Incyte Reports 2021 Fourth Quarter and Year-End Financial Results, and Provides 2022 Financial Guidance and Updates on Key Clinical Programs

• Total product and royalty revenues of $813 million (+20%) in Q4’21 and $2.891 billion (+17%) in FY’21
• Jakafi^® (ruxolitinib) net product revenues of $592 million (+15%) in Q4’21 and $2.135 billion (+10%) in FY’21; Jakafi guidance range of $2.3 to $2.4 billion for 2022
• Successful U.S. launch of Opzelura™ (ruxolitinib) cream in atopic dermatitis with nearly 19,000 patients treated from launch (October 11^th) through the end of the year
• Vitiligo is the next substantial growth opportunity for ruxolitinib cream – under Priority Review in the U.S. and under review in Europe

Conference Call and Webcast Scheduled Today at 8:00 a.m. EST

Incyte (Nasdaq:INCY) today reports 2021 fourth quarter financial results, provides 2022 financial guidance and a status update on the Company’s clinical development portfolio.

“2021 was a year of important accomplishments for Incyte. Growth of product and royalty revenues was strong, led by robust demand for Jakafi^® (ruxolitinib), continued uptake of Pemazyre^® (pemigatinib) in the U.S., and a rapidly growing royalty revenue stream. Throughout the year, we significantly expanded our commercial portfolio with several new approvals, including Pemazyre^® (pemigatinib) in cholangiocarcinoma (CCA) in Europe and Japan; Minjuvi^® (tafasitamab) in relapsed or refractory diffuse large B-cell lymphoma (DLBCL) in Europe; and, in the U.S., both Jakafi in steroid-refractory chronic graft-versus-host disease (GVHD) and Opzelura™ (ruxolitinib) cream in atopic dermatitis,” said Hervé Hoppenot, Chief Executive Officer, Incyte. “Our launch of Opzelura has been very successful thus far. Nearly 19,000 patients were treated in the fourth quarter and feedback from both dermatologists and patients has been very positive. Importantly, we have also made significant progress towards ensuring optimal patient access to Opzelura.”

Portfolio Updates

MPNs and GVHD – key highlights

Axatilimab (anti-CSF-1R monoclonal antibody) in chronic GVHD: In December, updated positive data from the Phase 1/2 trial evaluating axatilimab as a monotherapy in patients with recurrent or refractory chronic GVHD despite two or more prior lines of therapy were presented at ASH. A 68% overall response rate and broad clinical benefit across multiple organs were observed at doses being assessed in the pivotal AGAVE-201 trial. Additional trials of axatilimab are planned in patients with steroid-refractory chronic GVHD, including a Phase 2 trial in combination with a JAK inhibitor.

LIMBER (Leadership In MPNs BEyond Ruxolitinib) program: The new drug application (NDA) for once-daily ruxolitinib (QD) is on track for submission in the first half of this year. Two Phase 3 trials of ruxolitinib in combination with parsaclisib as a first-line therapy for patients with MF and as a therapy for MF patients with a suboptimal response to ruxolitinib monotherapy are both underway. Combination trials of ruxolitinib with INCB57643 (BET) and INCB00928 (ALK2) are in preparation with initial data expected later this year.

Other Hematology/Oncology – key highlights

Parsaclisib in warm autoimmune hemolytic anemia (wAIHA): Following positive Phase 2 results, a Phase 3 randomized trial evaluating the efficacy and safety of parsaclisib in adults with wAIHA has been initiated. There are currently no FDA approved treatments for wAIHA in the United States, and there are approximately 1 in 8,000 patients living with wAIHA, of which 30% are treatable.

Parsaclisib in non-Hodgkin lymphomas: In January, Incyte announced the withdrawal of the New Drug Application (NDA) in the United States for parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma (FL), marginal zone lymphoma (MZL) and mantle cell lymphoma (MCL). The decision to withdraw the NDA followed discussions with U.S. Food and Drug Administration (FDA) regarding confirmatory studies that Incyte determined cannot be completed within a reasonable period to support an accelerated approval. The withdrawal of the NDA is a business decision and is not related to any changes in either the efficacy or safety of parsaclisib. The decision impacts only the FL, MZL and MCL indications in the U.S., and does not affect other ongoing clinical trials in the U.S. or other countries. An MAA submission for parsaclisib in MZL is under review with the EMA.

