Incyte Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 31, 2023

There are 18 speakers on the call.

Operator

Hello, and welcome to the Incyte Third Quarter Earnings Conference Call. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Ben Strain, Associate Vice President, Investor Relations. Please go ahead.

Speaker 1

Thank you, Kevin. Good morning, and welcome to Incyte's Q3 2023 earnings conference call. Before we begin, I I encourage everyone to go to the Investors section of our website to find the press release, related financial tables and slides that follow the discussion related to today's call. On today's call, I'm joined by Herve, Pablo, Barry, Steven, Cristiano, who will deliver our prepared remarks and will participate in the Q and A. I would like to point out that we'll be making forward looking statements, which are based on our current expectations and beliefs.

Speaker 1

These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. I will now hand the call over to Herve.

Speaker 2

Thank you, Ben, and good morning, everyone. In the Q3, we continued to deliver double digit revenue growth, important successes in pricing and reimbursement and continued progress of the pipeline. Product and royalty revenues were $914,000,000 in the quarter with an 11% growth year over year driven by Jakafi and Opseloa. Jakafi net sales in the quarter were impacted by inventory variation, which Christiana will detail in her prepared remarks. As you see, in the 1st 9 months, Jakafi growth continues at a rate of around 8% this year.

Speaker 2

The growth trajectory of Opcellular continued in the 3rd quarter with net product revenue of $92,000,000 Driven by both new patients and refills in edi and vitiligo. In the 1st 9 months of 2023, Opsela revenues contributed $229,000,000 and we expect Opsela to continue to be a key contributor to the growth of Incyte in the next year. On Slide 6, we made important progress this quarter on 2 fronts related to pricing and access. 1st, As the IRA is implemented, we secured small biotech exception sales for ruxolitinib. This has two impacts on Jakafi pricing and growth to net in the coming years.

Speaker 2

1, we expect that Jakafi will be exempt from negotiation until 2029, making it de facto neutral to our initial business plan. And 2, as you can see, we expect to benefit from the specified small manufacturer phase in schedule for Part D catastrophic coverage versus the startup benefit, which will have a meaningful impact in the years 2025 to 2,031. For OXELURA coverage in the U. S. Starting in 2024, OXELURA will be listed as a preferred brand on the CVS Caremark and Aetna Formularies, which will benefit roughly 30,000,000 commercial lives.

Speaker 2

This achievement will move Occellara to preferred brand from non preferred brand tier and will result in increased access by reducing both step edit requirements, patients co pay for many patients while maintaining Occello's favorable utilization management criteria. Turning to Slide 7. We continue to make progress in our clinical development efforts across our portfolio. Just last week, we obtained new top line results The Phase 2 randomized study assessing the efficacy and safety of povarcitanib, our oral JAK1 inhibitor in patients with prurigo nodularies. The study met its primary endpoint across all three treatment dose groups and polarcitinib was generally well tolerated.

Speaker 2

There are approximately 100,000 treated patients in the U. S. With prorigo nodularies with limited treatment options and we are excited to move this program forward based on the Phase 2 data. Stephen will provide additional details. During the quarter, we had a significant presence at EADV where we presented the full OXELORA atopic dermatitis data in the pediatric population and positive long term extension data in vitiligo.

Speaker 2

We also shared new positive data from Phase 2b clinical trial of povarcitanib in adults with extensive Vitiligo. By the end of the year, we providing additional data from other key program including an update on our oral PD L1 program, additional combination data of ruxolitinib plus ALK2 and BED and full disclosure of a novel preclinical program targeting the JAK2V617F mutation, which has the potential to be a disease modifying therapy for many patients with I will now turn the call over to Barry, who will discuss our commercial performance in more detail.

Speaker 1

Thank you, Herve, and good morning, everyone. Starting with Jakafi on Slide 9. Jakafi continued to experience Increasing patient demand during the quarter as we delivered 2023 year to date net sales of $1,900,000,000 Growing 8% year over year, while total patients for the 1st 9 months has also grown 8% year over year across all indications. The quarter over quarter impact in net sales is primarily attributable to fluctuations in channel inventory. Recall that we reported exiting Q2 at the high end of our normal inventory range and inventory drew down modestly in Q3.

Speaker 1

We continue to see strong growth in underlying demand and now are tightening our full year 2023 guidance to a new range of $2,590,000,000 to $2,620,000,000 As we look to the future for Jakafi, PV will be a key growth driver, particularly considering that a significant portion of patients are not receiving adequate benefit with hydroxyurea. Now for the first time, we have data that clearly demonstrates the thrombosis free survival benefit that can be achieved with Jakafi. The data shows that patients who are not being adequately controlled and are switched to Jakafi experienced a 44% reduction in the risk of major thrombosis. We are already hearing from thought leaders that this data is game changing in PV and reinforces the importance of early intervention for these patients. We believe this important data will help drive earlier use, allowing us to further penetrate the PV market.

Speaker 1

Turning to OXOLLORA on Slide 11. The launch continues to be strong and is gaining positive momentum with both Physicians and patients as we establish OXOLORA as one of the best recent dermatology launches. Looking at the first 2 years post FDA approval, OXOLLORA outperforms all other dermatology products on a launch aligned basis. $92,000,000 up 141% when compared to the same quarter last year. U.

