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Incyte(INCY) - 2022 Q4 - Annual Report
INCYIncyte(INCY)2023-02-06 16:00
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Financial Performance - Total revenues for 2022 increased to 3,394,635K,up13.73,394,635K, up 13.7% from 2,986,267K in 2021[445] - Net income for 2022 decreased to 340,660K,down64.1340,660K, down 64.1% from 948,581K in 2021[445] - Cash and cash equivalents increased to 2,951,422Kin2022,up43.52,951,422K in 2022, up 43.5% from 2,057,440K in 2021[442] - Research and development expenses for 2022 were 1,585,936K,up8.81,585,936K, up 8.8% from 1,458,179K in 2021[445] - Product revenues, net for 2022 increased to 2,746,897K,up18.32,746,897K, up 18.3% from 2,322,012K in 2021[445] - Total assets for 2022 increased to 5,840,984K,up18.45,840,984K, up 18.4% from 4,933,352K in 2021[442] - Accumulated deficit improved to (437,214)Kin2022,comparedto(437,214)K in 2022, compared to (777,874)K in 2021[450] - Basic net income per share for 2022 was 1.53,down64.41.53, down 64.4% from 4.30 in 2021[445] - Total stockholders' equity for 2022 increased to 4,370,119K,up15.94,370,119K, up 15.9% from 3,770,004K in 2021[442] - Comprehensive income for 2022 was 375,183K,down60.3375,183K, down 60.3% from 944,487K in 2021[447] - Net income for 2022 was 340.66million,asignificantdecreasefrom340.66 million, a significant decrease from 948.58 million in 2021, and a recovery from a loss of 295.70millionin2020[452]−Netcashprovidedbyoperatingactivitiesin2022was295.70 million in 2020[452] - Net cash provided by operating activities in 2022 was 969.94 million, up from 749.49millionin2021andasignificantimprovementfromanetcashusedinoperatingactivitiesof749.49 million in 2021 and a significant improvement from a net cash used in operating activities of 124.60 million in 2020[452] - Depreciation and amortization expenses increased to 67.86millionin2022,comparedto67.86 million in 2022, compared to 57.84 million in 2021 and 51.81millionin2020[452]−Stock−basedcompensationroseto51.81 million in 2020[452] - Stock-based compensation rose to 188.42 million in 2022, up from 183.01millionin2021and183.01 million in 2021 and 177.88 million in 2020[452] - Net cash used in investing activities decreased to 78.54millionin2022,comparedto78.54 million in 2022, compared to 207.70 million in 2021 and 269.00millionin2020[452]−Cash,cashequivalents,andrestrictedcashattheendof2022stoodat269.00 million in 2020[452] - Cash, cash equivalents, and restricted cash at the end of 2022 stood at 2.95 billion, up from 2.06billionin2021and2.06 billion in 2021 and 1.51 billion in 2020[452] - Income taxes paid in 2022 were 136.24million,significantlyhigherthan136.24 million, significantly higher than 67.73 million in 2021 and 70.71millionin2020[452]−Totalproductrevenuesfor2022were70.71 million in 2020[452] - Total product revenues for 2022 were 2,746.9 million, with JAKAFI contributing 2,409.2million,ICLUSIG2,409.2 million, ICLUSIG 105.8 million, PEMAZYRE 83.4million,MINJUVI83.4 million, MINJUVI 19.7 million, and OPZELURA 128.7million[503]−Totalproductroyaltyrevenuesfor2022were128.7 million[503] - Total product royalty revenues for 2022 were 482.7 million, with JAKAVI contributing 331.6million,OLUMIANT331.6 million, OLUMIANT 134.5 million, TABRECTA 15.4million,andPEMAZYRE15.4 million, and PEMAZYRE 1.2 million[503] - Milestone and contract revenues for 2022 were 165.0million,comparedto165.0 million, compared to 95.0 million in 2021 and 205.0millionin2020[503]−Thefairvalueofacquisition−relatedcontingentconsiderationdecreasedto205.0 million in 2020[503] - The fair value of acquisition-related contingent consideration decreased to 221.0 million in 2022 from 244.0millionin2021,primarilyduetoupdatedprojectionsoffuturenetrevenuesofICLUSIG[512]−Thecompany′scashandcashequivalentsincreasedto244.0 million in 2021, primarily due to updated projections of future net revenues of ICLUSIG[512] - The company's cash and cash equivalents increased to 2,951.4 million in 2022 from 2,057.4millionin2021[511]−Debtsecurities(government)hadanestimatedfairvalueof2,057.4 million in 2021[511] - Debt securities (government) had an estimated fair value of 287.5 million in 2022, down from 290.8millionin2021[506]−Longterminvestmentsdecreasedto290.8 million in 2021[506] - Long term investments decreased to 133.7 million in 2022 from 221.3millionin2021[511]−Thecompany′stotalassetsmeasuredatfairvaluewere221.3 million in 2021[511] - The company's total assets measured at fair value were 3,372.6 million in 2022, up from 2,569.5millionin2021[511]−Thecompany′stotalliabilitiesmeasuredatfairvaluewere2,569.5 million in 2021[511] - The company's total liabilities measured at fair value were 221.0 million in 2022, down from 244.0millionin2021[512]−Contingentconsiderationearnedbutnotyetpaidwas244.0 million in 