Incyte Corporation (Nasdaq: INCY) today reported second-quarter 2013 financial results, including revenue from Jakafi ® (ruxolitinib), which is approved by the U.S. Food & Drug Administration (FDA) for the treatment of patients with intermediate or high-risk myelofibrosis (MF). The Company also increased its 2013 net product revenue guidance to a range of $220 million to $230 million, a change from the previous range of $210 million to $225 million; highlighted additional positive data recently presented at key scientific meetings for its lead JAK1 and JAK2 inhibitors, Jakafi and baricitinib, and its novel immunotherapy, INCB24360, an oral IDO1 inhibitor; and described progress for several other clinical programs, including additional potential indications for Jakafi. “The underlying demand for Jakafi was strong in the second quarter, leading to our decision to increase guidance for 2013,” stated Paul A. Friedman, M.D., Incyte’s President and Chief Executive Officer. “Looking forward, we expect the positive data recently presented at the European Hematology Association meeting regarding the overall survival advantage seen in COMFORT-II compared to best available therapy to continue to generate confidence in the therapeutic value of Jakafi.” In the three-year follow-up analysis of COMFORT-II, a 52 percent reduction in risk of death was observed in the patients treated with Jakafi as compared to patients treated with best available therapy, and the estimated probability of overall survival at three years in patients with intermediate or high-risk myelofibrosis treated with Jakafi was 81 percent. 2013 Second-Quarter Financial Results and Guidance Updates Cash Position As of June 30, 2013, cash, cash equivalents and marketable securities totaled $277.5 million compared to $228.4 million as of December 31, 2012. Revenues Total revenues for the quarter ended June 30, 2013, were $101.7 million as compared to $86.5 million for the comparable period in 2012. Total revenues for the six months ended June 30, 2013, were $172.8 million as compared to $122.7 million for the comparable period in 2012.
Jakafi net product revenues were $54.1 million for the quarter ended June 30, 2013, as compared to $29.7 million for the comparable period in 2012. For the six months ended June 30, 2013, Jakafi net product revenues were $102.4 million as compared to $49.0 million for the comparable period in 2012.The Company now expects that 2013 net product revenues from Jakafi will be in the range of $220 million to $230 million, an increase from the previous range of $210 million to $225 million. This range excludes any product royalty revenues received from Novartis on sales of Jakavi ®. Product royalties from sales of Jakavi outside the United States from Novartis for the quarter and six months ended June 30, 2013, were $5.8 million and $11.7 million, respectively; there were no product royalties earned in the comparable periods in 2012. Also included in revenues for the second quarter of 2013 were contract revenues of $41.7 million, which included a $25.0 million milestone from Novartis for our c-MET program, as compared to $56.7 million for the comparable period in 2012, which included a $40.0 million milestone from Novartis for Jakavi. For the six months ended June 30, 2013, contract revenues were $58.5 million as compared to $73.5 million for the comparable period in 2012. Net Income (Loss) Net loss for the quarter ended June 30, 2013, was $2.6 million, or $0.02 per basic and diluted share, as compared to net income of $4.0 million, or $0.03 per basic and diluted share, for the same period in 2012. For the six months ended June 30, 2013, net loss was $18.2 million, or $0.13 per basic and diluted share, as compared to a net loss of $41.4 million, or $0.32 per basic and diluted share, for the same period in 2012. Included in the net loss for the quarter and six months ended June 30, 2013, was a one-time cash charge of $9.8 million, or $0.07 per basic and diluted share, related to the exchange of the Company’s 4.75% Convertible Senior Notes (4.75% Senior Notes) due 2015 described below.