Speaker 1

S. Patient demand increased during the quarter with total prescriptions growing 72% year over year and refills growing by 19% versus the prior Quarter with over 9,100 dermatologists now having prescribed OXOLLORA. The weekly prescription trend as shown on the right demonstrates the continued growth of Opselorra, which is coming from both atopic dermatitis In AD, growth was primarily due to new patient flow driven by OXOLLORA's efficacy and impact on inflammation and In Vitiligo, where OXOLORA is the only approved treatment for repigmentation, growth was driven largely by refills and our educational and awareness initiatives. We remain very optimistic about the long term potential of OXOLORA as we continue to see the strong uptake and positive momentum. We are also working to drive new patient growth and adherence through ongoing initiatives.

Speaker 1

During the quarter, we kicked off a new marketing campaign called Moments of Clarity featuring Mandy Moore. The goal of this campaign is intended to bring to life the stories of real people struggling with eczema, who found relief by talking to their dermatologist and to build broad awareness of Opselor as a non steroidal topical option among mild to moderate AD patients. The campaign secured several high profile media placements including coverage with top tier outlets like the Today Show and People Magazine. We are also continuing to roll out DTC initiatives in Vitiligo, which is building awareness, driving demand and activating patients to discuss treatment options with their dermatologists. Turning to Slide 14, we continue to make advancements with our payer coverage for Opselara.

Speaker 1

In AD, payer adoption continues to improve with regional plans. And as of today, we have roughly 84 percent commercial coverage for OXOLLORIN atopic dermatitis covering over 127,000,000 lives. In Vitiligo, we have made significant progress since the launch and have improved our coverage by roughly 30% throughout 2023. The most recent progress was with Blue Cross Blue Shield Federal Employee Program, which accounts for over 5,500,000 lives. Additionally, as and OXOLORA will be moving from non preferred to preferred brand tier effective January 1, 2024 for CVS Caremark and Aetna Formularies.

Speaker 1

With that, I'll turn the call over to Pablo.

Speaker 3

Thank you, Barry, and good morning, everyone. As you may recall, earlier this year, we made the decision to increase our focus on 8 high potential programs. Consistently with this, our near term goals for the R and D organization will be to increase the rigor of our decision making, accelerate the progression of our pipeline and increase our efficiency to optimize our resource allocation. Before I hand the call over to Steven for an update on some of our later stage programs, I would like to spend a few minutes highlighting some of our key earlier stage programs to give a more clear picture of the depth and quality of our pipeline. During the Q3, our TGF beta receptor 2xPD-one bispecific antibody entered the clinic and the Phase 1 dose escalation study is progressing well.

Speaker 3

It has been designed with high selectivity for the PD-one receptor combined with TGF beta receptor 2 inhibition and it has the potential to enable a synergistic approach to target multiple immunosuppressive pathways across a number of cancers. INCA-thirty four thousand four hundred and sixty is a novel Humanized anti IL-fifteen receptor beta monoclonal antibody that's designed to target and deplete autoreactive tissue resin memory T cells. He has demonstrated efficacy as a treatment for vitiligo in preclinical models and received IND clearance last quarter. We have since initiated the Phase 1 single dose ascending study. We have also dosed the 1st patient for the Phase one study of our novel anti mutant COLR targeted monoclonal antibody with a potential to eradicate the malignant clone in approximately 25% to 35% of patients with MF and ET.

Speaker 3

Or disclosing today for the first time a program targeting the JAK2V617F mutation, the most common somatic mutation in myeloproliferative The JAK2V617A mutation is located in the JH2 domain of the JAK2 receptor and is present in 55%, 60% 95% of patients with MF, ET and PV respectively. Unlike ruxolitinib, which inhibits both wild type and V617A mutation positive cells, INCB-sixteen thousand and fifty eight selectively binds to the JAK2 JH2 site disrupting the V617F induced confirmation and thus allowing selective inhibition of mutant activity in the JAK2 receptor, whilst sparing wild type. We expect to file the IND by year end 2023 and enter into the clinic in 2024. Together with our anti mutant callout program, these 2 potentially disease modifying programs represent a fundamentally new approach to addressing MF, ET and PV and solidify our leadership in MPNs. With that, I would like

Speaker 4

to pass the call to Steven, who will further highlight some of our key achievements this quarter with our Mode Advanced programs. Steven? Thank you, Pablo. Starting on Slide 19. As Herve mentioned, we obtained the top line results From the Phase 2 randomized double blind placebo controlled dose ranging study assessing the efficacy and safety of Orbositinib in patients with prurigo nodularis.

Speaker 4

The study met the primary endpoint for all porvacitinib doses studied of 15, 45 and 75 milligram and at week 16, 36.1, 44.4 and 54.1% of patients respectively achieved the primary endpoint versus an 8.1% rate for patients on placebo. The primary endpoint was designed to assess the proportion of patients achieving a greater than or equal to 4 point improvement in itch at week 16. Ovacitinib was generally well tolerated across all doses and the safety analyses were consistent with previously presented data with no new reported treatment emergent adverse events. We plan on presenting the full data set at an upcoming medical conference in the first half of twenty twenty for. As a result of these very encouraging findings, plans are underway to initiate a Phase 3 study in 2024.

