Incyte Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 16 speakers on the call.

Operator

Hello, and welcome to the Incyte Second Quarter Earnings Conference Call and Webcast. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Greg Schutzer, Investor Relations for Incyte. Please go ahead, Greg.

Speaker 1

Thank you, Kevin. Good morning, and welcome to Incyte's Q2 2023 earnings conference call and webcast. The slides presented today are available for download on the Investors section of our website. Joining me on the call today are Herve, Pablo, Barry, Steven and Christiana, who will deliver our prepared remarks and participate in the Q and A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our reports filed with the SEC.

Speaker 1

We will now begin the call with Herve.

Speaker 2

Thank you, Greg, and good morning, everyone. So we had another quarter of strong performance with product revenues growing 25% year over year driven by Jakafi, Opcelloa And launches in Europe. Jakafi net product revenue grew 14% compared to the Q2 of 2022. For Occellular, the growth trajectory continues with net product revenues in the Q2 of $80,000,000 driven by new patient flow and growth in refills. Additionally, the launch in Europe is underway and OpcelloRa is now available to patients in Germany And Austria.

Speaker 2

Our other hematology and oncology net product revenues were $64,000,000 for the quarter, up 30% year over year driven by the growth of Pemazir and MINJUVIE in ex U. S. Market. Now turning to Slide 5. We continue to execute on our development efforts.

Speaker 2

Recently, we announced positive top line results from 2 of our high potential power: the true EDI-three study evaluating ruxolitinib cream in pediatric atopic dermatitis And the AGAVE-two zero one study evaluating axitelimab in chronic GvHD met our respective primary endpoints. Stephen will discuss these results in more detail during his prepared remarks as well as provide updates on the important progress we made across many of our high program as shown at the bottom of the slide. We also strengthened our research and development organization by appointing Cagnoni as President and Head of R&D and in this position and as member of the executive team, Pablo will lead in Cytron D activities. This new role aligns chemistry, biology and early and late stage clinical development with the goal of maximizing speed and productivity in our research and development efforts. I will now turn the call over to Pablo for a few words.

Speaker 3

Thank you, Herve. I'm thrilled to join the team at Incyte, A company with such an impressive history of success and who has refined the standard of care in myeloproliferative neoplasms, graft versus host disease And Vitiligo. Since joining just a few weeks ago, I have spent time with our teams and I'm even more enthusiastic about the capabilities of our organization and about the quality of our science. We're prosecuting a broad range of biology with a diversity of modalities, I look forward to working with them to continue to deliver major advances across our portfolio in order to make a meaningful difference for patients. Herve?

Speaker 2

Thank you, Pablo. And with that, I would like to pass the call to Barry for commercial update.

Speaker 4

Thank you, everybody. Good morning, everyone. Starting with Jakafi on Slide 7. Net product revenues for the quarter were $682,000,000 up 14% year over year, driven by the continued growth in patient demand across all indications. Total patient demand grew 5 are raising the bottom end of our full year 2023 revenue guidance to a new range of $2,580,000,000 to $2,630,000,000 Turning to OXOLLORA on Slide 8.

Speaker 4

The launch continues to be strong and is gaining positive momentum with both physicians and patients. The rapid adoption of Opselor is driven by its compelling product profile and its ability to address significant unmet need In both atopic dermatitis and vitiligo. OXOLLOR net product revenues in the quarter were 80,000,000 dollars up 42% compared to the prior quarter. U. S.

Speaker 4

Patient demand increased during the quarter with total prescription Growing 16% compared to the last quarter and refills growing by 23%. The monthly prescription trend as shown on the right demonstrate the continued growth of Opselorin, which is coming from both atopic dermatitis and vitiligo. In AD, Growth was primarily due to new patient flow driven by OXOLORA's efficacy and impact on inflammation and itch. In Vitiligo, where Opselorra is the only approved treatment for repigmentation, growth was driven largely by refills and our educational and awareness initiatives. We are very optimistic about the long term potential of OXOLORA as we continue to see Strong uptake and positive momentum.

Speaker 4

On Slide 9, MONJUVY net product revenue in the U. S. For the quarter were $24,000,000 up 2% year over year and were driven by continued growth in community accounts. Minjuvi net product revenues outside of the U. S.

Speaker 4

Related to the early access program in France, which ended in June. Pemazir net product revenue grew to $22,000,000 A 14% increase year over year with 5,000,000 coming from outside the U. S. Where the launch is ongoing in 10 key markets in Europe. With that, I'll turn the call over to Steven.

Speaker 5

Thank you, Barry. Starting on Slide 11. As Herve mentioned, we have 2 exciting program updates we want to highlight from this quarter. First for ruxolitinib Cream, The primary endpoint was met in the Phase 3 TRU-eighty three trial in pediatric atopic dermatitis patients aged 2 to 12. The top line results showed that significantly more patients achieved Investigators Global Assessment Treatment Score or IGATS With ruxolitinib Cream 0.75 percent and 1.5% and with the vehicle control.

Speaker 5

No new safety signals were

Speaker 2

observed and the overall safety

Speaker 5

profile is consistent with is consistent with previously reported data. The long term safety portion of the trial is ongoing and data will be submitted presentation at an upcoming scientific meeting. We also plan to discuss these data with regulatory agencies. We anticipate a submission in the Q1 of 2024. We are excited about the potential relief ruxolitinib can bring to the roughly 2,000,000 pediatric atopic dermatitis patients in the United States.

