Incyte Annual Report 2011

FY2011 Annual Report · Incyte

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W W W . I N C Y T E . C O M

Incyte Corporation
Experimental Station
Route 141 & Henry Clay Road
Building E336
Wilmington, DE 19880
855.4.INCYTE (855.446.2983)

NASDAQ: INCY

THE DRIVE TO DISCOVER.
THE EXPERIENCE TO DELIVER.

2011

A N N U A L R E P O R T

Imagine being one of the 16,000 to 18,500 people in the U.S. living with
myelofibrosis (MF) and having no approved treatments available to you.

The most difficult part emotionally was

when I was diagnosed with myelofibrosis. The

hard part was that nothing was out there. Jakafi

brought us hope, that there is a treatment, there

is something that we can do that may benefit us

significantly.

Dan is a patient with MF
who has participated in
COMFORT-I, our
pivotal Phase III U.S. trial

BOARD OF
DIRECTORS

EXECUTIVE
MANAGEMENT

STOCKHOLDER
INFORMATION

Market Information
Incyte's Common Stock
trades on The Nasdaq
Global Market under the
symbol INCY.

Investor Relations
You can obtain recent press
releases and other publicly
available information on
Incyte by visiting our website
at www.incyte.com.

Contact
Pamela Murphy
Vice President, Investor
Relations and Corporate
Communications
Email: pmurphy@incyte.com

Corporate Headquarters
Incyte Corporation
Experimental Station
Route 141 & Henry Clay
Road
Building E336
Wilmington, Delaware 19880
855/446.2983

Paul A. Friedman, M.D.
President and
Chief Executive Officer

Patricia S. Andrews
Executive Vice President and
Chief Commercial Officer

David C. Hastings
Executive Vice President and
Chief Financial Officer

Reid M. Huber, Ph.D.
Senior Vice President,
Discovery Biology

Richard S. Levy, M.D.
Executive Vice President and
Chief Drug Development and
Medical Officer

Eric H. Siegel
Executive Vice President and
General Counsel

Paula J. Swain
Executive Vice President,
Human Resources

Wenqing Yao, Ph.D.
Senior Vice President,
Discovery Chemistry

Transfer Agent and
Registrar
Computershare
PO Box 358015
Pittsburgh, PA 15252-8015
or
480 Washington Boulevard
Jersey City, NJ 07310-1900
Phone: 800/851-9677

TDD for Hearing Impaired:
800/231-5469

Foreign Shareowners:
201/680-6578

TDD Foreign Shareowners:
201/680-6610

www.bnymellon.com/
shareowner/equityaccess

Annual Meeting
The Annual Meeting of
Stockholders will be held
May 30, 2012, at 10:00 a.m.,
Eastern Daylight Time, at the
Hotel du Pont, 11th and
Market Streets, Wilmington,
Delaware 19801

Outside Counsel
Pillsbury Winthrop Shaw
Pittman LLP

Independent Registered
Public Accounting Firm
Ernst & Young LLP

Richard U. De Schutter
Chairman of the Board
Formerly Chairman and
Chief Executive Officer
DuPont Pharmaceuticals
Company

Paul A. Friedman, M.D.
President and
Chief Executive Officer
Incyte Corporation

Barry M. Ariko
Formerly President, Chief
Executive Officer and
Chairman
Mirapoint, Inc.

Julian C. Baker
Managing Member
Baker Bros. Advisors, LLC

Paul A. Brooke
Founder and Managing
Director
venBio LLC

Wendy L. Dixon, Ph.D.
Formerly Chief Marketing
Officer and President,
Global Marketing
Bristol-Myers Squibb
Company

John F. Niblack, Ph.D.
Formerly Vice Chairman and
President of Global Research
and Development
Pfizer Inc.

Roy A. Whitfield
Formerly Chairman of the
Board and Chief Executive
Officer
Incyte Corporation

Forward-Looking Statements

Except for the historical information set forth herein, the matters set forth in this annual report, including statements regarding our plans
and expectations with respect to Jakafi™(ruxolitinib) including its potential efficacy and therapeutic and commercial value, anticipated
future accomplishments in drug discovery, development and product commercialization, plans and expected timelines regarding our
pipeline and advancing our drug candidates through clinical trials and regulatory submissions, potential therapeutic and commercial
value, including attributes and indications, of our drug candidates, and our business goals for 2012 contain predictions, estimates and
other forward-looking statements.

