Analyst Conference Summary

biotechnology

conference date: November 2, 2021 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2021 (Q3, third quarter 2021)

Forward-looking statements

Overview: Continues storng revenue and profit growth, several new drug indications approved in the quarter.

Basic data (GAAP):

Revenue was $813 million, up 15% sequentially from $706 million, and up 31% from $621 million in the year-earlier period.

Net income was $182 million, up 22% sequentially from $149 million, and up from negative $15 million year-earlier.

Diluted EPS was $0.82, up 22% sequentially from $0.67, and up from negative $0.07 year-earlier.

Guidance:

Reaffirmed prior guidance for 2021.

Conference Highlights:

Hervé Hoppenot, Incyte's CEO, said "Multiple product approvals and global launches have significantly expanded our portfolio. Our robust development pipeline continues to mature and progress and we expect several additional regulatory submissions to occur over the coming months. Our strong third quarter performance is the result of an increasingly diversified portfolio, driven by double-digit growth in patient demand for Jakafi (ruxolitinib), continued uptake of both Pemazyre (pemigatinib) and Monjuvi/Minjuvi, as well as a significant and rapidly-growing royalty revenue stream."

Ruxolitinib (Jakafi) for the treatment of steroid-refractory chronic GVHD (graft versus host disease) was approved by the FDA in September 2021.

Ruxolitinib cream (Opzelura) for atopic dermatitis was approved by the FDA in September 2021.

Minjuvi for DLBCL was given conditional approval in the EU in August 2021.

QD (once daily) ruxolitinib NDA submission planned for early 2022. Clinical studies evaluating ruxolitinib in combination with parsaclisib, INCB57643 (BET) and INCB00928 (ALK2), are progressing as expected.

In Q3 Incyte entered a collaboration with Syndax Pharmaceuticals including a global license for axatilimab, an anti-CFS-1R antibody for GVHD and other fibrotic diseases. Currently in Phase 2.

In November 2021 announced that the FDA accepted an NDA seeking approval of parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma, marginal zone lymphoma and mantle cell lymphoma. PDUFA is April 30, 2022. A Phase 3 trial of parsaclisib in adults with warm autoimmune hemolytic anemia is planned.

Ruxolitinib for vitiligo application was validated in the EU in October 2021.

Product revenue was $594 milion; royalties $184 million; milestone and contract revenue $35 million.

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

Non-GAAP numbers: Net income $262 million, up sequentially from $179 million, and down from $50 million year-earlier. Diluted EPS $1.18, up sequentially from $0.80, and up from $0.23 year-earlier.

Cash and equivalents ended at $2.3 billion, up sequentially from $2.1 billion. No debt. There is a $259 million acquisition-related contingent consideration liability.

Both monotherapy trials of INCB57643 (BET) and INCB00928 (ALK2) are ongoing, and combination trials of both agents with ruxolitinib in patients with myelofibrosis are expected to initiate in 2021.

Two Phase 3 trials of ruxolitinib in combination with parsaclisib as a first-line therapy for patients with MF (LIMBER-313) and as a therapy for MF patients with a suboptimal response to ruxolitinib monotherapy (LIMBER-304) are ongoing.

In Q2 2021 3 year r/r DLBCL trial of tafasitamab showed durable responses. A positive CHMP opinion was received in June 2021.

INCB00928 Phase 2 trial for fibrodysplasia ossificans progressiva is underway.

In March 2021, the Marketing Authorization Application seeking approval of retifanlimab in squamous cell carcinoma of the anal canal (SCAC) was validated by the EMA. This follows the Biologics License Application (BLA) acceptance by the FDA for the same indication earlier in 2021.

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.

See also Incyte pipeline.

Cost of product revenue was $40 million. GAAP operating expenses were: $335 million for research and development; $191 million for selling, general and administrative expenses; $9 million collaboration loss sharing; and a $3 million charge for change in value of a contingent consideration. Total costs $578 million. Leaving income from operations of $235 million. Interest and other income was $2 million. Unrealized loss on investment was $27 million. Income tax $28 million.

Growth opportunities inlcude potential annual sales of $3 billion for GVHD, $750 million for monjuvi, and $1.5 billion for Opzelura (ruxolitinib) cream.

Q&A Summary:

MF patient volumes for Jakafi, trends? Total number of patients on Jakafi continues to increase. Believes only penetrated 50% of MF market, main rival is watch and wait.

Opzelura gross to net, etc.? Vitiligo approval? Long term 25% to 50% gross to net, but currently much higher due to programs to encourage coverage. Need more tubes per patient for Vitiligo, maybe 10. Patients continue to improve over time in vitiligo, so 10 to 11 tubes, 60 gm per tube.

Dermatology franchise involves lifecycle management, addressing long-term vitiligo patients, and the mechanism of action, which might address more indications. We already have some good early data.

Opzelura feedback on the launch? Black box, doctors are used to explaining safety to patients. They know a topical JAK inhibitor patient is not likely to respond badly.

Parsaclisib transition to molecular approach? It was a big filing, mantle zone and mantle cell got an accelerated review due to high unmet medical need. Follicular is standard because it is a more crowded field. There were some early signals in some cancers of being driven by particular mutations, so we are launching Phase 2 studies that way.

Size of sample tubes? Sample tubes are 5 gm. No requirements to get samples.

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