Analyst Conference Summary



conference date: November 5, 2020 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2020 (Q3, third quarter 2020)

Forward-looking statements

Overview: Strong revenue growth.

Basic data (GAAP):

Revenue was $621 million, down 10% sequentially from $688 million, and up 13% from $552 million in the year-earlier period.

Net income was negative $15 million, down sequentially from $290 million, and down % from $128 million year-earlier.

Diluted EPS was negative $0.07, down sequentially from $1.32, and down from $0.59 year-earlier.


Narrowed previous 2020 guidance, with Jakafi revenue now expected between $1.88 and $1.95 billion.

Conference Highlights:

Hervé Hoppenot, Incyte's CEO, said "We are pleased to report another strong quarter for Incyte, with continued strength across all Jakafi (ruxolitinib) indications, good momentum behind the U.S. launches of both Monjuvi (tafasitamab-cxix) and Pemazyre (pemigatinib), as well as increasing royalty contributions from our partnered medicines globally. In addition, we have now established Incyte Dermatology as a new franchise for Incyte in the U.S., and we are on track to submit the NDA for ruxolitinib cream at the end of this year which, by using our priority review voucher, could lead to an FDA decision in the middle of next year."

In July 2020, 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.

There was no milestone payment revenue in the quarter. R&D expense increased greatly, there was $13 million in investment loss, and $15 million in collaboration loss sharing. These were the main reason for decreasing profits despite higher revenue y/y.

Incyte is forming a dermatology franchise to market rux cream.

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. Will us the Priority Review voucher, so could have an FDA decision in June 2021. For vitiligo Phase 3 treatment is ongoing, with topline data expected in 2021.

Capmatinib was approved as Tabrecta in metastatic NSCLC (with MET exon 14 skipping mutations) in Q3 2020. Worldwide rights are licensed to Novartis. Also approved in Japan.

Product revenue was $522 milion; royalties $98 million; milestone and contract revenue $0 million.

Incyte Revenue by Type
(in $ millions) Q3 2020 Q2 2020 Q3 2019 y/y
Jakafi product
Iclusig product
Pemazyre product
Monjuvi 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 $50 million, down sequentially from $274 million, and down from $179 million year-earlier. Diluted EPS $0.23, down sequentially from $1.24, and down from $0.82 year-earlier.

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

Monotherapy treatment cohorts in the trials of INCB57643 (BET) and INCB00928 (ALK2) in patients with myelofibrosis continued 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.

INCB54707 showed positive results, presented in October 2020 for moderate-to-severe hidradenitis suppurativa (HS). A Phase 2b, randomized, double-blind, placebo-controlled trial is ongoing.

INCB00928 Phase 2 trial for fibrodysplasia ossificans progressiva is being prepared.

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 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 2020 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 $34 million. GAAP operating expenses were: $438 million for research and development; $121 million for selling, general and administrative expenses; $15 million collaboration loss sharing; and a $7 million charge for change in value of a contingent consideration. Total costs $615 million. Leaving income from operations of $5 million. Interest and other income was $5 million. Unrealized gain on investment was $13 million. Income tax $12 million.

Q&A Summary:

Physician feedback on Monjuvi? Now the preferred second line agent for the indication.

Atopic Dermatitis priority review voucher cost, return? For AD shortens review by 4 months, then we can submit vitilago for review earlier. We see it as very attractive return on investment.

Dermatology franchise rational, plans? We are following the product. We originally planned to partner, then realized the product showed superiority and had a large potential customer pool. The benefits for vitiligo are substantial. The team will have about 200 people, to be built over the next six months, and does not take our attention from cancer.

We believe there is unmet need in hidradenitis suppurativa, so we will continue to study 54707, and perhaps in other indications. Rux cream may have other indications.

Citadel program at ASH? Marginal zone lymphoma, mantle cell, follicular. Data continues to be extremely encouraging, with response rates maintained over time, and PFS. On track for an NDA in 2H 2021.

Tafasitamab in EU? The data looks very strong.

Bladder cancer discontinuation? IGFR inhibitor did not look competitive because care standards are changing. We are looking at the biology of bladder cancer. Does not change our other pemigatinib progrsms.

We have seen an impact of the pandemic on new patient starts.

707 JAK inhibitor, what do you need? TNF inhibitors do not give the results patients want. We beliee AN count is the best measure of benefits, but TNF inhibitors may use different measures. We are going to Phase 2b with 200 patients, hoping to address unmet need.

More severe atopic dermatitis patients? Our studies had a high proportion of patients with moderate disease. We think it will be the best topical. We have not studied patients with severe disease who are also receiving something like Dupixent.

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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