Incyte Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 29, 2024

There are 21 speakers on the call.

Operator

Greetings and welcome to the Incyte Third Quarter Financial Results Conference Call and Webcast. At this time, all participants are in a listen only mode. Session. 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.

Operator

Please go ahead, Ben.

Speaker 1

Thank you, Kevin. Good morning, and welcome to Insight's Q3 2024 Earnings Conference call. Before we begin, I encourage everyone to go to the Investors section of our website to find the press release, related financial tables and slides that follow today's discussion. On today's call, I'm joined by Herve, Pablo, Christiana, who will deliver our prepared remarks. Barry, Matteo and Steven will also be available for Q and A.

Speaker 1

I would like to point out that we'll be making forward looking statements, which are based on our current expectations and beliefs. 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. The Q3 of 2024 was a very positive quarter for Incyte with a good commercial performance, FDA approval of Nictimvo and progress of our pipeline with several key data readouts for our clinical programs. In Q3, total revenues increased by 24% year over year to $1,100,000,000 with net product revenues growing 23%. This growth was driven by the ongoing demand growth for Jakafi and Opellora, which I will highlight in the following slides. In August, we, along with our partner Syndax, announced the FDA approval of NIKtimvo for patients with chronic graft versus host disease after failure of 2 prior lines of therapy, making it the 1st anti CSF1R antibody approved to target the inflammation and fibrosis associated with chronic GvHD.

Speaker 2

To facilitate patient dosing and limit product waste following the FDA's approval of NIQTYMVO, we have submitted 2 smaller vial sizes to the FDA for their program. Following the potential approval of the new vial sizes, we anticipate launching NIQTYMVO in the U. S. In the Q1 of 2020 5. Additionally, the positive pivotal AGave-two zero one trial results were recently published in the New England Journal of Medicine.

Speaker 2

NINCTIMO was also included in the latest NCCN clinical practice guidelines in oncology for chronic GvHD treatment, both highlighting the significance of this data set and the transformative potential of NIKTHIMO. So sNDA for ruxolitinib cream in pediatric atopic dermatitis was recently filed with the FDA and we are on track for potential approval in the second half of twenty twenty five. During the quarter, we also provided important clinical updates at ESMO with encouraging data for our CDK2 inhibitor in ovarian and endometrial cancer as well as data from the Phase 3 trial of ratifanlimab in SCSC. At EADV, we presented extensive data on both povarcitinib and ruxolitinib PRIM, including multiple late breaking presentations shows the potential of this program to enhance treatment options for individual with immune mediated dermatologic conditions such as vitiligo, atopic dermatitis, hydrodinitis, suppurativa and prurigo nodularis. Moving to Slide 6, an update of the 3rd quarter commercial performance of Jakafi.

Speaker 2

Jakafi network revenue were $731,000,000 up 16% year over year. Paid demand increased 10% driven by patient growth across all indications. Based on the strength in demand seen during the 1st 3 quarters of 2024, we are raising our full year 2024 Jakafi net revenue guidance to a new range of $2,740,000,000 to $2,770,000,000 Turning to Slide 7 and looking at Jakafi total paid demand by indication during the 1st 9 months of 2022, 2023 and 2024. As you can see, unit growth remains robust. Myelofibrosis is stable year over year with some modest growth seen again this quarter, while the most significant growth is seen in polycythemia vera and graft versus host disease.

Speaker 2

We expect PV to become the largest contributor for Jakafi over time, supported by the data from the MAGIC PV study, which underscores the benefit of early intervention with Jakafi and its impact on thrombosis free survival. Moving to Occelora on Slide 8. Total Occelora net product revenues in the Q3 were $139,000,000 up 52% when compared to the same quarter last year. In the U. S, the annual prescription trends for 2022 and 2023 and year to date 2024 as shown on the right of the Slide 8 reflects continued year over year growth of OXELORA from both atopic dermatitis and vitiligo.

