01—Abstract
Summary
Summary of the 10-K/A filed March 15, 2016. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A amendment to Incyte Corporation's annual report adds the audited consolidated financial statements of Agenus Inc. as Exhibit 99.1, provided under Rule 3-09.
The amendment's exhibit list also covers Incyte's agreements and certifications, including several filed with the Original Form 10-K. Incyte's own financial statements are in Item 8 of that Original Form 10-K. For investors, the main content is Agenus's financial condition, which the filing shows as a company with a large accumulated deficit that depends on partnerships and financing.
Agenus reported 2015 total revenues of $24.8 milliona, up from $7.0 million in 2014, with 95% of 2015 revenue earned from one collaboration partner. Its net loss widened to $87.9 million in 2015 from $42.5 million in 2014, and its accumulated deficit reached $779.2 million at December 31, 2015. Agenus stated that its cash, cash equivalents and short-term investments of $171.7 million at year-end 2015 would be sufficient to meet liquidity requirements through the first half of 2017.
The filing also documents Incyte's ties to Agenus. In February 2015, Incyte bought approximately 7.76 million Agenus shares for $35.0 millionb under a Stock Purchase Agreement, and the two companies entered a January 2015 collaboration in which Incyte paid $25.0 million in non-creditable, nonrefundable upfront payments. Agenus also issued $100.0 million of limited recourse notes in September 2015 that accrue interest at 13.5%, secured by royalties on GSK vaccine sales.
02—Key points
Key Highlights
- Form 10-K/A amendment that adds Agenus Inc.'s audited 2015 consolidated financial statements as Exhibit 99.1 under Rule 3-09; Incyte's own statements remain in the Original Form 10-K.
- Agenus 2015 total revenues were $24.8 million, compared with $7.0 million in 2014, with 95% of 2015 revenue earned from one collaboration partner.
- Agenus net loss was $87.9 million in 2015, compared with $42.5 million in 2014, and its accumulated deficit was $779.2 million at December 31, 2015.
- Agenus reported cash, cash equivalents and short-term investments of $171.7 million at December 31, 2015, sufficient for liquidity needs through the first half of 2017.
- Incyte purchased approximately 7.76 million shares of Agenus common stock for $35.0 million in February 2015, with a 12-month no-disposal commitment.
- Incyte and Agenus's January 2015 Collaboration Agreement included $25.0 million in non-creditable, nonrefundable upfront payments; Agenus recognized $23.5 million of revenue under it in 2015.
- Agenus issued $100.0 million of limited recourse notes in September 2015 bearing 13.5% interest, repayable solely from GSK royalty payments, with total debt of $114.1 million at year-end 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Incyte kept $0.01.
- Revenue$753.8M100.0%
- Cost of revenue−$27.0M3.6%
- Gross profit$726.8M96.4%
- Operating costs−$676.1M89.7%
- Operating income$50.7M6.7%
- Interest, other & tax−$44.1M5.9%
- Net income$6.5M0.9%
Where FY2015 revenue went
$753.8M- R&D: $479.5M, 64% of revenue
- SG&A: $196.6M, 26% of revenue
- Net income: $6.5M, 0.9% of revenue
- Cost of revenue: $27.0M, 3.6% of revenue
- Interest, other & tax: $44.1M, 5.9% of revenue
Kept 0.9% as net incomeNet income $6.5M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2015filed March 15, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $753.75M$511.50M | +47.4% |
| Cost of Revenue | $26.97M$3.00M | +797.9% |
| Gross Profit | $726.78M$508.49M | +42.9% |
| R&D Expenses | $479.51M$347.52M | +38.0% |
| SG&A Expenses | $196.61M$165.77M | +18.6% |
| Operating Expenses | $703.10M$516.30M | +36.2% |
| Operating Income | $50.65M-$4.80M | +1154.4% |
| Interest Expense | $45.60M$46.83M | −2.6% |
| Net Income | $6.53M-$48.48M | +113.5% |
| EPS (Basic) | $0.04$-0.29 | +113.8% |
| EPS (Diluted) | $0.03$-0.29 | +110.3% |
| Shares Outstanding (Basic) | 179.60M167.95M | +6.9% |
| Shares Outstanding (Diluted) | 187.30M167.95M | +11.5% |
05—Questions
Frequently Asked Questions
Why does Incyte's 10-K/A include Agenus's financial statements?
The filing states that Rule 3-09 requires Agenus's consolidated financial statements, which Incyte provides as Exhibit 99.1 to this amendment. Agenus's 2015 Form 10-K was filed as the source for those statements, and the audit report by KPMG LLP is dated March 15, 2016.
How much cash does Agenus have and how long will it last?
Agenus reported $171.7 million of cash, cash equivalents and short-term investments at December 31, 2015. Agenus believes this balance will satisfy its liquidity requirements through the first half of 2017, and it says it is prepared to discontinue activities, restrict capital expenditures or reduce operations if key initiatives do not prove feasible.
What is Incyte's financial relationship with Agenus?
In February 2015 Incyte bought approximately 7.76 million Agenus shares for $35.0 million, approximately $4.51 per share. Under the January 2015 Collaboration Agreement, Incyte paid $25.0 million in upfront payments, and the parties share costs and profits or Incyte reimburses development costs for certain antibody programs, with Agenus eligible for milestone payments and royalties.
What are the main risks in Agenus's debt structure?
Agenus issued $100.0 million of limited recourse notes in September 2015 at a 13.5% interest rate, compounded quarterly. Principal and interest are paid solely from GSK royalties on shingles and malaria vaccine sales. Interest is capitalized if royalties are insufficient, and $4.3 million had been capitalized as of December 31, 2015. The notes carry a make-whole payment and redemption premiums, and the obligations are secured only by the royalty collateral.
What drove Agenus's larger net loss in 2015?
Agenus's operating loss grew to $80.7 million in 2015 from $43.3 million in 2014. Research and development expense rose to $70.4 million from $22.3 million, and the filing attributes $13.2 million of 2015 R&D expense to the Celexion asset acquisition. Non-operating expense was $6.0 million, and net interest expense was $6.6 million.
06—Continue