Analyst Conference Summary



conference date: February 9, 2021 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2020 (Q4, fourth quarter 2020)

Forward-looking statements

Overview: Rapid revenue growth and pipeline development. Revenue included $110 million milestone payment, v. none in Q4 2019.

Basic data (GAAP):

Revenue was $790 million, up 27% sequentially from $621 million, and up 36% from $579 million in the year-earlier period.

Net income was $150 million, up sequentially from negative $15 million, and up 35% from $111 million year-earlier.

Diluted EPS was $0.68, up sequentially from negative $0.07, and up 33% from $0.51 year-earlier.


For the full year 2021 product revenues between $2.27 and $2.36 billion. GAAP cost of revenue 6% to 7% of product revenue. GAAP R&D $1.35 to $1.39 billion. GAAP SG&A $735 to 775 million. Revenue guidance does not include revenue from launch of new products.

Conference Highlights:

Hervé Hoppenot, Incyte's CEO, said "Our team achieved many important accomplishments in the past year. Revenue growth was strong, driven by demand for Jakafi (ruxolitinib), and the launches of Monjuvi (tafasitamab-cxix) and Pemazyre (pemigatinib) continue to gain momentum. During 2020, we also announced positive results across multiple late-stage programs, including the pivotal trials of ruxolitinib in chronic GVHD, ruxolitinib cream in atopic dermatitis, parsaclisib in NHL, and retifanlimab in SCAC. During 2021, we expect regulatory decisions on seven applications seeking approval, including four in the U.S, two in Europe and one in Japan, and we are working towards the potential U.S. launch of ruxolitinib cream, which we expect to be approved by the FDA in the middle of the 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. Momentum is strong behind the U.S. launch of Monjuvi (tafasitamab-cxix), with good uptake in both academic and community settings and illustrated by the market share gained in the first several months since launch.

In December 2020, Incyte and Cellenkos announced a development collaboration to investigate the combination of ruxolitinib and Cellenkos' CK0804, cryopreserved CXCR4 enriched, allogeneic, umbilical cord blood-derived T-regulatory cells, in patients with myelofibrosis. Incyte obtained an exclusive option to acquire sole rights to develop and commercialize CK0804, and genetically-modified variants of CK0804, in benign and malignant hematology indications.

In December 2020, Incyte and Lilly announced that Olumiant had been approved in Japan as a treatment of patients with atopic dermatitis who have inadequate response to conventional therapies. In November 2020, Incyte and Lilly announced that the FDA) issued an Emergency Use Authorization (EUA) for emergency use of baricitinib in combination with remdesivir in hospitalized patients with suspected or laboratory confirmed COVID-19 who require supplemental oxygen or mechanical ventilation.

In Q2 2020 positive data was reported in the Phase 3 trial of ruxolitinib in cGVHD (REACH3). Full results were reported at ASH 2020. Submitted an sNDA in Q4 2020.

The NDA for Ruxolitinib cream for atopic dermatitis was submitted to the FDA by in Q4 of 2020. Will us the Priority Review voucher, so could have an FDA decision in Q2 2021. For vitiligo Phase 3 treatment recruitment is complete, with topline data expected in 2021. Preparing for launch.

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 $559 milion; royalties $120 million; milestone and contract revenue $110 million.

Incyte Revenue by Type
(in $ millions) Q4 2020 Q3 2020 Q4 2019 y/y
Jakafi product
Iclusig product
Pemazyre product
Monjuvi product
Jakavi royalty
Olumiant royalty
Tabrecta royalty
milestone, other
Total revenue:

*Monjuvi revenue left off press release, figure is from presentation. Jakafi royalty revenue is from sales by Novartis outside the U.S.

Non-GAAP numbers: Net income $205 million, up sequentially from $50 million, and up 44% from $142 million year-earlier. Diluted EPS $0.93, up sequentially from $0.23, and up 48% from $0.65 year-earlier.

Cash and equivalents ended at $1.80 billion, sequentially from $na billion. No debt. There is a $266 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.

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 underway.

Ruxolitinib + parsaclisib for first-line myelofibrosis is in the Phase 3 LIMBER-313 trial.

INCB39110 (now Itacitinib) Phase 3 GRAVITAS-301 trial for treatment of patients with newly-diagnosed acute GVHD continues. 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.

Tafacitimab trials in DLBCL and other cancers are expected to begin in 2021. Phase 3 FL trial is now open for recruitment.

See also Incyte pipeline.

Cost of product revenue was $36 million. GAAP operating expenses were: $406 million for research and development; $167 million for selling, general and administrative expenses; $12 million collaboration loss sharing; and a $4 million charge for change in value of a contingent consideration. Total costs $625 million. Leaving income from operations of $164 million. Interest and other income was $4 million. Unrealized los on investment was $1 million. Income tax $18 million.

Full Year 2020 revenue was $2.67 billion. Net income was a loss of $296 million GAAP or $90 million non-GAAP. EPS loss $1.36 GAAP, $0.42 non-GAAP.

Q&A Summary:

Rux cream differenced in Phase 2 v. Phase 3 study populations? Given the size of Phase 2, we expect no differences in outcome. One difference in Phase 3 we limit the body surface area of depigmentation a bit more than in Phase 2. In the U.S. there are a couple of million have vitiligo, though not all seek treatment.

Rux cream launch preparation, pricing? Going well. Building out the sales force. Talking to payers and negotiating soon. We do not see any impediments to adoption. Feedback from doctors is very good, they like a topical that has biologic-like activity.

Xeljanz non-inferiority v. Rux? We have had Lux on the market many years, there have been many trials showing safety. Rux cream has no warnings or black box.

Rux cream conversations with FDA? We expect mid-year action based on priority review, going as expected.

We are studying Rux in the pediatric population. Phase 2 is completed, we are planning for Phase 3, does involve developmental concerns.

Monjuvi real world use? We are starting in third and fourth line therapies, believe the benefit as we move up to second-line. We are doing well in academic centers where CAR-T therapy is available. We are moving into community centers. We are not seeing competition from bispecific therapies yet.

Could Monjuvi be a billion dollar product in current indication, or does it need a front-line label? We believe the current indication could reach $500 to $750 million in the U.S. Worldwide a billion or more.

Rux cream margins? COGS of 6% to 7%. Could drop as we use up the supply that we already expensed. Then normalize.

Business development plans? We did the Morphosis deal. We would like to see more opportunities like that to grow our revenue line and find drugs to combine with. It is about products that fit with our portfolio. Since we are launching products, we have no urgency to do BD in the near term.

Cosmetic condition or reimbursable under current plans? We do not have data on that. Patients don't seek therapy in part because prior therapies were not effective. It is up to us to educate payers that this is an autoimmune disease, not just a cosmetic one.

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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 2021 William P. Meyers