Speaker 5

Moving to Slide 12. In partnership with Syndax, the AGAVI-two zero one study, A global pivotal trial evaluating axotilumab in patients with chronic graft versus host disease after 2 or more prior therapies met its primary endpoint of overall response rate across all three treatment cohorts with the 0.3 milligram per kilogram every 2 week dose achieving a 74% overall response rate. In the 0.3 milligram per kilogram cohort, 60% of responders maintained their response at 1 year and 55% of patients achieved at least a 7 point decrease And they modified Lee's symptom scale indicating that responses were both durable and with symptom improvements. Actitilimab was well tolerated and the most common adverse events were consistent with on target effects. The full data set is planned for presentation at a scientific meeting later this year with a potential BLA submission by year end 2023.

Speaker 5

We are excited about the potential of axotilomab in chronic graft versus host disease and in this heavily pretreated and severe patient population. A Phase onetwo trial of axotilumab in combination with ruxolitinib is also being planned. Moving to Slide 13, an update on our broader dermatology pipeline. Bobsolura, In addition to the positive top line pediatric AD data, 3 Phase 2 studies for LICA planus, LICA Sclerosis hiradrenitis suppurativa have completed enrollment. For povacitinib, the Phase 2 study in prurago nodularis completed enrollment and we expect to have data in this indication later this year.

Speaker 5

Additionally, we previously announced expansion of porvacitinib development into inflammatory and autoimmune diseases beyond dermatology and now have initiated 2 Phase 2 trials in asthma And chronic spontaneous urticaria, CSU. On Slide 14, I want to provide a little more detail on our studies in asthma and chronic spontaneous Asthma is a chronic inflammatory disease with 2 endotypes. Type 2 eosinophilic asthma, The most common type is primarily driven by Th2 cytokines, whereas non type 2 asthma is characterized by a neutrophilic response. Many asthma patients have disease progression despite therapy with inhalers. Ovacitinib appears to have efficacy in both type 2 and non type 2 endotypes.

Speaker 5

In preclinical data, ovacitinib results in a reduction of eosinophil activation and may potentially reduce Neutrophil activation as well. The Phase 2 study has been evaluated in moderate to severe uncontrolled Type 2 and non Type 2 asthmatic patients. Unlike monoclonal antibodies that target a single cytokine, ovocitinib inhibits the actions of multiple cytokines, Potentially providing superior efficacy in both endotypes. CSU is a mast cell driven disease presenting with hives And severe chronic itch. Over activation of dermal mast cells and basophils results in increased serum levels of TH1, TH2 and Th17 related cytokines.

Speaker 5

We know JAK inhibition can modulate mast cell activation, including degranulation and cytokine production, Both of which are drivers of chronic spontaneous urticaria. The Phase 2 study has been evaluating patients who are inadequately controlled or progress on 2nd generation antihistamines. Moving to hematology and oncology, we achieved multiple clinical milestones across our high potential portfolio during the Q2. We continue to make progress in myeloproliferative neoplasms or MPNs, where we presented updated clinical data at ASCO for our ALK2 and BED program. We also initiated the Phase 1 study of INCA-three thousand three hundred and ninety nine, our mutant catar antibody and as previously discussed, axotilumab met the primary endpoint in chronic graft versus host disease.

Speaker 5

For oncology, both of the Phase 3 studies evaluating tafasitamab In first line diffuse large B cell lymphoma and in relapsed or refractory follicular and marginal zone lymphoma are fully enrolled And the small molecule oral PD L1 program continues to advance with multiple new studies initiated. Turning to Slide 16 and an update on our small molecule oral PD L1 program. Immune checkpoint inhibitors have transformed cancer treatment for patients. Despite the remarkable clinical benefits, intravenous formulations have disadvantages and there is ample opportunity Innovation and improved outcomes in this space. As the 1st company to demonstrate clinical activity With an orally available PD L1 targeted agent, we have a unique opportunity for differentiation.

Speaker 5

As an oral small molecule, INCB99,280 has a short half life, which can reduce the burden of managing immune related toxicities and provides a switch off option if needed, which may offer improved overall safety, especially when combined with other agents. Additionally, the convenience of an at home oral administration is often preferred by patients and may offer the potential for an improved quality of life. On the right, you can see the current studies of INCB99,280. We've initiated monotherapy Phase 2 studies With axitinib and ipilimumab, a 3rd Phase III study in combination with adagracisib is in preparation. We also announced last night that in partnership with Replimmune, we are starting a neoadjuvant study to evaluate 280 in combination with RP-one, product and is based on a proprietary new strain of herpes simplex virus engineered for robust tumor selective replication and is genetically armed With a fusogenic protein and GM CSF, RP-one has already demonstrated substantial activity in cutaneous squamous cell carcinoma.