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including
unanticipated developments in and risks related to the efficacy or safety of Jakafi, the acceptance of Jakafi in the marketplace, risks
related to market competition, the results of further research and development, the high degree of risk and uncertainty associated with
drug development, clinical trials and the regulatory approval processes, risks related to the timing of and patient enrollment in clinical
trials, the risk that results of clinical trials may be unsuccessful or insufficient to meet applicable regulatory standards, unanticipated
developments in and risks related to the efficacy or safety of our compounds in clinical trials, risks associated with our dependence on our
relationships with our collaboration partners, and other risks detailed from time to time in our reports filed with the Securities and
Exchange Commission, including our Form 10-K for the year ended December 31, 2011. Incyte disclaims any intent or obligation to
update these forward-looking statements.

Jakafi is a trademark of Incyte Corporation.

We have several other clinical programs
underway in oncology and inflammation
as we continue to expand our pipeline with
additional differentiated, best-in-class
compounds.

Continuing Our Drive to Discover

Our goal to discover and develop
proprietary new compounds with the
requisite characteristics to become
important new medicines remains a key
driver for our decisions and activities. With
our recognized core competency in
medicinal chemistry, a proven ability to
select clinically relevant targets, an
experienced and talented clinical
development team and now a commercial
group with substantial experience in the
promotion of new oncology therapies, I
am confident we are in a strong position to
build significant, sustainable shareholder
value.

In closing, I want to thank John Niblack for
his service on our Board of Directors. His
extensive experience in managing R&D at
Pfizer has been of great value over the
past six years as we sought to prioritize
our efforts and accelerate our most
promising programs.

I also want to thank our employees for
their commitment to rigorous science,
effective teamwork and disciplined
program execution which has enabled us
to bring Jakafi to market – a success I am
confident we can replicate and build on in
the years to come.

Sincerely,

Paul A. Friedman, M.D.
President and Chief Executive Officer
April 2012

2012 Key Business Goals

Ÿ Continue the successful launch of Jakafi for myelofibrosis (MF)
Ÿ Increase awareness of the progressive and life-threatening nature of MF
Ÿ Complete enrollment of the Phase III study of ruxolitinib in polycythemia vera, in

partnership with Novartis

Ÿ Continue clinical studies of ruxolitinib in other oncologic indications
Ÿ Support the ongoing development of LY3009104 (INCB28050) for rheumatoid

arthritis, in partnership with Lilly

Ÿ Advance several early development and discovery programs in oncology and

inflammation

To Our Stockholders:

The last year was truly significant for
Incyte, marked by the FDA approval and
the launch of our first product. These key
accomplishments attest to our commit-
ment to improving the lives of patients and
to establishing Incyte as a commercially
successful biopharmaceutical company.

A Tremendous Achievement

The FDA approval of Jakafi™ (ruxolitinib) for
the treatment of patients with intermediate
or high-risk myelofibrosis (MF) provides the
first approved medicine for MF and
represents a major breakthrough for the
people who suffer from this debilitating and
life-threatening blood cancer.

In just seven years, our scientific, clinical,
regulatory and manufacturing teams have
fulfilled our mission of bringing a novel
discovery from the laboratory to the market.
Our sales and marketing colleagues are
now committed to making Jakafi a com-
mercial success.

As the first JAK inhibitor to be approved for
any indication, Jakafi is evidence of our
leadership position in the discovery and
development of this important new class
of drugs.

JAK inhibitors have now shown thera-
peutic value in both oncology and chronic
inflammatory diseases, and we are in a
strong position to tap into these emerging
and potentially major markets.

Making a Difference in MF

MF has a significant impact on the lives of
patients. The loss of their ability to perform
certain basic activities of daily living as a
result of their enlarged spleens and heavy
symptom burden is similar to patients with
other advanced cancers, and the
prognosis of patients with MF worsens as
the disease progresses.

In the largest clinical program ever
conducted in MF patients, Jakafi
significantly reduced spleen volume and
alleviated the most burdensome symptoms.
By contrast, patients receiving placebo or
best available therapy continued to see their
spleens increase in size and their symptoms
worsen. Anemia and thrombocytopenia
were the most common adverse reactions,
but rarely led to discontinuation (only one
patient in each treatment group for each
event). Non-hematologic adverse reactions
that occurred more frequently in the group
treated with Jakafi were bruising, dizziness
and headache.

We're gratified that the majority of patients
treated with Jakafi saw their spleens shrink
and their symptoms improve. Additionally,
further analysis from the U.S. pivotal study
suggests that Jakafi may also have the
potential to improve survival as compared to
placebo. These data were presented at the
American Society of Hematology 2011
Annual Meeting and recently published in
The New England Journal of Medicine.

