (FIGHT-202), Phase 3 (FIGHT-302); MAA under review Bladder cancer: Phase 2 (FIGHT-201, FIGHT-205) 8p11 MPN: Phase 2 (FIGHT-203) Tumor agnostic: Phase 2 (FIGHT-207)
tafasitamab (CD19)2		r/r DLBCL: Phase 2 (L-MIND); Phase 3 (B-MIND); MAA under review First-line DLBCL: Phase 1b (First-MIND)
parsaclisib (PI3Kδ)		Follicular lymphoma: Phase 2 (CITADEL-203) Marginal zone lymphoma: Phase 2 (CITADEL-204) Mantle cell lymphoma: Phase 2 (CITADEL-205)
retifanlimab (PD-1)3		MSI-high endometrial cancer: Phase 2 (POD1UM-101) Merkel cell carcinoma: Phase 2 (POD1UM-201) SCAC: Phase 2 (POD1UM-202); Phase 3 (POD1UM-303) in preparation NSCLC: Phase 3 (POD1UM-304) in preparation

1)		Clinical development of ruxolitinib in GVHD conducted in collaboration with Novartis
2)		Development of tafasitamab in collaboration with MorphoSys
3)		Retifanlimab licensed from MacroGenics; SCAC = squamous cell carcinoma of the anal canal

Inflammation and Autoimmunity (IAI) – key highlights

The 44-week long-term safety and efficacy portions of both the TRuE-AD1 and TRuE-AD2 Phase 3 trials of ruxolitinib cream in patients with mild-to-moderate atopic dermatitis are proceeding as planned, and the NDA submission is expected at the end of 2020.

Data from the randomized Phase 2 trial of ruxolitinib cream in patients with vitiligo were recently published in The Lancet. The two randomized Phase 3 trials in the TRuE-V pivotal program evaluating ruxolitinib cream in patients with vitiligo are proceeding as planned, with results expected in 2021.

		Indication and status
ruxolitinib cream (JAK1/JAK2)		Atopic dermatitis: Phase 3 (TRuE-AD1, TRuE-AD2; primary endpoints 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

Based on emerging data from the LSD1 inhibitor program, development of INCB59872 has been discontinued. Incyte’s portfolio of other earlier-stage clinical candidates is summarized below.

Modality		Candidates
Small molecules		INCB01158 (ARG)1, INCB81776 (AXL/MER), epacadostat (IDO1), 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

Potential therapies for patients with COVID-19

There are several ongoing studies of ruxolitinib, conducted by Incyte alone or in collaboration with Novartis, and of baricitinib, conducted by Lilly, in patients with COVID-19. Initial results from these trials are expected in the second half of 2020.

Incyte and Lilly have amended their agreement to enable Lilly to move rapidly in the development and commercialization of baricitinib as a potential therapy for patients with COVID-19, moving financial obligations post-approval.

		Status
ruxolitinib (JAK1/JAK2)		COVID-19 associated cytokine storm: Phase 3 (RUXCOVID1; 369-DEVENT)
baricitinib (JAK1/JAK2)2		Hospitalized patients with COVID-19: Phase 3 (ACTT-23; COV-BARRIER)

1)		Sponsored by Incyte in the United States and by Novartis outside of the United States
2)		Worldwide rights to baricitinib licensed to Lilly: approved as Olumiant in multiple territories globally for certain patients with moderate-to-severe rheumatoid arthritis
3)		ACTT-2 agreement with the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health

Partnered – key highlights

In May, Incyte and Novartis announced the FDA approval of Tabrecta^TM (capmatinib) for the treatment of adult patients with metastatic non-small cell lung cancer (NSCLC) whose tumors have a mutation that leads to MET exon 14 skipping (METex14) as detected by an FDA-approved test. Tabrecta was reviewed under Priority Review and granted accelerated approval based on Phase 2 data in first-line and previously treated patients with METex14 mutated NSCLC.

In June, the Japanese Ministry of Health, Labour and Welfare (MHLW) approved Tabrecta^TM (capmatinib) for METex14 mutation-positive advanced and/or recurrent unresectable NSCLC.

		Indication and status
baricitinib (JAK1/JAK2)1		Atopic dermatitis: Phase 3 (BREEZE-AD) Systemic lupus erythematosus: Phase 3 Severe alopecia areata: Phase 3 (BRAVE-AA1)
capmatinib (MET)2		NSCLC (with MET exon 14 skipping mutations): Approved as Tabrecta in U.S. and Japan

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

2020 Second Quarter Financial Results

The financial measures presented in this press release for the three and six months ended June 30, 2020 and 2019 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.

