Market Overview

Incyte Reports 2018 Second Quarter Financial Results and Updates on Key Clinical Programs

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  • Total product-related revenues of $421 million in Q2 2018,
    representing 29 percent growth over the same period last year; Jakafi
    ®
    (ruxolitinib) revenues of $346 million in Q2
     2018,
    representing 25 percent growth over the same period last year
  • Pivotal REACH1 study of Jakafi in steroid-refractory acute GVHD met
    primary endpoint; sNDA submission expected in Q3 2018
  • Later-stage portfolio provides potential for accelerated growth
    from multiple near-to-market opportunities

Second Quarter Conference Call and Webcast Scheduled Today at 8:00 a.m.
EDT

Incyte Corporation (NASDAQ:INCY) today reports 2018 second quarter
financial results, highlighting strong growth in total product-related
revenue and providing a status update on the Company's development
portfolio.

"With four sources of revenue driving our fast-growing top-line, and
multiple opportunities in our later-stage development portfolio that may
accelerate this growth in the near-term, we believe we are
well-positioned for long-term success," stated Hervé Hoppenot, Chief
Executive Officer, Incyte. "At Incyte, we aim to build value through
developing innovative medicines, and over the next 6 months we expect to
provide multiple updates from our later-stage portfolio. These include
sharing data from, and submitting the supplemental New Drug Application
(sNDA) for, Jakafi in steroid-refractory acute graft-versus-host disease
(GVHD), as well as presenting data for ruxolitinib cream in atopic
dermatitis and updated data from our FGFR program in cholangiocarcinoma.
Later this year, we also plan to present data for ruxolitinib in
combination with our PI3Kδ inhibitor, which is part of our initiative to
maintain and expand our leadership position in the treatment of patients
with myeloproliferative neoplasms."

Portfolio Update

Oncology – key highlights

As previously announced, the pivotal REACH1 trial of ruxolitinib in
combination with corticosteroids for the treatment of patients with
steroid-refractory acute GVHD met its primary endpoint. Based on these
data, Incyte plans to file an sNDA for the approval of ruxolitinib for
the treatment of steroid-refractory acute GVHD with the U.S. Food and
Drug Administration (FDA) during the third quarter of 2018. The FDA
previously granted ruxolitinib Breakthrough Therapy Designation in this
indication, which is expected to provide an accelerated review period.
Planning is already underway for the U.S. launch, if approved.

Initial data, as previously announced, from the FIGHT-202 trial
evaluating pemigatinib (formerly INCB54828) show promising efficacy in
advanced cholangiocarcinoma patients with FGFR2 translocations. Incyte
expects to submit an NDA for pemigatinib as a treatment for patients
with advanced cholangiocarcinoma in 2019.

Status updates for later stage clinical programs are provided below.

                 
     

Indication

     

Status Update

                 

Ruxolitinib
(JAK1/JAK2)

Steroid-refractory acute GVHD

Pivotal Phase 2 (REACH1) met primary endpoint, sNDA in
preparation; Phase 3 (REACH2)

Ruxolitinib
(JAK1/JAK2)

Steroid-refractory chronic GVHD Phase 3 (REACH3)

Ruxolitinib
(JAK1/JAK2)

Essential thrombocythemia Phase 2 (RESET)

Ruxolitinib
(JAK1/JAK2)

combinations

Refractory myelofibrosis Phase 2 in combination with INCB50465 (PI3Kδ)

Itacitinib
(JAK1)

Treatment-naïve acute GVHD Phase 3 (GRAVITAS-301)

Itacitinib
(JAK1)

Treatment-naïve chronic GVHD Phase 3 (GRAVITAS-309) expected to begin in 2018

Itacitinib
(JAK1)

NSCLC Phase 1/2 in combination with osimertinib (EGFR)

INCMGA0012
(PD-1)
1

Solid tumors Phase 2 trials (MSI-high endometrial cancer, merkel cell carcinoma,
anal cancer) expected to begin in 2018

INCB50465
(PI3Kδ)

Non-Hodgkin lymphoma Phase 2 (CITADEL-203, follicular lymphoma), (CITADEL-204, marginal
zone lymphoma), (CITADEL-205, mantle cell lymphoma)

Pemigatinib
(FGFR1/2/3)

Bladder cancer Phase 2 (FIGHT-201)

Pemigatinib
(FGFR1/2/3)

      Cholangiocarcinoma       Phase 2 (FIGHT-202)
Notes:
      1)   INCMGA0012 licensed from MacroGenics
 

A brief status update for earlier-stage clinical candidates is provided
below.