Close Collaboration with the FDA –
A Key Success Factor

By working closely with the FDA, we were
able to demonstrate why spleen reduction
and improvement in symptoms were
clinically meaningful endpoints to support
approval in MF. Further, we developed a
symptom measurement tool specific to
MF that captured patient-reported
outcomes in a manner that was not only
acceptable to the FDA, but also praised as
“remarkable” by the agency.

Our collaborative approach, combined
with a compelling clinical efficacy and
safety profile, enabled us to gain a priority
review for the treatment of intermediate or
high-risk MF, which our
market research indicates
includes 80 percent to 90
percent of all patients with the
disease.

Favorable Market
Response
to Jakafi

Within one week of approval, our
experienced commercial team launched
Jakafi. They are meeting with thousands
of physicians across the country who treat
patients with MF, and we are encouraged
by the enthusiasm expressed by both
physicians and patients. We expect
acceptance of Jakafi to continue at a
steady, gradual pace as physicians
witness the benefits of Jakafi and
acknowledge the value of treating
intermediate or high-risk MF patients.

Because we want all appropriate patients
who can benefit from Jakafi to have
access to the drug, we have established a
comprehensive patient assistance and
education program called IncyteCARES,
and the program has already been widely
used and well-received.

Beyond the product launch of Jakafi in the
U.S., our strategic partner Novartis has
filed regulatory applications for ruxolitinib
in its key markets and expects to hear
from regulatory authorities in the second
half of 2012.

Unlocking the Full Potential of
JAK Inhibitors

There is a growing body of
evidence that implicates the
JAK pathway in multiple
disease settings in both
oncology and inflammation.
For this reason, and in
partnership with Novartis, we
are studying Jakafi in a
number of indications outside
of MF, including polycythemia vera (PV),
another related blood cancer.

We expect results from a global Phase III
study in patients with advanced PV in
2013; provided these data are positive,
FDA approval in this second indication
could occur in 2014. Early Phase II trials
are also underway to evaluate Jakafi in
leukemia, lymphoma and pancreatic
cancer – all of which could add
significantly to the therapeutic and
commercial value of Jakafi.

license

Our second JAK1 and JAK2 inhibitor is
currently in development for the treatment
of rheumatoid arthritis (RA) and psoriasis.
Given the broad market potential
associated with chronic inflammatory
this
diseases, we elected
program to Eli Lilly and Company. Because
of our confidence in this compound and its
potential commercial value, we are funding
30 percent of the associated global
development costs in RA in exchange for
tiered royalty rates ranging up to the high
twenties on potential future global sales.
We expect Lilly to initiate Phase III trials in
RA later this year.

Our Pipeline Continues to Grow

In addition to our JAK inhibitor programs,
we have a robust and growing pipeline in
oncology and inflammatory diseases. Our
c-MET inhibitor INCB28060, partnered

with Novartis, exhibits greater selectivity
and improved potency compared to other
known c-MET inhibitors in development.
This compound is nearing completion of
an initial Phase I trial in patients with solid
tumors, after which, Novartis will be
responsible for its development. We have
retained co-development and co-
promotion rights and Incyte will receive
royalties on any potential future sales of
INCB28060.

Our indoleamine 2, 3-dioxygenase (IDO)
inhibitor, INCB24360, is a novel immuno-
modulatory therapeutic that has shown in
pre-clinical studies that it can significantly
increase the efficacy of various chemo-
therapeutic agents in controlling tumor
growth. The compound has been well-
tolerated in our Phase I program, and
Phase II studies to treat patients with
melanoma and ovarian cancer are
scheduled to begin this year.

DISEASE - COMPOUND - TARGET

PHASE I

PHASE II

PHASE III

APPROVED

ONCOLOGY

Myelofibrosis - Jakafi

(ruxolitinib)

1,2

- JAK1 and JAK2

Polycythemia vera

- ruxolitinib - JAK1 and JAK2

1,2

Essential thrombocythemia

- ruxolitinib - JAK1 and JAK2

1,2

Pancreatic cancer - ruxolitinib - JAK1 and JAK2

1,2

Solid / hematologic tumors

- ruxolitinib - JAK1 and JAK2

1,2

Solid tumors - INCB28060 - c-MET

Solid tumors - INCB24360 - IDO

INFLAMMATION

Rheumatoid arthritis - LY3009104 (INCB28050) - JAK1 and JAK2

Psoriasis - LY3009104 (INCB28050) - JAK1 and JAK2

Formerly INCB18424 (INC424)

2
3
Novartis: worldwide rights
Incyte: U.S. rights; Novartis: ex U.S. rights

Lilly: worldwide rights