News Column

Incyte Reports 2014 Second-Quarter Financial Results and Updates Shareholders on Key Clinical Programs

August 11, 2014



By a News Reporter-Staff News Editor at Pharma Business Week -- Incyte Corporation (Nasdaq: INCY) reported 2014 second-quarter financial results, including revenue from JakafiŽ (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 highlighted its strong financial position, driven by growing Jakafi sales in the U.S. and JakaviŽ (ruxolitinib) royalties outside the U.S., as well as the submission of the ruxolitinib supplemental New Drug Application (sNDA) in the U.S. for patients with uncontrolled polycythemia vera (PV). The Company also discussed its expanding clinical pipeline, which includes pivotal as well as proof of concept studies, and the multiple data presentations for the Company's product candidates that were made at the recent American Society of Clinical Oncology (ASCO) meeting. The Company also highlighted additional clinical trial agreements for its investigational IDO1 inhibitor INCB24360 with Bristol-Myers Squibb, AstraZeneca/MedImmune and Genentech, as well as the initiation of the clinical trial of INCB24360 in combination with Merck's pembrolizumab (see also Biotechnology Companies).

"We continue the successful commercialization of Jakafi in myelofibrosis, and I am encouraged by the rapid regulatory and clinical advances we are making across the breadth of our development pipeline," stated Herve Hoppenot, Incyte's President and Chief Executive Officer. "The field of oncology is evolving at an unprecedented pace, and Incyte's scientific and commercial progress serves to highlight our central position in the ongoing transformation in how cancer patients are treated." 2014 Second-Quarter Financial Results Revenues For the quarter ended June 30, 2014, net product revenues of Jakafi were $84.0 million as compared to $54.1 million for the same period in 2013, representing 55 percent growth. For the six months ended June 30, 2014, net product revenues were $153.7 million as compared to $102.4 million for the same period in 2013, representing 50 percent growth.

The Company now expects that 2014 net product revenues from Jakafi will be in the range of $330 million to $340 million, an increase from the previous range of $315 million to $335 million. This range excludes any product royalty revenues received from the Company's collaboration partner Novartis on sales of JakaviŽ (ruxolitinib) outside the United States.

For the quarter and six months ended June 30, 2014, product royalties from sales of JakaviŽ outside the United States received from Novartis were $12.3 million and $22.2 million, respectively, as compared to $5.8 million and $11.7 million, respectively, for the same periods in 2013.

For the quarter ended June 30, 2014, contract revenues were $3.2 million as compared to $41.7 million for the same period in 2013, which included a $25.0 million milestone related to our c-MET program and $13.5 million of deferred revenue amortization related to the Novartis upfront payment. For the six months ended June 30, 2014, contract revenues were $13.4 million as compared to $58.5 million for the same period in 2013. The decrease in contract revenues for the six months ended June 30, 2014 compared to the same period in 2013 relates to the Novartis upfront payment received under the collaboration being fully amortized at December 31, 2013, and by the $25.0 million milestone related to our c-MET program recognized in the second quarter of 2013, partially offset by the $7.0 million milestone related to our c-MET program recognized in the first quarter of 2014.

For the quarter ended June 30, 2014, total revenues were $99.6 million as compared to $101.7 million for the same period in 2013. For the six months ended June 30, 2014, total revenues were $189.4 million as compared to $172.8 million for the same period in 2013. Non-Cash Stock Expense Included in operating expenses for the quarter ended June 30, 2014, was $15.5 million of non-cash expense related to equity awards to our employees, of which $8.5 million was included in research and development expenses and $7.0 million was included in selling, general and administrative expenses. For the year to date, non-cash expense related to equity awards to our employees was $30.8 million, of which $16.8 million was included in research and development expenses and $14.0 million was included in selling, general and administrative expenses. Operating Expenses Research and development expenses for the quarter and six months ended June 30, 2014, were $84.7 million and $160.3 million, respectively, as compared to $61.0 million and $113.7 million, respectively, for the same periods in 2013.

The increase in research and development expenses for the quarter and six months ended June 30, 2014, compared to the same prior year periods, was primarily due to the expansion of the Company's pipeline, which included the costs related to two Phase III trials of ruxolitinib in pancreatic cancer; Phase II trials of ruxolitinib in non-small cell lung cancer, colorectal cancer and breast cancer; a Phase II trial of INCB39110 in non-small cell lung cancer; and the Phase III program for baricitinib in rheumatoid arthritis.