Speaker 4

We had a significant presence at the European Academy of Dermatology and Venereology Congress earlier this month, which highlighted our commitment to the atopic dermatitis and vitiligo communities. In a late break in oral presentation, we presented positive 52 week data from a Phase 2b clinical trial evaluating the safety and efficacy of porvacitinib in adult patients with extensive non segmental vitiligo. These results show that treatment with oral porvacitinib was associated with substantial total body and facial repigmentation across all treatment groups at week 52 and was well tolerated at all doses throughout the study. During the 24 week post treatment period, total body and facial repigmentation was also maintained, which suggests durability of response following treatment discontinuation. These data further reinforce the efficacy and safety profile of porvacitinib As an oral treatment for patients with extensive non segmental vitiligo and we plan to initiate the Phase 3 study by the end of this calendar year.

Speaker 4

Orvacitinib has already demonstrated outstanding efficacy in the Phase 2 program in high adenitis Suppurativa. As a reminder, 52% to 56% of patients treated with porbusitinib achieved a Hiscar 50 at week 16, with responses improving to 59% to 67% at week 52. Additionally, Hisco 100 response, which is complete resolution of all manifestations of the disease was reported at week 52 in up to 29% of patients. The 2 Phase 3 studies, STOP HS1 and STOP HS2 are enrolling very well and this reflects the strong Phase 2 data presented earlier this year. We continue to expand the porvacitinib program focused on the science, while leveraging our We look forward to advancing the development of porvacitinib in areas of unmet need, It is currently being evaluated in 2 Phase 3 studies in HS and moving into a Phase 3 program for vitiligo and prurigo nodularis.

Speaker 4

Work continues in the Phase 2 proof of concept studies in asthma and chronic spontaneous urticaria. Moving to ruxolitinib Cream on Slide 23. Also presented at E ADV were the expanded results from the pivotal Phase 3 true AD3 study evaluating the safety and efficacy of ruxolitinib Cream in children 2 to 12 years old with atopic dermatitis. These data showed significantly more patients treated with ruxolitinib Cream 0.75% and 1.5% achieved investigator's global assessment treatment success and patients treated with placebo. Treatment with ruxolitinib Cream over 8 weeks under maximum use conditions was also well tolerated in children.

Speaker 4

Expert feedback on the data has been consistently positive, namely that ruxolitinib Cream could be advantageous to the currently available non steroidal topical options, an important option before resorting to currently available injectables. We are excited about the potential relief ruxolitinib Cream can bring to the over 2,000,000 pediatric Atopic dermatitis patients in the United States. As a late break in oral presentation at EADV, new results from the pooled analysis of the long term extension data from the pivotal Phase 3 TRU V program were presented. The long term study extension evaluate OXELURA in patients 12 years and older with non segmental vitiligo who previously experienced limited or no response to treatment at week 24. The data demonstrate that prolonged treatment of ruxolitinib Cream led to increased facial and total body repigmentation in those patients who were initial non responders.

Speaker 4

Approximately 70% of patients saw improvements in facial VASI and total VASI at week 52, which increased to 85% by week 104. Throughout the long term extension, Opselura continued to be well tolerated with no serious treatment related adverse events. This data highlights the importance of prolonged treatment in patients with vitiligo even when limited or no repigmentation is achieved in the 1st 6 months On Slide 25, we continue to advance OXOLLER development beyond ADN Vitiligo and into other indications where there's the potential to provide significant value as either the first approved therapy or first approved topical therapy for patients living with these dermatologic conditions. We currently have 3 Phase 2 studies, which have recently completed enrollment in lichen planus, lichen sclerosis and mild to moderate HS and 2 additional Phase 3 trials evaluating Opcellari and prurigo nodularis, which are all currently enrolling patients. Finally, on Slide 26, we have a number of upcoming data readouts And other exciting milestones expected and we look forward to sharing additional details throughout the remainder of this year.

Speaker 4

With that, I would like to turn the call over to Christiana for the financial update.

Speaker 5

Thank you, Stephen, and good morning, everyone. Q3 total product revenues were $783,000,000 representing a 10% year over year increase. In the 1st 9 months of 2023, total product revenues were $2,300,000,000 representing a 16% year over year increase. Total royalty revenues, which are primarily comprised of royalties from Novartis for Jakavi and Tabrecta And royalties from Lilly for Olumiant were $131,000,000 in the 3rd quarter and $374,000,000 in the 1st 9 months of the year. Turning to Jakafi.

Speaker 5

Jakafi net product revenues were $636,000,000 for the 3rd quarter and $1,900,000,000 in the 1st 9 months of 2023. In the 1st 9 months of the year, Jakafi net sales Grew 8% compared to the same period last year. While Jakafi demand Net sales have continued to steadily increase quarter over quarter. In the 1st 2 quarters of 2023, we saw more Notable fluctuations in channel inventory levels, which resulted in some variability in the quarterly reported net sales. As we had previously shared, at the end of Q1, channel inventory levels fell below the low end of the normal range, recovering in Q2 and ending the Q2 towards the high end of the normal range.

