01—Abstract
Summary
Summary of the 10-K filed March 5, 2010. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation's 10-K for fiscal 2009 describes a drug discovery and development company focused on oncology and inflammation, with no approved products and no drug revenues to date.
Total revenues were $9.3 milliona in 2009 versus $3.9 million in 2008, while net loss widened to $211.9 million ($2.06 per share) from $178.9 million ($1.99 per share). Research and development expense was $119.4 million and selling, general and administrative expense rose to $27.6 million, reflecting initial commercialization preparations for INCB18424 in myelofibrosis. The company's financial position strengthened considerably during 2009.
Cash, cash equivalents and marketable securities totaled $473.9 millionb at year-end, up from $217.8 million, supported by a $132.3 million net stock offering, $387.4 million net proceeds from 4.75% convertible senior notes due 2015, and a $150 million Novartis upfront payment. Stockholders' deficit narrowed to $102.4 million, and total debt principal was $594.6 million. In February 2010 the company redeemed its remaining 3.5% convertible notes due 2011 for $158.6 million in cash.
The pipeline's lead asset, INCB18424, is in Phase III for myelofibrosis under a Special Protocol Assessment from the FDA, with a second Phase III trial in Europe under the Novartis collaboration. The company also licensed rights to its JAK inhibitor INCB28050 to Eli Lilly and its c-MET inhibitor to Novartis, with upfront payments of $90 millionc (Lilly) and $150 million (Novartis). The filing notes continued losses expected in 2010 and beyond, dependence on collaborators, and the need for additional capital.
02—Key points
Key Highlights
- Net loss of $211.9 million, or $2.06 per share, in 2009, compared with $178.9 million, or $1.99 per share, in 2008
- Total revenues of $9.3 million in 2009, up from $3.9 million in 2008; no drug product has yet generated revenue
- Cash, cash equivalents and marketable securities of $473.9 million at December 31, 2009, up from $217.8 million a year earlier
- Lead JAK inhibitor INCB18424 in Phase III for myelofibrosis; Phase III trial began enrolling in the U.S. in September 2009
- Novartis collaboration (November 2009) provided a $150 million upfront payment plus a $60 million milestone; Lilly license (December 2009) provided a $90 million initial payment for INCB28050
- Total debt principal of $594.6 million, including $400.0 million of 4.75% convertible senior notes due 2015; stockholders' deficit of $102.4 million
- Accumulated deficit of $1.4 billion; the company expects to incur losses in 2010 and future periods
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed March 5, 2010Financial Statements
| Revenue | $9.27M |
| R&D Expenses | $119.44M |
| SG&A Expenses | $27.58M |
| Operating Expenses | $149.03M |
| Operating Income | -$139.77M |
| Interest Expense | $32.13M |
| Net Income | -$211.87M |
| EPS (Basic) | $-2.06 |
| Shares Outstanding (Basic) | 102.94M |
| Shares Outstanding (Diluted) | 102.94M |
05—Questions
Frequently Asked Questions
Has Incyte generated product revenue from any drug candidate?
No. The filing states that none of its drug candidates has been submitted for approval for sale in the United States or any foreign market, and that to date it has no drug products that have generated revenues. 2009 revenues of $9.3 million consisted of contract revenues from collaborations and license and royalty revenues from database and intellectual property licensing.
What is the status of the lead drug candidate, INCB18424?
INCB18424 is in Phase III development for myelofibrosis. The U.S. Phase III trial, under a Special Protocol Assessment from the FDA, began screening and enrolling in September 2009 with about 240 patients. A second Phase III trial in Europe, run under the Novartis collaboration, is fully enrolled with over 200 patients. The company also reports Phase II work in polycythemia vera and essential thrombocythemia and a Phase IIb psoriasis trial.
How is Incyte funding its operations and what debt obligations does it carry?
In 2009 Incyte raised $132.3 million net from a common stock offering and $387.4 million net from 4.75% convertible senior notes due 2015. It repurchased $227.2 million principal of its 3.5% convertible notes due 2011 and funded a $56.2 million escrow for the first six interest payments on the 2015 notes. In February 2010 it redeemed the remaining 2011 notes for $158.6 million in cash. The company believes its cash and marketable securities will be adequate for at least the next twelve months.
What are the main collaboration agreements and what do they provide?
Novartis received exclusive ex-U.S. development and commercialization rights to INCB18424 for hematologic and oncology indications and worldwide rights to the c-MET inhibitor INCB28060; Incyte received a $150 million upfront payment in December 2009 plus a $60 million milestone in January 2010 and may receive tiered, double-digit royalties. Eli Lilly received worldwide rights to INCB28050 for inflammatory and autoimmune diseases for an initial $90 million, with royalties up to 20%. Pfizer holds worldwide rights to the CCR2 antagonist portfolio under a 2006 agreement.
What are the principal risks highlighted in the filing?
The filing emphasizes that Incyte has a history of losses and expects to keep incurring them; that its most advanced candidate depends on successful Phase III results and regulatory approval, including whether the FDA will accept the SPA outcome; that it relies on third-party manufacturers and single-source suppliers; that it has limited commercial experience; that collaborators control significant development decisions; and that it will need additional capital, which may be dilutive or restrictive given its debt covenants.
06—Continue