Incyte Reports 2012 Second-Quarter Financial Results; Updates Shareholders on Launch of Jakafi and Lead Clinical Programs
Incyte Corporation (Nasdaq: INCY) today reported second-quarter 2012 financial results, including revenue from its first commercial product, Jakafi (ruxolitinib), which was approved by the US Food & Drug Administration (FDA) for the treatment of patients with intermediate or high-risk myelofibrosis (MF) in November 2011. The Company also provided updated information about several of its lead clinical programs, including data about Jakafi and baricitinib (LY3009104), presented at key medical meetings.
“The launch of Jakafi is going well. Interest in using this new therapy among hematologists and oncologists continues to grow as evidenced by shipments of Jakafi during the second quarter. We continue to believe that growth will be steady as physicians gradually expand use to those appropriate patients who are less severely ill. At this point in the launch, we’re now able to provide revenue guidance for 2012 net product sales in the range of $120 to $135 million,” stated Paul A. Friedman, M.D., Incyte’s President and Chief Executive Officer.
The Company anticipates that revenues from Jakafi net product sales will be in the range of $120 million to $135 million in 2012. This net product revenue guidance assumes the Company adopts the sell-in method for revenue recognition in the third or fourth quarter of 2012. Therefore, this guidance includes the recognition of net product deferred revenue as of the time of adoption of the sell-in method. As of June 30, 2012, net product deferred revenue was $9.0 million.
For the quarter and six months ended June 30, 2012, the Company shipped $35.1 million and $60.3 million, respectively, of Jakafi to its specialty pharmacies.
The Company currently uses the sell-through method for product revenue recognition, which means revenue from shipments to specialty pharmacies is deferred until the specialty pharmacy sends product to the patient. For the quarter ended June 30, 2012, $35.1 million of product was shipped, and $31.9 million of product was sent to patients and recognized as gross revenue. The gross to net adjustment for this revenue was approximately $2.2 million, resulting in net product revenue of $29.7 million for the quarter ended June 30, 2012. Gross product deferred revenue increased by $3.2 million during the second quarter.
For the six months ended June 30, 2012, $60.3 million of product was shipped, and $53.1 million of product was sent to patients and recognized as gross revenue. The gross to net adjustment for this revenue was approximately $4.1 million, resulting in net product revenue of $49.0 million for the six months ended June 30, 2012. Gross product deferred revenue increased by $7.2 million during the six months ended June 30, 2012.
The Company’s net product deferred revenue as of June 30, 2012, was $9.0 million.
Total revenues for the quarter and six months ended June 30, 2012, were $86.5 million and $122.7 million, as compared to $16.8 million and $48.8 million for the same periods in 2011. Included in total revenues for the quarter and six months ended June 30, 2012, were net product revenues of $29.7 million and $49.0 million, respectively. Also included in total revenues for the quarter and six months ended June 30, 2012, was a $40 million milestone payment received from Lilly for baricitinib (LY3009104). Total revenues for the six months ended June 30, 2011, included a $15 million milestone payment received from Novartis for INCB28060.
Net income for the quarter ended June 30, 2012, was $4.0 million, or $0.03 per basic and diluted share, as compared to a net loss of $51.9 million, or $0.41 per basic and diluted share, for the same period in 2011. Net loss for the six months ended June 30, 2012, was $41.4 million, or $0.32 per basic and diluted share, as compared to a net loss of $78.4 million, or $0.63 per basic and diluted share, for the same period in 2011. Included in net income for the quarter and net loss for the six months ended June 30, 2012, was a $40 million milestone payment received from Lilly for baricitinib (LY3009104). Included in net loss for the six months ended June 30, 2011, was a $15 million milestone payment received from Novartis for INCB28060.
Also included in net income for the quarter and net loss for the six months ended June 30, 2012, were $9.9 million and $19.8 million, respectively, of non-cash expenses related to the impact of expensing employee stock options, compared to $7.2 million and $14.1 million included in net loss for the same periods in 2011.
Research and development expenses for the quarter and six months ended June 30, 2012, were $51.6 million and $100.5 million, respectively, as compared to $46.0 million and $82.3 million, respectively, for the same periods in 2011. Included in research and development expenses for the quarter and six months ended June 30, 2012, were non-cash expenses of $6.5 million and $13.2 million, respectively, related to the impact of expensing employee stock options, as compared to $4.8 million and $9.2 million, respectively, for the same periods in 2011.
The increases in research and development expenses for the quarter and six months ended June 30, 2012, compared to the prior year period were primarily a result of increased clinical development costs related to the advancement of the Company's pipeline and increased non-cash employee stock option expense. The Company expects its research and development expenses to vary from period to period, mainly due to the timing of its clinical development activities.
Selling, general and administrative expenses for the quarter and six months ended June 30, 2012, were $19.7 million and $41.1 million, respectively, as compared to $11.9 million and $22.7 million for the same periods in 2011. Included in selling, general and administrative expenses for the quarter and six months ended June 30, 2012, were non-cash expenses of $3.4 million and $6.6 million, respectively, related to the impact of expensing employee stock options, as compared to $2.4 million and $4.9 million, respectively, for the same periods in 2011.
Increased selling, general and administrative expenses for the quarter and six months ended June 30, 2012, compared to the prior year periods reflected the additional costs related to the Company's sales force and the commercialization efforts for the launch of Jakafi.
Interest expense for the quarter and six months ended June 30, 2012, were $11.4 million and $22.7 million, respectively, as compared to $10.9 million and $21.6 million, respectively, for the comparable periods in 2011. Included in interest expense for the quarter and six months ended June 30, 2012, were $6.7 million and $13.2 million, respectively, of non-cash charges to amortize the discount on the Company's 4.75% Convertible Senior Notes due 2015, as compared to $6.1 million and $12.1 million, respectively, for the same periods in 2011.
