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Incyte Annual Report, Year Ended Dec 31, 2008

Filing Date
Filed March 3, 2009
Period End
December 31, 2008
Security
INCY
In the record · 2016–202610-K1510-Q348-K107

INCY filed 15 annual reports (10-K), 34 quarterly reports (10-Q) and 107 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Dec ’16Dec ’16
  2. FY2018 annual report10-K · Feb ’19Feb ’19
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 3, 2009. Cited figures are marked; the original filing is the authoritative source.

Incyte Corporation (INCY), a drug discovery and development company focused on small molecule drugs for serious unmet medical needs in oncology, inflammation and diabetes, reported a net loss of $178.9 milliona for 2008, compared with $86.9 million in 2007.

Total revenues were $3.9 millionb in 2008, down from $34.4 million in 2007, as contract revenues fell to $0.7 million from $29.8 million after the Pfizer upfront fee amortization was completed in early 2008. Research and development expenses rose to $146.4 million from $104.9 million, driven by clinical research and outside services, which increased to $84.1 million from $47.9 million. As of December 31, 2008, cash, cash equivalents and marketable securities totaled $217.8 million, against a stockholders' deficit of $220.8 million and total debt principal of $421.8 million.

The company's lead program is the oral JAK inhibitor INCB18424 for myelofibrosis, for which it plans a Phase III registration trial in the first half of 2009 following an FDA Special Protocol Assessment request. To conserve cash in 2009, management said it will focus on clinical programs with a greater likelihood of near-term value. It discontinued INCB18424 development in rheumatoid arthritis, prostate cancer and multiple myeloma, and deprioritized the HM74a, CCR2 and CCR5 programs.

The c-MET and IDO oncology programs will not enter clinical trials in 2009 unless additional funding is secured. Management stated that cash will be adequate for at least the next twelve months, but it expects continued losses and will likely need to raise additional capital, which could be dilutive to stockholders. The filing also notes that Incyte's revenue base is largely confined to its Pfizer collaboration and its legacy genomic information licensing, which are declining.

Its convertible notes, including $151.8 millionc of 3.5% senior notes and $250.0 million of 3.5% subordinated notes due 2011, create refinancing pressure. The company reported 212 employees as of December 31, 2008 and no material legal proceedings.

02—Key points

Key Highlights

  1. Net loss widened to $178.9 million in 2008 from $86.9 million in 2007; loss per share was $1.99 versus $1.03.
  2. Total revenues fell to $3.9 million from $34.4 million, mainly because the Pfizer upfront fee recognition was completed in early 2008.
  3. Research and development expense rose to $146.4 million from $104.9 million, with clinical research and outside services up to $84.1 million from $47.9 million.
  4. Cash, cash equivalents and marketable securities were $217.8 million at December 31, 2008, against $421.8 million of principal in convertible debt and a stockholders' deficit of $220.8 million.
  5. Lead asset INCB18424 (oral JAK inhibitor) is slated for a Phase III myelofibrosis registration trial in the first half of 2009, pending FDA SPA agreement.
  6. Management cut 2009 spending by discontinuing INCB18424 in rheumatoid arthritis, prostate cancer and multiple myeloma, and deprioritizing HM74a, CCR2 and CCR5 programs.
  7. The c-MET and IDO oncology programs will not start clinical trials in 2009 unless additional funding is obtained.

03—Questions

Frequently Asked Questions

  1. Does Incyte have enough cash to fund operations?

    Management believes cash, cash equivalents and marketable securities of $217.8 million at December 31, 2008 will be adequate for at least the next twelve months. However, the company expects continued losses, has substantial debt, and anticipates needing additional capital, which may be dilutive or unavailable on acceptable terms.

  2. What drove the increase in the 2008 net loss?

    Research and development expense increased to $146.4 million from $104.9 million, mainly due to clinical research and outside services, which rose to $84.1 million from $47.9 million. Revenues also declined to $3.9 million from $34.4 million as Pfizer contract revenue ended.

  3. What is the most important near-term catalyst in the pipeline?

    The company plans to start a Phase III registration trial of INCB18424 for myelofibrosis in the first half of 2009, provided the FDA agrees with its response to the Special Protocol Assessment. Results from the Phase IIb psoriasis trial (topical INCB18424) and the Phase IIb diabetes trial (INCB13739) are expected in mid-2009.

  4. What debt obligations does Incyte face?

    Total debt principal was $421.8 million at December 31, 2008, including $151.8 million of 3.5% convertible senior notes and $250.0 million of 3.5% convertible subordinated notes, both due in 2011, plus $20.0 million of non-interest-bearing Pfizer notes due 2013 and 2014. The company may seek to repurchase or refinance the notes maturing in February 2011.

  5. How dependent is Incyte on its Pfizer collaboration?

    Substantially all 2008 revenues came from the Pfizer collaboration and from licensing intellectual property. Pfizer holds worldwide development and commercialization rights to the CCR2 antagonist portfolio and may terminate the agreement on 90 days' notice, and the company has no remaining substantive obligations to Pfizer after the research plan concluded in January 2008.

04—Continue

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