Speaker 2

During the Q3, we continued to progress with the launch of OXELORA in Europe. So $20,000,000 in net sales during the Q3 were driven by France, where OXELORA is now reimbursed and available in retail pharmacy and from Germany. Earlier this month, we also achieved approval for atopic dermatitis and vitiligo in Canada. On Slide 9, I want to highlight 3 products that are expected to begin contributing to revenue in the near term. We anticipate that NIQtimvo for 3rd line chronic GvHD, tafacitamab for follicular lymphoma and ritifanlimab for SCAC could collectively generate $800,000,000 or more in incremental revenues by 2029.

Speaker 2

We anticipate all three products to be available in 2025 and this incremental sales will be leveraging the current commercial infrastructure used for Monjuvie, Peymazier and Jakafi. As illustrated on Slide 10, these three launches anticipated in 2025 will be followed by larger opportunities in 2026 and 2027, including povacitinib, CDK2 and tafasitamab in first line DLBCF. Between 2027 and 2,030, we have multiple programs that hold transformative potential with data for each anticipated in 2025. I would now turn the call over to Pablo.

Speaker 3

Thank you, Herve, and good morning. As we continue to execute on our pipeline of numerous potential first or best in class medicines, we remain on track to deliver more than 10 high impact launches by 2,030. In the next few slides, I will highlight a number of these programs. We continue to expand the opportunity of ruxolitinib Cream with additional indications. Based on the positive Phase 3 data in pediatric atopic dermatitis, the supplemental NDA was recently filed.

Speaker 3

With a potential approval in 2025, we are excited with the possibility of providing an effective non steroidal topical option for the 2000000 to 3000000 pediatric patients with AD in the U. S. Following interactions with the FDA, we have finalized the design for the Phase 3 study of ruxolitinib Cream in patients with mild to moderate hidradenitis suppurativa. This study, which will have a primary endpoint of high score 75, is expected to begin in the first half of twenty twenty five and could represent a new treatment option to the approximately 150,000 patients with mild to moderate HS in the U. S.

Speaker 3

As a reminder, we're currently conducting a Phase 3 study evaluating ruxolitinib cream in patients with prurigo nodularis, a chronic skin disorder that presents its multiple firm nodules commonly located on the extensive surfaces of the extremities and that are intensely pruritic. This pivotal study is enrolling well and we are now on track to report results in the first half of twenty twenty five with a potential approval as early as 2026. With no topical therapies currently approved for PN and approximately 200,000 patients diagnosed in the U. S, we see this as an important additional option for patients and a significant opportunity for ruxolitinib Cream. As shown on Slide 15, we're continuing to execute a broad development plan for povarsitinib, our oral small molecule highly selective JAK1 inhibitor.

Speaker 3

Povarsitinib is currently being evaluated in Phase 3 studies in adenitis suppurativa, vitiligo and prurigo nodularis and in randomized Phase 2 proof of concept studies in asthma and chronic spontaneous urticaria with data for both expected in 2025. Popercitinib has already shown encouraging efficacy and safety in a randomized Phase 2 study involving patients with moderate to severe hidradenitis suppurativa, a highly painful inflammatory condition. As a reminder, we reported that by week 52, up to 29% of patients achieved a high score 100 response, indicating complete resolution of all symptoms. Additionally, polvorcitanib demonstrated a rapid and significant reduction in pain, offering the opportunity to transform the current standard of care for this disease. The 2 Phase 3 studies, STOP HS1 and STOP HS2 are enrolling well.

Speaker 3

Thanks to the strong Phase 2 data and the limited effective treatment options available. We expect to have Phase 3 data by early 2025. We have refined our guidance for the Phase 2 proof of concept study of porcitanib in chronic spontaneous urticaria and now anticipate data in the first half of twenty twenty five. CSU is a mast cell driven disease characterized by hives and severe chronic itching. The over activation of dermal mast cells and basophils leads to increased serum levels of Th1, Th2 and Th17 related cytokines.

Speaker 3

We know that JAK1 inhibition can modulate mast cell activation, including degranulation and cytokine production, both of which contribute to chronic spontaneous urticaria. This randomized double blind Phase 2 study is being conducted in patients who are inadequately controlled or have progressed on 2nd generation antihistamines, which represent a potential patient population of over 300,000 patients in the U. S. Alone. As you can see on Slide 16, our updated inflammation autoimmunity pipeline continues to evolve.