         
       

Status Update

INCB57643
(BRD)

      Development discontinued after preclinical safety finding

INCB53914
(PIM)

First-in-man data at ASH 2017; development expected to focus on
combination therapy, including with JAK and PI3Kδ inhibition in
hematological malignancies

INCB59872
(LSD1)

Epigenetic mechanism targeting cell differentiation; evaluating both
oncology indications and sickle-cell disease

INCB62079
(FGFR4)

250x greater selectivity for FGFR4 over FGFR1/2/3; initial
development expected to focus on hepatocellular carcinoma

INCB81776
(AXL/MER)

Expected to enter clinical trials in 2018

INCB01158
(ARG)
1

Novel mechanism targeting myeloid cells; development expected to
focus on combination therapy

Epacadostat
(IDO1)

Phase 2 (ECHO-305; ECHO-306) in combination with pembrolizumab
(PD-1) in lung cancer

INCAGN1876
(GITR)
2

Dose escalation completed; development expected to focus on
combination therapy

INCAGN1949
(OX40)
2

Dose escalation completed; development expected to focus on
combination therapy

INCAGN2385
(LAG-3)
2

Phase 1/2 dose-escalation

INCAGN2390
(TIM-3)
2

      Expected to enter clinical trials in 2018
Notes:
      1)   INCB01158 co-developed with Calithera
2) INCAGN1876, INCAGN1949, INCAGN2385 and INCAGN2390 from discovery
alliance with Agenus
 

Inflammation / autoimmunity (IAI) – key highlights

Data from the randomized Phase 2 trial of ruxolitinib cream in adult
patients with atopic dermatitis showed a significant benefit over
vehicle control; these data have been accepted for oral presentation at
the 27th European Academy of Dermatology and Venerology Congress,
September 12-16, 2018 in Paris, France. Incyte is planning to initiate a
global, pivotal Phase 3 program in this indication.

INCB54707, a JAK1 selective inhibitor, is in development in IAI. Initial
development will be as a potential treatment for patients with
hidradenitis suppurativa, an inflammatory skin disease.

                 
     

Indication

     

Status Update

                 

Ruxolitinib cream
(JAK1/JAK2)

Atopic dermatitis Plans to initiate Phase 3 are underway

Ruxolitinib cream
(JAK1/JAK2)

Vitiligo Phase 2

INCB54707
(JAK1)

      Hidradenitis suppurativa       Expected to enter Phase 2 in H2 2018
 

Partnered – key highlights

In June 2018, the FDA approved the 2mg dose of Olumiant®
(baricitinib) as a once-daily oral medication for the treatment of
adults with moderately-to-severely active rheumatoid arthritis (RA) who
have had an inadequate response to one or more tumor necrosis factor
(TNF) inhibitor therapies.

                 
     

Indication

     

Status Update

                 

Baricitinib (JAK1/JAK2)1

Rheumatoid arthritis Approved in Europe and Japan at 2mg and 4mg doses; approved in U.S.
at 2mg dose

Baricitinib (JAK1/JAK2)1

Atopic dermatitis Phase 3

Baricitinib (JAK1/JAK2)1

Psoriatic arthritis Lilly expects the Phase 3 program to begin in 2018

Baricitinib (JAK1/JAK2)1

Systemic lupus erythematosus Lilly expects the Phase 3 program to begin in 2018

Baricitinib (JAK1/JAK2)1

Severe alopecia areata Lilly expects the Phase 2/3 trial to begin in 2018

Capmatinib (MET)2

      Non-small cell lung cancer, liver cancer       Phase 2 in EGFR wild-type, ALK negative NSCLC patients with MET
amplification and mutation
Notes:
      1)   Baricitinib licensed to Lilly
2) Capmatinib licensed to Novartis
 

