01—Abstract
Summary
Summary of the 10-K filed February 13, 2024. Cited figures are marked; the original filing is the authoritative source.
Incyte Corporation's Form 10-K for fiscal 2023 reports total revenues of $3.70 billiona for the year ended December 31, 2023, up from $3.39 billion in 2022.
Product revenues, net, were $3.17 billionb, led by JAKAFI at $2.59 billion, while OPZELURA grew to $337.9 million from $128.7 million. Product royalty revenues were $523.4 million and milestone and contract revenues were $7.0 million, down from $165.0 million in 2022. Net income was $597.6 million, or $2.65 per diluted share, compared with $340.7 million, or $1.52 per diluted share, in 2022.
The effective tax rate was 28.4%, versus 35.6% in the prior year. The company is heavily dependent on JAKAFI (ruxolitinib), which the filing says it expects to continue to contribute a significant percentage of total revenues. The filing also flags pending generic challenges to JAKAFI and OPZELURA, a U.S. ANDA challenge to OPZELURA, and a lawsuit against CMS over the OPZELURA line-extension treatment, for which about $59.5 millionc has been accrued.
Cash, cash equivalents and marketable securities were $3.66 billiond at year-end, against no outstanding borrowings under a $500.0 million revolving credit facility. Pipeline activity during the year included the FDA approval of ZYNYZ for Merkel cell carcinoma, a BLA submission for axatilimab in chronic GVHD, and the February 2024 purchase agreement with MorphoSys that gave Incyte exclusive global rights to tafasitamab. The company also disclosed a $1.4 billion Swiss income tax credit, which it fully reserved with a valuation allowance.
02—Key points
Key Highlights
- Total revenues were $3,695.6 million in 2023, up from $3,394.6 million in 2022.
- JAKAFI net revenues were $2,593.7 million in 2023 versus $2,409.2 million in 2022; OPZELURA net revenues rose to $337.9 million from $128.7 million.
- Net income was $597.6 million, or $2.65 per diluted share, compared with $340.7 million, or $1.52 per diluted share, in 2022.
- Cash, cash equivalents and marketable securities totaled $3.66 billion at December 31, 2023, with no borrowings outstanding under the $500.0 million revolving credit facility.
- Milestone and contract revenues fell to $7.0 million from $165.0 million, reflecting the absence of large 2022 regulatory milestones.
- The company recorded a $59.5 million accrual tied to its CMS lawsuit over whether OPZELURA is a line extension of JAKAFI for Medicaid rebate purposes.
- In February 2024, Incyte acquired exclusive global rights to tafasitamab (MONJUVI/MINJUVI) from MorphoSys for a $25.0 million payment, terminating the prior collaboration.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Incyte kept $0.16.
- Revenue$3.70B100.0%
- Cost of revenue−$255.0M6.9%
- Gross profit$3.44B93.1%
- Operating costs−$2.82B76.3%
- Operating income$620.5M16.8%
- Interest, other & tax−$22.9M0.6%
- Net income$597.6M16.2%
Where FY2023 revenue went
$3.70B- R&D: $1.63B, 44% of revenue
- SG&A: $1.16B, 31% of revenue
- Net income: $597.6M, 16% of revenue
- Cost of revenue: $255.0M, 6.9% of revenue
- Other operating costs: $36.9M, 1.0% of revenue
- Interest, other & tax: $22.9M, 0.6% of revenue
Kept 16% as net incomeOther operating costs $36.9M · 1.0%Interest, other & tax $22.9M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 13, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $3.70B$3.39B | +8.9% |
| Cost of Revenue | $254.99M$207.00M | +23.2% |
| Gross Profit | $3.44B$3.19B | +7.9% |
| R&D Expenses | $1.63B$1.59B | +2.6% |
| SG&A Expenses | $1.16B$1.00B | +15.3% |
| Operating Expenses | $3.08B$2.82B | +9.2% |
| Operating Income | $620.52M$579.44M | +7.1% |
| Interest Expense | $2.55M$2.67M | −4.3% |
| Net Income | $597.60M$340.70M | +75.4% |
| EPS (Basic) | $2.67$1.53 | +74.5% |
| EPS (Diluted) | $2.65$1.52 | +74.3% |
| Shares Outstanding (Basic) | 223.63M222.00M | +0.7% |
| Shares Outstanding (Diluted) | 225.93M223.96M | +0.9% |
05—Questions
Frequently Asked Questions
How dependent is Incyte on JAKAFI?
The filing states that JAKAFI product sales are expected to continue to contribute a significant percentage of total revenues over the next several years. JAKAFI net revenues were $2,593.7 million in 2023, the largest component of the company's $3,695.6 million in total revenues. The filing also notes that generic challenges to ruxolitinib patents have been made, though the composition-of-matter patent is cited as expiring in December 2027.
What drove the change in net income in 2023?
Net income rose to $597.6 million from $340.7 million. The filing attributes the increase to higher product revenues and a $172.3 million increase in interest income and other, net, primarily from higher interest rates on cash and securities. Provision for income taxes rose to $236.6 million from $188.5 million, and a $43.9 million unrealized gain on long-term investments compared with a $87.6 million unrealized loss in 2022.
What are the main litigation or regulatory risks disclosed?
The filing discloses a lawsuit against CMS challenging a regulation that could treat OPZELURA as a line extension of JAKAFI under the Medicaid rebate program, with about $59.5 million accrued. It also discloses an ongoing contract dispute with Novartis over royalties on U.S. JAKAFI net sales, with $375.6 million of accrued royalties at year-end, and a DOJ settlement of $12.6 million reached in May 2021 over patient assistance and speaker programs.
What is the status of key pipeline and regulatory programs?
ZYNYZ received FDA accelerated approval for Merkel cell carcinoma in March 2023, and a BLA for axatilimab in chronic GVHD was submitted in December 2023. The FDA issued a complete response letter for ruxolitinib XR tablets in March 2023, and Incyte agreed on the requirements to address it in December 2023. The filing also notes that OPZELURA was approved for vitiligo in the U.S. in July 2022 and the EU in April 2023.
How strong is the balance sheet and liquidity position?
At December 31, 2023, cash, cash equivalents and marketable securities were $3.66 billion, up from $3.24 billion a year earlier, and working capital was $3.41 billion. Operating cash flow fell to $496.5 million from $969.9 million, mainly due to working capital changes. The company stated that it believes its cash flows and existing resources will be adequate for the foreseeable future.
06—Continue