As of June 30, 2012, cash, cash equivalents and marketable securities totaled $261.8 million compared to $277.6 million as of December 31, 2011. These amounts exclude $9.5 million and $19.0 million, respectively, at June 30, 2012, and December 31, 2011, of restricted cash and investments held in an escrow account reserved for interest payments through October 2012 on the 4.75% Convertible Senior Notes.
Jakafi (ruxolitinib) - a JAK1 and JAK2 Inhibitor
Baricitinib, formerly known as LY3009104 (INCB28050) - a JAK1 and JAK2 Inhibitor
INCB28060 (also known as INC280) – a c-MET Inhibitor
INCB24360 – an Indoleamine Dioxygenase-1 (IDO1) Inhibitor
Early-Stage Development and Discovery Programs
Incyte will hold its second-quarter 2012 financial results conference call this morning at 8:30 a.m. ET. To access the conference call, please dial 877-407-8037 for domestic callers or 201-689-8037 for international callers. When prompted, provide the conference identification number, 397266.
If you are unable to participate, a replay of the conference call will be available for thirty days. The replay dial-in number for the U.S. is 877-660-6853 and the dial-in number for international callers is 201-612-7415. To access the replay you will need the conference account number, 278, and the identification number, 397266.
The conference call will also be webcast live and can be accessed at under Investor Relations – Events and Webcasts.
Incyte Corporation is a Wilmington, Delaware-based biopharmaceutical company focused on the discovery, development and commercialization of proprietary small molecule drugs for oncology and inflammation. For additional information on Incyte, please visit the Company’s website at .
Treatment with Jakafi can cause hematologic adverse reactions, including thrombocytopenia, anemia and neutropenia, which are each dose-related effects, with the most frequent being thrombocytopenia and anemia. A complete blood count must be performed before initiating therapy with Jakafi. Complete blood counts should be monitored as clinically indicated and dosing adjusted as required. The three most frequent non-hematologic adverse reactions were bruising, dizziness and headache. Patients with platelet counts less than 200 X 10/L at the start of therapy are more likely to develop thrombocytopenia during treatment. Thrombocytopenia was generally reversible and was usually managed by reducing the dose or temporarily withholding Jakafi. If clinically indicated, platelet transfusions may be administered. Patients developing anemia may require blood transfusions. Dose modifications of Jakafi for patients developing anemia may also be considered. Neutropenia (ANC <0.5 X 10/L) was generally reversible and was managed by temporarily withholding Jakafi. Patients should be assessed for the risk of developing serious bacterial, mycobacterial, fungal and viral infections. Active serious infections should have resolved before starting Jakafi. Physicians should carefully observe patients receiving Jakafi for signs and symptoms of infection (including herpes zoster) and initiate appropriate treatment promptly. A dose modification is recommended when administering Jakafi with strong CYP3A4 inhibitors or in patients with renal or hepatic impairment [see Dosage and Administration in the Full Prescribing Information]. Patients should be closely monitored and the dose titrated based on safety and efficacy. There are no adequate and well-controlled studies of Jakafi in pregnant women. Use of Jakafi during pregnancy is not recommended and should only be used if the potential benefit justifies the potential risk to the fetus. Women taking Jakafi should not breast-feed. Discontinue nursing or discontinue the drug, taking into account the importance of the drug to the mother.
For Full Prescribing Information for Jakafi, visit .
Except for the historical information set forth herein, the matters set forth in this press release, including without limitation statements regarding our plans and expectations with respect to Jakafi (ruxolitinib), including the potential efficacy and therapeutic and commercial value of Jakafi, our expectation that the RESPONSE trial will complete recruitment in the second half of 2012 and that results from the RESPONSE and RELIEF trials are expected to be part of a sNDA submission in 2014, our expectation that the RECAP trial will enroll approximately 130 patients and results being expected in the second half of 2013, our expectation that the six-month data from the six-month Phase IIb trial conducted by our collaboration partner Eli Lilly and Company evaluating baricitinib in patients with rheumatoid arthritis will be presented later in 2012, that the Phase III program will begin in the second half of 2012 and primary endpoint results being expected in 2013 from the Phase IIb trial in patients with moderate to severe psoriasis, our expectation that the initial Phase I trial evaluating INCB28060 is nearing completion, our expectation to begin a Phase II trial with INCB24360 in patients with ovarian cancer later this year, our expectation to transition from the sell-through method to the sell-in method to recognize revenue, and financial guidance about expected revenues, contain predictions, estimates and other forward-looking statements.
These forward-looking statements are based on Incyte’s current expectations and subject to risks and uncertainties that may cause actual results to differ materially, including unanticipated developments in and risks related to the efficacy or safety of Jakafi, the acceptance of Jakafi in the marketplace, risks related to market competition, the results of further research and development, risks and uncertainties associated with sales, marketing and distribution requirements, risks that results of clinical trials may be unsuccessful or insufficient to meet applicable regulatory standards, the ability to enroll sufficient numbers of subjects in clinical trials, other market or economic factors and technological advances, unanticipated delays, the ability of Incyte to compete against parties with greater financial or other resources, risks associated with Incyte's dependence on its relationships with its collaboration partners, and other risks detailed from time to time in Incyte’s reports filed with the Securities and Exchange Commission, including our Form 10-Q for the quarter ended March 31, 2012.
Incyte disclaims any intent or obligation to update these forward-looking statements.