2018 Second-Quarter and Year-to-Date Financial Results

The financial measures presented in this press release for the three and
six months ended June 30, 2018 and 2017 have been prepared by the
Company in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"), unless otherwise identified as a Non-GAAP financial measure.
Management believes that Non-GAAP information is useful for investors,
when considered in conjunction with Incyte's GAAP disclosures.
Management uses such information internally and externally for
establishing budgets, operating goals and financial planning purposes.
These metrics are also used to manage the Company's business and monitor
performance. The Company adjusts, where appropriate, for both revenues
and expenses in order to reflect the Company's core operations. The
Company believes these adjustments are useful to investors by providing
an enhanced understanding of the financial performance of the Company's
core operations. The metrics have been adopted to align the Company with
disclosures provided by industry peers. Reconciliations of GAAP net
income (loss) to Non-GAAP net income for the three and six months ended
June 30, 2018 and 2017 have been included at the end of this press
release.

Guidance related to research and development and selling, general and
administrative expenses does not include estimates associated with any
potential future strategic transactions.

Non-GAAP information is not prepared under a comprehensive set of
accounting rules and should only be used in conjunction with and to
supplement Incyte's operating results as reported under GAAP. Non-GAAP
measures may be defined and calculated differently by other companies in
our industry.

Revenues For the quarter ended June 30, 2018, GAAP net product
revenues of Jakafi were $346 million as compared to $276 million for the
same period in 2017, representing 25 percent growth. For the six months
ended June 30, 2018, GAAP net product revenues of Jakafi were $659
million as compared to $527 million for the same period in 2017,
representing 25 percent growth. For the three months ended June 30,
2018, GAAP net product revenues of Iclusig® (ponatinib) were
$20 million as compared to $16 million for the same period in 2017. For
the six months ended June 30, 2018, GAAP net product revenues of Iclusig
were $41 million as compared to $29 million for the same period in 2017.

For the quarter and six months ended June 30, 2018, GAAP product
royalties from sales of Jakavi® (ruxolitinib), which
has been out-licensed to Novartis outside of the United States, were $47
million and $88 million, respectively, as compared to $34 million and
$63 million, respectively, for the same periods in 2017. For the quarter
and six months ended June 30, 2018, GAAP product royalties from sales of
Olumiant, which has been out-licensed to Lilly globally, were $9 million
and $15 million, respectively, as compared to $1 million for the same
periods in 2017.

For the quarter and six months ended June 30, 2018, GAAP milestone
revenues were $100 million, as compared to $0 million and $90 million,
respectively, for the same periods in 2017. GAAP milestone revenues in
2018 and 2017 related to milestones earned from our collaborative
partners. Non-GAAP revenues exclude milestone revenues.

For the quarter and six months ended June 30, 2018, total GAAP revenues
were $522 million and $904 million, respectively, as compared to $326
million and $711 million, respectively, for the same periods in
2017. Total Non-GAAP revenues for the quarter and six months ended June
30, 2018 were $422 million and $804 million, respectively, as compared
to $326 million and $621 million, respectively, for the same periods in
2017.

 
Year Over Year Revenue Growth
(in thousands, unaudited)
           
Three Months Ended Six Months Ended
June 30, % June 30, %
2018 2017 Change 2018 2017 Change
Revenues:
Jakafi net product revenue $ 345,624 $ 276,038 25% $ 659,344 $ 527,115 25%
Iclusig net product revenue 19,900 15,629 27% 40,685 29,359 39%
Jakavi product royalty revenues 47,101 33,824 39% 88,438 62,665 41%
Olumiant product royalty revenues   8,852   945 -   15,231   1,325 -
Product-related revenues   421,477   326,436 29%   803,698   620,464 30%
Milestone revenues 100,000 - 100,000 90,000
Other revenues   39   8   100   62
Total GAAP revenues $ 521,516 $ 326,444 $ 903,798 $ 710,526
Milestone revenues   (100,000)   -   (100,000)   (90,000)
Total Non-GAAP revenues $ 421,516 $ 326,444 $ 803,798 $ 620,526
 

Cost of product revenues GAAP cost of product revenues for the
quarter and six months ended June 30, 2018 was $25 million and $43
million, respectively, as compared to $20 million and $35 million,
respectively, for the same periods in 2017. Non-GAAP cost of product
revenues for the quarter and six months ended June 30, 2018 was $19
million and $32 million, respectively, as compared to $15 million and
$24 million, respectively, for the same periods in 2017. Non-GAAP cost
of product revenues excludes the amortization of licensed intellectual
property for Iclusig relating to the acquisition of the European
business of ARIAD Pharmaceuticals, Inc.

