Analyst Conference Summary

biotechnology

conference date: October 31, 2023 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2023 (Q3, third quarter 2023)

Forward-looking statements

Overview: Continued strong revenue growth y/y.

Basic data (GAAP):

Revenue was $919 million, down 4% sequentially from $955 million, and up 12% from $823 million in the year-earlier period.

Net income was $171 million, down 16% sequentially from $204 million, and up 51% from $113 million year-earlier.

Diluted EPS was $0.76, down 16% sequentially from $0.90, and up 52% from $0.50 year-earlier.

Guidance:

Tightened 2023 Jakafi net product revenue range to $2.59 to $2.62 billion.

Conference Highlights:

Hervé Hoppenot, Incyte CEO, said "Our double-digit revenue growth during the quarter was driven by sustained performance of Jakafi (ruxolitinib) and an increasing contribution from Opzelura® (ruxolitinib) with continued strong patient demand and enhanced payer coverage. We made significant progress with our early programs in myeloproliferative neoplasms (MPNs), including mCALR and JAK2V617F, which have the potential to be disease modifying therapies that represent a fundamentally new approach to the way patients with MPNs are treated. Additionally, we recently received positive top line results from the Phase 2 study of povorcitinib in prurigo nodularis (PN) and plans are underway to initiate a Phase 3 study in 2024. With approximately 100,000 treated PN patients in the U.S., povorcitinib has the potential to be an efficacious therapy for those patients who currently have limited treatment options." Product revenue was up 11% y/y. Incyte received small biotech exemption status, so Jakafi will be exempt from Medicare price negotiations and coverage benefit limits will be phased in [see Slide 6].

In Q3 2023 the Phase 2 study of povorcitinib for prurigo nodularis met its primary endpoint. The Phase 2b study for extensive nonsegmental vitilago were also positive. Plans a Phase 3 study. Phase 2 trials in asthma and chronic spontaneous urticaria are enrolling.

In Q4 2023 announced INCB100658, a small molecule inhibitor targeting the JAK2V617F mutation, is expected to file the IND by year-end 2023. The mutation is present in 55-60% of myelofibrosis and essential thrombocythemia patients, and in 95% of polycythemia vera patients.

In Q3 2023 a Phase 1 study evaluating INCA33890 in patients with select advanced solid tumors has been 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. 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.

In August 2023, Jakavi was approved in Japan for the use in GVHD after hematopoietic stem cell transplant.

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

Product revenue was $783 million; royalties $131 million; milestone and contract revenue $5 million.

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

Non-GAAP numbers: Net income $249 million, up 7% sequentially from $223 million, and up 86% from $134 million year-earlier. Diluted EPS $1.10, up 11% sequentially from $0.99, and up 83% from $0.60 year-earlier.

Cash and equivalents ended at $3.52 billion, up sequentially from $3.42 billion. No debt.

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 $60 million. $376 million for research and development; $268 million for selling, general and administrative expenses; $1 million collaboration cost sharing; and a $0 million loss for change in value of a contingent consideration. Total costs $704 million. Leaving income from operations of $215 million. Interest and other income was $45 million. Unrealized loss on investment was $27 million. Income taxes $63 million.

Q&A Selective Summary:

Opzelura gross to net? In Q3 was 54%, Q2 55%, Q1 61%. Expect to stay around 55%, pending resolution of Medicaid.

Jakafi competitive landscape? In myelofibrosis there are already two other JAK inhibitors on the market, but they have gained little share. Monamotinib (sp?) approval for MF patietns with anemia, Jakafi has better survival. So we think we will continue to lead in MF. Jakafi is clearly the most effective when managing symptoms.

Opzelura reimbursement, utilization, pricing? Caremark/CVS, we are trying to make access as easy as possible. Going from double step for atopic dermatitis to one step. Now Op for vitiligo is firstline. It might cost us a little bit more on rebates, but we seek volume growth.

Tubes per patient for Opzelura. For AD around 2 on average. Vitiligo rate not established yet. Patients can use for years and continue to get benefits.

Our BET inhibitor has already shown responses, will have to see competitor's Phase 1 results to make a comparison. We will present updated data in late 2023.

Jakafi in PV? We have about 35% share, about 8,000 patients. They tend to stay on the drug for a long time, current average about 41 months. We think there are patients on other therapies who we think could move to Jakafi earlier.

Script volume AD/Vit? About 60/40.

Cash use? Continuing to look at outside opportunities. Still investing in our pipeline, but not as fast as our cash flow grows. The target is broad, the lower stock prices are creating opportunites, through partnerships or acquisitions.

Jakafi loss of exclusivity? The intent is to have new programs in place to offset that.

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