2021[512] - Contingent consideration earned but not yet paid was 9.3 million as of December 31, 2022, compared to 19.6millionin2021[513]−Collaborationpartnerscomprised2019.6 million in 2021[513] - Collaboration partners comprised 20% and 36% of the accounts receivable balance as of December 31, 2022 and 2021, respectively[515] - Customer A accounted for 19% of total net product revenues in 2022, up from 18% in 2021[516] - Total inventory increased to 120.96 million as of December 31, 2022, from 56.94millionin2021[521]−Thecompanyrecognized56.94 million in 2021[521] - The company recognized 157.0 million in development milestones, 340.0millioninregulatorymilestones,and340.0 million in regulatory milestones, and 200.0 million in sales milestones under the Novartis agreement through December 31, 2022[524] - Royalties on JAKAVI net sales outside the U.S. totaled 331.6millionin2022,comparedto331.6 million in 2022, compared to 338.0 million in 2021[530] - The company recognized 70.0millioninmilestoneandcontractrevenueundertheLillyagreementin2022,upfrom70.0 million in milestone and contract revenue under the Lilly agreement in 2022, up from 50.0 million in 2021[537] - The company recorded 134.5millioninproductroyaltyrevenuesrelatedtoLilly′snetsalesofOLUMIANToutsidetheU.S.in2022,downfrom134.5 million in product royalty revenues related to Lilly's net sales of OLUMIANT outside the U.S. in 2022, down from 220.9 million in 2021[537] - The company made a 20.0millionmilestonepaymenttoLillyinMarch2022followingtheEuropeanMedicinesAgency′spositiverecommendationforruxolitinibintheGVHDfield[538]−Agenusiseligibletoreceiveuptoanadditional20.0 million milestone payment to Lilly in March 2022 following the European Medicines Agency's positive recommendation for ruxolitinib in the GVHD field[538] - Agenus is eligible to receive up to an additional 500.0 million in future contingent development, regulatory, and commercialization milestones across all programs in the collaboration[540] - The fair market value of the long-term investment in Agenus as of December 31, 2022, was 29.0million,downfrom29.0 million, down from 38.9 million in 2021[541] - Merus is eligible to receive up to 100.0millioninfuturecontingentdevelopmentandregulatorymilestonesandupto100.0 million in future contingent development and regulatory milestones and up to 250.0 million in commercialization milestones for programs without co-funding rights[545] - The fair market value of the long-term investment in Merus as of December 31, 2022, was 54.9million,downfrom54.9 million, down from 112.9 million in 2021[547] - MacroGenics is eligible to receive up to an additional 335.0millioninfuturecontingentdevelopmentandregulatorymilestonesandupto335.0 million in future contingent development and regulatory milestones and up to 330.0 million in sales milestones[554] - Research and development expenses under the MacroGenics agreement totaled 89.2millionfortheyearendedDecember31,2022[556]−Syrosiseligibletoreceiveupto89.2 million for the year ended December 31, 2022[556] - Syros is eligible to receive up to 54.0 million in target selection and option exercise fees and up to 50.0millionindevelopmentandregulatorymilestonesforeachofthesevenvalidatedtargets[557]−Thefairmarketvalueofthelong−terminvestmentinSyrosasofDecember31,2022,was50.0 million in development and regulatory milestones for each of the seven validated targets[557] - The fair market value of the long-term investment in Syros as of December 31, 2022, was 0.3 million, down from 3.1millionin2021[558]−ZaiLabterminatedtheagreementforINCMGA0012developmentandcommercializationrightsinmainlandChina,HongKong,Macau,andTaiwan,effectiveJanuary11,2023[560]−Thefairmarketvalueofthelong−terminvestmentinCalitheraasofDecember31,2022,was3.1 million in 2021[558] - Zai Lab terminated the agreement for INCMGA0012 development and commercialization rights in mainland China, Hong Kong, Macau, and Taiwan, effective January 11, 2023[560] - The fair market value of the long-term investment in Calithera as of December 31, 2022, was 0.3 million, down from 1.1millionin2021[550]−Thecompanyrecordeda501.1 million in 2021[550] - The company recorded a 50% share of US losses for tafasitamab commercialization: 8.0 million in 2022, 37.0millionin2021,and37.0 million in 2021, and 42.8 million in 2020. R&D expenses for tafasitamab were 99.7millionin2022,99.7 million in 2022, 77.0 million in 2021, and 88.2millionin2020[566]−ThecompanyenteredacollaborationwithSyndaxforaxatilimab,payinganupfront88.2 million in 2020[566] - The company entered a collaboration with Syndax for axatilimab, paying an upfront 117.0 million in 2021. Syndax is eligible for up to 220.0millionindevelopmentmilestonesand220.0 million in development milestones and 230.0 million in sales milestones, with royalties ranging from mid-teens to low double digits[569] - The