Research and development expenses GAAP research and development
expenses for the quarter and six months ended June 30, 2018 were $298
million and $601 million, respectively, as compared to $202 million and
$610 million, respectively, for the same periods in 2017. The increase
in GAAP research and development expenses over the prior year quarter
was driven primarily by $15 million in upfront expense related to our
collaboration agreement with Bristol-Myers Squibb, $5 million in
milestone expense related to our collaboration agreement with Agenus and
an overall increase in development costs to advance our clinical
pipeline.

The decrease in GAAP research and development expenses from the prior
year six month period was driven primarily by upfront and milestone
expenses of $209 million related to our collaborative agreements
recorded in 2017 partially offset by $32 million in upfront and
milestone expenses in 2018 and an overall increase in development costs
to advance our clinical pipeline. For the six months ended June 30,
2018, GAAP research and development expenses also included $12 million
in upfront expense related to our collaboration agreement with Syros
Pharmaceuticals, Inc.

Non-GAAP research and development expenses for the quarter and six
months ended June 30, 2018 were $253 million and $520 million,
respectively, as compared to $179 million and $356 million,
respectively, for the same periods in 2017. Non-GAAP research and
development expenses for the quarter and six months ended June 30, 2018
exclude the cost of stock-based compensation of $25 million and $49
million, respectively, and upfront consideration and milestones paid to
our collaborative partners of $20 million and $32 million, respectively.
Non-GAAP research and development expenses for the quarter and six
months ended June 30, 2017 exclude the cost of stock-based compensation
of $23 million and $44 million, respectively, and upfront consideration
and milestones paid to our collaborative partners of $0 million and $209
million, respectively.

Selling, general and administrative expenses GAAP selling,
general and administrative expenses for the quarter and six months ended
June 30, 2018 were $108 million and $230 million, respectively, as
compared to $90 million and $177 million, respectively, for the same
periods in 2017. Increased GAAP selling, general and administrative
expenses were driven by an increase in donations to independent
non-profit patient assistance organizations in the United States and
additional costs related to the commercialization of Jakafi.

Non-GAAP selling, general and administrative expenses for the quarter
and six months ended June 30, 2018 were $96 million and $206 million,
respectively, as compared to $79 million and $157 million, respectively,
for the same periods in 2017. Non-GAAP selling, general and
administrative expenses exclude the cost of stock-based compensation.

Change in fair value of acquisition-related contingent consideration GAAP
change in fair value of acquisition-related contingent consideration for
the quarter and six months ended June 30, 2018 and 2017 was $7 million
and $14 million, respectively.

Unrealized loss on long term investments GAAP unrealized loss on
long term investments for the quarter and six months ended June 30, 2018
was $35 million and $12 million, respectively, as compared to $20
million and $25 million, respectively, for the same periods in 2017. The
unrealized loss on long term investments for the quarter and six months
ended June 30, 2018 represents the fair market value adjustments of the
Company's investments in Agenus, Calithera, Merus, and Syros.

Expense related to senior note conversions GAAP expense related
to senior note conversions for the quarter and six months ended June 30,
2017 was $1 million and $55 million, respectively, related to the
conversions of certain of our 2018 and 2020 convertible senior notes.

Net income (loss) GAAP net income for the quarter ended June 30,
2018 was $52 million, or $0.25 per basic and $0.24 per diluted share, as
compared to a net loss of $12 million, or $0.06 per basic and diluted
share for the same period in 2017. GAAP net income for the six months
ended June 30, 2018 was $11 million, or $0.05 per basic and diluted
share, as compared to a net loss of $200 million, or $1.00 per basic and
diluted share for the same period in 2017.

Non-GAAP net income for the quarter ended June 30, 2018 and 2017 was $57
million. Non-GAAP net income per share for the quarter ended June 30,
2018 was $0.27 per basic and $0.26 per diluted share, as compared to
Non-GAAP net income per share of $0.28 per basic and $0.27 per diluted
share for the same period in 2017. Non-GAAP net income for the six
months ended June 30, 2018 was $54 million, as compared to Non-GAAP net
income of $86 million for the same period in 2017. Non-GAAP net income
per share for the six months ended June 30, 2018 was $0.26 per basic and
$0.25 per diluted share, as compared to Non-GAAP net income per share of
$0.43 per basic and $0.42 per diluted share for the same period in 2017.