Selling, general and administrative expenses for the quarter and six months ended June 30, 2014, were $40.9 million and $77.9 million, respectively, as compared to $23.2 million and $45.5 million, respectively, for the same periods in 2013.

Increased selling, general and administrative expenses for the quarter and six months ended June 30, 2014, compared to the same prior year periods reflected the additional costs related to the commercialization of Jakafi in MF, including the expansion in our field force, as well as preparation for the anticipated launch in PV. Interest Expense Interest expense for the quarter and six months ended June 30, 2014, was $11.4 million and $22.8 million, respectively, as compared to $10.3 million and $22.0 million, respectively, for the same periods in 2013. Included in interest expense for the quarter and six months ended June 30, 2014, were $8.9 million and $17.7 million, respectively, of non-cash charges to amortize the discount on the Company's 4.75% Convertible Senior Notes due 2015 (2015 Notes), 0.375% Convertible Senior Notes due 2018 and 1.25% Convertible Senior Notes due 2020, as compared to $6.2 million and $13.2 million, respectively, to amortize the discount on the Company's 2015 Notes for the same periods in 2013. Net Loss Net loss for the quarter ended June 30, 2014, was $36.9 million, or $0.22 per basic and diluted share, as compared to a net loss of $2.6 million, or $0.02 per basic and diluted share, for the same period in 2013. Net loss for the six months ended June 30, 2014, was $70.8 million, or $0.43 per basic and diluted share, as compared to a net loss of $18.2 million, or $0.13 per basic and diluted share, for the same period in 2013. Cash and Marketable Securities Position As of June 30, 2014, cash, cash equivalents and marketable securities totaled $508.8 million compared to $509.0 million as of December 31, 2013. Recent Clinical Highlights JakafiŽ (ruxolitinib) - a JAK1 and JAK2 Inhibitor Myeloproliferative Neoplasms The product label for Jakafi was recently expanded to include overall survival data and additional safety and dosing information. This new information is based on three-year data from the two pivotal Phase III trials in myelofibrosis patients, COMFORT-I and II.

Positive data from RESPONSE, a Phase III trial conducted under a Special Protocol Assessment (SPA) from the FDA in collaboration with Novartis to evaluate ruxolitinib in patients with polycythemia vera (PV) who are resistant to, or intolerant of, hydroxyurea, were presented in an oral session at the ASCO annual meeting in June. The trial met its primary endpoint of achieving phlebotomy independence and reducing spleen size by 35 percent or more. The safety profile of ruxolitinib was generally consistent with previous studies. Global submissions seeking regulatory approval of ruxolitinib in uncontrolled PV are underway, and the sNDA was submitted to the FDA in June 2014.

As previously announced, the RELIEF trial measuring disease-related symptoms in patients with PV did not meet its primary endpoint of the proportion of subjects achieving a = 50% reduction in a cluster of PV-related symptoms at week 16 compared to baseline, although positive trends in favor of ruxolitinib versus continued hydroxyurea were observed. Further analyses of RELIEF are underway to evaluate what factors may have contributed to a symptom control rate for patients on stable doses of hydroxyurea that was significantly higher than that seen in the best available therapy control arm of the RESPONSE trial, and which led to an underpowering of the RELIEF trial. Data from RELIEF are expected to be presented at an upcoming scientific meeting.

In July 2014 JakaviŽ (ruxolitinib) received approval in Japan for the treatment of patients with myelofibrosis, triggering a $25 million milestone payment from Novartis. This milestone will be recognized as contract revenue in the third quarter of 2014. Novartis also continues to make progress in obtaining formal pricing and reimbursement approval for a third major European country. Once achieved, the Company will earn an additional $60 million milestone payment, which is expected to occur in the second half of 2014. Solid Tumors Full results from RECAP, a Phase II trial of ruxolitinib in combination with capecitabine in patients with metastatic pancreatic cancer, were presented in an oral session at ASCO in June. These data highlighted the beneficial effect of ruxolitinib in a pre-specified subgroup of pancreatic cancer patients with high levels of C-reactive protein (CRP), a well-established marker of systemic inflammation.

Keywords for this news article include: Oncology, FDA Actions, Gastroenterology, Pancreatic Cancer, Pancreatic Neoplasms, Investment and Finance, Biotechnology Companies, Clinical Trials and Studies, Marketing and Licensing Agreements.

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Source: Pharma Business Week


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