Inflammation and Autoimmunity (IAI) – key highlights

Dermatology

Opzelura launch in AD in the U.S.: In October, Incyte launched its first dermatology product with the FDA approval of Opzelura, a novel cream formulation of Incyte’s selective JAK1/JAK2 inhibitor ruxolitinib, in AD. Nearly 19,000 new patients started Opzelura in the fourth quarter and feedback from dermatologists and patients has been very positive with efficacy, and in particular the rapid onset and itch reduction, as a top reason for prescribing.

Ruxolitinib cream in vitiligo in the U.S. and Europe: In December, Incyte announced the FDA accepted for Priority Review the supplemental New Drug Application (sNDA) for ruxolitinib cream 1.5% (Opzelura) as a potential treatment for adolescents and adults (age ≥12 years) with vitiligo. The Prescription Drug User Fee Act (PDUFA) target action date is April 18, 2022. The Marketing Authorization Application (MAA) is under review at the European Medicines Agency (EMA). Vitiligo represents the second substantial opportunity for Opzelura, an indication where there are no approved therapies for repigmentation. There are over 1.5 million patients living with vitiligo in the United States and over 2 million in Europe.

Ruxolitinib cream in pediatric AD: A Phase 3 randomized trial (TRuE-AD3) evaluating the efficacy and safety of ruxolitinib cream in children ages two to twelve years old with AD is currently ongoing.

Ruxolitinib cream in chronic hand eczema (CHE): Incyte continues to expand the development of ruxolitinib cream into new indications as part of its life cycle management strategy. A Phase 3 trial evaluating ruxolitinib cream in chronic hand eczema is being initiated.

INCB54707 (JAK1) in multiple dermatology indications: Incyte’s growing dermatology portfolio includes INCB54707, a JAK1 specific inhibitor, which is being evaluated across multiple indications. Phase 2 trials are currently ongoing in vitiligo, hidradenitis suppurativa and prurigo nodularis, with data in vitiligo and hidradenitis suppurativa expected later this year.

Discovery and early development – key highlights

Incyte’s portfolio of other earlier-stage clinical candidates is summarized below.

Oral PD-L1 Program: In November, Incyte presented data from a Phase 1 study evaluating INCB86550, the first in a series of oral PD-L1 inhibitors in the clinic. INCB86550 is the first oral PD-L1 inhibitor to demonstrate clinical efficacy. Early data were presented for INCB99280 and INCB99318, two other oral PD-L1 inhibitors which are also in the clinic.

MCLA-145 (CD137/PD-L1 bispecific antibody): In January, Incyte announced the decision to opt-out of the continued development of MCLA-145 as part of its ongoing portfolio prioritization and capital allocation review. Incyte will continue to collaborate with Merus and leverage their platform to develop a pipeline of novel agents, as the Company continues to hold worldwide development and commercialization rights to up to ten additional programs.

Partnered – key highlights

Baricitinib in alopecia areata (AA): Regulatory applications for baricitinib as a treatment for alopecia areata have been submitted in the U.S., Europe and Japan. Submissions were based on results from two pivotal Phase 3 trials (BRAVE-AA1 and BRAVE-AA2), which found once-daily baricitinib 4-mg was superior to placebo in achieving significant scalp hair regrowth as early as 24 weeks in adults with severe AA as defined by ≥50% scalp hair loss at baseline. Baricitinib has the potential to be a first-in-disease treatment for the millions of adults worldwide living with AA.

Baricitinib in AD in the U.S.: In January, Incyte and Lilly provided a regulatory update on the sNDA for baricitinib in AD. Based on ongoing discussions with the FDA, Lilly announced that alignment on the indicated population had not yet been reached and given the FDA’s position, there would be the possibility of a Complete Response Letter (CRL).

Baricitinib in systemic lupus erythematosus (SLE): In January, Incyte and Lilly announced the discontinuation of the Phase 3 development program for baricitinib in SLE based on top-line efficacy results from two pivotal Phase 3 trials (SLE-BRAVE-I and –II). The primary endpoint of SRI-4 response was reached in SLE-BRAVE-I but was not reached in SLE-BRAVE-II and key secondary endpoints were not met in either study.