Speaker 5

At the end of Q3, channel inventory levels returned to the midpoint over the normal range. In the Q3 of 2023, the decrease in inventory had a $14,000,000 Negative impact on reported net sales. Turning now to Opsilura. Net product revenues for 3rd quarter were $92,000,000 representing a 141% increase year over year driven by increased patient demand and expanded coverage. In the 1st 9 months of the year, total OXELURA net product revenues were $229,000,000 Moving on to Slide 32 and our operating expenses on a GAAP basis.

Speaker 5

Total R and D expenses were 3 $76,000,000 for the 3rd quarter, representing a 2% year over year decrease, driven primarily by the decrease in one time collaboration related expenses, partially offset by continued investment in our late stage development assets and timing of certain expenses. Total SG and A expenses were $268,000,000 for the 3rd quarter, representing a 1% year over year growth. Moving on to our guidance for 2020 We're tightening our guidance range for Jakafi to a new range of $2,590,000,000 to $2,620,000,000 we are reaffirming our other hematology oncology revenue, COGS, R and D and SG and A guidance for the year. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q and A.

Operator

Our first question today is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Speaker 6

Good morning. This is Anumet on for Thank you for taking our question. First, could you help us understand Uxolora growth in our trends during the quarter and your expectations on the forward. And then just a quick question on the combo data with Jakafi, Alk2 and Betts that's expected in 4Q. I guess in the context of where the once a day dosing stands and the overall combination strategy and the positioning Each asset, can you just help us understand your thinking on how this could play out from a life cycle management standpoint?

Speaker 6

Thank you.

Speaker 5

Hi, Ana. It's Cristiana. I'll take the first part of your question and then turn it to Steven. Regarding the gross to net for OXELURA, In Q3, gross to net was 54%, down from 55% in Q2 60% in Q1. As we said in our prior call, in last quarter's call, we expect Gross to net to continue around that 55% level and any improvement would very much Depend on the evolution of Medicaid.

Speaker 4

And then in terms of your second question and the life cycle management of ruxolitinib in myeloproliferative neoplasms and beyond including graft versus host disease. Just to take the components of your question separately, The once daily dosing, we continue to work with the FDA on a response. And one of the efforts involves modeling that may be a little short in terms of timeline and one may require some further work. Regardless of the effort we undertake, both will be delivered way before the LOE for ruxolitinib, so that we'll pursue and continue. In terms of ELK2 and BEP, both very important combinations, we're showing further monotherapy and combination data at the American Society of Hematology meeting in December.

Speaker 4

So you'll have

Speaker 1

to wait for those abstracts

Speaker 4

and the meeting itself to see the data, but it's more data in terms of monotherapy and combination. Your question relates to how they may play out. ELK 2 is principally addressing hepcidin inhibition and then resulting in hemoglobin improvement. And the idea there would be to treat both the anemia from myelofibrosis as well as potentially the drug induced anemia from RUX we'll see how that data evolves. That is already a mechanism that has demonstrated the ability to shrink spleen, spleen volume reduction, to improve symptoms and also through epigenetic means, improve hemoglobins.

Speaker 4

And we've already shown quite towards our registration directed efforts here, it could be plays in the first line setting in combination with rux, in the suboptimal setting in combination with RUX and even as monotherapy post JAK inhibitors, there's substantial efficacy with the bet program. And then just to round out Limba, let me remind you axotilumab had a positive Phase 3 this year with really excellent data in third line graft versus host These net submission is going in and we'll progress that through the regulatory cycle. Thanks.

Operator

Thank you. Next question is coming from Tazeen Ahmad from Bank of America. Your line is now live.

Speaker 7

Good morning and thanks so much for taking my question. Just one for me. I just want to get a sense of how you're thinking about the evolution of the competitive landscape as it relates to Jakafi, there's been a recent new approval from mamolitinib for a subset of patients that might be on Jakafi. How are you thinking about marketing Jakafi in relation to this newly approved drug? And do you think that there's any risk of that drug taking market share.

Speaker 7

Thanks.

Speaker 1

Sure, Tanzan. This is Barry. So as we think about Petition in myelofibrosis, there was already 2 other JAK inhibitors on the market. And neither of those JAK inhibitors have really penetrated and their approvals have actually been in the first and second line setting and haven't really moved at all over many quarters now in terms of their market share or quite frankly in terms of their net sales. For momelotinib itself, Jakafi was compared directly in SIMPLIFY-one study to momelotinib and momelotinib failed in that study.

Speaker 1

The approval that they received both in the 1st line and second line setting for patients with anemia. Jakafi is in fact the only drug that really has superior overall survival in myelofibrosis patients regardless of anemia. So in other words, patients who have anemia and got Jakafi for myelofibrosis have a survival advantage. So that strong designation gives us confidence that we'll continue to be the leader in myelofibrosis. Additionally, of course, patients are started myelofibrosis patients are mostly started on therapy when they have symptoms.