Speaker 3

Recently, we presented promising data from a Phase 2 study of ruxolitinib Cream in patients with cutaneous like emplanus. At this time, we do not plan to advance ruxolitinib Cream into a registrational study for this indication and intend to publish the results of this study in the future. For lichen sclerosis, given the prioritization of other indications and programs, we are not currently planning to advance this indication into a registrational study. As a reminder, 262 and 547 are currently being evaluated in a number of indications and we anticipate data for these studies in the Q1 of 2025. Moving to MPNs and graft versus host disease on Slide 17.

Speaker 3

We highlight here a number of ongoing programs where we have the goal of developing new therapeutic options to build upon the significant impact Jakafi has had on patients. For our BET inhibitor dose escalation is ongoing both as monotherapy and in combination with ruxolitinib. As a reminder, we have reported reductions in spleen length and volume as well as improvements in both symptoms and hemoglobin. We plan to advance this program into Phase 3 development and expect to provide an update later this year. Additionally, for zilogosertib, our IL-two inhibitor, we plan to provide an update later this year and for ruxolitinib XR, we plan to share the bio equivalency data in early 2025.

Speaker 3

Moving to our oncology pipeline on Slide 18. We continue to build a robust portfolio with increased emphasis on 1st in class and our best in class and novel immuno oncology programs. For tafasitamab, we shared positive top line results from the Phase 3 study in patients with follicular lymphoma and we are on track to file the sNDA with the FDA this year, which could lead to a potential approval in 2025. As a reminder, the Phase 3 data for first line DLBCL in combination with R squared CHOP is expected in the first half of twenty twenty five. During the ESMO conference in September, we shared positive top line results for the pivotal Phase 3 study of retifanlimab in SCAC.

Speaker 3

Retifanlimab met the primary endpoint, demonstrating a clinically meaningful 37% reduction in the risk of progression or death with a hazard ratio of 0.63. The study showed that retifanumab was generally well tolerated and no new safety signals were detected. At ESMO, we also shared promising evidence of clinical activity from our potentially 1st in class small molecule CDK2 inhibitor, which demonstrated a number of complete and partial responses as well as stable disease in patients with secrete1 overexpressed in tumors, most notably in ovarian and endometrial cancer. We believe our CDK2 inhibitor could be a foundational therapy for patients with ovarian cancer as well as other Cyclin E1 overexpressed in tumor types, and we plan to move aggressively in initiating registrational studies in 2025. We will be meeting with FDA in the coming months to discuss trial designs.

Speaker 3

As highlighted on the slide, we're considering different designs for the registrational program and we will continue to update you on the regulatory strategy for this program in the coming months. In closing, Slide 20 shows a summary of the considerable number of milestones across the remainder of 2024 2025. These milestones will continue the transformation of our pipeline with a strong focus on new molecular entities with the potential to make an indelible impact on patients. With that, I would like to turn the call over to Cristiana for the financial update.

Speaker 4

Thank you, Pablo, and good morning, everyone. Our 3rd quarter results reflect strong commercial execution and continued growth with total revenues of $1,140,000,000 up 24% versus the same period last year. Total product revenues of $963,000,000 in Q3 were driven by strong demand growth for Jakafi and Opsilura and increased revenue contribution from ONJUVY as a result of the acquisition of Hood Rights to tafasitamab earlier this year. Total royalty revenues were $157,000,000 up 20% compared to the Q3 of 2023, driven by increased demand for Jakavi and Olumiant. Turning to Jakavi on Slide 24.

Speaker 4

Jakavi net product revenues were $741,000,000 for the 3rd quarter, reflecting continued demand growth with total demand up 10% year over year, driven by growth in all indications and a $9,000,000 gross to net favorability as a result of true ups to prior quarter estimates. At the end of Q3, channel inventory was up 2% year over year and stable quarter over quarter and within normal range. Turning now to Opeller on Slide 25. Net product revenues for the Q3 were $139,000,000 representing a 52% year over year increase driven by growth in new patient starts and refills across both AB and Vitiligo in the U. S.