Speaker 5

At ASCO, we presented data for zilugosertib, our ALK2 inhibitor in patients with myelofibrosis. Initial data from 36 patients demonstrated early signs of clinical activity through hepcidin reduction and anemia response In monotherapy and in combination with ruxolitinib, dalergisertib was well tolerated with a favorable safety profile allowing for Continued dose escalation. We've added an additional treatment group in first line JAK naive mitofibrosis patients with anemia We plan to have updated data later this year. Additional data presented at ASCO for our BET inhibitor, INCB576 It was generally well tolerated with 2 dose limiting toxicities observed in the higher 12 milligram once daily monotherapy arm. We believe we have an active compound with encouraging early data.

Speaker 5

Dose finding work is ongoing with 10 milligrams once daily as monotherapy We continue to make progress in other development programs. During the quarter, INCA-thirty three thousand eight hundred and ninety, a TGF beta R2 by PD-one Predafanumab, which was recently approved in Merkel cell carcinoma, has completed enrollment in the Phase 3 non small cell lung cancer study and in the squamous cell anal carcinoma study. Finally, on Slide 20, 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. With that, I'd like to turn the call over to Christiana for the financial update.

Speaker 6

Thank you, Stephen, and good morning, everyone. Q2 was a very strong quarter with total product revenues increasing 25% year over year to $827,000,000 driven by the strong performance of Jakafi and OXELURA. Jakafi net product revenues for the 2nd quarter were $682,000,000 representing a 14% year over year increase driven primarily by continued growth in patient demand across all indications and an increase in channel inventory. At the end of Q2, channel inventory had recovered from the depressed Q1 levels and was towards the high end of the normal range. The increase in inventory represented around $35,000,000 in net product revenues.

Speaker 6

OXELURA Net product revenues for the 2nd quarter were $80,000,000 representing a 3 84 an increase year over year driven by increased patient demand and expanded coverage. Finally, other rheumatology oncology net product revenues And the recognition of $6,000,000 of previously deferred Minjuvie revenue related to the early access program in France, which ended in June. Turning to royalty revenues. Total royalty revenues for the quarter were $128,000,000 and are primarily comprised royalties from Novartis of $90,000,000 for Jakavi and $5,000,000 for Tabrecta and royalties from Lilly of $32,000,000 for Olumiant. Jacobian and Olumiant royalties for the quarter were negatively impacted by FX headwinds.

Speaker 6

Turning now to Slide 24 and the performance of Opselura. The launch of Opselura has been very strong With 2023 year to date net sales of $137,000,000 Since the launch of Vitilago, Opselura net product revenues Have grown at an average quarterly rate of 28%. Net product revenues grew 42% compared to last quarter, primarily driven by demand and the normalization of the typical Q1 dynamics. Moving on to Slide 25 and our operating expenses on a GAAP basis. Total R and D expenses were $401,000,000 for the 2nd quarter, representing a 15% year over year growth, driven primarily by the the progression of flovacitinib into pivotal studies.

Speaker 6

The SG and A expenses were $284,000,000 for the 2nd quarter, Representing a 12% year over year growth, driven primarily by promotional activities launched at the beginning of the year to support OXELURA in Vitiligo and the timing of certain other expenses. Moving on to our guidance for 2023. As a result of Jakafi's strong demand growth, we are raising again the bottom end of our full year Jakafi guidance to a new range of $2,580,000,000 to 2.6 $3,000,000,000 We are reaffirming our other hematology oncology revenue, COGS, R and D And the 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

Certainly, we'll now be conducting a question and answer session. Our first question today is coming from Brian Abrahams from RBC Capital Markets. Your line is now live.

Speaker 7

Hey, this is Leonid on for Brian. Thanks for taking my Question. I guess I had one maybe on MF development in the Limber program. Given the high bar that Jakafi sets and the challenges on TSS-fifty exemplified by difficulties one of the competitor drugs recently had in hitting on the symptoms score. How is this shaping your thinking about going to the frontline or the second line with the BET inhibitor and just positioning of these molecules going forward?

Speaker 7

Thanks.

Speaker 5

Leanna, thanks for the question. It's Steven. Yes, and for acknowledging ruxolitinib's Incredible activity in terms of both spleen responses, but especially symptom improvement. And as you point out, it's a very high bar To beat, in terms of our own thinking, one has to be obviously careful in study design, in adequate powering in terms of endpoints And also making sure that you maintain adequate JAK inhibitor dose intensity going forward. And so both just to point out in terms of our combination programs, we talk about ELK 2 first.

Speaker 5

You can see where it's heading. Clearly, we have Increasing hepcidin reduction with increasing doses, and we're starting to see very encouraging hemoglobin responses. So the thinking along those lines would be potentially looking at in the first line, Steli, an ability to Prevent anemia development and thus maintain very importantly RUX dose intensity and get the maximum benefits in terms of JAK inhibition in spleen and symptoms. And so that's where that's heading. And hopefully, as we've said repeatedly, By next year, we'll complete the dose escalation and be able to declare where we want to go.

Speaker 5

It's incredibly safe In terms of tolerability, so we're able to continue to dose escalate at the moment. In terms of the bet program, it's a little bit of a different thing in terms of tolerability. There's no one on target toxicity in terms of thrombocytopenia in terms of going in higher doses. So in monotherapy at the 12 milligram, we saw dose limiting toxicity there and we back at the 10 milligram dose in terms of monotherapy. We've seen again extremely encouraging lean response, symptom response and also occasionally hemoglobin improvement.

