Analyst Conference Summary

biotechnology

conference date: February 7, 2023 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2022 (Q4, fourth quarter 2022)

Forward-looking statements

Overview: Revenue growing, large divergence between GAAP and non-GAAP profits.

Basic data (GAAP):

Revenue was $927 million, up 13% sequentially from $823 million, and up 7% from $863 million in the year-earlier period.

Net income was $28 million, down 75% sequentially from $113 million, and down 95% from $567 million year-earlier.

Diluted EPS was $0.13, down 74% sequentially from $0.50, and down 95% from $2.54 year-earlier.

Guidance:

For the full year 2023 Incyte expects Jakafi net product revenue of $2.53 to $2.63 billion and other product revenue of $215 to $255 million. No estimate of royalty or opzelura revenue was given.

Conference Highlights:

Hervé Hoppenot, Incyte CEO, said "We are entering 2023 with significant momentum, following a year of strong commercial performance and progress of several important mid-to-late stage programs across our pipeline. Opzelura has now become the market share leader among branded agents for new atopic dermatitis patients and the adoption in vitiligo has been strong. We are well positioned for strong growth with our current product portfolio and we expect to deliver many important updates this year as we continue to execute on our growth and diversification strategy." Sees Opzelura as a significant growth driver in 2023, helped by an EU approval.

In December at ASH final Phase 2 parsaclisib with ruxolitinib for myelofibrosis results, in patients with suboptimal responses to rux, were positive. The Phase 3 trial results are expected at the end of 2023. Zilurgisertib with rux for MF Phase 1 initial results showed improvement in anemia. INCA33989, a novel mCALR antibody, is expected to begin Phase 1 later this year.

The Ruxolitinib extended release formulation NDA was accepted by the FDA with a PDUFA target action date of March 23, 2023.

In Q4 2023 Axatilimab for chronic GVHD, third-line, Phase 1/2 positive results were released. More results are expected in mid-2023, and a combo trial with rux will start in 2023.

Ruxolitinib cream marketing authorization application is under review at the EMA with a CHMP opinion expected in the first half of 2023. Trials to expand the cream to other indications are ongoing.

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

In October, Incyte announced an agreement to acquire Villaris Therapeutics, a biopharmaceutical company focused on the development of novel antibody therapeutics for vitiligo. Its lead asset, auremolimab (VM6) is a novel, ultra-humanized anti-IL-15Rß monoclonal antibody designed to target and deplete autoreactive resident memory T cells (TRM). It demonstrated efficacy as a treatment for vitiligo in preclinical models. Incyte will receive exclusive global rights to develop and commercialize auremolimab for all uses, including in vitiligo and other autoimmune and inflammatory diseases. IND-enabling studies are currently underway, with clinical development expected to begin in 2023. The acquisition is subject to clearance by the U.S. antitrust authorities.

Product revenue was $764 million; royalties $132 million; milestone and contract revenue $30 million.

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

Non-GAAP numbers: Net income $140 million, up 4% sequentially from $134 million, and up 509% from $23 million year-earlier. Diluted EPS $0.62, up 3% sequentially from $0.60, and up 520% from $0.10 year-earlier. In Q4 2021 there had been a $569 million non-operating tax adjustment lowering non-GAAP net income and increasing GAAP net income.

Cash and equivalents ended at $3.24 billion, up sequentially from $3.0 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 $59 million. $501 million for research and development; $273 million for selling, general and administrative expenses; $1 million collaboration profit sharing; and a $24 million loss for change in value of a contingent consideration. Total costs $857 million. Leaving income from operations of $70 million. Interest and other income was $27 million. Interest expense $1 million. Unrealized loss on investment was $15 million. Income taxes $52 million.

Full year 2023 results: revenue $3.39 billion, GAAP net icome $321 million or $1.52 per share, non-GAAP net income $623 million or $2.78 per share.

Q&A Selective Summary:

No Opzelura guidance, but vitiligo data color? Duration of therapy, to early for real world data, but in study went 52 weeks and beyond. Tubes per year will average about 10 for vitiligo. End of year inventory was low, two to three weeks.

Zilurgisertib (ALK2)? Excited with updated data showing increases in hemoglobin, in both monotherapy and combination with Rux. Still in dose escalation. Still assessing what populations to pursue in later cohorts/trials.

Jakafi guidance implications? Appropriate guidance given we will see a third competitor for MF in mid-2023. We already have two GVHD competitors. Still, we expect continued q/q and y/y growth.

Opzelura gross to net going forward? Working assumption is 50% for the year, but Q1 above that due to reset of deductibles.

We would like to see a few more quarters of uptake before we start giving guidance for opzelura, particularly given the vitiligo ramp.

About 84% of opzelura patients have commercial insurance coverage, Medicaid coverage is available in all 50 states. Unlike when we launched it for atopic dermatitis, the problems for scripts for vitiligo are minimal.

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