Speaker 4

As well as continued contribution from the commercialization of OXELURA for Vitiligo in Europe. In the Q3, Europe contributed $20,000,000 of OXELURA net product revenues, driven by continued uptake in Germany and broader access in France, where OXOLURA is now reimbursed and available in retail pharmacies. 3rd quarter net product revenues in France include a $2,000,000 stock built up at wholesalers. Finally, in the Q3, we made significant progress in including OXELURA on regional formularies in Spain and Italy. Moving on to Slide 26 and our operating expenses.

Speaker 4

Total GAAP R and D expenses were $573,000,000 for the 3rd quarter due to the $100,000,000 milestone payment made to Microgenics during the quarter and continued investment in our late stage development assets. Excluding all one time expenses, ongoing R and D expenses for the 3rd quarter increased 26% compared to the same period in 20 23 due to continued investment in our late stage development assets, additional R and D expenses resulting from the ASN acquisition and timing of certain expenses. For the 9 months ended September 30, 2024, ongoing R and D expenses increased 15% compared to the prior year period as a result of increased investment in the Phase 3 studies of povacitinib and OXELURA. As we wrap up the clinical development of axaglimab in 3rd line chronic GvHD, tafasitinib in relapsed refractory follicular lymphoma and retifamulumab in SEAC and non small cell lung cancer, as well as the development activities of discontinued programs, we anticipate the reduction in investment in those programs to partially offset the increased investment in other programs, which would allow us to control future R and D expense growth. Moving to SG and A.

Speaker 4

Total GAAP SG and A expenses were $309,000,000 for the 3rd quarter, representing a 15% year over year increase, primarily driven by timing of consumer marketing activities and certain other expenses. For the 9 months ended September 30, total GAAP SG and A expenses increased 6% year over year. Finally, total ongoing operating expenses for the 1st 9 months of the year increased 11% versus a 14% increase in revenues, leading to an increase in operating leverage and margin. Moving on to our guidance for 2024. Based on the strong performance of Jakafi in the 1st 9 months of the year, we're increasing our full year 2024 guidance to a new range of $2,740,000,000 to $2,770,000,000 We're also updating our full year guidance for other hematology oncology products to a new range of $310,000,000 to $320,000,000 to reflect the 1st 9 months actual demand and the unfavorable impact of foreign exchange rates.

Speaker 4

In addition, we are updating the full year GAAP R and D guidance to include the $100,000,000 milestone payment to MacroGenics. The full year GAAP R and D guidance is now $2,540,000,000 to 2.5 $9,000,000,000 which includes $791,000,000 in one time expenses related to the $691,000,000 of upfront consideration for the acquisition of Acient and the $100,000,000 milestone payment of MacroGenics. Ongoing R and D guidance remains unchanged. Finally, we are reiterating our full year 2024 guidance for COGS and SG and A. Operator, that concludes our prepared remarks.

Speaker 4

Please give your instructions and open the call to Q and A.

Operator

Certainly. We'll now be conducting a question and answer session. Our first question today is coming from Michael Schmidt from Guggenheim. Your line is now live.

Speaker 5

Hey, guys. Good morning. Congrats on a great Q3 and thanks for taking my question. I had one on povercitanib. Just looking ahead to the upcoming Phase III data in adenitis early next year.

Speaker 5

So beyond top line success, do you have any thoughts on where you think where you want efficacy to shake out in order to be competitive with Humira and other market biologics? Is there a particular placebo adjusted effect size that you're looking forward to hit with the

Speaker 6

Thanks. Michael, it's Steven just taking your question and thank you for the question on HS. Our feeling is if we replicate the Phase 2 data, which was incredibly strong and as Pablo said in his prepared remarks that includes a Hiscar 100 of up to 29%, then we'll have an extremely favorable efficacy profile that will really benefit patients with HS. You couple that with the other symptomatology, particularly the pain from the lesions and we were able to get in that Phase 2 data set to demonstrate pain relief and that will add to what we think will be a differentiated profile that will really benefit patients. Obviously, it's hard to predict how Phase 3 will readout.