Speaker 5

But to your point, we have to think carefully about where to go in terms of first line or suboptimal study. And obviously, there's a competitor reporting out bet data later this year, which we're going to watch carefully. And again, to be Repetitive, powering in terms of symptoms, you have to be very careful in the first line setting because ruxolitinib is so good. So that program as well, we'd like to declare by the end of year timeframe next year, earlier part of the year where we go in, in terms of registration direct And then also just to remind you, completely different effort, the CALR antibodies in the clinic now, potentially Disease modifying even curative in the 30% of KLR patients that are in the MF population and in the ET And that could be a completely different way of thinking if you can eliminate the clone and change The disease trajectory completely and you wouldn't even be thinking then in terms of spleen and symptom response, you'd be eliminating the clone. So that's where we are with the program at the moment.

Speaker 5

Thanks.

Speaker 7

Thank you.

Operator

Thank you. Next question today is coming from Kripa Devarikanda from Truist Securities. Your line is now live.

Speaker 8

Thank you so much for taking my question. I have a question about the axotilumab data from the Phase II trial you reported recently. The big question we've been getting is around the unusual dose response. So we've heard that this could be because of potential impact I know it's not been too many days since you reported the data, but it's been a few days Since you've had to digest the data, wondering if you have a sense of what it might take to understand what's going on there? And more importantly, how this might affect Regulatory review.

Speaker 8

And then for MINJUVY, as you continue to work through reimbursement in EU, are you seeing a difference in how it's being used In U. S. Versus EU? Thank you.

Speaker 5

Professor, it's Steven. I'll start off with your axotilumab question. So the AUGAVA-two 1 study had 3 doses and a schedule difference as well. So the first two were 0.3 milligram per 1 milligram per kilogram Q2 and the 3rd dose level was 3 milligram per kilogram Q4. And you're right.

Speaker 5

We had a pleasant surprise in having excellent activity across all the dose levels In patients who had actually a medium of 4 prior therapies and including prior ROCK inhibition, you're getting that with a 0.3, A 74% best overall response. The 1 milligram per kilogram is not really different, just to be clear. Now when you're up at 67% on best overall response. And then if you look across at some other ways of looking at responses in a very similar territory. So we don't think there's a difference in response rate, but there is a difference in terms of tolerability, in terms of on target effects, Likely on liver Kupffer cells and transaminitis that gets worse with increasing dose.

Speaker 5

And certainly at the 3 milligram per kilogram, There's clearly more transaminitis and that is likely not the regulatory dose. It will be the discussion with the regulators on the 0.3 versus the 1, Both showing excellent activity in terms of overall response rate and tolerability. And we're still in the early days working that out with regulators, but we'd like to get that submission in, the BLA in by the end of this calendar year 2023. I'll turn it over to Barry for your second question.

Speaker 2

I will take it. I will take it. That's on MINJUV in Europe. So there are 2 ways to look at it. I mean the overall Profile of patients that we are seeing using MINJUV in Europe is not dissimilar to what we have in the U.

Speaker 2

S. It stands that You have basically a group of patients who are not eligible to CAR T, obviously not eligible to transplant And in many cases, it would be patients who are frail and are attracted by the very good safety profiles that we have with Minjury Len. And obviously, the very good efficacy that you can get there. Now the extent to which CAR T is used in different European countries different from the U. S.

Speaker 2

So I would say it's a little bit maybe earlier on the curve. And what we see is that the volumes, there's a group of patients that End up being eligible for MINJUV is in fact larger in Europe, and we see that from the uptake that we are seeing. Now we have Reimbursement in Germany, Italy, Spain and a few other countries, and we continue to work, as you heard, In France and the rest of Europe to have full access, but the adoption curve from MINJUVY In Europe, it's in fact faster than what we saw in the U. S. In terms of volume.

Speaker 2

So it's doing okay.

Speaker 8

Okay, that's very helpful.

Speaker 2

Thank you.

Speaker 8

Thank you.

Operator

Thank you. Next question today is coming from Allison Bratzel from Piper Sandler. Your line is now live.

Speaker 9

Hi, good morning. Thank you for taking the questions. First, just on OXOLURA. Could you Help us understand gross to net trends during the quarter. And also just the mix you're seeing between atopic derm and vitiligo, I think it was 30% of scripts were thought to be for Vitiligo last quarter.

Speaker 9

Is that consistent now that we're into the second half of the year? And I guess what are you seeing in terms of persistence and refill rates in Vitiligo? And then secondly, just On the pipeline, just on the Replimmune agreement announced yesterday, could you talk about the rationale for entering that agreement now? What aspects of RP-1's clinical data in CSCC or other derm oncology indications give you confidence in Evaluating the 99,280 combo in new adjuvant CSCC. And just help us understand that the scope of that trial expected to start early Is that going to have, registrational intent?

Speaker 9

Thank you.

Speaker 6

Hi, Allison. It's Cristiana. Let me take the first Part of your Opselura question and then I will turn it to Barry to discuss the mix. So in terms of the gross to net, In Q2, the average gross to net discount was 55%. So that was down from 60% In Q1, as we were expecting, Q1 has the highest gross to net given the higher co pays and deductibles at beginning of the year that we have to pay down and that then comes down through the year.