Speaker 1

And Jakafi clearly is the most effective therapy when it comes to managing symptoms and spleen. And then, momelotinib, just like the other drugs, are in fact much more costly than Jakafi. Momenotinib being $26,900 per month 60% or so higher than Jakafi. So Seems like it was priced for a second line drug and we think that's where it will be mostly used.

Speaker 5

Thank

Operator

you. Our next question is coming from Brian Abrahams from RBC Capital Markets. Your line is now live.

Speaker 8

Hey, thanks. It's Leonid on for Brian and thanks for taking our question. I just wanted to go back to maybe some of the reimbursement dynamics with Upsella. You guys mentioned the preferred brand designation from Caremark and I guess I'm curious, how do you anticipate that impacting Access and ultimately pulling through to utilization? And did you guys have to make any net pricing concessions for And I guess related to that, I mean, is this contracting that you're working on with some of the other payers as well?

Speaker 8

Thanks.

Speaker 1

Sure, Lina. Barry again. So, in terms of Caremark, CVS Caremark in particular, it's very important in terms of access for the patients. We're trying to make it as easy as possible for dermatologists to prescribe the drug and then for patients to receive it. So, in this particular situation, we're going from a double step for atopic dermatitis.

Speaker 1

So patients would have had this to go through Topical steroids and topical calcineurin inhibitors, before they get to, Opsilara and in Vitiligo also had to go through multiple steps. Now in Vitiligo as it should be because of the label and the only drug approved for Vitiligo that re pigments the skin for Vitiligo, having no steps to go through. So first line therapy is excellent. And just having to go through one step because most patients will have in fact use topical steroids when they have AD, so that makes it much easier. In terms of contracting and concessions, there's always a negotiation of course with the PBMs and the payers over rebates and fees and so forth.

Speaker 1

So it might cost us a little bit more on the Rebate and, but in fact, then the co pays generally go down. And most importantly, what we're really trying to achieve Is volume. And then I suppose your last question is the negotiations with payers always continues. We don't really have to have any further negotiations unless we choose to until 2025 for OXOLLORA. But there's always the chance that we come back and decide to do something slightly different in terms of getting in terms of making access easier for patients.

Speaker 1

Most of the contracts that we have in place currently, in fact, allow patients to allow plans to step up and change their step therapy from 2 to 1 and so forth.

Operator

Thank you. Next question today is coming from David Lebowitz from Citi. Your line is now live.

Speaker 9

Thank you very much for taking my question. Would you be able to give us insight on the current, I guess rate of the number of tubes per patient in AD and D excuse me, AD and Vitiligo, you were Have there been any changes in expectations and where do you think stand right now?

Speaker 1

Sure. So in terms of AD, I think we had it on the slide, it's around 2. We've been saying that for a while. We expect Two tubes per patient for atopic dermatitis on average. Obviously, some patients will get a lot more than that.

Speaker 1

In Vitiligo, we need some more time really to evaluate exactly in the real world how patients will Receive Opsilora for Vitiligo. So patients who have might just apply the drug to the face, for example, or apply it all over their body, it varies. But we'll continue to track the number of tubes for vitiligo, but obviously with our data so far, long term extension data, patient and use it safely for years and continue to get benefits. So, we'll update you when we have more information as we gather more data, as we have more use in Vitiligo.

Operator

Thank you. Next question is coming from Jessica Fye from JPMorgan. Your line is now live.

Speaker 10

Hey, good morning. Thanks for taking my question. Curious, if you'll be in a position to provide OXOLLARA guidance for 2024 and with respect to your bet, what you'll be looking for in the upcoming pelabrasib results?

Speaker 5

So, Jason, I'll take the first part of the question regarding the Opsilura guidance. As We've shared with you in the past, in order to provide guidance, we want to have a few Quarters of real world experience with Opsilura, especially for Vitiligo, given that it is a new market and be able to see how in the real world utilization is how many tubes on average Vitiligo patients use and also how quickly and at what rate inactive patients can getting to see their physicians and get on therapy. So we are still very early in the launch of Vitiligo and we

Speaker 4

And then in terms of your question related to BET inhibition in myelofibrosis, the competitor ongoing First line study, which you allude to, is what we consider a pretty standard first line study in about 4 40 patients. The primary endpoint is spleen volume reduction of 35% or greater and already communicated, it has to be an end in terms of the secondary endpoint of hitting total symptom score, 50% improvement or above versus the competitor RACs in that situation. For our own BET inhibitor, as I said earlier, both monotherapy data we've already shown spleen reduction, symptom response and some hemoglobin responses and then the ongoing combo works showing the same. And we'll have to see how that data plays out versus what delivers in their first line study in terms of our registration efforts and we'll communicate further about that at the ASH meeting coming up in December. Thanks.

Operator

Thank you. Next question is coming from Mark Krum from TD Callender. Your line is now live.

Speaker 11

Hi, thanks for taking my questions. Maybe first to start just on the commercial side to Follow-up on one of the prior questions. Just Barry, on a blended basis, given this is a pretty large plan that you're moving up the formulary, But on a blended overall basis for the franchise, should we expect Gerstinet to incrementally increase in 'twenty four versus the full year 'twenty three given that move?

