On May 1, 2018 Incyte Corporation (Nasdaq:INCY) reported 2018 first-quarter financial results, highlighting strong growth in total product-related revenue and providing a status update on the Company’s development portfolio (Press release, Incyte, MAY 1, 2018, View Source;p=RssLanding&cat=news&id=2345828 [SID1234525889]).
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"Jakafi continues to grow with significant momentum as we bring the benefits of this first-in-class treatment to an increasing number of patients," stated Hervé Hoppenot, Incyte’s Chief Executive Officer. "We expect to be able to provide important updates from our development portfolio over the coming months—including the results of the first pivotal trial of Jakafi in graft-versus-host disease and initial data from our FGFR program in cholangiocarcinoma—as we continue to work on developing innovative therapies for patients in need."
Portfolio Update
Oncology – key highlights
Results from the REACH1 trial evaluating ruxolitinib in patients with steroid-refractory acute graft-versus-host disease (GVHD) are expected in the first half of 2018. Data emerging from this open-label, pivotal trial continue to support Incyte’s intention to submit an sNDA in the second half of 2018, seeking approval of ruxolitinib in this indication.
Initial data from the trial evaluating INCB54828 in patients with cholangiocarcinoma are expected in second half of 2018.
As previously announced, the external Data Monitoring Committee (eDMC) review of the pivotal Phase 3 ECHO-301 study evaluating epacadostat in combination pembrolizumab in patients with unresectable or metastatic melanoma determined that the study did not meet the primary endpoint of improving progression-free survival in the overall population compared to pembrolizumab monotherapy. The study’s second primary endpoint of overall survival also was not expected to reach statistical significance. Based on these results, and at the recommendation of the eDMC, the study has been stopped to enable patients and their physicians to consider alternative therapeutic options, and Incyte is also significantly downsizing the epacadostat development program.
In consultation with Incyte’s collaboration partners, and after the results of ECHO-301, the two pivotal trials of epacadostat in combination with pembrolizumab in lung cancer (ECHO-305 and ECHO-306) will be converted into randomized phase 2 trials. Enrollment will be discontinued in the four additional pivotal trials of epacadostat in combination with pembrolizumab, and in the two pivotal trials of epacadostat in combination with nivolumab; each of these studies will be amended to enable patients and their physicians to consider alternative therapeutic options. The pivotal trial in combination with durvalumab in Stage 3 lung cancer will not be initiated.
Incyte intends to continue to investigate epacadostat’s potential as a component of combination immunotherapy in proof-of-concept trials, which will include hypotheses distinct from combinations with PD-1 and PD-L1 antagonists.
Status updates for Incyte’s most advanced clinical programs are provided below.
Indication
Status Update
Ruxolitinib
(JAK1/JAK2)
Steroid-refractory acute GVHD Pivotal Phase 2 (REACH1); Phase 3 (REACH2)
Ruxolitinib
(JAK1/JAK2)
Steroid-refractory chronic GVHD Phase 3 (REACH3)
Ruxolitinib
(JAK1/JAK2)
Essential thrombocythemia Phase 2 (RESET)
Itacitinib
(JAK1)
Treatment-naïve acute GVHD Phase 3 (GRAVITAS-301)
Itacitinib
(JAK1)
NSCLC Phase 1/2 in combination with osimertinib (EGFR)
Epacadostat
(IDO1)
Lung cancer Phase 2 (ECHO-305; ECHO-306) in combination with pembrolizumab (PD-1)
INCMGA0012
(PD-1)1
Solid tumors Phase 1 dose-escalation completed, monotherapy expansion cohorts ongoing
INCB50465
(PI3Kδ)
DLBCL Phase 2 (CITADEL-202)
INCB50465
(PI3Kδ)
Follicular lymphoma Phase 2 (CITADEL-203)
INCB50465
(PI3Kδ)
Marginal zone lymphoma Phase 2 (CITADEL-204)
INCB50465
(PI3Kδ)
Mantle cell lymphoma Phase 2 (CITADEL-205)
INCB54828
(FGFR1/2/3)
Bladder cancer Phase 2 (FIGHT-201)
INCB54828
(FGFR1/2/3)
Cholangiocarcinoma Phase 2 (FIGHT-202)
Notes:
1) INCMGA0012 licensed from MacroGenics
A brief status update for Incyte’s earlier-stage clinical candidates is provided below.
