Analyst Conference Summary

biotechnology

conference date: August 1, 2023 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2022 (Q2, second quarter 2023)

Forward-looking statements

Overview: Strong Opzelura revenue ramp.

Basic data (GAAP):

Revenue was $955 million, up 18% sequentially from $808 million, and up 5% from $911 million in the year-earlier period.

Net income was $204 million, well up sequentially from $21 million, and up 27% from $161 million year-earlier.

Diluted EPS was $0.90, well up sequentially from $0.10, and up 25% from $0.72 year-earlier.

Guidance:

Tightened 2023 to higher end of prior range. Jakafi net product revenue $2.58 to 42.63 billion.

Conference Highlights:

Hervé Hoppenot, Incyte CEO, said "We delivered a strong quarter with total net product revenues growing 25% year over year led by double-digit Jakafi (ruxolitinib) growth and continued momentum from Opzelura (ruxolitinib) cream in atopic dermatitis and vitiligo in the United States. We continue to advance multiple programs in our pipeline, and recently announced positive topline results for two high potential programs, ruxolitinib cream in pediatric atopic dermatitis and axatilimab in chronic graft-versus-host disease." Product revenue was up 25% y/y.

In Q2 2023 axatilimab for chronic GVHD reported Phase 2 trial met its primary endpoint.

In Q2 2023 a Phase 1 study evaluating INCA033989 (mCALR) for myelofibrosis was initiated.

In Q2 2023 two studies evaluating INCB99280 in combination with axitinib (VEGF) and in combination with ipilimumab (CTLA-4) were initiated. A Phase 2 study evaluating INCB99280 in patients with select solid tumors who are checkpoint inhibitor naive also was initiated. A Phase 2 study evaluating INCB99280 in metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC was initiated.

The Phase 3 studies of tafasitamab in DLBCL and r/r FL/MZL are fully enrolled.

Ruxolitinib cream marketing authorization application was approved in Europe in Q2 2023. Trials to expand the cream to other indications are ongoing. The Phase 3 trial in pediatric atopic dermatitis met its primary endpoint in Q2 2023. Three Phase 2 studies in lichen planus, lichen sclerosus and mild to moderate hidradenitis suppurativa (HS) have completed enrollment. Two Phase 3 trials evaluating ruxolitinib cream in prurigo nodularis (PN) are ongoing.

Povorcitinib reported positive Phase 2 results in sidradenitis suppurativa and in a separate vitiligo Phase 2 trial. Incyte iniiated phase 2 trials in asthma and chronic spontaneous urticaria.

Jakafi patent protection now expected to expire towards the end of 2028. But Opzelura protected until 2040.

Product revenue was $827 million; royalties $128 million; milestone and contract revenue $0 million.

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

Non-GAAP numbers: Net income $223 million, up 162% sequentially from $85 million, and down 1% from $226 million year-earlier. Diluted EPS $0.99, up sequentially from $0.37, and down 1% from $1.01 year-earlier.

Cash and equivalents ended at $3.42 billion, up sequentially from $3.1 billion. No debt.

In Q1 2023, Zynyz, a humanized monoclonal antibody targeting programmed death receptor-1 (PD-1), received accelerated FDA approval for the treatment of adults with metastatic or recurrent locally advanced Merkel cell carcinoma (MCC). This represents the first regulatory approval for Incyte's PD-1 inhibitor, which is also being evaluated in pivotal trials in non-small cell lung cancer (NSCLC) and squamous cell carcinoma of the anal canal (SCAC).

Opzelura was approved by the European Commission for the treatment of non-segmental vitiligo with facial involvement in adults and adolescents 12 years of age and older. The label is very favorable.

In Q1 2023 the FDA issued a complete response letter or CRL for ruxolitinib extended-release (XR) tablets for once-daily (QD) use in the treatment of certain types of MF, PV and GVHD. Incyte will work with the FDA to determine appropriate next steps. But A Phase 3 trial of ruxolitinib cream in pediatric AD has completed enrollment with results expected by end of year. There are an estimated 2-3 million pediatric AD patients ages 2-11 in the US. Phase 2 trials evaluating ruxolitinib cream in mild to moderate hidradenitis suppurativa (HS), lichen planus (LP) and lichen sclerosus (LS) are ongoing. Additionally, two Phase 3 trials evaluating ruxolitinib cream in prurigo nodularis (PN) were initiated.

INCA33989 (mCALR) is on track for initiating first-in-human study in MF (myelofibrosis) and essential thrombocythemia in 2023.

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 $68 million. $401 million for research and development; $284 million for selling, general and administrative expenses; profit $1 million collaboration profit sharing; and a $8 million loss for change in value of a contingent consideration. Total costs $761 million. Leaving income from operations of $194 million. Interest and other income was $43 million. Interest expense $1 million. Unrealized loss on investment was $42 million. Income taxes $30 million.

Q&A Selective Summary:

MF Limber program? Given known symptoms score difficulties, your plan? Rux is a high bar to beat. Study must be adequately powered. We are seeing encouraging trends. Looking for good spleen response, so far very safe so continuing to increase doses.

Axatilimab data dosing anomaly? AGAVE-201 had 3 doses and a schedule difference. Activity was good across all dose levels. 3 mg/km had some side effects, so will likely go with the lower, but effective, dose. Hope to submit BLA by end of 2023.

Increased Opzelura demand? Vitaligo, we don't know what % of patients are new to treatment, but our direct to consumer ads are targetting them. Launch in Germany and Austria began at end of Q2, we are seeing good early adoption. It will take time for other nations to approve reimbursement. There is no Black Box Warning in Europe. We want to see a few more quarters of data before we issue revenue guidance for Opzelura.

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