Financial Highlights

Financial Highlights
(unaudited, in thousands, except per share amounts)
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2020			2019			2020				2019
Total GAAP revenue		$	688,043		$	529,932		$	1,256,550			$	1,027,789
Total GAAP operating income (loss)			230,773			98,612			(433,231	)			172,682
Total Non-GAAP operating income (loss)			288,514			151,219			(320,966	)			277,936
GAAP net income (loss)			290,298			105,318			(430,344	)			207,630
Non-GAAP net income (loss)			273,578			162,469			(345,342	)			297,011
GAAP basic EPS		$	1.33		$	0.49		$	(1.98	)		$	0.97
Non-GAAP basic EPS		$	1.26		$	0.76		$	(1.59	)		$	1.39
GAAP diluted EPS		$	1.32		$	0.48		$	(1.98	)		$	0.96
Non-GAAP diluted EPS		$	1.24		$	0.75		$	(1.59	)		$	1.37

Revenue Details

Revenue Details
(unaudited, in thousands)
		Three Months Ended									Six Months Ended
		June 30,						%			June 30,						%
		2020			2019			Change			2020			2019			Change
Revenues:
Jakafi net product revenue		$	473,706		$	409,506		16	%		$	933,185		$	785,117		19	%
Iclusig net product revenue			22,798			24,391		(7	%)			50,046			45,029		11	%
Pemazyre net product revenue			3,786			–						3,786			–
Jakavi product royalty revenues			66,217			56,895		16	%			122,550			102,466		20	%
Olumiant product royalty revenues			25,830			19,140		35	%			51,277			35,177		46	%
Tabrecta product royalty revenues			706			–						706			–
Product and royalty revenues			593,043			509,932		16	%			1,161,550			967,789		20	%
Milestone and contract revenues			95,000			20,000		375	%			95,000			60,000		58	%
Total GAAP revenues		$	688,043		$	529,932		30	%		$	1,256,550		$	1,027,789		22	%

Product and Royalty Revenues Product and royalty revenues for the three and six months ended June 30, 2020 increased 16% and 20%, respectively, over the prior year comparative periods primarily as a result of increases in Jakafi net product revenues and higher product royalty revenues from Jakavi and Olumiant. Jakafi net product revenues for the three and six months ended June 30, 2020 increased 16% and 19%, 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									Six Months Ended
		June 30,						%			June 30,						%
		2020			2019			Change			2020			2019			Change
GAAP cost of product revenues		$	33,364		$	29,406		13	%		$	60,683		$	51,994		17	%
Non-GAAP cost of product revenues1			27,734			23,846		16	%			49,444			40,874		21	%
GAAP research and development			286,601			289,363		(1	%)			1,371,888			559,908		145	%
Non-GAAP research and development2			254,108			261,747		(3	%)			1,310,682			504,870		160	%
GAAP selling, general and administrative			117,998			105,943		11	%			229,146			229,926		(0	%)
Non-GAAP selling, general and administrative3			104,434			93,120		12	%			202,007			204,109		(1	%)
GAAP change in fair value of acquisition-related contingent consideration			6,054			6,608		(8	%)			12,681			13,279		(5	%)
Non-GAAP change in fair value of acquisition-related contingent consideration4			–			–						–			–
GAAP collaboration loss sharing			13,253			–						15,383			–
Non-GAAP collaboration loss sharing			13,253			–						15,383			–

^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 three months ended June 30, 2020 decreased 1% and 3%, respectively, compared to the same period in 2019. For the six months ended June 30, 2020, GAAP and Non-GAAP research and development expense increased 145% and 160%, respectively, compared to the same period in 2019, primarily due to upfront consideration of $805 million related to our collaborative agreement with MorphoSys.

Selling, general and administrative expenses GAAP and Non-GAAP selling, general and administrative expenses for the three months ended June 30, 2020 increased 11% and 12%, respectively, compared to the same period in 2019, primarily due to increased headcount and commercialization efforts of our products. For the six months ended June 30, 2020, GAAP and Non-GAAP selling, general and administrative expenses remained relatively flat compared to the same period in 2019.

