On October 30, 2018 Incyte Corporation (Nasdaq:INCY) reported 2018 third quarter and nine month financial results and provides a status update on the Company’s development portfolio (Press release, Incyte, OCT 30, 2018, View Source [SID1234530360]).
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"The total number of patients taking Jakafi continues to increase in both approved indications, and we have raised the lower end of our full year revenue guidance," stated Hervé Hoppenot, Chief Executive Officer, Incyte. "We see a remarkable set of opportunities in the coming months from our late-stage development portfolio, including both ruxolitinib and itacitinib as potential treatments for certain patients with GVHD. Recent data from pemigatinib and capmatinib, which are both Incyte-invented molecules, as well as from ruxolitinib cream, all serve to highlight the quality of Incyte’s drug discovery capabilities, and the value created by our R&D efforts."
Portfolio Update
Oncology – key highlights
The sNDA seeking approval of ruxolitinib for the treatment of steroid-refractory acute GVHD has been accepted for Priority Review by the U.S. Food and Drug Administration (FDA), and was given a Prescription Drug User Fee Act (PDUFA) date of February 24, 2019. The application for approval was based on the successful REACH1 trial, additional results from which are expected to be presented in the fourth quarter of 2018. Planning is already underway for the U.S. launch should ruxolitinib be approved in this new indication.
The global Phase 3 GRAVITAS-301 trial of itacitinib as a treatment for patients with newly-diagnosed acute GVHD is enrolling well, and results are expected next year. If the GRAVITAS-301 trial is successful, Incyte expects to submit applications seeking marketing approval for itacitinib in major markets globally.
Data from the ongoing trials evaluating pemigatinib in cholangiocarcinoma and bladder cancer were recently presented at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress. Incyte expects to submit an NDA for pemigatinib as a treatment for patients with advanced cholangiocarcinoma during 2019, and to start a Phase 3 trial for the first-line treatment of patients with cholangiocarcinoma in the coming months. Enrollment in the continuous dosing cohort of the Phase 2 trial of pemigatinib in patients with bladder cancer is now underway.
Positive data from the randomized Phase 2 trial of ruxolitinib cream in adult patients with atopic dermatitis were presented as an oral presentation at the European Academy of Dermatology and Venerology (EADV) Congress on September 13th. Incyte is planning to initiate a global, pivotal Phase 3 program in this indication.
Data from the randomized Phase 2 trial of ruxolitinib cream in patients with vitiligo are expected in 2019.
Incyte has initiated a Phase 2 trial of INCB54707, a selective JAK1 inhibitor, for the treatment of patients with hidradenitis suppurativa, an inflammatory follicular skin disease.
Lilly recently initiated a Phase 3 trial of baricitinib in patients with systemic lupus erythematosus and a Phase 2/3 adaptive design trial of baricitinib in patients with severe alopecia areata.
Novartis recently presented data from the ongoing trial of capmatinib in patients with MET exon-14 skipping mutated non-small cell lung cancer, and expects to submit an NDA for capmatinib in 2019.
The financial measures presented in this press release for the three and nine months ended September 30, 2018 and 2017 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 both revenues and 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. Reconciliations of GAAP net income (loss) to Non-GAAP net income for the three and nine months ended September 30, 2018 and 2017 have been included at the end of this press release.
Guidance related to research and development and selling, general and administrative expenses does not include estimates associated with any potential future strategic transactions.
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.
Revenues For the quarter ended September 30, 2018, GAAP net product revenues of Jakafi were $348 million as compared to $304 million for the same period in 2017, representing 14 percent growth. For the nine months ended September 30, 2018, GAAP net product revenues of Jakafi were $1.0 billion as compared to $831 million for the same period in 2017, representing 21 percent growth. For the three months ended September 30, 2018, GAAP net product revenues of Iclusig (ponatinib) were $20 million as compared to $18 million for the same period in 2017. For the nine months ended September 30, 2018, GAAP net product revenues of Iclusig were $61 million as compared to $47 million for the same period in 2017.
For the quarter and nine months ended September 30, 2018, GAAP product royalties from sales of Jakavi (ruxolitinib), which has been out-licensed to Novartis outside of the United States, were $51 million and $139 million, respectively, as compared to $41 million and $104 million, respectively, for the same periods in 2017. For the quarter and nine months ended September 30, 2018, GAAP product royalties from sales of Olumiant, which has been out-licensed to Lilly globally, were $11 million and $26 million, respectively, as compared to $3 million and $5 million, respectively, for the same periods in 2017.
For the quarter and nine months ended September 30, 2018, GAAP milestone revenues were $20 million and $120 million, as compared to $15 million and $105 million, respectively, for the same periods in 2017. GAAP milestone revenues in 2018 and 2017 related to milestones earned from our collaborative partners. Non-GAAP revenues exclude milestone revenues.
For the quarter and nine months ended September 30, 2018, total GAAP revenues were $450 million and $1.4 billion, respectively, as compared to $382 million and $1.1 billion, respectively, for the same periods in 2017. Total Non-GAAP revenues for the quarter and nine months ended September 30, 2018 were $430 million and $1.2 billion, respectively, as compared to $367 million and $987 million, respectively, for the same periods in 2017.