Speaker 6

So we are at 55% average gross to net In terms of dynamics, one thing that we saw in Q1 and we continue to see in Q2 was an increase in Medicaid utilization. And that has continued in Q2 with Medicaid increasing as Percent as a percent of the total payer mix.

Speaker 4

So Allison, it's Barry. So as far as your other questions, Vitiligo now represents About 35% of total prescriptions. In terms of refills, so for Atopic dermatitis, I think we've said before that we expect 2 to 3 refills 2 to 3 tubes per patients and that's Where we are now with AD, we're over 2 tubes per patient. For Vitiligo, We don't have enough time yet. Most of the Vitiligo patients coming on, as you can imagine, are new patients and we need more time To reach the average number of refills, as we've said in the past, we expect the average to be around 10 tubes per year and we think we're progressing Towards that, I'll turn it over to Steven for a repelimin question.

Speaker 5

Thanks, Barry. So Allison, in terms of cutaneous Squamous cell carcinoma, it's an entity that's not very well captured by the groups that capture cancer statistics Just because of the way it's treated, variability, often with surgery alone, etcetera, but it could be common enough that there may be upwards of 1,000,000 cases across the board Of cutaneous squamous cell carcinoma in the United States and actually north of 10,000 deaths. So it's clearly a medical problem with a lot of morbidity. For 280 itself, we have now, as we've outlined for you, cutaneous cell squamous carcinoma study Ongoing up on clinicaltrials dot gov is doing some dose ranging work with 280 and then will expand with a declared dose going forward And could potentially serve on its own as a registration effort, but that's down the pipe and to be determined. Why Replimmune?

Speaker 5

Why RP1? It's a tumor oncolytic virus with actually Outstanding efficacy already demonstrated in cutaneous squamous cell carcinoma that's advanced With checkpoint inhibitors, activity in terms of response rates in the 70% range, complete responses In a 47% range. So really outstanding activity with checkpoints already demonstrated, but with intravenous. Given on how this is administered with intratumoral injections, it really lends itself to combining With an oral agent like 2,800, and we view this as an exciting potential going forward. This is a proof of concept study though in the neoadjuvant setting.

Speaker 5

And then we'll determine if there's a registration

Operator

from Vikram Porekh from Morgan Stanley. Your line is now live.

Speaker 3

Hi, good morning. Thanks for taking our questions. So we had 2, Both on Jakafi. So first, could you comment on whether there were any outsized or large inventory purchases that contributed to Jakafi's 2Q sales base? And then secondly, could you remind us where your dialogue stands with the FDA on QDrox and just what the next steps are for moving this program forward?

Speaker 3

Thanks.

Speaker 6

Hi, Vikram. It's Christiana. So first of all, in terms of your inventory question, as you may recall, Inventory at the end of Q1 was below the low end of the normal range and that was because of the timing of an order. What we saw in Q2 was an increase in inventory to that brought inventory back Within the normal range. And I would say it's towards the higher end of the range, but That variability you see it from quarter to quarter within that normal range.

Speaker 6

So we are back at the normal range. And as I commented During my remarks, the inventory increase during Q2 represented $35,000,000 in net sales. Let me turn it to Barry for the second part of Actually, I'll take it.

Speaker 5

Thanks, Christiana. So Vikram, in terms of RUX XR, just to remind you, the CRL from the FDA was a concern around Cmin at steady state, not area under the curve and not Cmax and then resulting in a potential theoretic concern In terms of efficacy and that there was a 24% lower semen when you compare it to the IR. So in terms of the go forward, there's a potential approach that's quicker and involves modeling work that we doing at the moment and we need to discuss with regulatory agency and we can't give you timing yet on that. And then a potentially longer effort that May take a little longer and but clearly for both, we'll have them ready and be able to submit way before the loss exploration for RUX itself. So it's too early to give you regulatory timing, but both efforts are underway.

Speaker 5

Thanks.

Speaker 3

Got it. Thank you.

Operator

Thank you. Next question is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Speaker 10

Good morning. Thanks for taking my question. You will share more combo data on the Jakafi ALK2 and bet combo in the second half. But In the context of where QD stands and the overall combination strategy here, can you just help us And what you're thinking is on how this could play out from a life cycle management standpoint?

Speaker 5

Yes. So thanks, Salveen. It's Steven. Both, as I alluded to in my Both Bet and L2 are progressing well. Bet, clearly activity with monotherapy and in combination, And now it's just about declaring the dose and then the registration intent for that and then also watching the competitive space.

Speaker 5

ELK2, very well tolerated. We can keep escalating and hopefully continue to see improved efficacy. And then that may be potentially a first line effort because of its tolerability and the ability To both treat the anemia and maintain RUX dose intensity. And then I just outlined the QD effort on its own in terms of formulation Development. We also are working on fixed dose combinations for both BETA and L2 and those aren't impacted by the CRL in any way, but it is likely that when we go to pivotal studies with beta and L2 that those will be done with the IR in combination with the beta and L2 And then should we want to use FTCs, we'd pivot to that with bioavailability, bioequivalence work at that time.