2021 Fourth Quarter and Year-End Financial Results

The financial measures presented in this press release for the quarter and year ended December 31, 2021 and 2020 have been prepared by the Company in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), unless otherwise identified as a Non-GAAP financial measure. Management believes that Non-GAAP information is useful for investors, when considered in conjunction with Incyte’s GAAP disclosures. Management uses such information internally and externally for establishing budgets, operating goals and financial planning purposes. These metrics are also used to manage the Company’s business and monitor performance. The Company adjusts, where appropriate, for expenses in order to reflect the Company’s core operations. The Company believes these adjustments are useful to investors by providing an enhanced understanding of the financial performance of the Company’s core operations. The metrics have been adopted to align the Company with disclosures provided by industry peers.

Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used in conjunction with and to supplement Incyte’s operating results as reported under GAAP. Non-GAAP measures may be defined and calculated differently by other companies in our industry.

Financial Highlights

Revenue Details

Product and Royalty Revenues Product and royalty revenues for the quarter and year ended December 31, 2021 increased 20% and 17%, respectively, over the prior year comparative periods primarily as a result of increases in Jakafi and Pemazyre net product revenues, and higher product royalty revenues from Jakavi and Olumiant. Jakafi net product revenues for the quarter and year ended December 31, 2021 increased 15% and 10%, respectively, over the prior year comparative periods, primarily driven by growth in patient demand across all indications. The 113% growth in Olumiant royalty revenues for the quarter ended December 31, 2021 reflects an increase in net product sales as a result of the use of Olumiant for the treatment of COVID-19.

Operating Expenses

Research and development expenses GAAP and Non-GAAP research and development expense for the quarter ended December 31, 2021 increased 16% and 18%, respectively, compared to the same period in 2020 primarily due to the upfront consideration of $127 million related to our collaborative agreement with Syndax.

For the year ended December 31, 2021, GAAP and Non-GAAP research and development expense decreased 34% and 36%, respectively, compared to the year ended December 31, 2020 primarily due to lower upfront and milestone payments when compared to the prior year period which included upfront consideration of $805 million related to our collaborative agreement with MorphoSys and $120 million of expense related to the purchase of an FDA priority review voucher (“PRV”) utilized to accelerate the FDA review of Opzelura.

Selling, general and administrative expenses GAAP and Non-GAAP selling, general and administrative expenses for the quarter ended December 31, 2021 increased 35% and 37% respectively, and for the year ended December 31, 2021 increased 43% and 42%, respectively, compared to the same periods in 2020, primarily due to expenses related to the establishment of our dermatology commercial organization and activities to support the launch of Opzelura for the treatment of atopic dermatitis.

Other Financial Information

Operating income (loss) GAAP and Non-GAAP operating income for the quarter ended December 31, 2021 decreased compared to the same period in 2020, due to expenses related to the establishment of our dermatology commercial organization and the launch of Opzelura and upfront consideration related to our collaborative agreement with Syndax, partially offset by growth in total revenues. For the year ended December 31, 2021, Incyte recorded operating income compared to an operating loss for the same period in 2020, on both a GAAP and Non-GAAP basis, primarily due to growth in total revenues, lower upfront consideration and milestones related to our collaborative agreements, and the 2020 PRV purchase, partially offset by higher selling, general and administrative expenses.

(Benefit) provision for income taxes The company released the valuation allowance on the majority of its U.S. deferred tax assets in the fourth quarter of 2021 based on, among other things, its achievement of cumulative profitability over the last several years and its expectations regarding future profitability. The release of this valuation allowance accounts for a $569 million GAAP income tax benefit. This was partially offset by higher reported tax expense from 2021 operations.

Cash, cash equivalents and marketable securities position As of December 31, 2021 and 2020, cash, cash equivalents and marketable securities totaled $2.3 billion and $1.8 billion, respectively.

2022 Financial Guidance

Guidance does not include revenue from Opzelura or the impact of any potential future strategic transactions.

Conference Call and Webcast Information

Incyte will hold a conference call and webcast this morning at 8:00 a.m. ET. To access the conference call, please dial 877-407-3042 for domestic callers or 201-389-0864 for international callers. When prompted, provide the conference identification number, 13726298.

If you are unable to participate, a replay of the conference call will be available for 90 days. The replay dial-in number for the United States is 877-660-6853 and the dial-in number for international callers is 201-612-7415. To access the replay you will need the conference identification number, 13726298.

The conference call will also be webcast live and can be accessed at investor.incyte.com.

About Incyte

Incyte is a Wilmington, Delaware-based, global biopharmaceutical company focused on finding solutions for serious unmet medical needs through the discovery, development and commercialization of proprietary therapeutics. For additional information on Incyte, please visit Incyte.com and follow @Incyte.

