01—Abstract
Summary
Summary of the 10-K filed February 21, 2013. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation's annual report for fiscal 2012 shows the company's first year of commercial sales of JAKAFI (ruxolitinib), approved by the FDA in November 2011 for intermediate or high-risk myelofibrosis.
Total revenues rose to $297.1 milliona in 2012 from $94.5 million in 2011, driven by product revenues, net, of $136.0 million (up from $2.0 million) and contract revenues of $156.9 million. Net loss narrowed to $44.3 million, or $0.34 per share, from $186.5 million, or $1.49 per share, in 2011. Income from operations was $1.1 million in 2012 compared with a loss of $143.2 million in 2011.
The company remains heavily dependent on JAKAFI and its pipeline. Its accumulated deficit was $1.7 billionb at December 31, 2012, and it had cash, cash equivalents and marketable securities of $228.4 million, against $410.0 million of total consolidated debt and a stockholders' deficit of $175.0 million. Management believes existing cash will be adequate for at least the next twelve months.
Key pipeline items include a Phase III trial of ruxolitinib in polycythemia vera, a Phase III program of baricitinib in rheumatoid arthritis partnered with Eli Lilly, and multiple Phase II programs. Novartis holds ex-U.S. rights to ruxolitinib (sold as JAKAVI), and the filing notes that all of the company's 2012 revenues came from JAKAFI product sales, JAKAVI royalties, and collaborations and licensing.
The filing also flags material risks: reliance on single third-party manufacturers and suppliers for JAKAFI, dependence on reimbursement from payors, competition from better-resourced companies, and the possibility of further financing needs. Management concluded that internal control over financial reporting was effective as of December 31, 2012, and Ernst & Young LLP issued an unqualified audit opinion dated February 21, 2013.
02—Key points
Key Highlights
- Total revenues increased to $297.1 million in 2012 from $94.5 million in 2011, with product revenues, net, of $136.0 million from JAKAFI sales versus $2.0 million in 2011.
- Contract revenues were $156.9 million in 2012 versus $91.9 million in 2011, mainly from straight-line recognition of Novartis and Lilly upfront fees and milestone payments, including $90.0 million of milestones recognized in 2012.
- Net loss narrowed to $44.3 million ($0.34 per share) in 2012 from $186.5 million ($1.49 per share) in 2011; income from operations was $1.1 million compared with a loss of $143.2 million in 2011.
- Cash, cash equivalents and marketable securities were $228.4 million at December 31, 2012, against $277.6 million a year earlier; management believes this is adequate for at least the next twelve months.
- Total consolidated debt was $410.0 million at December 31, 2012, including $400.0 million of 4.75% convertible senior notes due 2015, and the stockholders' deficit was $175.0 million.
- JAKAFI was approved by the FDA in November 2011 for intermediate or high-risk myelofibrosis and is the first FDA-approved JAK inhibitor; a Phase III trial in polycythemia vera is fully enrolled with results expected to support a supplemental NDA submission in 2014.
- The company relies on single third-party contract manufacturers for JAKAFI's active ingredient and finished product, and the filing states that it is qualifying a second source but cannot assure timely qualification.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2012, Incyte lost $0.15.
- Revenue$297.1M100.0%
- Cost of revenue−$157,0000.1%
- Gross profit$296.9M99.9%
- Operating costs−$295.8M99.6%
- Operating income$1.1M0.4%
- Interest, other & tax−$45.5M15.3%
- Net income−$44.3M14.9%
Where FY2012 revenue went
$297.1M- R&D: $210.4M, 71% of revenue
- SG&A: $85.4M, 29% of revenue
- Operating income: $1.1M, 0.4% of revenue
- Cost of revenue: $157,000, 0.1% of revenue
Kept 0.4% as operating incomeOperating income $1.1M · 0.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 21, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $297.06M$94.45M | +214.5% |
| Cost of Revenue | $157K— | — |
| Gross Profit | $296.90M— | — |
| R&D Expenses | $210.39M$178.71M | +17.7% |
| SG&A Expenses | $85.36M$58.22M | +46.6% |
| Operating Expenses | $295.91M$237.64M | +24.5% |
| Operating Income | $1.15M-$143.18M | +100.8% |
| Interest Expense | $46.06M$43.82M | +5.1% |
| Net Income | -$44.32M-$186.54M | +76.2% |
| EPS (Basic) | $-0.34$-1.49 | +77.2% |
| Shares Outstanding (Basic) | 129.75M125.36M | +3.5% |
05—Questions
Frequently Asked Questions
What drove the improvement in Incyte's results in 2012?
Total revenues rose to $297.1 million from $94.5 million, led by JAKAFI product revenues of $136.0 million, which followed commercial launch in November 2011, and contract revenues of $156.9 million, including $90.0 million of milestone payments from Novartis and Lilly recognized in 2012.
How much cash does Incyte have and how much debt does it carry?
At December 31, 2012, cash, cash equivalents and marketable securities totaled $228.4 million. Total consolidated debt was $410.0 million, including $400.0 million of 4.75% convertible senior notes due October 2015, and the stockholders' deficit was $175.0 million.
Is Incyte profitable, and what is its accumulated deficit?
Incyte reported a net loss of $44.3 million in 2012, or $0.34 per share, compared with a net loss of $186.5 million in 2011. The company had an accumulated deficit of $1.7 billion as of December 31, 2012, and states that it could continue to incur losses in 2013 and later.
What are the main risks to JAKAFI's commercial success?
The filing cites dependence on JAKAFI as the company's lead product, the need for ongoing third-party reimbursement, reliance on a limited number of specialty pharmacies, single-source third-party manufacturing, and the need to maintain FDA approval and compliance with healthcare fraud and abuse laws.
What are the key pipeline catalysts beyond JAKAFI?
The filing describes a global Phase III trial of ruxolitinib in advanced polycythemia vera with results expected to support a supplemental NDA in 2014, a Phase III program of baricitinib in rheumatoid arthritis partnered with Eli Lilly that began in late 2012, and a Phase II diabetic nephropathy trial with results expected in 2014.
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