Speaker 1

Mark, I'm not really sure to be honest with you. We'll have to see what the volume is and what the improvement in co pays is to see how it affects our gross to net. But Anyway, we'll see, but there's always a chance that we could actually benefit a great deal from Net sales by making it much easier for patients to be able to access our drug.

Operator

Thank you. Next question is coming from Vikram Parulant from Morgan Stanley. Your line is now live.

Speaker 12

Good morning. This is Gasper on for Vikram. We have two questions for Jakafi. Due to the recent approval of GSK or Jira. The first one is what portion of MF patients using Jakafi could you estimate are using this optimal dose due to anemia and in this patient population have you seen an increased rate of discontinuations as prescribers and patients potentially move towards Orgera?

Speaker 12

And secondly, have you observed a decrease in Jakafi new fishing start in MF since Aljera was approved?

Operator

Thank you.

Speaker 1

Well, guys, the most important thing is that, so Ojira only got Approved on September 15th, it really only launched in the last week of the year. I'd be surprised that there was actually any sales except for stocking sales in the quarter. So anyway, so I can't imagine that it affected any part of us yet. Now what percent of patients might be receiving a suboptimal dose? What we've only said before, I believe is that the number of patients who are at steady state on 5 milligram twice a day dose or something like that is only about 5% of our patients.

Speaker 1

I believe those patients are actually getting benefit, but That's the most. And just like in our clinical trials, cover one trial, I mean, only one patient discontinued for anemia. So We don't believe that that's a big part of it. And like I said before about the benefits that Jakafi provides to MF patients, whether they're anemic or Non anemic, it's overall survival, it's symptom control, it's spleen control. So, so far, we don't really see We don't really anticipate impact by lomelatinib certainly in the Q3.

Operator

Thank you. Our next question today is coming from Matt Phipps from William Blair. Your line is now live.

Speaker 13

Thanks for taking my questions. I wondered on the toborsitinib Phase 3 plans in Vitiligo, how you can structure that trial to complement The current OXOLURA utilization opportunities are really just around baseline VASI scores. And then as you think further out about additional opportunities for pobrastinib, what are you keeping in mind considering it looks based on the profile so far as to work in a pretty wide range of more classical autoimmune indications, Clearly, there you might have more competition.

Speaker 4

Matt, hi, it's Steven. Thanks for the question. So in terms of Vitiligo, as we Told you the data in more extensive non segmental, but the LIGO, we saw really good effect in terms of facial VASI, facial VASI 75 and And then total Vaz as well, body rig pigmentation of 50% or above. We will disclose when we go on to controls.gov what the endpoints are and what doses we'll be using. So it's premature to point you towards that other than just broadly tell you that The population we target in is people with more extensive body surface area involvement when you compare it to the cream, which is indicated for people with 10% or below, this would open up the Vitiligo community with people with much more extensive body surface area involvement, where it becomes a little pragmatically hard to apply cream across the body and an oral JAK can be used in that setting with the right therapeutic ratio.

Speaker 4

And as we guided to, we want to get the study going by the end of this calendar year. Porvacitinib is Relatively JAK1 specific, you saw the program in HS both stop HS1s, HS2 are enrolling really, really well based on the what we think is excellent Phase 2 data, including that Hisco-one hundred response. But as you allude to, we have now Data in corrago nodularis, that's excellent and we want to progress that into Phase 3 and then ongoing efforts beyond dermatology in asthma and chronic spontaneous urticaria, where the biology points to this kind of JAK1 agent potentially showing substantial benefit in patients with more severe asthma, who on inhaled corticosteroids, long acting bronchodilators and still having yearly exacerbations. That's a Phase 2 proof of concept study and then standard endpoints in chronic spontaneous urticaria. So, we this drug has demonstrated thus Remarkable activity in those areas where we study in Phase 3 now and we'll see what happens in asthma and CSU.

Speaker 4

So thanks for the question.

Operator

Thank you. Next question today is coming from Michael Schmidt from Guggenheim Securities. Your line is now live.

Speaker 14

Hey, good morning. This is Paul on for Michael. Thanks for taking our question. I just want to build on the prior question. Can you talk about how you plan to position and prurigo dotalaris in the planned Phase 3 relative to sort of how you design the ongoing Phase 3 studies for OXOLORA.

Speaker 14

Is there a meaningful difference in the target patient populations? And how should we think about the specific addressable opportunities within PN for the 2 programs? Thank you.

Speaker 4

Yes. Thank you for the question. Just in terms and Herve said this upfront in his remarks, There's a prevalence upwards of 200,000 plus patients, but they're about 80,000 to 100,000 that currently get treated in the setting, and their main manifestation of their disease is itch and very severe itch. So and that's what the Phase 2 showed that activity in that setting across I think it's premature beyond that to talk about the endpoint and the dose we'll be using because we've just got the Phase 2 data in. But it will be again because it's an oral agent targeting the more severe spectrum of PN.

Speaker 4

That's what I can tell you now. Thanks.

Operator

Thank you. Our next question is coming from Maura Goldstein from Mizuho Securities. Your line is now live.