Cost of product revenues GAAP cost of product revenues for the quarter and nine months ended September 30, 2018 was $25 million and $68 million, respectively, as compared to $22 million and $57 million, respectively, for the same periods in 2017. Non-GAAP cost of product revenues for the quarter and nine months ended September 30, 2018 was $19 million and $52 million, respectively, as compared to $17 million and $41 million, respectively, for the same periods in 2017. 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.
Research and development expenses GAAP research and development expenses for the quarter and nine months ended September 30, 2018 were $293 million and $894 million, respectively, as compared to $270 million and $879 million, respectively, for the same periods in 2017. The increase in GAAP research and development expenses over the prior year quarter was driven primarily by $15 million in milestone expenses related to our collaboration agreements. The increase in GAAP research and development expenses from the prior year nine month period was driven primarily by an overall increase in development costs to advance our clinical pipeline.
Non-GAAP research and development expenses for the quarter and nine months ended September 30, 2018 were $251 million and $771 million, respectively, as compared to $234 million and $590 million, respectively, for the same periods in 2017. Non-GAAP research and development expenses for the quarter and nine months ended September 30, 2018 exclude the cost of stock-based compensation of $26 million and $75 million, respectively, and upfront consideration and milestones to our collaborative partners of $15 million and $47 million, respectively. Non-GAAP research and development expenses for the quarter and nine months ended September 30, 2017 exclude the cost of stock-based compensation of $23 million and $68 million, respectively, upfront consideration and milestones paid to our collaborative partners of $0 million and $209 million, respectively, and an asset impairment charge of $12 million.
Selling, general and administrative expenses GAAP selling, general and administrative expenses for the quarter and nine months ended September 30, 2018 were $97 million and $326 million, respectively, as compared to $91 million and $269 million, respectively, for the same periods in 2017. The increase in GAAP selling, general and administrative expenses from the prior year nine month period were driven by an increase in donations to independent non-profit patient assistance organizations in the United States and additional costs related to the commercialization of Jakafi.
Non-GAAP selling, general and administrative expenses for the quarter and nine months ended September 30, 2018 were $85 million and $291 million, respectively, as compared to $80 million and $237 million, respectively, for the same periods in 2017. 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 nine months ended September 30, 2018 was expense of $5 million and $19 million, respectively, as compared to a benefit of $16 million and $2 million respectively, for the same periods in 2017.
Unrealized gain (loss) on long term investments GAAP unrealized loss on long term investments for the quarter and nine months ended September 30, 2018 was $10 million and $22 million, respectively, as compared to a gain of $23 million and a loss of $2 million, respectively, for the same periods in 2017. The unrealized gain (loss) on long term investments for the quarter and nine months ended September 30, 2018 represents the fair market value adjustments of the Company’s investments in Agenus, Calithera, Merus, and Syros.
Expense related to senior note conversions GAAP expense related to senior note conversions for the nine months ended September 30, 2017 was $55 million related to the conversions of certain of our 2018 and 2020 convertible senior notes.
Net income (loss) GAAP net income for the quarter ended September 30, 2018 was $29 million, or $0.14 per basic and diluted share, as compared to a net income of $36 million, or $0.17 per basic and diluted share for the same period in 2017. GAAP net income for the nine months ended September 30, 2018 was $40 million, or $0.19 per basic and diluted share, as compared to a net loss of $164 million, or $0.81 per basic and diluted share for the same period in 2017.
Non-GAAP net income for the quarter ended September 30, 2018 was $83 million, or $0.39 per basic and $0.38 per diluted share, as compared to Non-GAAP net income of $41 million, or $0.20 per basic and $0.19 per diluted share for the same period in 2017. Non-GAAP net income for the nine months ended September 30, 2018 was $137 million, or $0.64 per basic and $0.63 per diluted share, as compared to Non-GAAP net income of $127 million, or $0.63 per basic and $0.61 per diluted share for the same period in 2017.
Cash, cash equivalents and marketable securities position As of September 30, 2018, cash, cash equivalents and marketable securities totaled $1.4 billion as compared to $1.2 billion as of December 31, 2017.
(1)Adjusted to exclude the amortization of licensed intellectual property for Iclusig relating to the acquisition of the European business of ARIAD Pharmaceuticals, Inc.
(2)Adjusted to exclude the estimated cost of stock-based compensation, upfront consideration of approximately $12 million related to the Syros collaboration, upfront consideration of $15 million related to the BMS license agreement, milestone payments of $10 million related to the Agenus collaboration and milestone payments of $10 million related to the MacroGenics collaboration.
(3)Adjusted to exclude the estimated cost of stock-based compensation.
(4)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 upfront and ongoing milestones relating to third-party collaboration partners, 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 2018 and 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, 13683637.
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, 13683637.
The conference call will also be webcast live and can be accessed at www.incyte.com in the Investors section under "Events and Presentations