Status Update
INCB57643
(BRD)
First-in-man data presented at ASH (Free ASH Whitepaper) 2017, showing optimized PK profile for combination therapy
INCB53914
(PIM)
First-in-man data at ASH (Free ASH Whitepaper) 2017; development expected to focus on combination therapy, including with JAK and PI3Kδ inhibition in hematological malignancies
INCB52793
(JAK1)
Development in AML to be discontinued due to lack of efficacy
INCB59872
(LSD1)
Epigenetic mechanism targeting cell differentiation; evaluating both oncology indications and sickle-cell disease
INCB62079
(FGFR4)
250x greater selectivity for FGFR4 over FGFR1/2/3; initial development expected to focus on hepatocellular carcinoma
INCB81776
(AXL/MER)
Expected to enter clinical trials in 2018
INCB01158
(ARG)1
Novel mechanism targeting myeloid cells; development expected to focus on combination therapy
INCAGN1876
(GITR)2
Dose escalation completed; development expected to focus on combination therapy
INCAGN1949
(OX40)2
Dose escalation completed; development expected to focus on combination therapy
INCAGN2390
(TIM-3)2
Expected to enter clinical trials in 2018
INCAGN2385
(LAG-3)2
Expected to enter clinical trials in 2018
Notes:
1) INCB01158 co-developed with Calithera
2) INCAGN1876, INCAGN1949, INCAGN2390 and INCAGN2385 from discovery alliance with Agenus
Non-oncology
Data from the randomized Phase 2 trial of topical ruxolitinib versus vehicle and triamcinolone creams in adult patients with atopic dermatitis are expected in the second half of 2018.
Indication
Status Update
Topical ruxolitinib
(JAK1/JAK2)
Atopic dermatitis Phase 2
Topical ruxolitinib
(JAK1/JAK2)
Vitiligo Phase 2
Partnered – key highlights
In April 2018, the US. Food and Drug Administration (FDA) convened its Arthritis Advisory Committee to discuss the resubmission of the baricitinib NDA, which recommended approval of the 2mg dose of baricitinib as a once-daily oral medication for the treatment of moderately-to-severely active rheumatoid arthritis for adult patients who have had an inadequate response or intolerance to methotrexate. While the Advisory Committee unanimously supported the efficacy of the 4mg dose of baricitinib, it did not recommend approval of the 4mg dose of baricitinib for the proposed indication based on the adequacy of the safety and benefit-risk profiles. The FDA action date for baricitinib is in June 2018.
Indication
Status Update
Baricitinib (JAK1/JAK2)1
Rheumatoid arthritis Approved in Europe and Japan at 2mg and 4mg doses; NDA resubmitted to FDA
Baricitinib (JAK1/JAK2)1
Atopic dermatitis Phase 3
Baricitinib (JAK1/JAK2)1
Psoriatic arthritis Lilly expects the Phase 3 program to begin in 2018
Baricitinib (JAK1/JAK2)1
Systemic lupus erythematosus Phase 2
Capmatinib (MET)2
Non-small cell lung cancer, liver cancer Phase 2 in EGFR wild-type, ALK negative NSCLC patients with MET amplification and mutation
Notes:
1) Baricitinib licensed to Lilly
2) Capmatinib licensed to Novartis
Corporate Update
In April 2018, Maria E. Pasquale joined the Incyte Executive Management team as Executive Vice President and General Counsel. Maria joined Incyte from Celgene Corporation, where for 17 years she held positions of increasing responsibility including Chief Counsel and Senior Vice President, Legal & Deputy General Counsel, where she led the legal department through Celgene’s global expansion. Most recently, Maria served as Celgene’s Executive Vice President and Global Chief Compliance Officer, responsible for GxP and healthcare compliance globally.
2018 First-Quarter Financial Results
The financial measures presented in this press release for the three months ended March 31, 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 loss to Non-GAAP net income (loss) for the three months ended March 31, 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 March 31, 2018, GAAP net product revenues of Jakafi were $314 million as compared to $251 million for the same period in 2017, representing 25 percent growth. For the three months ended March 31, 2018, GAAP net product revenues of Iclusig were $21 million as compared to $14 million for the same period in 2017.
For the quarter ended March 31, 2018, GAAP product royalties from sales of Jakavi, which has been out-licensed to Novartis outside of the United States, was $41 million, as compared to $29 million for the same period in 2017. For the quarter ended March 31, 2018, GAAP product royalties from sales of Olumiant outside of the United States from Lilly were $6 million, as compared to less than $1 million for the same period in 2017.
For the quarter ended March 31, 2018, GAAP milestone revenues were $0 million, as compared to $90 million for the same period in 2017. GAAP milestone revenues in 2017 related to milestones earned from our collaborative partners.
For the quarter ended March 31, 2018, total GAAP revenues were $382 million as compared to $384 million for the same period in 2017. Total Non-GAAP revenues for the quarter ended March 31, 2018 were $382 million as compared to $294 million for the same period in 2017.