Speaker 15

Great. Thanks so much for taking the question. I just was hoping actually to get a little bit more color on The Medicaid penetration with respect to Upsilura, because last quarter it was identified as a jump in the payer mix that had an effect, Right, on, Obscilura and the gross to net. And then secondarily, I'm just hoping maybe you could talk a little bit about PV for Jakafi. I mean, it looks like the percentage just eyeballing it, right, of Jakafi sales from PV has remained relatively stable.

Speaker 15

And I'm curious as to with this new data and potentially earlier patient starts, where you think the growth could be?

Speaker 1

Sure. So as far as Medicaid patients for Opsilargos, it's about 14% of paid patients. As we said in the past, we had such good coverage for Medicaid throughout all 50 states that it was sort of Grew faster than perhaps the commercial patients. So I think that answers part of your question. For Jakafi and PV, I guess if you're looking at the slide that we had there, PV, it continued in terms of the patient share, it is about 35% or so at any given time, for example, this year, year to date, there's more than 8,000 patients on PV, but PV patients stay on the drug for a long time.

Speaker 1

So we're talking about what we think now the average is about 41 months that patients are staying on Jackify for PV. So that's important. So every new PV patient becomes that more important. And we think that there's lots of patients who are currently on other therapies, including hydroxyurea that would benefit from moving to Jakafi earlier and now that we have a study where there was no crossover, so that you can actually evaluate the long term thrombosis free survival and in fact progression free survival for patients that that's really an indicator that you really should start earlier with an effective therapy like Jakavi. And we think that's really where The upside is here is that each and every PD patient is valuable and we can provide them with really effective therapy to manage their disease long term.

Speaker 1

So that's what our growth expectations are. Thanks.

Operator

Your next question today is coming from Andrew Berens from SVB Securities. Your line is now live.

Speaker 16

Hi, thanks. Can you remind us how you see 3,399 fitting into the treatment paradigm for MF relative to the JAK agents? And then, do you see the regulatory pathway leveraging surrogate endpoints for approval? Or would you want to show a decrease in malignant transformation

Speaker 4

Andy, you are asking about Steven, just to clarify your question about mutant KLR and V617S in the future, we couldn't hear clearly your first part of your question.

Speaker 16

Yes, just I'm trying to understand how you see that fitting into the treatment paradigm relative to the JAK agents?

Speaker 4

Okay, great. Thank you. So as Pablo said in his remarks, remarkable effort from our research group to come up with compounds that now target new areas of biology. So in terms of mutant KLR, it's about 25% to 30% of myelofibrosis and ET, that's a neoantigen that's expressed and the antibody targets that and could eradicate the clone. So you could be talking about a very new treatment paradigm that's disease modifying or potentially in inverted commas curable if you eliminate the clone in those settings.

Speaker 4

Obviously, we're early in the clinic, we need to prove it safe and get there, But there's a lot of excitement and obviously got a plenary at ASH last year because of that with the mutant CALOR antibody. In terms of where it fits in, it won't be an agent that's in the way we think about spleen volume reduction, symptom improvement, it could be, as I said, to be a little bit repetitive to eliminate the clone and sort of get rid of the disease, if you will. The same with V617F, a target that many have pursued for a long time. And again, credit to our research group for coming up with, as Pablo pointed out, a very novel way of targeting the mutation in the JH2 domain. And then again, the idea would be to eliminate the clone and disease modified.

Speaker 4

And this is a bigger population, is about 50% of MF, 60% of ET and 95% plus of polycythemovira. So for the first time now, we've been able to show you that we've come up with a target in PV, where it's an area where we haven't been able yet to give you anything new beyond RUX. We're very excited about that. Again, it's early to get the IND across the finish line and get into the clinic, but it's a superb science and would be a very different way of thinking about those entities. So thanks for the question.

Operator

Thank you. Next question is coming from Jay Olson from Oppenheimer. Your line is now live.

Speaker 13

Hi, this is Sean on line for Jay. Thanks for taking the question. So just following on the prior question just for the V617A mutations. I'm just wondering you are thinking about the monotherapy versus And just on the slide, it seems like the COLA mutations and V617 as mutations are mutually exclusive. So just want to confirm if that's correct.

Speaker 13

And just a quick question on Ophthalura. Wondering if you can talk about split between AD and Vitiligo in 3Q, that'd be great. Thank you.

Speaker 3

So this is Pavel. Let me take the first part of the question. So as Steven mentioned and I explained in my remarks, it's early days for both programs. I think that When you start thinking about how to position them and the potential combination with Jakafi, I think we need to get through a few cohorts in the Phase 1 studies understand the profile of these 2 new medicines and then we'll start building a combination strategy. I think potentially that could be the case, particularly as you start thinking about symptom resolution with Jakafi early in the treatment paradigm and then using either V617F for the mutant caller antibody to then try to eliminate the clone and potentially transform the outcomes in these diseases.

Speaker 3

The second part of your question I think was related Whether these are mutually exclusive and they are, and that's actually an important point in understanding how to position them in the future. Then I think you had a question about AD, which I'll pass over to Barry.

Speaker 1

Yes. Chung, I didn't really hear you. So AD versus Vitiligo, what were you trying to say? What is the script volume?

Speaker 13

Yes, that's split between 80% and Vitiligo. Thank you.