Speaker 6

The other thing Pablo alluded to in his prepared remarks is extremely good enrollment on both studies, which is probably a testament to the Phase 2 data driving investigators wanting to put patients on the study. Thanks.

Operator

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

Speaker 7

Hey there. Good morning. Thanks for taking my questions. I had a few on the pipeline. I believe earlier this morning Novartis announced the longer follow-up time is needed to determine the regulatory path forward for their BET inhibitor.

Speaker 7

Curious, how that impacts at all your thinking or development strategy for your BET? And then can you help us think about the potential development plans for pobercitinib and 262 in CSU and just kind of where you see both molecules best fitting in the treatment paradigm? Thank you.

Speaker 3

Yes. Good morning, Jess. This is Pablo. Let me take the first one. So our BET inhibitor, as we've presented over the past year and we will provide an update later this year, we're very happy with the data that we've seen so far.

Speaker 3

We've seen spleen reduction, spleen volume reduction. We've seen pretty impressive improvement in symptoms, obviously with the caveats that this is not randomized blinded data, but very important effect on symptoms. We believe that the ability of our BET inhibitor to be dosed continuously as opposed to the way Palabresia has to be dosed with a break of a week every 2 weeks could potentially make it an important difference in our ability to control symptoms. So, our plan remains the same. As I said in my prepared remarks, we'll provide an update on the data before the end of the year and we intend to advance into a Phase 3 study and we will provide details on those designs when we provide an update on the data.

Speaker 3

So that plan remains the same. On POBA262 for CSU, both are in different stages in a way. POBA, as you know, is in a randomized Phase 2 study with proof of concept. We believe there's a potential for POBA in this indication because of the very strong anti inflammatory effect that it has. So we look forward to sharing data and future plans after that.

Speaker 3

262 is in a randomized Phase 2 study with 2 dose levels at 50 150 compared with placebo. And we also initiated a study at a lower dose of 25 milligrams compared with placebo. And the idea here is to explore a full range of doses for 262 to potentially once we have the results, assuming positive results to be ready for pivotal studies. In terms of how both fit, I think the difference here is probably a sequence on how these medicines could potentially be used in patients with CSU. As you know, first line of therapy is antihistamines, about 50% to 60% of the patients do not respond to antihistamines or progress on antihistamines.

Speaker 3

This is a multiyear disease. And so patients need a sequence of treatments to be used to see which one controls best the symptoms for that particular individual. The mechanism is different. Porvosiran has a broad anti inflammatory effect. 262 is exquisitely designed to block mRTPRX2 in mast cells in the skin.

Speaker 3

So we believe that that selectivity will lead to an excellent safety profile. So once we have data for both programs, we'll share a little bit more how we think those can potentially be sequenced in the treatment paradigm.

Operator

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

Speaker 7

Good morning. Thank you for taking my questions. Just regarding the Essient portfolio, could you just help us understand how you're thinking about development strategy here when you think about the different mechanisms addressing some of these diseases and how you see the differentiation playing out? Thank you.

Speaker 3

Yes. So we have 2 programs that were acquired with Essent MRGPRX2 and MRGPRX4. So MRGPRX2 is currently being developed in 3 indications, chronic spontaneous urticaria and I just highlighted where we are with that indication. We have an ongoing study with 2 dose levels versus placebo, 51 150 and the 2nd study of 25 milligrams versus placebo. Once we have all that data, we'll decide next steps for chronic spontaneous urticaria.

Speaker 3

For the other two indications are chronic inducible urticaria, particularly focus on 2 of those, dermographism and cold induced urticaria and atopic dermatitis. The reason why we like the MRG PRX2 as a target is the excellent cell activity, not just for a cell type mast cells, but also mast cells specifically in the skin and connective tissues. And we think that should lead to an excellent safety profile and make this perhaps in some of these patients the first therapy after patients progress on antihistamines in the case of chronic urticaria, for example. So good evidence of efficacy together with a very, very clean safety, we think it will make this a very important option for patients at that stage of the disease. Second program was MRGPRX004.