Speaker 5

All of those efforts Are underway aggressively. And again, we very much want to complete and should complete them before the loss of exploration of Rux

Speaker 10

Thanks. Just a follow-up here. So then how does CALR and CK-eight zero four kind of call into this strategy as well.

Speaker 5

Yes. Thank you. So mutant killer is On its own, an entity that, as I said earlier, about 30% of myelofibrosis and in fact, 25% to 30% of essential thrombocythemia And is the oncogenic driver on its own, it's mutually exclusive, doesn't overlap with MIPL or V617F or anything else. And so should this work the way it looks preclinically and be well tolerated, it's an entity on its own and would be a Different treatment paradigm in terms of thinking, because the idea would be to eliminate the malignant clone and potentially And that is why got a plenary at Ashen is potentially so exciting. And should that pan out all the way to the end, Then about a third of each of those entities would be taken care of on their own with the antibody and would be no need for JAK inhibition, BEST inhibition, ELK2 inhibition, etcetera.

Speaker 5

The silankos 804 effort is a different effort entirely. It's umbilical cord Treg cells That are enriched to hone to the bone marrow and have already shown in small in a single case studies To change the natural history of myelofibrosis and potentially also improve fibrosis there as well and to be safe. So it's early days with that and we want to again show data on that later this year. And it's too hard to comment on where that will go from a point of view, but the idea there again is to be disease modifying given the therapeutic modality. Thanks.

Operator

Thank you. Next question today is coming from Evan Seigerman From BMO Capital Markets, your line is now live.

Speaker 3

Hi, there. This is Connor McKay on for Evan. Thanks for taking our questions. Congrats on the quarter. So you noted in your press release this morning increased demand for OXOLLORA.

Speaker 3

And I'm just wondering, now that we're a bit further into the launch in Vitiligo, Could you just comment on if you're seeing any previously inactive patients or patients who had stopped seeking treatment previously starting to come on to Obslera? Thank you.

Speaker 4

Hi, Connor, it's Barry. So we obviously have patients that have been Seeking treatment all along for their vitiligo and then new patients that learned about Opsalura and go in to see their dermatologists.

Operator

I can't give you any

Speaker 4

numbers at all about the number of patients who were in fact inactive. But we do want to part of our entire effort for Any direct to consumer activity is really just to let those patients who want to have their Vitiligo treated To know that there's a treatment available for the very first time that can actually help them to repigment their skin.

Operator

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

Speaker 3

Hey, congrats on the quarter and thank you for taking the question. Can you talk about the pace of OXOLURA uptake in Europe versus The U. S. And any comments you could share on the momentum of OXOLLURA growth and when you might provide Specific revenue guidance on Optelera? Thank you.

Speaker 2

I can take the European. I'll do the European part of this today. So The approval of the launch in Germany and Austria took place at the end of the end of the quarter. It was In the last days of June, so we are in the process. Now we have a month and a half.

Speaker 2

We see Good uptake. In fact, we see adoption in Germany, where you see the most important market and it will continue to be The most important for a year because we anticipate the next reimbursement to take almost that long To become effective in other countries in Europe. So what you can anticipate there is Another 10 months where Germany and Austria would be the only or the main countries where OXXELOIR is being used. And what we I mean, there was in Europe when the approval was done for the label in Europe is excellent. It's different from the label in the U.

Speaker 2

S. In terms of the entire safety profile, in fact, it has no equivalent of whether black box in Europe. So all of this Issue of systemic exposure to JAK has been looked at by the European authorities very differently from what the FDA has done in the U. S. And the media impact of the approval has been very visible on TVs and Everywhere across Europe, we had a number of patients and physicians speaking about the importance of treating and repigmenting vitiligo.

Speaker 2

So The awareness of Opsela is already very high. We have a lot of demand. We have programs we are trying to put in place to help patients where we can. And we are fairly optimistic that it will be a good product for Incyte and it will have a reasonable potential. And the second part of your question is about guidance for Opsela.

Speaker 2

I think you can yes.

Speaker 6

So in terms of the guidance, we Still want to see a few more quarters of uptake. It's still early. We want to be able to see to the earlier discussion How vitiligo patients, especially that have been active come into therapy and also more information On the refills before we are in a position to provide guidance.

Speaker 3

Great. Thank you for taking the questions.

Operator

Thank you. Next question today is coming from Mark Goldstein from Mizuho Securities. Your line is now live.

Speaker 11

Hi. This is Jerry Gong on for Meyer Goldstein. Thanks for taking our questions. Starting first with OXOLLURA with the free drug Program and the IQVIA projection, are you seeing a difference between AD and Vitiligo? And can you comment on the Moving forward rates for the rest of 2023.

Speaker 11

And then looking towards axotilumab, could you share how Incyte and Syndax are planning to share

Speaker 4

So, Terry, for OXOLAR for free drug, we don't really see any difference whatsoever between For a free drug for atopic dermatitis and Vitiligo, obviously said before that there's more AD patients that are on Opsilara and a growing number of patients with Vitiligo that are on Opsilara, but the free drug difference We don't know.

Speaker 5

Jerry, it's Steven. In terms of the BLA, obviously, both companies have Worked really well together. The study was executed well, brought in well, high quality, etcetera. But Incyte will be leading the filing activities With Syndax appropriately helping along the way. On the commercialization question, I'll ask Herve to address it.