About Jakafi^® (ruxolitinib)

Jakafi is a first-in-class JAK1/JAK2 inhibitor approved by the U.S. FDA for treatment of chronic GVHD after failure of one or two lines of systemic therapy in adult and pediatric patients 12 years and older.

Jakafi is also indicated for treatment of polycythemia vera (PV) in adults who have had an inadequate response to or are intolerant of hydroxyurea, in adults with intermediate or high-risk myelofibrosis (MF), including primary MF, post-polycythemia vera MF and post-essential thrombocythemia MF and for treatment of steroid-refractory acute GVHD in adult and pediatric patients 12 years and older.

Jakafi is marketed by Incyte in the United States and by Novartis as Jakavi^® (ruxolitinib) outside the United States. Jakafi is a registered trademark of Incyte Corporation. Jakavi is a registered trademark of Novartis AG in countries outside the United States.

About Opzelura™ (ruxolitinib) Cream

Opzelura (ruxolitinib) cream is a novel cream formulation of Incyte’s selective JAK1/JAK2 inhibitor ruxolitinib, is the first and only topical JAK inhibitor approved for use in the United States for the topical short-term and non-continuous chronic treatment of mild to moderate atopic dermatitis (AD) in non-immunocompromised patients 12 years of age and older whose disease is not adequately controlled with topical prescription therapies, or when those therapies are not advisable. Use of Opzelura in combination with therapeutic biologics, other JAK inhibitors, or potent immunosuppressants, such as azathioprine or cyclosporine, is not recommended.

In October 2021, Incyte announced the validation of the European Marketing Authorization Application (MAA) for ruxolitinib cream as a potential treatment for adolescents and adults (age >12 years) with non-segmental vitiligo with facial involvement. Additionally, in December 2021, Incyte announced the acceptance and priority review of the supplemental New Drug Application (sNDA) for ruxolitinib cream as a potential treatment for adolescents and adults (age ≥12 years) with vitiligo.

Incyte has worldwide rights for the development and commercialization of ruxolitinib cream, marketed in the United States as Opzelura.

Opzelura is a trademark of Incyte.

About Monjuvi^®/Minjuvi^® (tafasitamab)

Tafasitamab is a humanized Fc-modified cytolytic CD19 targeting monoclonal antibody. In 2010, MorphoSys licensed exclusive worldwide rights to develop and commercialize tafasitamab from Xencor, Inc. Tafasitamab incorporates an XmAb^® engineered Fc domain, which mediates B-cell lysis through apoptosis and immune effector mechanism including Antibody-Dependent Cell-Mediated Cytotoxicity (ADCC) and Antibody-Dependent Cellular Phagocytosis (ADCP).

In the United States, Monjuvi^® (tafasitamab-cxix) is approved by the U.S. Food and Drug Administration in combination with lenalidomide for the treatment of adult patients with relapsed or refractory DLBCL not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT). This indication is approved under accelerated approval based on overall response rate. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s).

In Europe, Minjuvi^® (tafasitamab) received conditional approval, in combination with lenalidomide, followed by Minjuvi monotherapy, for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplant (ASCT).

Tafasitamab is being clinically investigated as a therapeutic option in B-cell malignancies in several ongoing combination trials.

Minjuvi^® and Monjuvi^® are registered trademarks of MorphoSys AG. Tafasitamab is co-marketed by Incyte and MorphoSys under the brand name Monjuvi^® in the U.S., and marketed by Incyte under the brand name Minjuvi^® in the EU.

XmAb^® is a registered trademark of Xencor, Inc.

About Pemazyre^® (pemigatinib)

Pemazyre is a kinase inhibitor indicated in the United States for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or other rearrangement as detected by an FDA-approved test*. This indication is approved under accelerated approval based on overall response rate and duration of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial(s).

In Japan, Pemazyre is approved for the treatment of patients with unresectable biliary tract cancer (BTC) with a fibroblast growth factor receptor 2 (FGFR2) fusion gene, worsening after cancer chemotherapy.

In Europe, Pemazyre is approved for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or rearrangement that have progressed after at least one prior line of systemic therapy.

Pemazyre is a potent, selective, oral inhibitor of FGFR isoforms 1, 2 and 3 which, in preclinical studies, has demonstrated selective pharmacologic activity against cancer cells with FGFR alterations.

Pemazyre is marketed by Incyte in the United States, Europe and Japan. Incyte has granted Innovent Biologics, Inc. rights to develop and commercialize pemigatinib in hematology and oncology in Mainland China, Hong Kong, Macau and Taiwan. Incyte has retained all other rights to develop and commercialize pemigatinib outside of the United States.

