INCYTE CORP [INCY] Filings

10-Q 1 incy-20210930x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-12400

INCYTE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		94-3136539
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1801 Augustine Cut-Off Wilmington, DE 19803		19803
(Address of principal executive offices)		(Zip Code)

(302) 498-6700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $.001 par value per share	INCY	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of outstanding shares of the registrant’s Common Stock, $.001 par value, was 220,890,618 as of October 26, 2021.

Table of Contents

INCYTE CORPORATION

INDEX

0
PART I: FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Comprehensive Income (Loss)	5

	Condensed Consolidated Statements of Stockholders’ Equity	6

	Condensed Consolidated Statements of Cash Flows	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41

	Forward-Looking Statements	41

	Summary Risk Factors	44

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	70

Item 4.	Controls and Procedures	70

PART II: OTHER INFORMATION

Item 1A.	Risk Factors	70

Item 6.	Exhibits	98

	Signatures	99

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

INCYTE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except number of shares and par value)


	September 30,		December 31,
	2021		2020*
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,999,021	$	1,513,008
Marketable securities—available-for-sale (amortized cost $285,135 and $288,199 as of September 30, 2021 and December 31, 2020; allowance for credit losses $0 and $0 as of September 30, 2021 and December 31, 2020)		285,054		288,369
Accounts receivable		516,689		481,994
Inventory		21,303		16,425
Prepaid expenses and other current assets		101,730		60,098
Total current assets		2,923,797		2,359,894

Restricted cash and investments		1,682		1,757
Long term investments		192,096		222,301
Inventory		30,885		19,548
Property and equipment, net		686,718		559,625
Finance lease right-of-use assets, net		27,133		28,451
Other intangible assets, net		156,139		172,291
Goodwill		155,593		155,593
Other assets, net		24,788		41,458
Total assets	$	4,198,831	$	3,560,918

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	114,509	$	98,767
Accrued compensation		105,705		113,340
Accrued and other current liabilities		481,879		378,404
Finance lease liabilities		2,400		2,284
Acquisition-related contingent consideration		38,219		38,400
Total current liabilities		742,712		631,195

Acquisition-related contingent consideration		213,781		227,600
Finance lease liabilities		31,376		32,573
Other liabilities		62,305		58,282
Total liabilities		1,050,174		949,650

Commitments and contingencies (Note 15)

Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding as of September 30, 2021 and December 31, 2020		—		—
Common stock, $0.001 par value; 400,000,000 shares authorized; 220,885,119 and 219,489,329 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		221		219
Additional paid-in capital		4,508,807		4,352,864
Accumulated other comprehensive loss		(18,646)		(15,360)
Accumulated deficit		(1,341,725)		(1,726,455)
Total stockholders’ equity		3,148,657		2,611,268
Total liabilities and stockholders’ equity	$	4,198,831	$	3,560,918

* The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date.

See accompanying notes.

Table of Contents

INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenues:
Product revenues, net	$	594,013	$	522,252	$	1,673,974	$	1,509,269
Product royalty revenues		183,974		98,391		404,440		272,924
Milestone and contract revenues		35,000		—		45,000		95,000

Total revenues		812,987		620,643		2,123,414		1,877,193

Costs and expenses:
Cost of product revenues (including definite-lived intangible amortization)		39,869		34,322		107,117		95,005
Research and development		334,945		438,109		985,352		1,809,997
Selling, general and administrative		190,704		120,788		513,358		349,934
Change in fair value of acquisition-related contingent consideration		2,910		7,109		13,068		19,790
Collaboration loss sharing		9,149		14,989		29,476		30,372

Total costs and expenses		577,577		615,317		1,648,371		2,305,098

Income (loss) from operations		235,410		5,326		475,043		(427,905)
Other income (expense), net		1,948		4,917		4,931		18,396
Interest expense		(439)		(544)		(1,156)		(1,746)
Unrealized gain (loss) on long term investments		(27,450)		(13,207)		(28,394)		10,935

Income (loss) before provision for income taxes		209,469		(3,508)		450,424		(400,320)

Provision for income taxes		27,730		11,695		65,694		45,227

Net income (loss)	$	181,739	$	(15,203)	$	384,730	$	(445,547)

Net income (loss) per share:
Basic	$	0.82	$	(0.07)	$	1.75	$	(2.05)
Diluted	$	0.82	$	(0.07)	$	1.73	$	(2.05)

Shares used in computing net income (loss) per share:
Basic		220,845		218,784		220,243		217,684
Diluted		222,248		218,784		222,113		217,684

See accompanying notes.

