Analyst Conference Summary

biotechnology

conference date: April 30, 2024 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2024 (Q1, first quarter 2024)

Forward-looking statements

Overview: Solid y/y growth quarter. But keep in mind Jakafi patent expires end of 2026.

Basic data (GAAP):

Revenue was $881 million, down 13% sequentially from $1.01 billion, and up 9% from $809 million in the year-earlier period.

Net income was $170 million, down 15% sequentially from $201 million, and way up from $22 million year-earlier.

Diluted EPS was $0.75, down 16% sequentially from $0.89, and up from $0.10 year-earlier.

Guidance:

Maintained.

Conference Highlights:

Hervé Hoppenot, Incyte CEO, said "In the first quarter of 2024, total revenues grew 9% year-over-year driven by patient demand growth in the U.S. for Opzelura (ruxolitinib) cream and Jakafi (ruxolitinib). As anticipated, the revenue growth during the quarter was offset by an inventory drawdown for Jakafi and the typical first quarter net pricing dynamics. We made important progress with our clinical pipeline including the initiation of two Phase 1 studies evaluating our JAK2V617F inhibitor and KRASG12D inhibitor. We also recently announced an agreement to acquire Escient Pharmaceuticals, pending the appropriate regulatory review process. Escient's lead compound EP262, is a first-in-class, potent, highly selective, once-daily small molecule designed to block mast cell activation, independent from IgE. We believe this novel mechanism has broad clinical utility in a number of conditions including chronic spontaneous urticaria (CSU), chronic inducible urticaria (CIndU) and other diseases."

In February 2024 Incyte bought exclusive global rights to tafasitamab, a CD19 immunotherapy, sold as Monjuvi or Minjuvi, for $25 million.

In February 2024, Incyte announced the FDA accepted, for Priority Review, the BLA for axatilimab, an anti-CSF-1R antibody, for chronic graft-versus-host disease (GVHD) after at least two prior lines of systemic therapy. With Syndax Pharmaceuticals. Anticipates FDA decision 2H 2024.

In April 2024, Incyte entered into an agreement to acquire Escient Pharmaceuticals. Its clinical development portfolio includes EP262, a first-in-class, potent, highly selective, once-daily small molecule antagonist of Mas-related G protein-coupled receptor (MRGPRX2). Also EP547, a first-in-class oral MRGPRX4 antagonist. Incyte will acquire Escient and its assets for $750 million plus Escient's net cash remaining at the close of the transaction.

In Q1 2024 Opzelura Phase 2 study for hidradenitis suppurativa met its primary endpoint.

In Q1 2024 the Phase 2, randomized, double-blind, placebo-controlled, dose ranging study evaluating povorcitinib in participants with PN data was presented at the 2024 AAD Annual Meeting. The study met its primary and secondary endpoints following 16 weeks of treatment across all dosing groups. A Phase 3 study in PN is planned.

In Q1 2024 a Phase 1 study of KRASG12D was started for patients with advanced metastatic solid tumors with KRAS mutations.

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

Product revenue was $856 million; royalties $ million; milestone and contract revenue $25 million.

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

Non-GAAP numbers: Net income $145 million, down 39% sequentially from $239 million, and up 71% from $85 million year-earlier. Diluted EPS $0.64, down 40% sequentially from $1.06, and up 73% from $0.37 year-earlier.

Cash and equivalents ended at $3.9 billion, up sequentially from $3.7 billion. No debt.

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 $61 million. $429 million for research and development; $300 million for selling, general and administrative expenses; $1 million collaboration profit sharing; and a $0.5 million gain for change in value of a contingent consideration. Total costs $789 million. Leaving income from operations of $92 million. Interest and other income was $44 million. Unrealized loss on investment was $100 million. Income taxes $67 million.

Q&A Selective Summary:

Opzelura revenue projections? Gross to Net around 60%. Looking to maximize net sales. 40/60 vitaligo/dermatitis, both indications growing.

Mild HS has a large population and unmet need. Physician feedback on a topical agent was excelent.

IRA effect on Jakafi? We are guiding to continued growth. We benefit in IRA because we have a small biotech exemption. IRA helps the patients without hurting us.

Jakafi competition effects on duration of treatment? We have seen no impact on duration or discontinuation. Market size itself is now growing with multiple therapies for multiple lines.

BET inhibitor genotoxicity? Our BET program was first for solid tumors, switched to neoproliferative, we believe we do not have the same issue as the competitor had in preclinical work.

Jakafi drop Q4 to Q1? Abnormal free drug ratio in Q4, fixed in Q1. Not seeing impact from new competitors because they are being used second line. Jakafi has great data for myelofibrosis. We expect to continue to be the market leader in first line myelofibrosis.

CDK2, we believe ovarian cancer is a good space to explore, most competitors are focussed on breast cancer. We will have more on our plans later in the year.

Atopic dermatitis market was weak in March, likely due to the cyber attack, but seems to have recovered in April.

Opzelura refill rates? Atopic Dermatitis refills average 2 tubes per person. In Vitaligo we ar seeing some lack of compliance, believe will need 10 tubes per patient to be successful, not up to that yet.

Opzelura launch in France? Had launched in Germany and Austria. In France a phase where we can sell pre-authorization, which we expect in Q3. Now have price agreements in Italy and Spain, could launch midyear.

Buy backs? Possible, part of our dialog.

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