company purchased 1.4 million shares of Syndax common stock for 35.0millionin2021,withafairmarketvalueof35.0 million in 2021, with a fair market value of 36.2 million as of December 31, 2022[570] - The company entered a collaboration with CMS Aesthetics for ruxolitinib cream in Greater China and Southeast Asia, receiving an upfront payment of 30.0millionin2022[572]−Propertyandequipment,net,totaled30.0 million in 2022[572] - Property and equipment, net, totaled 739.3 million as of December 31, 2022, up from 723.9millionin2021.Depreciationexpensewas723.9 million in 2021. Depreciation expense was 46.3 million in 2022, 36.3millionin2021,and36.3 million in 2021, and 29.6 million in 2020[574][576] - The company capitalized 158.2millioninbuildingandofficeequipmentforitsnewlaboratoryandofficebuildinginWilmington,Delaware,completedinDecember2021[577]−Thecompany′stotalleaseliabilitiesasofDecember31,2022,were158.2 million in building and office equipment for its new laboratory and office building in Wilmington, Delaware, completed in December 2021[577] - The company's total lease liabilities as of December 31, 2022, were 55.6 million, with a weighted average lease term of 12.0 years for finance leases and 5.5 years for operating leases[581][584] - Operating lease expenses for 2022 were 11.7million,adecreasefrom11.7 million, a decrease from 14.2 million in 2021 and 12.5millionin2020[587]−Amortizationexpenseforintangibleassetswas12.5 million in 2020[587] - Amortization expense for intangible assets was 21.5 million annually for 2022, 2021, and 2020, with future amortization projected at 21.536millionperyearthrough2027[588]−Totalaccruedandothercurrentliabilitiesincreasedto21.536 million per year through 2027[588] - Total accrued and other current liabilities increased to 701.053 million in 2022 from 533.595millionin2021,drivenbyhigherroyalties(533.595 million in 2021, driven by higher royalties (263.466 million) and sales allowances (192.133million)[590]−Thecompanyhas5,428,932sharesofcommonstockavailableforfutureissuanceunderstockcompensationplansasofDecember31,2022[592]−The2010StockIncentivePlanwasamendedinMay2021toincreasereservedsharesfrom44,453,475to53,953,475[594]FinancialRisksandLiabilities−Thecompanyhadanaccumulateddeficitof192.133 million)[590] - The company has 5,428,932 shares of common stock available for future issuance under stock compensation plans as of December 31, 2022[592] - The 2010 Stock Incentive Plan was amended in May 2021 to increase reserved shares from 44,453,475 to 53,953,475[594] Financial Risks and Liabilities - The company had an accumulated deficit of 0.4 billion as of December 31, 2022[309] - The company may need additional capital in the future, which could impact research and development or commercialization efforts[313] - The company's marketable securities and long-term investments are subject to risks that could adversely affect its financial position[315] - The company's marketable securities were valued at 287.5millionasofDecember31,2022,primarilycomposedofU.S.governmentsecurities[426]−Thecompany′sacquisition−relatedcontingentconsiderationliabilitywas287.5 million as of December 31, 2022, primarily composed of U.S. government securities[426] - The company's acquisition-related contingent consideration liability was 221.0 million as of December 31, 2022, subject to significant estimation uncertainty[439] - Liabilities related to sales allowances, including Medicaid Drug Rebate Program rebates, totaled 192.1millionasofDecember31,2022[436]−Thecompany′sITsystemsarevulnerabletodisruptions,maliciousintrusion,andcybersecurityrisks,exacerbatedbyremoteworkduetoCOVID−19[334]−Thecompany′srelianceonthird−partyITsystemsandsocialmediausageincreasesrisksofdatabreachesandreputationaldamage[336][339]−Thecompany′sITsystemenhancementsmaynotresultinproductivityimprovementssufficienttooutweighimplementationcosts[335]−Thecompany′smarketablesecuritiesconsistofinvestmentsinU.S.governmentdebtsecurities,classifiedasavailable−for−saleandcarriedatfairvalue[461]−Inventorycostsareprimarilyaccountedforunderthespecificidentificationmethod,withinventorycapitalizedafterregulatoryapproval[463]−Thecompanyevaluatespotentialexcessinventorybyanalyzingcurrentandfutureproductdemandrelativetotheremainingproductshelflife,whichisapproximately36monthsformostproducts[464]−GoodwillimpairmentassessmentcompletedasofOctober1,2022,withnoimpairmentidentified[472]−ValuationallowanceonthemajorityofU.S.deferredtaxassetsreleasedasofDecember31,2021[473]−RevenuerecognitionfollowsASC606,withrevenuerecognizedwhencontrolofgoodsorservicesistransferredtocustomers[477]−Revenuerecognitionnetofallowancesforcustomercredits,includingrebates,chargebacks,discounts,andgovernmentrebates[479]−Fullbuy−downprogramsforOPZELURAendedeffectiveJanuary31,2023[481]−MedicarePartDcoveragegapfundingincreasedby30192.1 million