On May 9, 2016 Incyte Corporation (Nasdaq: INCY) reported 2016 first-quarter financial results, including strong revenue growth driven by increased Jakafi (ruxolitinib) sales in the U.S. as well as continued growth in ex-U.S. Jakavi (ruxolitinib) royalties from Novartis (Press release, Incyte, MAY 9, 2016, View Source [SID:1234512105]).

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Incyte’s broad portfolio of development candidates includes immuno-oncology as well as targeted anti-cancer therapies and is made up of both small and large molecules. The recent presentations at the 2016 annual meeting of the American Association of Cancer Research (AACR) (Free AACR Whitepaper) showcased the depth of Incyte’s discovery and development expertise, including both monotherapy and combination therapy approaches.

As also announced today, Incyte has agreed to acquire the European operations of ARIAD Pharmaceuticals and the development and commercialization rights to Iclusig (ponatinib) in Europe. The acquisition of a fully-integrated and established pan-European team, including medical, sales and marketing personnel, will help Incyte optimize clinical development and maximize the potential of future European launches for its portfolio of products.

"Incyte has a unique profile within the biopharmaceutical industry. Our revenue growth and the underlying demand for Jakafi are strong, and we also have the potential for a second important source of revenue should baricitinib be approved in 2017," stated Hervé Hoppenot, Incyte’s Chief Executive Officer. "We have a fast-moving and rapidly expanding portfolio of exciting development projects, and we also look forward to the initiation of two new pivotal programs – epacadostat for the 1st line treatment of advanced melanoma and ruxolitinib for the treatment of graft versus host disease – during 2016."

2016 First-Quarter Financial Results
Revenues For the quarter ended March 31, 2016, net product revenues of Jakafi were $183 million as compared to $115 million for the same period in 2015, representing 59 percent growth. For the quarter ended March 31, 2016, product royalties from sales of Jakavi outside of the United States received from Novartis were $22 million as compared to $16 million for the same period in 2015. For the quarter ended March 31, 2016, contract revenues were $58 million as compared to $28 million for the same period in 2015. We earned $55 million in milestone payments from Lilly during the quarter ended March 31, 2016 and a $25 million milestone payment from Novartis during the quarter ended March 31, 2015. For the quarter ended March 31, 2016, total revenues were $263 million as compared to $159 million for the same period in 2015.

Year Over Year Revenue Growth
(in thousands, unaudited)

Three Months Ended
March 31, %
2016 2015 Change
Revenues:
Jakafi net product revenue $ 183,267 $ 115,330 59%
Product royalty revenues 21,903 15,673 40%
Contract revenues 58,214 28,214 -
Other revenues 80 58 -
Total revenues $ 263,464 $ 159,275

Research and development expenses Research and development expenses for the quarter ended March 31, 2016 were $157 million as compared to $118 million for the same period in 2015. Included in research and development expenses for the quarter ended March 31, 2016 is the previously announced $35 million upfront payment to acquire the rights from Lilly to develop ruxolitinib for the treatment of patients with GVHD and non-cash expenses related to equity awards to our employees of $13 million. In addition to the $35 million upfront payment to Lilly, the increase in research and development expenses was primarily due to the expansion of the Company’s clinical portfolio.

Selling, general and administrative expenses Selling, general and administrative expenses for the quarter ended March 31, 2016 were $65 million as compared to $45 million for the same period in 2015. Included in selling, general and administrative expenses for the quarter ended March 31, 2016 were non-cash expenses related to equity awards to our employees of $8 million. Increased selling, general and administrative expenses are driven primarily by additional costs related to the commercialization of Jakafi.
Unrealized loss on long term investment Unrealized loss on long term investment of $3 million for the quarter ended March 31, 2016 represents the fair market value adjustments of the Company’s investment in Agenus.

Net income / (loss) Net income for the quarter ended March 31, 2016 was $24 million, or $0.13 per basic and $0.12 per diluted share, as compared to net loss of $18 million, or $0.11 per basic and diluted share for the same period in 2015.

Cash, cash equivalents and marketable securities position As of March 31, 2016, cash, cash equivalents and marketable securities totaled $811 million, as compared to $708 million as of December 31, 2015.

2016 Financial Guidance
The Company has updated its full year 2016 financial guidance, as detailed below.

Incyte

ARIAD EU

Combined
Jakafi net product revenues
$815-$830 million
(previously $800-$815 million) - $815-$830 million
Iclusig net product revenues
- $25-$30 million $25-$30 million
Research and development expenses
$620-$640 million
(no change) $15-$20 million $635-$660 million
Selling, general and administrative expenses
$255-$275 million
(previously $255-$270 million) $30-$35 million $285-$310 million

Corporate Update
In May 2016, Dr. Vijay Iyengar joined the Incyte Executive Management team as Head of Global Product Strategy, a position from which he will also lead Incyte’s business development, licensing and strategic planning teams. Vijay was previously President, Genoptix Corporation, a Novartis Company, and has significant international biopharma experience in building and managing teams in the U.S. and in Europe.

Portfolio Update
Targeted Cancer Therapies
In April, preliminary data from an open-label Phase 1 dose escalation trial of INCB50465, Incyte’s second-generation, highly selective PI3K delta inhibitor, was presented at AACR (Free AACR Whitepaper) 2016. INCB50465 showed promising efficacy in B-cell malignancies and was generally well tolerated at all doses tested.