Year Over Year Revenue Growth
(in thousands, unaudited)
Three Months Ended
March 31, %
2018 2017 Change
Revenues:
Jakafi net product revenue $ 313,720 $ 251,077 25%
Iclusig net product revenue 20,785 13,730 51%
Product royalty revenues 47,716 29,221 63%
Product-related revenues 382,221 294,028 30%
Milestone revenues - 90,000
Other revenues 61 54
Total GAAP revenues $ 382,282 $ 384,082
Milestone revenues - (90,000)
Total Non-GAAP revenues $ 382,282 $ 294,082
Cost of product revenues GAAP cost of product revenues for the quarter ended March 31, 2018 was $18 million, as compared to $15 million for the same period in 2017. Non-GAAP cost of product revenues for the quarter ended March 31, 2018 were $13 million, as compared to $9 million for the same period in 2017. Non-GAAP cost of product revenues exclude 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 ended March 31, 2018 were $303 million as compared to $408 million for the same period in 2017. Decreased GAAP research and development expenses were driven primarily by upfront and milestone expenses of $209 million related to our collaborative agreements recorded in the quarter ended March 31, 2017 partially offset by an overall increase in development costs to advance our clinical pipeline. For the quarter ended March 31, 2018, GAAP research and development expenses included $12 million related to our collaboration agreement with Syros Pharmaceuticals, Inc. and $291 million of ongoing expenses.
Non-GAAP research and development expenses for the quarter ended March 31, 2018 were $266 million, as compared to $177 million for the same period in 2017. Non-GAAP research and development expenses exclude the cost of stock-based compensation of $24 million and $21 million for the quarters ended March 31, 2018 and 2017, respectively, and upfront consideration and milestones paid to our collaborative partners of $12 million and $209 million for the quarters ended March 31, 2018 and 2017, respectively.
Selling, general and administrative expenses GAAP selling, general and administrative expenses for the quarter ended March 31, 2018 was $121 million, as compared to $87 million for the same period in 2017. Increased GAAP selling, general and administrative expenses were driven by additional costs related to the commercialization of Jakafi.
Non-GAAP selling, general and administrative expenses for the quarter ended March 31, 2018 was $109 million, as compared to $78 million for the same period 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 quarters ended March 31, 2018 and 2017 was $7 million.
Unrealized gain (loss) on long term investments GAAP unrealized gain on long term investments for the quarter ended March 31, 2018 was $23 million as compared to an unrealized loss of $6 million for the same period in 2017. The unrealized gain on long term investments for the quarter ended March 31, 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 quarter ended March 31, 2017 was $54 million related to the conversions of certain of our 2018 and 2020 convertible senior notes.
Net income (loss) GAAP net loss for the quarter ended March 31, 2018 was $41 million, or $0.19 per basic and diluted share, as compared to a net loss of $187 million, or $0.96 per basic and diluted share for the same period in 2017. Non-GAAP net loss for the quarter ended March 31, 2018 was $3 million, as compared to net income of $29 million for the same period in 2017. Non-GAAP net loss per share for the quarter ended March 31, 2018 was $0.01 per basic and diluted share, as compared to Non-GAAP net income per share of $0.15 per basic and $0.14 per diluted share for the same period in 2017.
Cash, cash equivalents and marketable securities position As of March 31, 2018 and December 31, 2017, cash, cash equivalents and marketable securities totaled $1.2 billion.
2018 Financial Guidance
The Company has updated its full year 2018 financial guidance, as detailed below.
Current Previous
GAAP and Non-GAAP Jakafi net product revenues $1,350 – $1,400 million Unchanged
GAAP and Non-GAAP Iclusig net product revenues $80 – $85 million Unchanged
GAAP Cost of product revenues $85 – $95 million Unchanged
Non-GAAP Cost of product revenues(1) $64 – $74 million Unchanged
GAAP Research and development expenses $1,150 – $1,250 million $1,200 – $1,300 million
Non-GAAP Research and development expenses(2) $1,013 – $1,108 million $1,077 – $1,172 million
GAAP Selling, general and administrative expenses $390 – $410 million $515 – $535 million
Non-GAAP Selling, general and administrative expenses(3) $340 – $355 million $465 – $480 million
GAAP Change in fair value of acquisition-related contingent consideration $30 million Unchanged
Non-GAAP Change in fair value of acquisition-related contingent consideration(4) $0 million 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.
(2)
Adjusted to exclude the estimated cost of stock-based compensation, upfront consideration of approximately $12 million relating to the Syros collaboration and upfront consideration of $15 million related to a license agreement.
(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.