Cash, cash equivalents and marketable securities position As of
June 30, 2018 and December 31, 2017, cash, cash equivalents and
marketable securities totaled $1.2 billion.

2018 Financial Guidance

The Company has updated its full year 2018 financial guidance, as
detailed below.

                 
        Current       Previous
GAAP and Non-GAAP Jakafi net product revenues       $1,350 - $1,400 million       Unchanged
GAAP and Non-GAAP Iclusig net product revenues $80 - $85 million Unchanged
 
GAAP Cost of product revenues $85 - $95 million Unchanged
Non-GAAP Cost of product revenues(1) $64 - $74 million Unchanged
 
GAAP Research and development expenses $1,150 - $1,250 million Unchanged
Non-GAAP Research and development expenses(2) $1,008 - $1,103 million $1,013 - $1,108 million
 
GAAP Selling, general and administrative expenses $390 - $410 million Unchanged
Non-GAAP Selling, general and administrative expenses(3) $340 - $355 million Unchanged
 
GAAP Change in fair value of acquisition-related contingent
consideration
$30 million Unchanged
Non-GAAP Change in fair value of acquisition-related contingent
consideration(4)
      $0 million       Unchanged
     

(1)

  Adjusted to exclude the amortization of licensed intellectual
property for Iclusig relating to the acquisition of the European
business of ARIAD Pharmaceuticals, Inc.

(2)

Adjusted to exclude the estimated cost of stock-based compensation,
upfront consideration of approximately $12 million related to the
Syros collaboration, upfront consideration of $15 million related to
the BMS license agreement and milestone payment of $5 million
related to the Agenus collaboration.

(3)

Adjusted to exclude the estimated cost of stock-based compensation.

(4)

Adjusted to exclude the change in fair value of estimated future
royalties relating to sales of Iclusig in the licensed territory
relating to the acquisition of the European business of ARIAD
Pharmaceuticals, Inc.

Future Non-GAAP financial measures may also exclude upfront and ongoing
milestones relating to third-party collaboration partners, impairment of
goodwill or other assets, changes in the fair value of equity
investments in our collaboration partners, non-cash interest expense
related to the amortization of the initial discount on our 2018 and 2020
Senior Notes and the impact on our tax provision of discrete changes in
our valuation allowance position on deferred tax assets.

Conference Call and Webcast Information

Incyte will hold its 2018 second-quarter financial results conference
call and webcast this morning at 8:00 a.m. EDT. To access the conference
call, please dial 877-407-3042 for domestic callers or 201-389-0864 for
international callers. When prompted, provide the conference
identification number, 13681303.

If you are unable to participate, a replay of the conference call will
be available for 30 days. The replay dial-in number for the United
States 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
identification number, 13681303.

The conference call will also be webcast live and can be accessed at www.incyte.com
in the Investors section under "Events and Presentations".

About Incyte

Incyte Corporation is a Wilmington, Delaware-based biopharmaceutical
company focused on the discovery, development and commercialization of
proprietary therapeutics. For additional information on Incyte, please
visit the Company's website at www.incyte.com.

Follow @Incyte on Twitter at https://twitter.com/Incyte.

About Jakafi® (ruxolitinib)

Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the U.S. Food
and Drug Administration for treatment of people with polycythemia vera
(PV) who have had an inadequate response to or are intolerant of
hydroxyurea. Jakafi is also indicated for treatment of people with
intermediate or high-risk myelofibrosis (MF), including primary MF,
post–polycythemia vera MF, and post–essential thrombocythemia MF.

Jakafi is marketed by Incyte in the United States and by Novartis as
Jakavi® (ruxolitinib) outside the United States.

About Iclusig® (ponatinib) tablets

Iclusig targets not only native BCR-ABL but also its isoforms that carry
mutations that confer resistance to treatment, including the T315I
mutation, which has been associated with resistance to other approved
TKIs.