Non-Cash Stock Option ExpenseNon-cash expense related to employee stock options for the second quarter of 2013 was $9.9 million, of which $6.7 million was included in research and development expenses and $3.2 million was included in selling, general and administrative expenses. For the year to date, non-cash expense related to employee stock options was $19.1 million, of which $13.2 million was included in research and development expenses and $5.9 million was included in selling, general and administrative expenses. Operating Expenses Research and development expenses for the quarter and six months ended June 30, 2013, were $61.0 million and $113.7 million, respectively, as compared to $51.6 million and $100.5 million, respectively, for the same periods in 2012. Selling, general and administrative expenses for the quarter and six months ended June 30, 2013, were $23.2 million and $45.5 million, respectively, as compared to $19.7 million and $41.1 million, respectively, for the same periods in 2012. Interest Expense and 4.75% Convertible Senior Notes Interest expense for the quarter and six months ended June 30, 2013, was $10.3 million and $22.0 million, respectively, as compared to $11.4 million and $22.7 million, respectively, for the comparable periods in 2012. Also included in interest expense for the quarter and six months ended June 30, 2013, were $6.2 million and $13.2 million, respectively, of non-cash charges to amortize the discount on the 4.75% Senior Notes, as compared to $6.7 million and $13.2 million, respectively, for the same periods in 2012. During the second quarter the Company entered into separately negotiated agreements with certain holders of the Company’s 4.75% Senior Notes pursuant to which such holders agreed to exchange $143.7 million in aggregate principal amount of the 4.75% Senior Notes for the shares of the Company’s stock into which the 4.75% Senior Notes were convertible, aggregating 16.4 million shares, and $9.8 million in cash. The Company recorded the $9.8 million in debt exchange expense in the second quarter.
As a result of the reduction in the outstanding principal balance of the 4.75% Senior Notes, the Company now expects interest expense to be approximately $38 million for 2013, including non-cash charges of $23 million to amortize the discount on the 4.75% Senior Notes, a decrease from previous guidance of $47.0 million, which included $28.0 million of non-cash charges to amortize the discount on the 4.75% Senior Notes.Recent Clinical Highlights Jakafi ® (ruxolitinib) - a JAK1 and JAK2 Inhibitor
- Polycythemia Vera
RELIEF is an ongoing Phase III trial measuring disease-related symptoms in patients with PV, and not being part of the SPA agreement with the FDA, it is not required for approval. Once completed, the trial results are expected to be submitted to support labeling claims regarding the symptomatic benefit of ruxolitinib in PV.
- Pancreatic Cancer
- Other Potential Indications
INCB24360 – an IDO1 InhibitorFinal results from the Phase I clinical trial of INCB24360, which were presented at the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, demonstrate that this novel oral immunotherapy achieves greater than 90 percent inhibition of IDO1 at generally well-tolerated doses and may represent a new treatment option for advanced malignancies either as monotherapy or in combination with other cancer treatments. INCB24360 is currently in Phase I/II clinical development for metastatic melanoma in combination with ipilimumab and as monotherapy for ovarian cancer. INCB39110 – a JAK1 Inhibitor Three proof-of-concept studies evaluating INCB39110 in patients with myelofibrosis, psoriasis and rheumatoid arthritis are underway, with results expected in the second half of 2013. The results of these studies are expected to provide information about the most appropriate indications for further development. INCB47986 – a JAK1 Inhibitor A second JAK1 inhibitor, INCB47986, is currently in Phase I clinical development, and future studies will focus on its use in hematology and oncology indications. Conference Call Information Incyte will hold its second-quarter 2013 financial results conference call this morning at 8:30 a.m. ET. To access the conference call, please dial 877-407-8037 for domestic callers or 201-689-8037 for international callers. When prompted, provide the conference identification number, 417382. 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, 417382. The conference call will also be webcast live and can be accessed at www.incyte.com under Investor Relations – Events and Webcasts. About Incyte Incyte Corporation is a Wilmington, Delaware-based biopharmaceutical company focused on the discovery, development and commercialization of proprietary small molecule drugs for oncology and inflammation. For additional information on Incyte, please visit the Company’s website at www.incyte.com. Important Safety Information Jakafi can cause serious side effects including: Low blood counts: Jakafi may cause your platelet, red blood cell, or white blood cell counts to be lowered. If you develop bleeding, stop taking Jakafi and call your healthcare provider. Your healthcare provider will perform blood tests to check your blood counts before you start Jakafi and regularly during your treatment. Your healthcare provider may change your dose of Jakafi or stop your treatment based on the results of your blood tests. Tell your healthcare provider right away if you experience unusual bleeding, bruising, fatigue, shortness of breath, or a fever. Infection: You may be at risk for developing a serious infection while taking Jakafi. Tell your healthcare provider if you develop symptoms such as chills, nausea, vomiting, aches, weakness, fever, or painful skin rash or blisters. The most common side effects of Jakafi include dizziness and headache. These are not all the possible side effects of Jakafi. Ask your healthcare provider or pharmacist for more information. Tell your healthcare provider about any side effect that bothers you or that does not go away.