Pemazyre is a trademark of Incyte Corporation.

^* Pemazyre^® (pemigatinib) [Package Insert]. Wilmington, DE: Incyte; 2020.

About Iclusig^® (ponatinib) tablets

Ponatinib (Iclusig^®) targets not only native BCR-ABL but also its isoforms that carry mutations that confer resistance to treatment, including the T315I mutation, which has been associated with resistance to other approved TKIs.

In the EU, Iclusig is approved for the treatment of adult patients with chronic phase, accelerated phase or blast phase chronic myeloid leukemia (CML) who are resistant to dasatinib or nilotinib; who are intolerant to dasatinib or nilotinib and for whom subsequent treatment with imatinib is not clinically appropriate; or who have the T315I mutation, or the treatment of adult patients with Philadelphia-chromosome positive acute lymphoblastic leukemia (Ph+ ALL) who are resistant to dasatinib; who are intolerant to dasatinib and for whom subsequent treatment with imatinib is not clinically appropriate; or who have the T315I mutation.

Click here to view the Iclusig EU Summary of Medicinal Product Characteristics.

Incyte has an exclusive license from Takeda Pharmaceuticals International AG to commercialize ponatinib in the European Union and 29 other countries, including Switzerland, UK, Norway, Turkey, Israel and Russia. Iclusig is marketed in the U.S. by Millennium Pharmaceuticals, Inc., a wholly owned subsidiary of Takeda Pharmaceutical Company Limited.

Forward-Looking Statements

Except for the historical information set forth herein, the matters set forth in this release contain predictions, estimates and other forward-looking statements, including any discussion of the following: Incyte’s financial guidance for 2022, including its expectations regarding sales of Jakafi; Incyte’s expectations with regard to the regulatory submissions seeking approval of ruxolitinib cream in vitiligo; Incyte’s expectations with regard to filing an NDA for once-daily ruxolitinib; Incyte’s expectations with respect to Opzelura, including the Company’s ongoing discussions with payers; Incyte’s expectations regarding ongoing clinical trials and clinical trials to be initiated, including trials of axatilimab in chronic GVHD, the LIMBER program, a phase 3 clinical trials of parsaclisib in warm autoimmune hemolytic anemia, Phase 2 trials of pemigatinib in glioblastoma and non-small cell lung cancer, a proof of concept trial of tafasitamab in combination with lenalidomide and plamotamab in relapsed/refractory B-cell malignancies, phase 3 trials for ruxolitinib cream in pediatric AD and chronic hand eczema, and a Phase 2 trial of INCB00928 in fibrodysplasia ossificans progressiva; Incyte’s life cycle management strategy for ruxolitinib cream; Incyte’s expectations with regard to its ongoing partnership with Merus; and Incyte’s expectations with regard to regulatory submissions for baricitinib and capmatinib.

These forward-looking statements are based on the Company’s current expectations and subject to risks and uncertainties that may cause actual results to differ materially, including unanticipated developments in and risks related to: further research and development and the results of clinical trials possibly being unsuccessful or insufficient to meet applicable regulatory standards or warrant continued development; the ability to enroll sufficient numbers of subjects in clinical trials and the ability to enroll subjects in accordance with planned schedules; the effects of the COVID 19 pandemic and measures to address the pandemic on the Company’s clinical trials, supply chain and other third-party providers, sales and marketing efforts and business, development and discovery operations; determinations made by the FDA, EMA, and other regulatory agencies; the Company’s dependence on its relationships with and changes in the plans of its collaboration partners; the efficacy or safety of the Company’s products and the products of the Company’s collaboration partners; the acceptance of the Company’s products and the products of the Company’s collaboration partners in the marketplace; market competition; unexpected variations in the demand for the Company’s products and the products of the Company’s collaboration partners; the effects of announced or unexpected price regulation or limitations on reimbursement or coverage for the Company’s products and the products of the Company’s collaboration partners; sales, marketing, manufacturing and distribution requirements, including the Company’s and its collaboration partners’ ability to successfully commercialize and build commercial infrastructure for newly approved products and any additional products that become approved; greater than expected expenses, including expenses relating to litigation or strategic activities; and other risks detailed in the Company’s reports filed with the Securities and Exchange Commission. The Company disclaims any intent or obligation to update these forward-looking statements.

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