Indication Status Update
INCB50465 (PI3Kδ) B-cell malignancies Phase 1/2 as monotherapy and in combination with INCB39110 (JAK1); expansion cohorts initiating
INCB39110 (JAK1) Lung cancer Phase 1/2 in combination with osimertinib (EGFR) expected to initiate mid-year 2016
INCB52793 (JAK1) Advanced malignancies Phase 1/2 dose-escalation
Capmatinib (c-MET, licensed to Novartis) Non-small cell lung cancer, glioblastoma, liver cancer Phase 2 in EGFR wild-type ALK negative NSCLC patients with c-MET amplification and mutation
INCB54828 (FGFR) Advanced malignancies Phase 1/2 dose escalation; expansion cohorts in genetically-defined tumor types now underway
INCB54329 (BRD) Advanced malignancies Phase 1/2 dose-escalation
INCB53914 (PIM) Advanced malignancies Phase 1/2 dose-escalation
INCB59872 (LSD1) Acute myeloid leukemia, small cell lung cancer Phase 1/2 dose-escalation

Immune Cancer Therapies
The Phase 3 ECHO-301 study evaluating the combination of epacadostat with the anti-PD-1 antibody pembrolizumab for the first-line treatment of patients with advanced or metastatic melanoma is expected to begin in the first half of 2016. The trial, randomized, double-blind and placebo controlled, is planned to enroll 600 patients and to have dual-primary endpoints of overall survival and progression-free survival. Updated data from the dose-escalation portion of ECHO-202, initial data from which was presented at SITC (Free SITC Whitepaper) 2015 and drove the decision to initiate the Phase 3 trial, are expected to be presented in the second half of 2016. In addition, initial data from the ongoing Phase 2 dose-expansion cohorts investigating the safety and efficacy of epacadostat in combination with anti-PD-1 and anti-PD-L1 agents are anticipated to become available in the second half of 2016.
Driven by preclinical data presented at the AACR (Free AACR Whitepaper) annual meeting in 2015, Incyte has launched two clinical platform studies to investigate a series of therapeutic doublet combinations on the tumor microenvironment. The PD-1 platform study will investigate the effects of adding either INCB39110 (JAK1) or INCB50465 (PI3Kδ) to pembrolizumab (PD-1). The JAK1 platform study will investigate all-oral doublets combining either INCB50465 (PI3Kδ) or epacadostat (IDO1) with INCB39110 (JAK1).

Indication Status Update
Epacadostat First line, advanced melanoma Phase 3 (ECHO-301) expected to begin in the first half of 2016 in combination with pembrolizumab (PD-1)
Multiple tumor types Phase 2 (ECHO-202) expansion cohorts now recruiting in combination with pembrolizumab (PD-1)
Multiple tumor types Phase 2 (ECHO-204) expansion cohorts now recruiting in combination with nivolumab (PD-1)
Multiple tumor types Phase 2 (ECHO-203) expansion cohorts now recruiting in combination with durvalumab (PD-L1)
Non-small cell lung cancer Phase 1/2 (ECHO-110) dose-escalation ongoing in combination with atezolizumab (PD-L1)
INCSHR1210 (PD-1,
licensed from Hengrui) Solid tumors Phase 1/2 dose-escalation
INCAGN1876 (GITR,
co-developed with Agenus) Solid tumors Phase 1/2 expected to initiate in the first half of 2016
INCAGN1949 (OX40,
co-developed with Agenus) Solid tumors Phase 1/2 expected to initiate in the second half of 2016

PD-1 platform study Solid tumors Phase 1/2, pembrolizumab (PD-1) in combination with INCB39110 (JAK1) or INCB50465 (PI3Kδ)
JAK1 platform study Solid tumors Phase 1/2, INCB39110 (JAK1) in combination with epacadostat (IDO1) or INCB50465 (PI3Kδ)
Non Oncology

During the first quarter of 2016, Eli Lilly and Company began a series of global submissions seeking regulatory approval for baricitinib, a JAK1 / JAK2 inhibitor licensed by Incyte to Lilly. The submissions of the New Drug Application (NDA) and the Marketing Authorization Application (MAA) to the U.S. Food and Drug Administration and the European Medicines Agency, respectively, generated milestone payments from Lilly to Incyte. Incyte is eligible to earn further regulatory milestones and, if baricitinib is approved, will also become eligible for commercial milestones as well as royalties on global net sales. Baricitinib is also in Phase 2 trials for the treatment of atopic dermatitis and systemic lupus erythematosus.

Incyte recently announced an agreement with Lilly enabling Incyte to develop and commercialize ruxolitinib in the U.S. for the treatment of GVHD, and an agreement granting Novartis exclusive research, development and commercialization rights for ruxolitinib in GVHD ex-U.S. Incyte intends to initiate a U.S. registration program for ruxolitinib in GVHD in the second half of 2016. A proof-of-concept trial of INCB39110, a selective JAK1 inhibitor, in patients with GVHD is already underway.

Indication Status Update
Baricitinib (JAK1/JAK2, licensed to Lilly) Rheumatoid arthritis NDA & MAA submitted
Psoriasis Phase 2 studies completed
Atopic dermatitis, systemic lupus erythematosus Phase 2
Ruxolitinib (JAK1/JAK2) Graft versus host disease Phase 3 to begin in the second half of 2016
INCB39110 (JAK1) Graft versus host disease Phase 1/2
Topical ruxolitinib (JAK1/JAK2) Alopecia areata Phase 2