Table of Contents

INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income (loss)	$	181,739	$	(15,203)	$	384,730	$	(445,547)

Other comprehensive income (loss):
Foreign currency translation (loss) gain		(629)		2,532		(4,061)		5,085
Unrealized (loss) gain on marketable securities, net of tax		(86)		(77)		(251)		48
Defined benefit pension obligations, net of tax		342		220		1,026		661
Other comprehensive income (loss)		(373)		2,675		(3,286)		5,794

Comprehensive income (loss)	$	181,366	$	(12,528)	$	381,444	$	(439,753)

See accompanying notes.

Table of Contents

INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands, except number of shares)


	For the Nine Months Ended September 30, 2021
									Total
	Common		Additional		Accumulated Other		Accumulated		Stockholders’
	Stock		Paid-in Capital		Comprehensive Loss		Deficit		Equity
Balances at January 1, 2021	$	219	$	4,352,864	$	(15,360)	$	(1,726,455)	$	2,611,268
Issuance of 389,512 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes		1		20,027		—		—		20,028
Issuance of 1,357 shares of Common Stock for services rendered		—		108		—		—		108
Stock compensation		—		47,903		—		—		47,903
Other comprehensive loss		—		—		(4,998)		—		(4,998)
Net income		—		—		—		53,535		53,535
Balances at March 31, 2021	$	220	$	4,420,902	$	(20,358)	$	(1,672,920)	$	2,727,844
Issuance of 390,001 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes and 153,082 shares of Common Stock under the ESPP		—		11,016		—		—		11,016
Issuance of 1,288 shares of Common Stock for services rendered		—		109		—		—		109
Stock compensation		—		45,351		—		—		45,351
Other comprehensive income		—		—		2,085		—		2,085
Net income		—		—		—		149,456		149,456
Balances at June 30, 2021	$	220	$	4,477,378	$	(18,273)	$	(1,523,464)	$	2,935,861
Issuance of 459,084 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and performance shares, net of shares withheld for taxes		1		(11,993)		—		—		(11,992)
Issuance of 1,466 shares of Common Stock for services rendered		—		108		—		—		108
Stock compensation		—		43,314		—		—		43,314
Other comprehensive loss		—		—		(373)		—		(373)
Net income		—		—		—		181,739		181,739
Balances at September 30, 2021	$	221	$	4,508,807	$	(18,646)	$	(1,341,725)	$	3,148,657

Table of Contents

INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

(unaudited, in thousands, except number of shares)


	For the Nine Months Ended September 30, 2020
									Total
	Common		Additional		Accumulated Other		Accumulated		Stockholders’
	Stock		Paid-in Capital		Comprehensive Loss		Deficit		Equity
Balances at January 1, 2020	$	216	$	4,044,490	$	(15,542)	$	(1,430,758)	$	2,598,406
Issuance of 772,538 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes		1		14,618		—		—		14,619
Issuance of 1,957 shares of Common Stock for services rendered		—		145		—		—		145
Stock compensation		—		42,758		—		—		42,758
Other comprehensive income		—		—		2,435		—		2,435
Net loss		—		—		—		(720,642)		(720,642)
Balances at March 31, 2020	$	217	$	4,102,011	$	(13,107)	$	(2,151,400)	$	1,937,721
Issuance of 936,688 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes and 175,615 shares of Common Stock under the ESPP		1		69,193		—		—		69,194
Issuance of 1,403 shares of Common Stock for services rendered		—		139		—		—		139
Issuance of 3,187 shares of Common Stock upon conversion of Convertible Senior Notes due 2020		—		162		—		—		162
Stock compensation		—		46,406		—		—		46,406
Other comprehensive income		—		—		684		—		684
Net income		—		—		—		290,298		290,298
Balances at June 30, 2020	$	218	$	4,217,911	$	(12,423)	$	(1,861,102)	$	2,344,604
Issuance of 698,032 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and performance shares, net of shares withheld for taxes		1		7,782		—		—		7,783
Issuance of 1,434 shares of Common Stock for services rendered		—		131		—		—		131
Issuance of 134,413 shares of Common Stock upon conversion of Convertible Senior Notes due 2020		—		6,873		—		—		6,873
Stock compensation		—		43,970		—		—		43,970
Other comprehensive income		—		—		2,675		—		2,675
Net loss		—		—		—		(15,203)		(15,203)
Balances at September 30, 2020	$	219	$	4,276,667	$	(9,748)	$	(1,876,305)	$	2,390,833