Speaker 2

Commercialization of AXA will be different in the U. S. And Europe and the rest of the world. So in the U. S, it's So co commercialization led by Incyte where we would be booking the revenue and where there is an option for Syndax to Field up to 30 percent of FTEs in the field force if they choose to.

Speaker 2

And at the so that would for them to decide if they want to do that. And at the end, we will do a fifty-fifty profit split of commercial activities in the U. S. Outside of the U. S, it's a license where we will be paying a royalty to Syndax and we will be prosecuting all activities related to regulatory and commercial

Operator

Your next question is coming from Eva Privatera from TD Cowen. Your line is now live.

Speaker 8

Thank you. Congrats on the quarter. A few questions from us. Can you help set expectations for povarsitinib in Rigel nodularis, what would be considered a good profile in that disease? And what's the efficacy bar for moving into Phase 3?

Speaker 5

Steve, it's Steven. Yes, the pobacitinibpiragunodularis Phase 2 enrolled really well. It's complete to elect data later this year. The central problem for those patients is a very intense and severe itch. And then obviously, the actual Skin lesions, but what the patients really want is the itch relief.

Speaker 5

And that's why we feel an oral JAK inhibitor is appropriate In these patients with more severe pruragonodularis, there is already approved drug in terms of Dupixent in PN in general. So the regulatory path is pretty well established. This study though is a Phase 2 proof of concept study. If we get the profile we want In terms of itch relief and then lesion resolution, then we'll advance to Phase 3 development, but we'll talk about that later this year. Thanks.

Speaker 8

Thanks. And another question on povaricitinib. Can you give a quick enrollment update For the Phase 3 in HS, we know that AbbVie has recently opened a Phase 3 for WinbVieq.

Speaker 5

Yes. Thank you. So, we don't give numbers as we progress. We have 2 Phase 3s up and going. They enroll in really well.

Speaker 5

We obviously started before them. I think across dermatology in general, when you go back to Rux Cream, AD, Vitiligo, etcetera, our operational execution has Excellent. So we've got really good at knowing the derm space and how to conduct these studies, but we don't provide patient by patient enrollment updates. Thanks.

Speaker 8

Thank you for taking our question.

Operator

Thank you. Next question is coming from Michael Schmidt Guggenheim Securities, your line is now live.

Speaker 12

Hey, good morning. This is Kelsey on for Michael. Thanks for taking our questions. I just had 2 on axotilimab. Maybe could you just remind us how it might be positioned competitively versus Sanofi's Resiroc in the 3rd line setting Based on the previously announced top line data.

Speaker 12

And then I guess, could you just tell us how you're tracking with the planned Jakafi combo study in the frontline setting and maybe what you might need to see in order to advance that into a Phase 3 trial, any specific efficacy outcomes? Thanks so much.

Speaker 5

Kelsey, it's Steven. So the AXA data, I won't go through again. I had them in my prepared remarks. But the eligibility criteria was 2 or more prior therapies, the median on the patients is actually 4. So we'll have to be discussing with regulatory agencies as to what Line of therapy that will be given in terms of a label, it's likely to be at least United But as I said in my prepared remarks, that efficacy of 74% was seen across the board, including In post Resiroc patients and obviously those were predominantly in the United States given that's where that drug is approved.

Speaker 5

But it's premature to comment on the exact line we get in labeling, so we have those discussions. In terms of the combo work, I assume you're talking about graft versus host disease again. And in combination with ruxolitinib, there's theoretically a huge Because one, you have a small molecule with a large molecule and no dairy consumed in terms of drug drug interactions, Non overlapping MOA, a JAK inhibitor with a macrophage monocyte targeted drug. So we don't expect to run into tox. And then we want 2 very now very active drugs in graft versus host disease.

Speaker 5

It's really appealing Can you move up the treatment paradigm? So we're going to start that combination as soon as possible with ruxinaxa, test it likely In the first, second line setting and then we'll work out, see that activity and see where we want to go. There is appeal to go first line Because steroids are dominantly used, they are active, but have a lot of long term toxicity, but there's also appeal in second line as well. So We'll see where the data leads us, but an exciting time for that combination.

Speaker 12

Okay, great. Thank you so much and congrats on the quarter.

Operator

Thank you. Our next question is coming from David Lebowitz from Citi, your line is now live.

Speaker 13

Thank you very much for taking my question. Could you provide more detail on the number of tubes Per patient on OXOLLURA. Just curious as to where the extent that overall growth in the quarter was driven

Speaker 4

Sure. So David, it's Barry. So basically, I mean, where they're driven from is we said that the Total Rx's grew by 16%. So that's across AD and Vitiligo and refills grew by 23 So we expect refills to continue to grow and be more than 50%, in fact, going up much higher than that Over time, as far as the growth from AD and Vitiligo, both are growing, new patient starts in both Vitiligo And AD continue in the right direction in terms of the refills for each. I discussed it before that We expect in fact that 2 to 3 tubes for the AD patients And we hope to get to an average of 10 tubes per patient for Vitiligo.

Speaker 4

We think we're headed in that direction now and we'll continue to Reinforce how to use the drug both with dermatologists and with patients and we think we'll achieve at least that number.

