01—Abstract
Summary
Summary of the 10-K filed February 23, 2011. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation's annual report for fiscal 2010 shows a company still in drug development that posted a much smaller net loss than prior years, driven mainly by collaboration revenue.
Total revenues were $169.9 milliona in 2010 versus $9.3 million in 2009, with contract revenues of $169.0 million, largely from the Novartis and Lilly agreements. The company reported income from operations of $14.0 million and a net loss of $31.8 million, or $0.26 per share, compared with a net loss of $211.9 million in 2009. Management states it has not yet had any drug product generate revenue, and the filing reports an accumulated deficit of $1.4 billion and a stockholders' deficit of $88.6 million at December 31, 2010.
The pipeline is centered on ruxolitinib, a JAK1/JAK2 inhibitor in Phase III development for myelofibrosis and polycythemia vera. The company says a New Drug Application for myelofibrosis is planned, and it is building U.S. commercial infrastructure, including anticipated hiring of about 60 sales representatives in the second half of 2011. The filing notes that the COMFORT-I Phase III trial in myelofibrosis reported a 42%b response rate versus less than 1% for placebo, and that the FDA granted a Special Protocol Assessment.
Other programs include LY3009104 (licensed to Eli Lilly), c-MET, sheddase, and IDO inhibitors. Investors should weigh the reliance on collaboration payments, which the filing says drove 2010 revenue, against a debt load of $420.0 millionc in principal, including $400.0 million of 4.75% convertible senior notes due 2015.
Cash, cash equivalents and marketable securities were $424.2 milliond at year-end, and management believes this is adequate for at least the next twelve months. The company also states it expects to continue incurring losses in 2011 and beyond.
02—Key points
Key Highlights
- Total revenues rose to $169.9 million in 2010 from $9.3 million in 2009, primarily from contract revenues of $169.0 million under the Novartis and Lilly agreements.
- Income from operations was $14.0 million in 2010, compared with a loss from operations of $139.8 million in 2009; net loss narrowed to $31.8 million ($0.26 per share) from $211.9 million ($2.06 per share).
- Ruxolitinib is in Phase III for myelofibrosis and polycythemia vera; the COMFORT-I trial reported a 42% response rate versus less than 1% for placebo, and the company plans to file a New Drug Application for myelofibrosis.
- The company has retained U.S. commercialization rights to ruxolitinib and is building sales and marketing infrastructure, with plans to hire about 60 sales representatives in the second half of 2011.
- Total debt principal was $420.0 million at December 31, 2010, including $400.0 million of 4.75% convertible senior notes due 2015; stockholders' deficit was $88.6 million.
- Cash, cash equivalents and marketable securities totaled $424.2 million at year-end 2010 (excluding a $37.9 million restricted escrow for note interest), which management says is adequate for at least the next twelve months.
- No drug candidate has yet been submitted for approval, and the company has never generated product revenue; the accumulated deficit was $1.4 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 23, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $169.88M$9.27M | +1733.5% |
| R&D Expenses | $123.88M$119.44M | +3.7% |
| SG&A Expenses | $32.33M$27.58M | +17.2% |
| Operating Expenses | $155.83M$149.03M | +4.6% |
| Operating Income | $14.05M-$139.77M | +110.1% |
| Interest Expense | $43.32M$32.13M | +34.9% |
| Net Income | -$31.85M-$211.87M | +85.0% |
| EPS (Basic) | $-0.26$-2.06 | +87.4% |
| Shares Outstanding (Basic) | 121.63M102.94M | +18.2% |
| Shares Outstanding (Diluted) | 121.63M102.94M | +18.2% |
05—Questions
Frequently Asked Questions
What drove the improvement in Incyte's 2010 results?
Revenue increased to $169.9 million from $9.3 million, mainly from contract revenues of $169.0 million tied to the Novartis and Lilly agreements, including amortization of upfront fees and $102.0 million in milestone payments received from Novartis, Lilly and Pfizer.
What is the lead product candidate and where is it in development?
The lead candidate is ruxolitinib, a JAK1/JAK2 inhibitor in Phase III development for myelofibrosis and polycythemia vera and in Phase II for essential thrombocythemia. The company says COMFORT-I met its primary endpoint with a 42% response rate versus less than 1% for placebo.
How much debt does Incyte carry and when is it due?
Aggregate principal of total consolidated debt was $420.0 million at December 31, 2010. This includes $400.0 million of 4.75% convertible senior notes due October 2015 and $20.0 million of non-interest-bearing Pfizer convertible subordinated notes due in 2013 and 2014. Funds to cover interest through October 2012 are held in escrow.
Does Incyte expect to become profitable?
The company states it expects to continue incurring losses in 2011 and in future periods, and it cannot be certain whether or when it will achieve profitability because it has no drug products generating revenue yet.
What are the main risks tied to the collaboration model?
The filing notes that Incyte's revenues come from collaborations and licensing, that collaborators can terminate agreements for convenience, and that future milestone and royalty payments may not contribute significantly for several years or may never result in revenue.
06—Continue