01—Abstract
Summary
Summary of the 10-K filed February 21, 2014. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation's 10-K for fiscal 2013 reports that its lead product JAKAFI (ruxolitinib) was approved by the FDA in November 2011 for intermediate or high-risk myelofibrosis and generated product revenues, net, of $235.4 milliona in 2013, up from $136.0 million in 2012.
Total revenues were $354.9 millionb in 2013 versus $297.1 million in 2012, supported by $28.3 million of product royalty revenues from Novartis sales of JAKAVI outside the United States and $91.0 million of contract revenues. The company still reported a net loss of $83.1 million, or $0.56 per share, compared with a net loss of $44.3 million in 2012, and an accumulated deficit of $1.7 billion as of December 31, 2013. The balance sheet strengthened during 2013.
Cash, cash equivalents and marketable securities rose to $509.0 millionc from $228.4 million, driven by net proceeds of $728.7 million from the issuance of 0.375% convertible senior notes due 2018 and 1.25% convertible senior notes due 2020, partly offset by a $500.0 million repurchase of 4.75% convertible senior notes due 2015. Total debt principal was $846.6 million, and stockholders' deficit was $193.1 million. Management believes existing cash will be adequate for at least the next twelve months.
The pipeline spans oncology and inflammation. Ruxolitinib is in a Phase III trial for polycythemia vera, with supplemental NDA results expected in mid-2014 under a special protocol assessment, and a Phase II pancreatic cancer trial showed a survival benefit in a pre-specified subgroup, with Phase III trials expected to begin in the first half of 2014.
Baricitinib, licensed to Eli Lilly, is in Phase III for rheumatoid arthritis. The filing also discloses two securities class action lawsuits filed in March and April 2013 that the company intends to defend vigorously, and it names Hervé Hoppenot as President and Chief Executive Officer effective January 13, 2014.
02—Key points
Key Highlights
- JAKAFI product revenues, net, rose to $235.4 million in 2013 from $136.0 million in 2012, and total revenues reached $354.9 million versus $297.1 million.
- Net loss narrowed to $83.1 million ($0.56 per share) in 2013 from $44.3 million in 2012 only in the sense that the figure increased; the net loss widened from $44.3 million to $83.1 million year over year, and the accumulated deficit stood at $1.7 billion.
- Cash, cash equivalents and marketable securities increased to $509.0 million at December 31, 2013, from $228.4 million a year earlier.
- Issued $375.0 million of 0.375% convertible senior notes due 2018 and $375.0 million of 1.25% convertible senior notes due 2020 in November 2013, with net proceeds of $728.7 million.
- Total debt principal was $846.6 million and the stockholders' deficit was $193.1 million at December 31, 2013.
- Ruxolitinib's Phase III polycythemia vera trial under an SPA is fully enrolled with about 220 patients, with results expected to support a supplemental NDA in mid-2014; a Phase III pancreatic cancer program is expected to begin in the first half of 2014.
- Two securities class action lawsuits filed in 2013 allege misleading statements about the JAKAFI launch, and the company intends to defend them vigorously.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2013, Incyte lost $0.23.
- Revenue$354.9M100.0%
- Cost of revenue−$630,0000.2%
- Gross profit$354.3M99.8%
- Operating costs−$370.4M104.4%
- Operating income−$16.1M4.5%
- Interest, other & tax−$67.0M18.9%
- Net income−$83.1M23.4%
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 21, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $354.95M$297.06M | +19.5% |
| Cost of Revenue | $630K$157K | +301.3% |
| Gross Profit | $354.32M$296.90M | +19.3% |
| R&D Expenses | $260.44M$210.39M | +23.8% |
| SG&A Expenses | $109.98M$85.36M | +28.8% |
| Operating Expenses | $371.05M$295.91M | +25.4% |
| Operating Income | -$16.10M$1.15M | −1502.6% |
| Interest Expense | $38.65M$46.06M | −16.1% |
| Net Income | -$83.15M-$44.32M | −87.6% |
| EPS (Basic) | $-0.56$-0.34 | −64.7% |
| EPS (Diluted) | $-0.56— | — |
| Shares Outstanding (Basic) | 148.40M129.75M | +14.4% |
| Shares Outstanding (Diluted) | 148.40M— | — |
05—Questions
Frequently Asked Questions
How much revenue did JAKAFI generate in 2013 and how did it compare with 2012?
Product revenues, net, from JAKAFI were $235.4 million in 2013, compared with $136.0 million in 2012. Product royalty revenues from Novartis sales of JAKAVI outside the United States were $28.3 million in 2013, up from $3.7 million in 2012.
Did Incyte remain unprofitable in 2013?
Yes. The company reported a net loss of $83.1 million, or $0.56 per basic and diluted share, for 2013, compared with a net loss of $44.3 million, or $0.34 per share, in 2012. It has had an accumulated deficit of $1.7 billion as of December 31, 2013.
How did Incyte fund its operations and change its debt structure in 2013?
In November 2013 Incyte issued $375.0 million of 0.375% convertible senior notes due 2018 and $375.0 million of 1.25% convertible senior notes due 2020. Using part of the proceeds, it repurchased $117.3 million of 4.75% convertible senior notes due 2015 for about $500.0 million, and exchanged $186.0 million of those notes for common stock and $11.5 million in cash.
What are the key near-term catalysts in the pipeline?
The filing points to a supplemental NDA for ruxolitinib in polycythemia vera, with Phase III results expected in mid-2014 under a special protocol assessment. It also expects the Phase III pancreatic cancer program to begin in the first half of 2014, and baricitinib, licensed to Eli Lilly, is in Phase III for rheumatoid arthritis.
What legal proceedings and leadership changes does the filing disclose?
Two lawsuits were filed in March and April 2013 in the U.S. District Court for the District of Delaware, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 related to statements about the JAKAFI commercial launch; the company believes it has meritorious defenses. Hervé Hoppenot joined as President and Chief Executive Officer effective January 13, 2014.
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