Speaker 3

This has been developed in patients with cholestatic pruritus, specifically primary biliary cirrhosis and primary sclerosing cholangitis. We know that X4 is a receptor, bile acids and bile salts bind to it and this is an important way and why this patients have intractable pruritus. We are conducting a randomized double blind study in those indications. We'll have data in the Q1 of 2025, same as for MRGBIX2 program. And once we report all the data early next year, we'll give you clarity on the next steps.

Operator

Thank you. Next question is coming from Eric Schmidt from Cantor Fitzgerald. Your line is now live.

Speaker 8

Thanks for taking my question and congrats again on all the updates. Maybe a commercial question for Matteo on UxLura and the potential upcoming launch for pediatric AD in the second half of next year. How do you think you're doing with regard to formulary access and efforts to ensure reimbursement in what could be a pretty sizable marketplace? Thanks.

Speaker 9

Yes. Thanks, Harry, for the question. On the pediatric side, we're very excited about the potential for us to bring this new tool to patients, 2 11 years old in AD. The unmet need is very clearly there. We have 2,000,000 patients in terms of sizing.

Speaker 9

They're still cycling vastly on TCS and TCIs and they still remain a high unmet need for us to potentially get into that. In terms of the 2025 formally coverage, I mean, we look at the formally position for the entire OXOLURA brand for next year. Right now from the feedback that we're receiving, we're confident that we will have a competitive overall coverage also for next year. And that will include obviously the pediatric indication if we had to come to fruition.

Operator

Thank you. Next question is coming from Kelly Hsieh from Jefferies. Your line is now live.

Speaker 10

Thanks for taking my questions. Curious for the Phase III trial of ruxolitinib, Ukraine in the mild to moderate to HS. What is the rationales for using most stringent primary endpoint of high score of 75 over typically use the high score of 50? Thank you.

Speaker 6

Yes, Kelly, it's Steven. Thanks for the question. So firstly, there's a lot of unmet need in mild to moderate HS defined in our study as people with abscess and nodules of a count of about 3 to 10, no draining tunnels. And those patients can have a reasonable placebo placebo effect because of the disease phenotype I just described to you. So that's looking at Hiscox 75 will help to control for that.

Speaker 6

It's a higher endpoint, a higher bar, obviously, rest the unmet need and hopefully eliminate a large placebo effect to get it across the finish line. It's agreed with regulatory agencies and we're a go on the program. Thanks.

Operator

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

Speaker 11

Good morning. Thanks for taking my questions in the next quarter. I had another question on 262. The clinical trial recently showed the addition of 25 mg arm to that CSU trial. Can you give us any rationale for that?

Speaker 11

I assume that is maybe not going to be included in the Q1 update. And also just thinking about the profile here, are you guys should we think most about, I guess competing with the recent BTK data as far as another oral or do you look at maybe some of the more effective treatments like the KIT inhibitors as far as efficacy goes?

Speaker 3

Yes, Matt, thank you for the question. So the reason for the 25 is to have to explore the full range of doses. So as you point out, there's an ongoing study 50 versus 150 versus placebo. That's the data that we're going to have in the Q1 of 2025. We decided in the meantime to start a second study with 25 milligrams versus placebo in order to have the full range of doses explored.

Speaker 3

So if we have positive data, in the ongoing study, then we'll be ready with the 25 already running to be to get to a Phase 3 study faster. So that's the idea of the 25 milligram to explore the full range of dose of 262 in patients with CSU. In terms of where it fits, I mentioned a few times before that we don't necessarily expect to send the same level of efficacy that you may have with the KIT antibody. When you deplete all mast cells, which is what kin antibodies do, obviously the efficacy is very strong. In our opinion, that comes through a series of side effects that have been well reported.

Speaker 3

I think with BTK inhibitors a little bit cleaner in terms of safety profile. We think 262, if it shows positive data in CSU will fit perfectly after antihistamines. Once patients progress in antihistamines, what we expect to be a very clean safety profile for a very convenient daily pill will be ideal for those patients before they need to try more aggressive alternatives. So that we continue to believe is a perfect fit for 262 in CSU.

Operator

Thank you. Next question today is coming from James Hinn from Deutsche Bank. Your line is now live.

