Analyst Conference Summary



conference date: August 2, 2022 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2022 (Q2, second quarter 2022)

Forward-looking statements

Overview: Strong growth and new drug approvals. $130 milestone revenue inflated the quarter's results.

Basic data (GAAP):

Revenue was $911 million, up 24% sequentially from $733 million, and up 29% from $706 million in the year-earlier period.

Net income was $161 million, up 324% sequentially from $38 million, and up 8% from $149 million year-earlier.

Diluted EPS was $0.72, up 324% sequentially from $0.17, and up 7% from $0.67 year-earlier.


2002 guidance was tightened for Jakafi product revenue to $2.36 to $2.40 billion; otherwise unchanged.

Conference Highlights:

Hervé Hoppenot, Incyte CEO, said "The second quarter was strong with total revenues up 29% year-over-year, multiple approvals and the continued advancement of our pipeline. The launch of Opzelura in atopic dermatitis continues to progress well and in recent weeks, improvements in reimbursement have translated into an increase in covered claims. Revenues in the second quarter were temporarily impacted by the shift from free drug to paid prescription. Patient demand and satisfaction remain strong. In July, Opzelura was also approved by the FDA in nonsegmental vitiligo, creating a new growth opportunity as the first therapy approved for repigmentation of vitiligo." July saw in increase in covered claims for dermatitis. The $130 million in milestone revenues reported were from the drug approvals in the quarter.

In July 2022 Opzelura received FDA approval for nonsegmental vitiligo; also under review in EU. In October 2021 Incyte launched its first dermatology product after the FDA approval of Opzelura, a novel cream formulation of the JAK1/JAK2 inhibitor ruxolitinib.

In Q2 the FDA accepted the NDA for once-daily ruxolitinib. The FDA set the PDUFA at March 23, 2023. Partner, Cellenkos, announced the FDA clearance of its IND application to initiate a Phase 1b, open-label study of CK0804 as an add on therapy to ruxolitinib in patients with myelofibrosis who experience a suboptimal response to ruxolitinib. Combination trials of parsaclisib, INCB57643 (BET) and INCB00928 (ALK2) with ruxolitinib are also ongoing.

In Q2 Jakavi was approved in the EU for GVHD.

In August 2022 Incyte announced it no longer plans to develop itacitinib.

Povorcitinib (INCB54707) is currently in Phase 2 trials for hidradenitis suppurativa (HS), vitiligo and prurigo nodularis. Based on findings from the Phase 2 trial, Incyte intends to initiate a Phase 3 study in HS later this year.

INCB123667, a novel, potent and selective oral small molecule inhibitor of CDK2 which has been shown to suppress tumor growth as monotherapy and in combination with standard of care, in Cyclin E amplified tumor models, began a Phase 1 dose-escalation and dose-expansion study in adults with selected advanced or metastatic solid tumors.

Capmatinib (Tabrecta) was approved in Q2 2022 the EU for NSCLC with MET exon-14 mutations. In April 2022, Incyte and Novartis had announced a positive opinion from the CHMP.

Product revenue was $664 milion; royalties $118 million; milestone and contract revenue $130 million.

Incyte Revenue by Type
(in $ millions) Q2 2022 Q1 2022 Q2 2021 y/y
Jakafi product
Jakavi royalty
Iclusig product
Pemazyre product
Opzelura product
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 $226 million, up 84% sequentially from $123 million, and up 26% from $179 million year-earlier. Diluted EPS $1.01, up 84% sequentially from $0.55, and up 26% from $0.80 year-earlier.

Cash and equivalents ended at $2.72 billion, up sequentially from $2.54 billion. No debt.

Developing an oral PD-L1. INCB99280 and INCB99318 have shown tumor shrinkage; data readout in 2022.

In January 2022, Incyte and Lilly provided a regulatory update on the sNDA for baricitinib in Atopic Dermatitis. Based on ongoing discussions with the FDA, Lilly announced that alignment on the indicated population had not yet been reached and given the FDA position, there is the possibility of a Complete Response Letter (CRL).

Two Phase 3 trials evaluating ruxolitinib cream in chronic hand eczema are being initiated (TRuE-CHE1 and TRuE-CHE2).

INCB54707, a JAK1 specific inhibitor, is in Phase 2 studies for hidradenitis suppurativa, prurigo nodularis and vitiligo.

In March, 2022 Incyte and Eli Lilly presented 52-week data at the American Academy of Dermatology annual meeting demonstrating that nearly 40% of adults with alopecia areata and who were taking baricitinib 4mg saw at least 80% scalp hair coverage. There are no approved treatments for AA.

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.

Incyte has numerous other trials in multiple therapies and indications underway, plus preclinical agents.

See also Incyte pipeline.

GAAP operating expenses were: cost of product revenue $51 million. $347 million for research and development; $253 million for selling, general and administrative expenses; $3 million collaboration loss sharing; and a $3 million charge for change in value of a contingent consideration. Total costs $657 million. Leaving income from operations of $254 million. Interest and other income was $0 million. Unrealized loss on investment was $25 million. Income taxes $68 million.

Q&A Selective Summary:

Opzelura, how do you know demand not dropping when shifting from free drug to paid? The revenue was mostly a gross to net situation, as forecast in Q1. We did see a dip in demand during the switch, but overcame that as we moved into Q3. Last week of July had the highest demand ever.

There is a gradual time to onset to repigmentation. It says that in the label, up to 24 weeks or even beyond. We are educating physicians and patients to that.

Gross to net guidance, what is required to hit your target? To get to 40% to 50%, that is just what is in the contracts. Confidence is based on growing demand. NDC blocks continue to be removed, that will get us to the target. We believe there are 5 million AD patients in our label. There are less vitiligo patients, where we are waiting for insurers to write utilization criteria.

Myelofibrosis program? There are problems with measuring fibrosis in bone marrow. Clinical benefit is mainly seen as spleen volume modification. We did see preclinical indications of underlying disease modification. ALK2 may show anemia improvements as well. Will need to see the clinical data.

Competing topical approved in AD space, priced lower, impact? Don't know why Arcetus (SP?) priced as they do, their data was no where near that of Opzelura, they are mainly in plaque psoriasis. Both recent plaque psoriasis approvals will not equal the efficacy we have shown in our Phase 3 trials.

Opzelura copay assistance? Couple of parts. On launch picked up full cost while waiting for reimbursement, that is being phased out. High copay assistance program will be permanent.

More questions on Opzelura prescriptions, reimbursement, etc, no further details given.

Rux QD positioning? We think once per day v. twice per day will be attractive for all our patients, and will work well with therapies in the pipeline.

Breyanzi impact on Monjuvi revenue projections? We are confident in Monjuvi, believe we can get to $500 million, market is dynamic, CAR-T products, bispecifics, etc. We need to do a better job educating physicians. It has great duration of response. Waiting for first line and folicular lymphoma data, which is where the bulk of the value is.

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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 2022 William P. Meyers