Speaker 13

Thanks for taking my question.

Operator

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

Speaker 14

Hi, good morning. This is Eva on for Derek. Thanks for taking our questions. Two quick ones for a moment. First, how are you thinking about M and A and what would be your priority between I and I and oncology assets?

Speaker 14

And second, what are your thoughts on the HS opportunity

Operator

Do you

Speaker 2

want to take the HF?

Speaker 5

So I'll do the second question first. So the profile in HS for povacitinib, which we presented earlier this year at a medical meeting is outstanding in terms of efficacy. In fact, we think, As far as we can tell, it's the first time ever that a Hisco-one hundred has been reported by a compound in this entity. And that by that, I mean a complete response. So abscess, nodules, fistulas completely disappearing and that's Really encouraging for the profile going forward for Porvoo.

Speaker 5

You're right, it's now an active space of research, there's many biologics, including IL-seventeen targeted drugs. And There's lots of unmet need and so it's good that other people are trying to address that. I would just say when you compare studies, Look carefully at patient populations, look carefully at concomitant antibiotic administration. We didn't allow that on our studies. Then obviously the placebo arm activity as well when comparing.

Speaker 5

But the profile we saw in our Phase 2 is outstanding. And if you replicate that in Phase 3, we'll have a potentially best in class compound there. Thanks. Maybe I can

Speaker 2

say a word about M and A. I mean, we are in a position where as you can see, I mean, the growth of our Existing business is very strong. The pipeline is very promising. We have a number of very good products that we are now developing at late stage, and We didn't speak very much about some of the early stage projects, but they are also very interesting. So we are looking at what could be the best use of The cash that we have, we have north of €3,000,000,000 now.

Speaker 2

And how we could add to this diversification and growth That we are doing with our organic portfolio, it could be M and A or it could be licensing, business development. You see axatilimab was a license from Syndax and it's Clearly helping us strategically with the portfolio and the Limber program and also adding mechanism that we can combine with Jakafi. So this type of Agreement could continue when we see them, when we find them or acquisitions that could be In dermatology or oncology, assuming that these products that we would be acquiring Have the potential to contribute to the growth in the year 2025, 2020 6 and beyond because that's where really we need to add to the portfolio at that point. So that's really the criteria we are using. And we are sort of agnostic of Encore versus derm, I think the question is the quality of the science, the quality of the product and the timing and the potential of the products we would be adding to our

Operator

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

Speaker 15

Great. Thank you. Congratulations on a great quarter and thanks Can you talk a little bit about the opportunity in Purigo, Nigel Iris? How big or small is this opportunity? And how should we be thinking if these current studies are positive, how should we be thinking about pivotal studies And how big they might be going forward?

Speaker 15

And maybe a bigger picture question is, when we think about Durham as a business, Is this something that ultimately will be part of Incyte kind of going forward and taking up a significant part of the revenues? Something that might get spun off at some point just given the size of the studies that you might need to conduct for these other indications? Any thoughts there would be helpful.

Speaker 5

Yes, Ren, it's Steven. So, corrugonodularis is often is not diagnosed or under diagnosed. It's hard to be Precise on the epidemiology, but they're probably around 200,000 or north of that patients In the United States with PN, and as I said earlier, their biggest morbidity is itch and its Massive impact on quality of life. So that's what we're looking for in terms of porvacitinib. The regulatory part It's already been defined by the Dupixent approval and how to get there.

Speaker 5

And it's premature to talk about sizing and powering until we see our Phase Two proof of concept data there. Just by the way, ruxolitinoprem, OXELURA in more mild PN It's also very active and it's something we're obviously interested in studying and seeing the outcome of as well. In terms of the second question, I'll turn that over to Herve. Yes. I mean, you can I mean, the question is really is dermatology a business that we believe has the potential to continue to

Speaker 2

grow to be of a Meaningful size and the answer is yes and yes? And you can see it. You can see the program we are developing for Rockstream. There are 4 or 5 new indications we are prosecuting on top of vitiligoanatopic derm, where we believe there is a clear medical need and where In fact, the power of topical jack is with the safety profile it has and with the efficacy it has, It's really competitively well positioned. We choose to develop povacitinib in a number of indication where there is Interest and you can see that interest in fact now coming from the biologics and some other ways of approaching this biology, but We believe again that the JAK inhibitor is a very good way with the fact that we are ahead of the pack In that development process, it's a very good way to help these patients and being first or best in class in that case is very feasible.

Speaker 2

And then we have To add this to the growth of the corporation in the next few years. And we see a lot of complementarity in the research that we are doing in Inflammation in immunology and how it could apply for cancer on one hand and in some cases how it can apply for Autoimmune disease or inflammatory disease on the other hand. So all of that now is Something that is well established. We have the team on the commercial side in the U. S.

Speaker 2

Now fully Phil did and we are building it in Europe. So I think it's a picture of insight for the next 5 year will be both

Operator

Thank you. We've reached the end of our question and answer session. I'd like the floor back over to management for any further or closing comments.

Speaker 1

Thank you all for participating in the call today and for your questions. The IR team will be available for the rest of the day for follow-up. Thank you and goodbye.

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 Q2 2023
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