01—Abstract
Summary
Summary of the 10-K filed February 13, 2020. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation reported total revenues of $2.16 billiona for 2019, up from $1.88 billion in 2018, and net income of $446.9 million ($2.05 per diluted share), compared with $109.5 million in 2018.
Growth was driven mainly by JAKAFI (ruxolitinib) product revenues, net, of $1.68 billionb versus $1.39 billion in 2018, with the increase comprised of a volume increase of $204.5 million and a price increase of $93.5 million. Product royalty revenues from JAKAVI and OLUMIANT rose to $306.3 million, while milestone and contract revenues fell to $77.5 million from $180.0 million. Cash, cash equivalents and marketable securities stood at $2.12 billion at December 31, 2019, and operating cash flow was $710.7 million.
The company still carried an accumulated deficit of $1.4 billionc. The filing highlights a pipeline with several regulatory milestones. The FDA accepted the NDA for pemigatinib in cholangiocarcinoma for Priority Review with a PDUFA target action date of May 30, 2020, and the NDA for capmatinib submitted by Novartis was accepted for Priority Review.
Pipeline setbacks included the Phase III GRAVITAS-301 trial of itacitinib in steroid-naive acute GVHD, which did not meet its primary endpoint, and the decision to end recruitment into the RESET trial in essential thrombocythemia. Positive readouts included TRuE-AD2 for ruxolitinib cream in atopic dermatitis and several BREEZE-AD baricitinib trials.
Investors should note the company's dependence on JAKAFI, which the filing describes as its first and currently only product approved in the United States, and the January 2020 MorphoSys agreement, which includes a $750.0 milliond upfront payment and a $150.0 million purchase of MorphoSys ADSs. The filing also discloses a qui tam complaint tied to a DOJ civil investigative demand about speaker and patient assistance programs, which the company says it is defending vigorously, with no reserve recorded.
02—Key points
Key Highlights
- Total revenues of $2,158.8 million in 2019, up from $1,881.9 million in 2018
- Net income of $446.9 million, or $2.05 per diluted share, versus $109.5 million in 2018
- JAKAFI product revenues, net, of $1,685.0 million in 2019 versus $1,387.0 million in 2018; JAKAFI revenue growth included a $93.5 million price increase and $204.5 million volume increase
- Product royalty revenues rose to $306.3 million, including $80.4 million from OLUMIANT versus $40.1 million in 2018
- Milestone and contract revenues declined to $77.5 million from $180.0 million
- Cash, cash equivalents and marketable securities of $2.1 billion at December 31, 2019; operating cash flow of $710.7 million
- Pemigatinib NDA accepted for Priority Review with a PDUFA target action date of May 30, 2020; itacitinib missed its primary endpoint in GRAVITAS-301
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Incyte kept $0.21.
- Revenue$2.16B100.0%
- Cost of revenue−$114.2M5.3%
- Gross profit$2.04B94.7%
- Operating costs−$1.64B76.1%
- Operating income$402.0M18.6%
- Interest, other & tax$44.9M2.1%
- Net income$446.9M20.7%
Where FY2019 revenue went
$2.16B- R&D: $1.15B, 53% of revenue
- SG&A: $468.7M, 22% of revenue
- Operating income: $402.0M, 19% of revenue
- Cost of revenue: $114.2M, 5.3% of revenue
- Other operating costs: $19.7M, 0.9% of revenue
Kept 19% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 13, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.16B$1.88B | +14.7% |
| Cost of Revenue | $114.25M$94.12M | +21.4% |
| Gross Profit | $2.04B$1.79B | +14.4% |
| R&D Expenses | $1.15B$1.20B | −3.7% |
| SG&A Expenses | $468.71M$434.41M | +7.9% |
| Operating Expenses | $1.76B$1.75B | +0.2% |
| Operating Income | $402.01M$129.22M | +211.1% |
| Interest Expense | $1.85M$1.54M | +20.2% |
| Net Income | $446.91M$109.49M | +308.2% |
| EPS (Basic) | $2.08$0.52 | +300.0% |
| EPS (Diluted) | $2.05$0.51 | +302.0% |
| Shares Outstanding (Basic) | 214.91M212.38M | +1.2% |
| Shares Outstanding (Diluted) | 217.66M215.63M | +0.9% |
05—Questions
Frequently Asked Questions
How did Incyte's profitability change in 2019?
Net income rose to $446.9 million, or $2.05 per diluted share, from $109.5 million, or $0.51 per diluted share, in 2018. Income from operations was $402.0 million compared with $129.2 million in 2018.
What drove the growth in product revenue?
Product revenues, net, totaled $1,774.9 million in 2019 versus $1,466.9 million in 2018. The filing attributes the JAKAFI increase to a volume increase of $204.5 million and a price increase of $93.5 million.
What are the key near-term regulatory events?
The FDA accepted the NDA for pemigatinib for previously treated cholangiocarcinoma with FGFR2 fusions or rearrangements for Priority Review, with a PDUFA target action date of May 30, 2020. The NDA for capmatinib, submitted by Novartis, was also accepted for Priority Review, and REACH3 results are expected in 2020.
What legal risk does the filing disclose?
The company received a DOJ civil investigative demand in December 2018 about its speaker and patient assistance programs. A qui tam complaint was unsealed in November 2019, and Incyte filed an answer on January 22, 2020. The company says it is defending itself vigorously and has recorded no reserve for these matters.
What did the MorphoSys agreement involve?
In January 2020, Incyte agreed to pay MorphoSys an upfront non-refundable payment of $750.0 million for worldwide rights to tafasitamab, and to purchase American Depositary Shares for an aggregate $150.0 million. MorphoSys is eligible for up to $740.0 million in development and regulatory milestones and up to $315.0 million in commercialization milestones.
06—Continue