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Incyte Reports 2016 Third-Quarter Financial Results and Updates Key Clinical Programs

WILMINGTON, Del.--(BUSINESS WIRE)--Incyte Corporation (Nasdaq: INCY) today reports 2016 third-quarter financial results, including strong revenue growth driven by increased sales of Jakafi® (ruxolitinib) in the U.S., Iclusig® (ponatinib) in Europe and royalties from ex-U.S. sales of Jakavi® (ruxolitinib) by Novartis. In September, Jakafi was included as a recommended treatment for appropriate patients with myelofibrosis in the latest National Comprehensive Cancer Network® (NCCN®) Clinical Practice Guidelines in Oncology, underscoring the important and long-term clinical benefits seen in patients treated with Jakafi.

“Our commercial footprint has expanded to include Europe in addition to the U.S., and as our portfolio matures, we are in an excellent position to build Incyte into a world-class biopharmaceutical organization.”

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The Company also highlighted progress being made across its clinical portfolio. Within the targeted therapies segment, two Phase 2 trials of INCB54828, a selective FGFR inhibitor, are now open for recruitment in bladder cancer and cholangiocarcinoma, respectively. In immuno-oncology, updated Phase 1 data from ECHO-202 were recently presented at the ESMO Congress, supporting the therapeutic profile of epacadostat plus pembrolizumab for the first-line treatment of patients with advanced or metastatic melanoma.

“Incyte continues to deliver dynamic sales growth from Jakafi in the U.S. and now from Iclusig in Europe. With a potential additional future source of revenue from baricitinib, we are able to make significant investments in opportunities across our broad and diverse clinical portfolio,” stated Hervé Hoppenot, Incyte’s Chief Executive Officer. “Our commercial footprint has expanded to include Europe in addition to the U.S., and as our portfolio matures, we are in an excellent position to build Incyte into a world-class biopharmaceutical organization.”

2016 Third-Quarter Financial Results

Revenues For the quarter ended September 30, 2016, net product revenues of Jakafi were $224 million as compared to $161 million for the same period in 2015, representing 39 percent growth. For the nine months ended September 30, 2016, net product revenues of Jakafi were $615 million as compared to $419 million for the same period in 2015, representing 47 percent growth. For the quarter and four month period ended September 30, 2016, net product revenues of Iclusig were $13 million and $17 million, respectively1. For the quarter and nine months ended September 30, 2016, product royalties from sales of Jakavi outside of the United States received from Novartis were $30 million and $77 million, respectively, as compared to $18 million and $51 million, respectively, for the same periods in 2015. For the quarter and nine months ended September 30, 2016, contract revenues were $3 million and $70 million, respectively, as compared to $8 million and $40 million, respectively, for the same periods in 2015. The increase in contract revenues for the nine months ended September 30, 2016 relates to milestone payments earned. For the quarter ended September 30, 2016, total revenues were $269 million as compared to $188 million for the same period in 2015. For the nine months ended September 30, 2016, total revenues were $779 million as compared to $510 million for the same period in 2015.

Year Over Year Revenue Growth
(in thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, % September 30, %
2016 2015 Change 2016 2015 Change
Revenues:
Jakafi net product revenue $ 223,892 $ 161,259 39 % $ 615,285 $ 418,994 47 %
Iclusig net product revenue 12,731 - - 16,721 - -
Product royalty revenues 29,626 18,138 63 % 77,486 51,175 51 %
Contract revenues 3,214 8,214 - 69,643 39,643 -
Other revenues 6 - - 86 58 -
Total revenues $ 269,469 $ 187,611 44 % $ 779,221 $ 509,870 53 %

In October 2016, the Company was notified by Novartis that a $40 million milestone payment obligation to Incyte related to reimbursement of Jakavi in Europe for polycythemia vera had been triggered. The Company expects to record this payment as contract revenue during the fourth quarter of 2016.

Research and development expenses Research and development expenses for the quarter and nine months ended September 30, 2016 were $143 million and $420 million, respectively, as compared to $132 million and $363 million, respectively, for the same periods in 2015. Included in research and development expenses for the quarter and nine months ended September 30, 2016 were non-cash expenses related to equity awards to our employees of $16 million and $43 million, respectively. The increase in research and development expenses for the nine months ended September 30, 2016 was primarily due to the expansion of the Company’s clinical portfolio.

Selling, general and administrative expenses Selling, general and administrative expenses for the quarter and nine months ended September 30, 2016 were $76 million and $207 million, respectively, as compared to $48 million and $144 million, respectively, for the same periods in 2015. Included in selling, general and administrative expenses for the quarter and nine months ended September 30, 2016 were non-cash expenses related to equity awards to our employees of $10 million and $26 million, respectively. Increased selling, general and administrative expenses are driven primarily by additional costs related to the commercialization of Jakafi.

Change in fair value of acquisition-related contingent consideration The change in fair value of acquisition-related contingent considerationof $8 million and $10 million for the quarter and nine months ended September 30, 2016 represents the fair market value adjustments of the Company’s contingent liability related to the acquisition of the European business of ARIAD Pharmaceuticals, Inc.

Unrealized gain on long term investment...


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