Before taking Jakafi, tell your healthcare provider about all the medications, vitamins, and herbal supplements you are taking and all your medical conditions, including if you have an infection, have or had liver or kidney problems, are on dialysis, or have any other medical condition. Do not drink grapefruit juice while taking Jakafi.Women should not take Jakafi while pregnant or planning to become pregnant, or if breast-feeding. Please see the Full Prescribing Information available at www.jakafi.com , which includes a more complete discussion of the risks associated with Jakafi. Forward-Looking Statements Except for the historical information set forth herein, the matters set forth in this press release, including without limitation statements regarding financial guidance about expected net product revenues and interest expense, our plans and expectations with respect to Jakafi (ruxolitinib), including the potential efficacy and therapeutic and commercial value of Jakafi, our expectation that the positive data recently presented at EHA regarding the overall survival advantage seen with long-term use of Jakafi will continue to generate confidence in the therapeutic value of Jakafi, our expectation of results from the RESPONSE trial evaluating ruxolitinib in PV in early 2014 and the filing of a supplemental new drug application in the first half of 2014, our expectation to submit results from the RELIEF trial to support labeling claims on symptomatic benefit of ruxolitinib in PV, our expectation of top-line results from the RECAP trial in the third quarter of 2013, our belief that INCB24360 may represent a new treatment option for advanced malignancies, our expectation of results from the three proof-of-concept studies evaluating INCB39110 in patients with myelofibrosis, psoriasis and rheumatoid arthritis in the second half of 2013 and these results being expected to provide information as to the most appropriate indications for further development, and our expectation that future studies of INCB47986 will focus on its use in hematology and oncology indications, contain predictions, estimates and other forward-looking statements.
These forward-looking statements are based on Incyte’s current expectations and subject to risks and uncertainties that may cause actual results to differ materially, including unanticipated developments in and risks related to the efficacy or safety of Jakafi, the acceptance of Jakafi in the marketplace, risks related to market competition, the results of further research and development, risks and uncertainties associated with sales, marketing and distribution requirements, risks that results of clinical trials may be unsuccessful or insufficient to meet applicable regulatory standards, the ability to enroll sufficient numbers of subjects in clinical trials, other market or economic factors and technological advances, unanticipated delays, the ability of Incyte to compete against parties with greater financial or other resources, risks associated with Incyte's dependence on its relationships with its collaboration partners, and other risks detailed from time to time in Incyte’s reports filed with the Securities and Exchange Commission, including our Form 10-Q for the quarter ended March 31, 2013.Incyte disclaims any intent or obligation to update these forward-looking statements.
|Condensed Consolidated Statements of Operations|
|(in thousands, except per share amounts)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Product revenues, net||$||54,099||$||29,727||$||102,388||$||49,006|
|Product royalty revenues||5,800||-||11,709||-|
|Costs and expenses:|
|Cost of product revenues||157||16||308||27|
|Research and development||60,950||51,588||113,713||100,548|
|Selling, general and administrative||23,249||19,719||45,509||41,115|
|Total costs and expenses||84,356||71,323||159,530||141,690|
|Income (loss) from operations||17,319||15,219||13,222||(18,968||)|
|Interest and other income, net||245||315||444||366|
|Debt exchange expense||(9,771||)||-||(9,771||)||-|
|Income (loss) before income taxes||(2,500||)||4,104||(18,127||)||(41,322||)|
|Provision for income taxes||71||67||113||67|
|Net income (loss)||$||(2,571||)||$||4,037||$||(18,240||)||$||(41,389||)|
|Net income (loss) per share|
|Shares used in computing basic and diluted net income (loss) per share|
|Condensed Consolidated Balance Sheet Data|
|June 30,||December 31,|
|Cash, cash equivalents, and short-term marketable securities||277,453||228,418|
|Accounts receivable, net||27,522||70,951|
|Convertible senior notes(1)||214,530||322,043|
|Convertible subordinated notes||9,287||9,033|
|Total stockholders’ deficit||(27,786||)||(174,957||)|
|(1) Net of unamortized debt discount of $41.8 million and $78.0 million at June 30, 2013 and December 31, 2012, respectively.|