In the EU, Iclusig is approved for the treatment of adult patients with
chronic phase, accelerated phase or blast phase chronic myeloid leukemia
(CML) who are resistant to dasatinib or nilotinib; who are intolerant to
dasatinib or nilotinib and for whom subsequent treatment with imatinib
is not clinically appropriate; or who have the T315I mutation, or the
treatment of adult patients with Philadelphia-chromosome positive acute
lymphoblastic leukemia (Ph+ ALL) who are resistant to dasatinib; who are
intolerant to dasatinib and for whom subsequent treatment with imatinib
is not clinically appropriate; or who have the T315I mutation.

Incyte has an exclusive license from ARIAD Pharmaceuticals, Inc., since
acquired by Takeda Pharmaceutical Company Limited, to develop and
commercialize Iclusig in the European Union and 22 other countries,
including Switzerland, Norway, Turkey, Israel and Russia.

Forward-Looking Statements

Except for the historical information set forth herein, the matters set
forth in this release contain predictions, estimates and other
forward-looking statements, including without limitation statements
regarding: opportunities for the later-stage development portfolio to
accelerate growth and for the Company to achieve long-term success; the
expected timing of the release of data for, and the sNDA submission
seeking approval of, ruxolitinib in GVHD and whether or when approval
will be obtained or the Company will launch ruxolitinib in this
indication, if approved; the expected timing of data from the trial
evaluating pemigatinib in patients with cholangiocarcinoma, and whether
and when the Company will submit an NDA with respect thereto, and the
expected timing of data from the study of ruxolitinib cream in atopic
dermatitis and ruxolitinib in combination with INCB50465; plans and
expectations for development of and clinical trials involving the
Company's other product candidates; and the Company's updated financial
guidance for 2018 and the expectations underlying such guidance.

These forward-looking statements are based on the Company'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: unanticipated delays; further
research and development and the results of clinical trials possibly
being unsuccessful or insufficient to meet applicable regulatory
standards or warrant continued development; the ability to enroll
sufficient numbers of subjects in clinical trials; determinations made
by the FDA; the Company's dependence on its relationships with its
collaboration partners; the efficacy or safety of the Company's products
and the products of the Company's collaboration partners; the acceptance
of the Company's products and the products of the Company's
collaboration partners in the marketplace; market competition; sales,
marketing, manufacturing and distribution requirements; greater than
expected expenses; expenses relating to litigation or strategic
activities; and other risks detailed from time to time in the Company's
reports filed with the Securities and Exchange Commission, including its
Form 10-Q for the quarter ended March 31, 2018. The Company disclaims
any intent or obligation to update these forward-looking statements.

 
INCYTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
       
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
GAAP GAAP
Revenues:
Product revenues, net $ 365,524 $ 291,667 $ 700,029 $ 556,474
Product royalty revenues 55,953 34,769 103,669 63,990
Milestone revenues 100,000 - 100,000 90,000
Other revenues   39   8   100   62
Total revenues   521,516   326,444   903,798   710,526
 
Costs and expenses:
Cost of product revenues (including definite-lived intangible
amortization)
24,856 20,260 42,962 35,084
Research and development 298,089 201,786 601,192 609,706
Selling, general and administrative 108,029 90,066 229,527 177,295
Change in fair value of acquisition-related contingent consideration   7,303   7,073   13,988   14,429
Total costs and expenses   438,277   319,185   887,669   836,514
 
Income (loss) from operations 83,239 7,259 16,129 (125,988)
Other income (expense), net 5,808 4,066 10,270 5,213
Interest expense (398) (384) (783) (6,323)
Unrealized loss on long term investments (34,641) (19,574) (11,962) (25,388)
Expense related to senior note conversions   -   (751)   -   (54,881)
Income (loss) before provision (benefit) for income taxes 54,008 (9,384) 13,654 (207,367)
Provision (benefit) for income taxes   1,614   3,100   2,400   (7,800)
Net income (loss) $ 52,394 $ (12,484) $ 11,254 $ (199,567)
 
Net income (loss) per share:
Basic $ 0.25 $ (0.06) $ 0.05 $ (1.00)
Diluted $ 0.24 $ (0.06) $ 0.05 $ (1.00)
 
Shares used in computing net income (loss) per share:
Basic 212,210 205,141 211,945 200,200
Diluted 215,103 205,141 215,294 200,200
 