as of December 31, 2022[436] - The company's IT systems are vulnerable to disruptions, malicious intrusion, and cybersecurity risks, exacerbated by remote work due to COVID-19[334] - The company's reliance on third-party IT systems and social media usage increases risks of data breaches and reputational damage[336][339] - The company's IT system enhancements may not result in productivity improvements sufficient to outweigh implementation costs[335] - The company's marketable securities consist of investments in U.S. government debt securities, classified as available-for-sale and carried at fair value[461] - Inventory costs are primarily accounted for under the specific identification method, with inventory capitalized after regulatory approval[463] - The company evaluates potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life, which is approximately 36 months for most products[464] - Goodwill impairment assessment completed as of October 1, 2022, with no impairment identified[472] - Valuation allowance on the majority of U.S. deferred tax assets released as of December 31, 2021[473] - Revenue recognition follows ASC 606, with revenue recognized when control of goods or services is transferred to customers[477] - Revenue recognition net of allowances for customer credits, including rebates, chargebacks, discounts, and government rebates[479] - Full buy-down programs for OPZELURA ended effective January 31, 2023[481] - Medicare Part D coverage gap funding increased by 30% starting January 2020 due to changes in the True Out of Pocket (TrOOP) calculation methodology[483] - Royalty revenues recognized from sales of JAKAVI, OLUMIANT, TABRECTA, and PEMAZYRE by Novartis, Lilly, and Innovent[485] - Milestone revenues recognized upon achievement of pre-specified developmental or regulatory events[489] - Research and development costs expensed as incurred, including collaboration payments and clinical trial expenses[494] - Advertising expenses for 2022 were 196.4 million, a significant increase from 66.0millionin2021and66.0 million in 2021 and 28.9 million in 2020[497] Intellectual Property and Legal Risks - The company faces risks related to intellectual property, including potential infringement claims and the need to protect proprietary information[322][325] - The company may be involved in future lawsuits or legal proceedings, which could be costly and disrupt drug discovery and development efforts[324] - The company's patents may be challenged, invalidated, or fail to provide competitive advantages, potentially impacting revenues[325][331] - The company's foreign patent protection is uncertain and costly, with potential loss of rights in certain jurisdictions[333] - The company's patent litigation risks have increased due to recent U.S. Supreme Court rulings on reverse payment settlements[332] Regulatory and Tax Risks - Changes in tax laws, such as the Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022, could adversely affect the company's tax liability and financial condition[319] - The company faces potential fines of up to €20 million or 4% of annual global revenues for noncompliance with the GDPR[338] Research and Development - The company anticipates increased expenditures on drug discovery and development, including preclinical tests and clinical trials[310] - The company has not generated significant revenues from drug products other than JAKAFI and cannot assure substantial revenues from drug candidates like ICLUSIG, PEMAZYRE, MONJUVI/MINJUVI, and OPZELURA[311] - The company is implementing a new enterprise resource planning system, which involves substantial capital expenditures and operational risks[335] - The company completed the acquisition of Villaris Therapeutics for an upfront payment of 70.3million,withpotentialmilestonepaymentsupto70.3 million, with potential milestone payments up to 1.05 billion[518][520] - The company received exclusive commercialization rights outside the US for tafasitamab, with co-commercialization rights in the US shared with MorphoSys. The company is responsible for 55% of global and US-specific clinical trial costs, while MorphoSys covers 45%[562] - The company paid MorphoSys an upfront non-refundable payment of 750.0millionin2020,withpotentialfuturemilestonesofupto750.0 million in 2020, with potential future milestones of up to 737.5 million for development and regulatory, and 315.0millionforcommercialization.Royaltiesrangefrommid−teenstomid−twentiesonnetsalesoutsidetheUS[563]−ThecompanypurchasedMorphoSysADSsfor315.0 million for commercialization. Royalties range from mid-teens to mid-twenties on net sales outside the US[563] - The company purchased MorphoSys ADSs for 150.0 million, with a fair market value of 13.0millionasofDecember31,2022,downfrom13.0 million as of December 31, 2022, down from 34.2 million in 2021[564]