01—Abstract
Summary
Summary of the 10-K filed February 9, 2021. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation reported a net loss of $295.7 milliona for 2020, compared with net income of $446.9 million in 2019, as total revenues rose to $2.67 billion from $2.16 billion.
Product revenues, net, reached $2.07 billionb, led by JAKAFI revenues of $1.94 billion, while product royalty revenues were $392.97 million and milestone and contract revenues were $205.0 million. The net loss reflected research and development expense of $2.22 billion, which included $976.1 million of upfront and milestone expenses under collaboration agreements, including $804.5 million of upfront consideration paid to MorphoSys. Cash, cash equivalents and marketable securities totaled $1.80 billion at December 31, 2020, down from $2.12 billion a year earlier, and operating cash flow was negative $124.6 million.
The company remains heavily dependent on JAKAFI (ruxolitinib), which the filing says it expects will continue to contribute a significant percentage of total revenues over the next several years. Recent regulatory milestones include FDA approvals of PEMAZYRE in April 2020, TABRECTA in May 2020, and MONJUVI in July 2020, along with several EU and Japan approvals for OLUMIANT and TABRECTA. Pending items include an sNDA for ruxolitinib in steroid-refractory chronic GVHD, an NDA for ruxolitinib cream in atopic dermatitis, and a Biologics License Application for retifanlimab accepted for Priority Review in January 2021.
The filing also reports an accumulated deficit of $1.7 billionc, a Department of Justice civil investigative demand and a qui tam action concerning speaker and patient assistance programs for which no reserve has been recorded. The filing states that the Company's COVID-19 related effects had not been material to commercial operations as of the filing, although new patient starts for JAKAFI decreased during shelter-in-place measures. The RUXCOVID Phase III study did not prevent complications compared with standard of care alone, while baricitinib received an FDA Emergency Use Authorization in November 2020 for use with remdesivir in hospitalized COVID-19 patients.
02—Key points
Key Highlights
- Total revenues of $2.67 billion in 2020, up from $2.16 billion in 2019, driven by JAKAFI product revenues of $1.94 billion.
- Net loss of $295.7 million (($1.36) per share) in 2020, compared with net income of $446.9 million in 2019.
- Research and development expense rose to $2.22 billion from $1.15 billion, including $804.5 million of upfront consideration paid to MorphoSys.
- Operating cash flow was negative $124.6 million in 2020, versus $710.7 million provided in 2019.
- Cash, cash equivalents and marketable securities were $1.80 billion at December 31, 2020, with an accumulated deficit of $1.7 billion.
- Four approved products: JAKAFI, ICLUSIG, PEMAZYRE (approved April 2020) and MONJUVI (approved July 2020, co-commercialized with MorphoSys).
- Pending regulatory submissions include a ruxolitinib cream NDA for atopic dermatitis and a retifanlimab BLA accepted for Priority Review.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2020, Incyte lost $0.11.
- Revenue$2.67B100.0%
- Cost of revenue−$131.3M4.9%
- Gross profit$2.54B95.1%
- Operating costs−$2.80B105.0%
- Operating income−$263.7M9.9%
- Interest, other & tax−$32.0M1.2%
- Net income−$295.7M11.1%
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 9, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $2.67B$2.16B | +23.5% |
| Cost of Revenue | $131.33M$114.25M | +14.9% |
| Gross Profit | $2.54B$2.04B | +24.0% |
| R&D Expenses | $2.22B$1.15B | +92.0% |
| SG&A Expenses | $516.92M$468.71M | +10.3% |
| Operating Expenses | $2.93B$1.76B | +66.8% |
| Operating Income | -$263.68M$402.01M | −165.6% |
| Interest Expense | $2.17M$1.85M | +17.2% |
| Net Income | -$295.70M$446.91M | −166.2% |
| EPS (Basic) | $-1.36$2.08 | −165.4% |
| EPS (Diluted) | $-1.36$2.05 | −166.3% |
| Shares Outstanding (Basic) | 218.07M214.91M | +1.5% |
| Shares Outstanding (Diluted) | 218.07M217.66M | +0.2% |
05—Questions
Frequently Asked Questions
How dependent is Incyte on JAKAFI?
The filing states that Incyte depends heavily on JAKAFI (ruxolitinib), with JAKAFI product revenues of $1.94 billion in 2020, and that JAKAFI product sales are expected to continue to contribute a significant percentage of total revenues over the next several years. JAKAFI faces potential generic competition, and an ANDA filer has challenged patents covering ruxolitinib phosphate.
Why did Incyte report a net loss in 2020 after a profit in 2019?
The filing attributes the swing mainly to research and development expense of $2.22 billion, up from $1.15 billion, which includes $976.1 million of upfront and milestone expenses under collaboration agreements, including $804.5 million of upfront consideration paid to MorphoSys. Collaboration loss sharing of $42.8 million and higher selling, general and administrative expense also contributed.
What is the status of Incyte's pipeline and near-term regulatory decisions?
The filing reports an sNDA for ruxolitinib in steroid-refractory chronic GVHD has been submitted, an NDA for ruxolitinib cream in atopic dermatitis was submitted in December 2020 with a priority review voucher, and a BLA for retifanlimab in previously treated anal canal squamous cell carcinoma was accepted for Priority Review in January 2021. Phase III trials are ongoing for several other programs.
Are there material legal proceedings disclosed?
Incyte discloses a civil investigative demand from the U.S. Department of Justice received in December 2018 concerning its speaker and patient assistance programs, and a qui tam complaint unsealed in November 2019. A Motion for Summary Judgment was filed in November 2020, and the company states it cannot predict the outcome and has recorded no reserve for these matters as of December 31, 2020.
What was the effect of COVID-19 on Incyte's results?
The filing states that, to date, Incyte had not experienced a material effect on the results of its commercial operations or manufacturing supply chain. It notes that new patient starts for JAKAFI decreased during shelter-in-place measures, and that clinical trial enrollment and monitoring were affected. The company says the ultimate long-term impact cannot currently be predicted.
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