 
INCYTE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
   
June 30, December 31,
2018 2017
ASSETS
Cash, cash equivalents and marketable securities $ 1,198,382 $ 1,169,645
Accounts receivable 316,310 266,299
Property and equipment, net 267,586 259,763
Inventory 12,570 14,448
Prepaid expenses and other assets 89,254 65,577
Long term investments 131,330 134,356
Other intangible assets, net 226,132 236,901
Goodwill   155,593   155,593
Total assets $ 2,397,157 $ 2,302,582
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses and other liabilities $ 351,664 $ 360,952
Convertible senior notes 24,570 24,001
Acquisition-related contingent consideration 288,000 287,000
Stockholders' equity   1,732,923   1,630,629
Total liabilities and stockholders' equity $ 2,397,157 $ 2,302,582
 
 
INCYTE CORPORATION
RECONCILIATION OF GAAP NET INCOME (LOSS) TO SELECTED NON-GAAP
ADJUSTED INFORMATION
(unaudited, in thousands)
       
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
 
GAAP Net Income (Loss) $ 52,394 $ (12,484) $ 11,254 $ (199,567)
Adjustments:
Milestones received from new or existing partners1 (100,000) - (100,000) (90,000)
Upfront consideration and milestones paid to new or existing partners2 20,000 - 32,444 209,109
Non-cash stock compensation from equity awards (R&D)3 24,795 22,878 49,017 44,347
Non-cash stock compensation from equity awards (SG&A)3 11,811 10,866 23,813 20,010
Non-cash interest expense related to convertible notes4 300 409 597 5,478
Expense related to senior note conversions5 - 751 - 54,881
Changes in fair value of equity investments6 34,641 19,574 11,962 25,388
Amortization of acquired product rights7 5,384 5,384 10,768 10,768
Change in fair value of contingent consideration8 7,303 7,073 13,988 14,429
Tax effect of Non-GAAP adjustments9   224   2,549   400   (8,719)
Non-GAAP Net Income $ 56,852 $ 57,000 $ 54,243 $ 86,124
 
Non-GAAP net income per share:
Basic $ 0.27 $ 0.28 $ 0.26 $ 0.43
Diluted $ 0.26 $ 0.27 $ 0.25 $ 0.42
 
Shares used in computing Non-GAAP net income per share:
Basic 212,210 205,141 211,945 200,200
Diluted 215,103 211,167 215,294 206,683
 
 

1

  As included within the Milestone revenues line item in the
Consolidated Statement of Operations, which included (in thousands)
for the three and six months ended June 30, 2018, $100,000 for
Olumiant FDA approval and for the six months ended June 30, 2017,
$65,000 for Olumiant EMA approval and $25,000 for ruxolitinib GVHD
Phase III initiation.

2

As included within the Research and development expenses line item
in the Consolidated Statement of Operations, which included (in
thousands) for the three and six months ended June 30, 2018, $5,000
related to Agenus and $15,000 related to Bristol-Myers Squibb and
for the six months ended June 30, 2018, $12,444 related to Syros.
For the six months ended June 30, 2017, $127,209 related to Merus,
$41,400 related to Calithera and $40,500 related to Agenus.

3

As included within the Research and development expenses line item
in the Consolidated Statement of Operations, and within the Selling,
general and administrative expenses line item in the Consolidated
Statement of Operations.

4

As included within the Interest expense line item in the
Consolidated Statement of Operations.

5

As included within the Expense related to senior note conversions
line item in the Consolidated Statement of Operations.

6

As included within the Unrealized gain (loss) on long term
investments line item in the Consolidated Statement of Operations.

7

As included within the Cost of product revenues line item in the
Consolidated Statement of Operations. Acquired product rights of
licensed intellectual property for Iclusig is amortized utilizing a
straight-line method over the estimated useful life of 12.5 years.

8

As included within the Change in fair value of acquisition-related
contingent consideration line item in the Consolidated Statement of
Operations.

9

As included within the Provision (benefit) for income taxes line
item in the Consolidated Statement of Operations. Income tax effects
of Non-GAAP adjustments are calculated using the applicable
statutory tax rate for the jurisdictions in which the charges
(benefits) are incurred, while taking into consideration any
valuation allowances.

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