Other Financial Information

Operating income (loss) GAAP and Non-GAAP operating income for the three months ended June 30, 2020 increased compared to the same period in 2019, due to growth in both product and royalty revenues and milestone and contract revenues. For the six months ended June 30, 2020 we recorded an operating loss compared to operating income for the same period in 2019, on both a GAAP and Non-GAAP basis, primarily due to upfront consideration related to our collaborative agreement with MorphoSys, partially offset by the growth in product and royalty revenues.

Cash, cash equivalents and marketable securities position As of June 30, 2020 and December 31, 2019, cash, cash equivalents and marketable securities totaled $1.6 billion and $2.1 billion, respectively. The decrease reflects the upfront payment and stock purchase related to our collaborative agreement with MorphoSys and was partially offset by the cash flow generated during this six-month period.

2020 Financial Guidance

The Company has reaffirmed its full year 2020 financial guidance, as detailed below. The R&D expense guidance excludes $805 million of upfront consideration paid under the MorphoSys collaboration. The financial guidance also excludes the impact of any potential future strategic transactions.

All data in millions		Current		Previous
Jakafi net product revenues		$1,880 – $1,950		Unchanged
Iclusig net product revenues		$100 – $105		Unchanged
GAAP Cost of product revenues		$130 – $135		Unchanged
Non-GAAP Cost of product revenues1		$107 – $112		Unchanged
GAAP Research and development expenses		$1,210 – $1,280		Unchanged
Non-GAAP Research and development expenses2		$1,079 – $1,149		Unchanged
GAAP Selling, general and administrative expenses		$505 – $535		Unchanged
Non-GAAP Selling, general and administrative expenses2		$447 – $477		Unchanged
GAAP Change in fair value of acquisition-related contingent consideration		$25 – $27		Unchanged
Non-GAAP Change in fair value of acquisition-related contingent consideration3		$0		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 convertible 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, 13706620.

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, 13706620.

The conference call will also be webcast; the livestream and the replay 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 Monjuvi^® (tafasitamab-cxix)

Monjuvi is a humanized Fc-modified cytolytic CD19 targeting monoclonal antibody. In 2010, MorphoSys licensed exclusive worldwide rights to develop and commercialize tafasitamab from Xencor, Inc. Tafasitamab incorporates an XmAb^® engineered Fc domain, which mediates B-cell lysis through apoptosis and immune effector mechanism including antibody-dependent cell-mediated cytotoxicity (ADCC) and antibody-dependent cellular phagocytosis (ADCP).

Monjuvi is approved by the U.S. Food and Drug Administration in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT).

In January 2020, MorphoSys and Incyte entered into a collaboration and licensing agreement to further develop and commercialize Monjuvi globally. Monjuvi will be co-commercialized by Incyte and MorphoSys in the United States. Incyte has exclusive commercialization rights outside the United States.

A marketing authorization application (MAA) seeking the approval of tafasitamab in combination with lenalidomide in the EU has been validated by the European Medicines Agency (EMA) and is currently under review for the treatment of adult patients with relapsed or refractory DLBCL, including DLBCL arising from low grade lymphoma, who are not candidates for ASCT.

Tafasitamab is being clinically investigated as a therapeutic option in B-cell malignancies in a number of ongoing combination trials.

Monjuvi is a registered trademark of MorphoSys AG. XmAb^® is a registered trademark of Xencor, Inc.

About Pemazyre^® (pemigatinib)

Pemazyre is a kinase inhibitor indicated for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or other rearrangement as detected by an FDA-approved test.

Pemazyre is a potent, selective, oral inhibitor of FGFR isoforms 1, 2 and 3 which, in preclinical studies, has demonstrated selective pharmacologic activity against cancer cells with FGFR alterations.

Pemazyre is marketed by Incyte in the United States. Incyte has granted Innovent Biologics, Inc. rights to develop and commercialize pemigatinib in hematology and oncology in Mainland China, Hong Kong, Macau and Taiwan. Incyte has retained all other rights to develop and commercialize pemigatinib outside of the United States.

Additionally, Incyte’s marketing authorization application (MAA) seeking the approval of pemigatinib for patients with cholangiocarcinoma in the EU has been validated by the European Medicines Agency (EMA) and is currently under review for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or rearrangement that is relapsed or refractory after at least one line of systemic therapy.

Contacts

Incyte Contacts
Media
Catalina Loveman

+1 302 498 6171

cloveman@incyte.com

Investors
Michael Booth, DPhil

+1 302 498 5914

mbooth@incyte.com

Read full story here