Speaker 12

Hi. Thanks for taking my question. For Ruxolitinib Cream's HS Phase 3, what time point is the high score of 75 being assessed? When I look at the pipeline slide, it shows the approval range starting around mid-twenty 27 timeframe. So is Phase 3 HS data for RUXCRM expected in 2026?

Speaker 6

Yes, it's Steven. It's hard to be given much precision beyond what we showed in that for the moment because of the study has to start and be underway and then see how it enrolls. The endpoint is HISCA-seventy 5 as agreed with regulatory agencies. And we'll update at a more appropriate time and try to give more precision on the endpoint. We expect given the unmet need, the lack of competition in the space, and the excitement around this that it should enroll well, but we'll see how it goes at a later time.

Speaker 6

Thanks.

Operator

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

Speaker 13

Hi, good morning. Thank you for taking our question. So we had one on the oncology pipeline. For the Phase 1 data sets expected for the mutant CALAR program and then also for the JAK2V617 programs in 2025. Could you help us understand just the scope of those data releases that we could expect to see and how you'll be gauging success for these initial data sets?

Speaker 13

And if I could squeeze a question in on the base business. For Abzalura, could you just give us a sense of how utilization is tracking in terms of tubes per patient per year for both ADN vitiligo versus your last update? Thank you.

Speaker 3

Let me take the first one on the pipeline. So mutant color antibody program is ahead of 617F. As we disclosed previously, a 617F program this year started in healthy volunteers to understand the formulation better. And then we advanced into in myelofibrosis patients and is now in patients, but it's a little bit behind mutant COLOR antibody. We expect both to have meaningful data available next year, but that data will be comprised basically a fairly large number of patients with single agent, particularly for the mutant color antibody and some of the data also in combination.

Speaker 3

I think it's difficult to start putting numbers around what success looks like. What we've been consistent about is that what we expect to see in addition to obviously addressing some of the signs and symptoms of myeloproliferative neoplasms is to see some evidence of decrease in VAF or allele reduction with these medicines. And we expect that we will have that data next year when we decide the right timing to disclose to provide an update.

Speaker 9

On OBSELURATE utilization for AD, we still see over 2 tubes per patient per year. For Vitiligo, we're beefing up the cohort that we're following throughout the time to make sure that the cohort is meaningful enough and as well as we follow for long enough to have a very reliable number. On what you see on the prescription side is that the growth rate is actually coming from new patients as well as refills. So we continue to improve over time. At the same time, we're increasing the focus on the overall adherence and we have quite exciting programs kicking off this quarter and the Q1 of next year to actually put more emphasis on this part of support for our patient population.

Operator

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

Speaker 14

Hey, good morning and congrats on the quarter. Just two quick ones. Just on 262, I just want to know if you've characterized the tryptase reduction you've seen with the agent in the earlier stage trials? And then just on the base business, just in terms of what we've seen with Jakafi in the MF market, it looks like you're still driving new patient volumes. Just was wondering if that's more share gains or just the overall market growing?

Speaker 14

Thanks.

Speaker 3

Let me take the first one on 262. So we are measuring triptase in the ongoing trials. A word of caution, I think that the degree of the magnitude of triptase reduction that we expect to see is not the same you'll see with depletion of mast cells by using a KIT antibody. I mean, it's just common sense that if you deplete mast cells regardless of their location, you're going to have particularly those in circulation, you're going to have pretty dramatic decrease in triptase in circulation. What we address with 262 is MRGPRX2 in the mast cells in the skin, as a result of which the decrease in triptase that we may see, it's not going to be quite as dramatic, but we are measuring that and we will report it.

Speaker 15

Thanks, Derek. Yes, as far as myelofibrosis market goes, Jakafi, as we said, continues to grow. Total patients increased 4% in myelofibrosis. But in fact, yes, the overall market is growing. Patients are getting 1st line.

Speaker 15

They're starting earlier because now you have multiple agents to go to after Jakafi and patients are being treated in the 2nd line, 3rd line and even 4th line setting, which we had not seen before.