Speaker 1

Sure. Currently, it's about sixty-forty. So sixty-eighty-forty percent Vitiligo. Thanks.

Operator

Thank you. Next question is coming from Ren Benjamin from JMP Securities. Your line is now live.

Speaker 11

Hey, good morning guys. Thanks for taking the questions. Maybe for Stephen, can you talk a little bit about how you view the competitive landscape in PN and NHS, and could the landscape change prior to your Phase 3 readouts? Or are you the Clear sort of market leader in both indications. And I guess just as a second sort of follow-up question maybe for Herve.

Speaker 11

You guys are generating significant cash flow, you have a strong balance sheet. The pipeline is largely ignored by investors and is you know, significantly down. Can you talk maybe a little bit about the process, that you might be going through to, you know, maybe which years maybe acquire an entire company platform and pipeline and all versus striking kind of one off product collaboration agreements?

Speaker 4

I'll start and then hand it over to Steven. So let me remind you, so Porvoo Sitam is oral agent. In both entities, you're talking about becoming very interesting in terms of the science, a lot of targeting with different modalities, But they're mostly intravenous IV large molecules that target things like IL-seventeen, so very specific biology. Whereas in these entities, there's more broad biology and that's why we think Jack may be important here, both in PN and HS. An oral agent, Now we've shown what we think is very strong proof of concept data in both entities, HS, we have ongoing 2 Phase 3s and PN will be proceeding there.

Speaker 4

Sure. The landscape can always change as part of any assessment we do. We look at the competitive landscape and what may occur. But in terms of In oral agent, we think that's the big differentiator here and then I'll hand it over for the second part of your

Speaker 2

question. So your question about the way are we sort of turning into a new direction Regarding the use of cash, and the answer is we are still continuing to look at opportunities outside of the company, we are still investing in our pipeline. But as you have noticed, our growth of the revenue continues to be faster, higher than the growth of our expenses. So we continue to generate leverage and we continue to have an increasing cash flow quarter after quarter, and we are looking at opportunities to continue to add to the growth of the corporation in the 25 to 30. So it's a relatively broad target.

Speaker 2

Obviously, valuations have been Fluctuating a lot in the past month and it's creating opportunities that we are looking at. So there is A clear willingness for the right price to add new products that would be fitting with our portfolio If we can, we could do it through partnership or acquisition. In fact, we think both would be appropriate And it's a financial question or it's a question of willingness to go one route or the other, but we could do it either way.

Operator

Thank you. Next question is coming from Derek Archila from Wells Fargo. Your line is now live.

Speaker 17

Good morning. This is Eva on for Derik. Thanks for taking our question. A quick one from us. Can you provide some color on the pace

Speaker 4

So, thanks for the question. Absolutely, that's the case. I'll be a little repetitive. The XR program, we're busy in In terms of response to the FDA now and the idea is to get the XR approval prior to the loss of the LOE for RUX. Both bet and elk programs, we want to declare where we go and if we go into registration studies end of this year, early part of next year and it will give us enough time to execute a Phase 3 program and get across the finish line there.

Speaker 4

So that's absolutely the intent. The mutant CALR and V617F, as Pablo said, are early, but with great promise of disease modifying agents. And So it's a little unclear the regulatory path there and it will depend on demonstrating safety and efficacy. But we will We'll see if that keeps going well, you could potentially execute a rapid Phase 3 program, but it's really too early to say. Thanks.

Speaker 2

Maybe I can add, I mean, on this view about the Jakafi patent exploration and the way we are sort of allocating That's basically the 8 program. You saw one of the slides is speaking about the 8 programs that we are prioritizing in R and D, And that's where you have the list of the programs that will be impacting our revenue in the years that are coming relatively Soon with Kala being maybe the one that is a little bit of a stretch, but for everything else it could come before that time and the povarcitinib program, which is increasing today, we have the news of an additional indication in Prorego Nodularis is in Phase 3 now for one indication HS. Phase 3 is being planned for Prorego, Nadilares and Vitiligo, so all of that should be coming into years that precede the patent expiration for JAKAD5.

Operator

Thank you. Our final question today is coming from Evan Seyegerman from BMO Capital Markets. Your line is now live.

Speaker 13

Hi, Michael Hoffman on for Evan. Just wanted to ask with the pre submission meeting with FDA planned for rux in pediatric patients. Are there any nuances with that submission in the pediatric population versus adults that you think will require special consideration for the FDA and Incyte? And has there been any indication on when that meeting may take place? Thank you.

Speaker 4

Steven, so we don't guide to when we have the actual meetings, but the only nuance impedes some safety requirements to demonstrate, under maximum use conditions that there's no increased levels or untoward side effects, we've completed that work. We're satisfied with the results and we're discussing it with the FDA. So that will put out submission sometime hopefully in the first half of next year in terms of having that complete data set and submitting it then and we're very comfortable with the

Speaker 1

Thank you. We've reached the

Operator

end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Speaker 1

Thank you all for participating on today's call and for your questions. The IR team will be available for the rest of the day. Please don't hesitate to reach out. Thank you.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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Earnings Conference Call
Incyte Q3 2023
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