Analyst Conference Summary



conference date: August 4, 2020 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2020 (Q2, second quarter 2020)

Forward-looking statements

Overview: Strong revenue growth.

Basic data (GAAP):

Revenue was $688 million, up 21% sequentially from $569 million, and up 30% from $530 million in the year-earlier period.

Net income was $290 million, up sequentially from negative $721 million, and up 176% from $105 million year-earlier.

Diluted EPS was $1.32, up sequentially from negative $3.33, and up 175% from $0.48 year-earlier.


Reaffirmed prior 2020 guidance.

Conference Highlights:

Hervé Hoppenot, Incyte's CEO, said "Demand for Jakafi is robust and the recent approval of Pemazyre (pemigatinib), as well as those of Monjuvi with MorphoSys and Tabrecta with Novartis, add to our momentum. In addition, clinical updates from the tafasitamab and LIMBER programs at the recent EHA congress, the successful outcome of REACH3, and our plan to submit an NDA seeking approval for ruxolitinib cream at the end of this year, further illustrate the opportunities within our portfolio to drive additional diversification and growth."

In July, the FDA granted approval for Monjuvi (tafasitamab-cxix), an Fc-engineered anti-CD19 antibody, in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplant. Incyte and MorphoSys will co-commercialize Monjuvi in the U.S. The EU application was made in May 2020.

Positive proof-of-concept data for parsaclisib in combination with ruxolitinib in myelofibrosis (MF) patients with an inadequate response to ruxolitinib monotherapy were presented at EHA 2020. Incyte plans to initiate pivotal trials of the combination of ruxolitinib and parsaclisib as both first-line therapy for MF patients and in MF patients with an inadequate response to ruxolitinib monotherapy. Parsaclisib (INCB50465) the selective PI3Kδ inhibitor as monotherapy in patients with diffuse large B-cell lymphoma (DLBCL), continued the Phase 2 CITADEL 203, 204 and 205 trials (for follicular, marginal zone, and mantle cell lymphomas, respectively).

In Q2 2020 positive data was reported in the Phase 3 trial of ruxolitinib in cGVHD (REACH3). Full results will be unveiled at an appropriate meeting. Expects to submit an sNDA in 2H 2020.

Pemazyre (Pemigatinib, INCB54828) for cholangiocarcinoma was approved by the FDA in April 2020. Also under review in Europe. It is a selective fibroblast growth factor receptor (FGFR) inhibitor, for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test. Bladder cancer data presented at ESMO showed promising efficacy; now in Phase 3. Incyte initiated a pivotal tumor-agnostic trial evaluating pemigatinib in patients with driver-activations of FGF/FGFR in Q3 2019.

The NDA for Ruxolitinib cream for atopic dermatitis is on track for submission to the FDA by the end of 2020. For vitiligo Phase 3 treatment is ongoing, with topline data expected in 2021.

Capmatinib was granted Priority Review in metastatic NSCLC. Worldwide rights are licensed to Novartis. An FDA decision is expected before the end of 2020.

Product revenue was $500 milion; royalties $93 million; milestone and contract revenue $95 million.

Incyte Revenue by Type
(in $ millions) Q2 2020 Q1 2020 Q2 2019 y/y
Jakafi product
Iclusig product
Pemazyre product
Jakavi royalty
Olumiant royalty
Tabrecta royalty
milestone, other
Total revenue:

Jakafi royalty revenue is from sales by Novartis outside the U.S.

Non-GAAP numbers: Net income $274 million, up sequentially from negative $619 million, and up 69% from $162 million year-earlier. Diluted EPS $1.24, up sequentially from negative $2.86, and up 65% from $0.75 year-earlier.

Cash and equivalents ended at $1.59 billion, down sequentially from $1.30 billion. Debt $18 million in convertible notes. There is a $274 million acquisition-related contingent consideration liability.

In Q2 2020 monotherapy treatment cohorts in the trials of INCB57643 (BET) and INCB00928 (ALK2) in patients with myelofibrosis are being opened for recruitment, and these are expected to be followed by the initiation of ruxolitinib combination trials with both agents. Further development of the combination of INCB53914 (PIM) plus ruxolitinib has been discontinued.

On January 27, 2020, Eli Lilly (LLY) and Incyte announced that baricitinib met the primary endpoint in BREEZE-AD4, an investigational Phase 3, randomized, placebo-controlled study evaluating the safety and efficacy of baricitinib in combination with topical corticosteroids (TCS) for the treatment of adult patients with moderate to severe atopic dermatitis (AD)

The LIMBER program (Leadership In MPNs BEyond Ruxolitinib), a key development priority, is evaluating multiple monotherapy and combination strategies to deliver improved therapies for patients with myeloproliferative neoplasms. The program has three key areas of focus: new formulations of ruxolitinib; JAK inhibitor-based combinations; and new targets beyond JAK inhibition.

In July 2020, Incyte and Novartis announced that the REACH3 study, evaluating ruxolitinib in patients with steroid-refractory chronic graft-versus-host disease (GVHD), met its primary endpoint of overall response rate (ORR) at Month 6 and both key secondary endpoints. The ruxolitinib safety profile in REACH3 was consistent with that seen in previously reported studies. Data are being prepared for presentation at an upcoming medical meeting and for regulatory submission.

INCB39110 (now Itacitinib) Phase 3 GRAVITAS-301 trial for treatment of patients with newly-diagnosed acute GVHD completed enrollment; results are expected ? If successful, Incyte expects to submit applications for itacitinib in major markets globally. GRAVITAS-309, a Phase 3 trial of itacitinib as a treatment for patients with newly-diagnosed chronic GVHD, was launched in January of this year with results expected in 2021. An NSCLC combination trial is in Phase 1/2.

INCMGA0012 (PD-1) is now in Phase 2 for endometrial cancer, merkel cell carcinoma, and anal cancer, with data expected in 2020, and possible future combination studies.

See also Incyte pipeline.

Cost of product revenue was $33 million. GAAP operating expenses were: $286 million for research and development; $118 million for selling, general and administrative expenses; $13 million collaboration cost sharing; and a $6 million charge for change in value of a contingent consideration. Total costs $457 million. Leaving income from operations of $231 million. Interest and other income was $4 million. Unrealized gain on investment was $72 million. Income tax $17 million.

Q&A Summary:

Limber program, discontinued PIM+Rux? It was the last PIM inhibitor, it had too many off-target effects. So we did not think it would succeed going forward.

GVHD timeline? We had a great outcome. Will file REACH3 data as a supplement to REACH2. There is already some off-label use in chronic GVHD. There was a decrease in new patients due to the pandemic. But if you need a bone marrow transplant, you need it, so GVHD will also go up again.

Oral PDL1 program? Making progress, should have translational data later this year. Substantive clinical data will be more likely in 2021.

Tumor agnostic program (Pemazyre)? Enrolling well.

Bladder program data? Next year.

It has been hard to beat the cure rate for CHOP. The combination would have to beat that to get first line approval.

We are still looking at the best commercial deployment method for vitiligo in Europe.

Why isn't revenue guidance higher? Pandemic? Jakafi was up 19% y/y in 1H, mostly from demand. Low end of guidance implies flattening from potential pandemic risk.

Positive REACH3 data included in Jakofi sales guidance? While results are very positive, there is still uncertainty, so we are waiting to see how it evolves.

Rux cream has some advantages over other topical products, we are looking at how big it could be. We will be building a new division around it.

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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is investment journalism, really my personal notes, not financial advice.

Copyright 2020 William P. Meyers