See accompanying notes.

Table of Contents

INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Nine Months Ended
	September 30,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	384,730	$	(445,547)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		42,986		38,641
Stock-based compensation		134,784		132,616
Deferred income taxes		(178)		—
Other, net		5,268		8,698
Unrealized loss (gain) on long term investments		28,394		(10,935)
Change in fair value of acquisition-related contingent consideration		13,068		19,790
Changes in operating assets and liabilities:
Accounts receivable		(34,695)		(55,656)
Prepaid expenses and other assets		(24,784)		(11,384)
Inventory		(16,215)		(9,204)
Accounts payable		15,742		38,865
Accrued and other liabilities		85,037		62,196
Net cash provided by (used in) operating activities		634,137		(231,920)
Cash flows from investing activities:
Purchase of long term investments		(8,662)		(95,468)
Sale of long term investments		10,473		17,250
Capital expenditures		(146,543)		(135,946)
Purchases of marketable securities		(228,170)		(418,698)
Sale and maturities of marketable securities		231,250		466,591
Net cash used in investing activities		(141,652)		(166,271)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock plans net of tax withholding		19,052		91,596
Payment of finance lease liabilities		(1,788)		(619)
Payment of contingent consideration		(20,093)		(31,140)
Net cash (used in) provided by financing activities		(2,829)		59,837
Effect of exchange rates on cash, cash equivalents, restricted cash and investments		(3,718)		5,085
Net increase (decrease) in cash, cash equivalents, restricted cash and investments		485,938		(333,269)
Cash, cash equivalents, restricted cash and investments at beginning of period		1,514,765		1,833,707
Cash, cash equivalents, restricted cash and investments at end of period	$	2,000,703	$	1,500,438
Supplemental Schedule of Cash Flow Information
Interest paid	$	—	$	119
Income taxes paid	$	45,872	$	56,787
Reclassification to common stock and additional paid in capital in connection with conversions of 1.25% convertible senior notes due 2020	$	—	$	6,992
Unpaid purchases of property and equipment	$	23,892	$	12,836
Leased assets obtained in exchange for new operating lease liabilities	$

INCYTE CORP [INCY] Filings
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-04]
10-K	[2021-02-09]
10-Q	[2020-11-05]
10-Q	[2020-08-04]
10-Q	[2020-05-05]
10-K	[2020-02-13]
10-Q	[2019-10-29]
10-Q	[2019-07-30]
10-Q	[2019-04-30]
10-K	[2019-02-14]
10-Q	[2018-10-30]
10-Q	[2018-07-31]
10-Q	[2018-05-01]
10-K	[2018-02-15]
10-Q	[2017-10-31]
10-Q	[2017-08-01]
10-Q	[2017-05-04]
10-K	[2017-02-14]
10-Q	[2016-11-01]
10-Q	[2016-08-09]
10-Q	[2016-05-09]
10-K	[2016-02-12]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
10-Q	[2015-04-30]
10-K	[2015-02-17]
10-Q	[2014-10-30]
10-Q	[2014-07-31]
10-Q	[2014-05-01]
10-K	[2014-02-21]
10-Q	[2013-10-31]
10-Q	[2013-08-01]
10-Q	[2013-05-02]
10-K	[2013-02-21]
10-Q	[2012-11-01]
10-Q	[2012-08-03]
10-Q	[2012-04-26]
10-K	[2012-02-22]