Operator

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

Speaker 16

Thank you for taking my question. Just following up on the Jakafi question. I understand that the step down in the catastrophic out of pocket costs are in the middle, they'll be at their lowest $2,000 per year next year. Has that played any role in the uptick in Jakafi growth in the current quarter? And then looking forward to later in the year, could you outline what type of data we might actually see at ASH?

Speaker 15

So I'll take the first question and hand it over to Steven or Pablo. So, yes, so, Jakafi as well, but we always believe, that Medicare Part D patients, who are cancer patients, out of pockets should really, not be a barrier to use. So getting rid of the catastrophic coverage this year for patients on Medicare Part D was a very good thing. Going to $2,000 out of pocket next year is a very good thing and especially smoothing over the whole period of time. So patients out of pocket in any given month is better.

Speaker 15

But really the growth that we see is coming from demand and mostly as we've said from polycythemia vera and mostly that's because physicians are starting patients earlier on Jakafi and polycythemia vera because of the results largely from MAGIC TV, which demonstrates that patients will have thrombosis survival improvements when they start Jakafi and when they start Jakafi

Speaker 6

earlier. Steve? Yes. David, it's Steven. Unfortunately, it's premature to comment on what will be seen at ASH.

Speaker 6

We have to wait for the acceptances and then we'll provide the update at that point.

Operator

Thank you. Next question is coming from Mark Frahm from TD Cowen. Your line is now live.

Speaker 11

Hi. Yes. Thanks for taking my questions. Just on 260 2, back to adding the 25 milligram dose, can you

Speaker 4

just talk

Speaker 11

about kind of what led to adding that? And was it informed at all by the AD trial, which I believe is marked as completed as of over the summer. And then just when you get the data from those different dose levels in CSU, you obviously you don't necessarily need to match the KIT antibodies from an efficacy perspective given the potential for improved safety here. But what is that kind of minimum bar that would justify use of a branded drug after antihistamines in your mind?

Speaker 3

Yes. So let me first of all, the decision to start, but it's indeed a new study or it's part of the ongoing study, but it really is a totally separate cohort with 25 milligrams versus placebo. They had nothing to do with any data that we've seen from the program. We made that decision early in the process very soon after the transaction closed and it was based on our desire to be ready for Phase 3 study as soon as possible once we have data. That decision was made at that time.

Speaker 3

In terms of the bar, look, all the patients in their ongoing study are refractory to antihistamines. So basically after that, the question is what's the best option for these patients. We believe in that context, obviously showing efficacy over placebo and with what we believe will be an excellent safety profile will be sufficient for 262 to be the first option after antihistamines in some of the patients with CSU. We remain convinced that that is the right place for this drug to be used assuming obviously efficacy in the randomized trial.

Operator

Thank you. Next question is coming from Brian Abrahams from RBC Capital Markets. Your line is now live.

Speaker 11

Hey, good morning. Thanks for taking my question and congrats on the quarter and all the progress. Maybe on the CDK2, I'm curious if there's any updates on the aspects that you're considering as you think about the next steps and pivotal plans into the upcoming FDA meeting and sort of how you're thinking about the balance between exploring late line versus maintenance? And then any more color around the companion diagnostic for that drug? Thanks.

Speaker 6

Yes, Brian, it's Steven. Thanks for the question. So, as Pablo said in his slides, there are numerous areas we're interested in, but broadly speaking, the ovarian cancer settings divided into a platinum refractory and a platinum sensitive setting, divided by a time period of approximately 6 months, although that's getting gray in terms of retreatment. And the different unmet needs in each population and we're interested in both. You saw the data update at ESMO, we got upwards of north of a 30% response rate, but the data is still maturing and they may actually be late responders where it may go up.

Speaker 6

So we really like the profile we've seen. We've done 200 plus patients of dose ranging work. So we think we're in a very good place to pick both a dose and schedule. In the platinum refractory ovarian cancer setting, the potentially two ways of thinking about it for the U. S, primarily the FDA, one could do a single arm study in that setting, looking at response rate and durability of response to get across the finish line.

Speaker 6

As potential confirmatory study and for ex U. S. Approvals, it will require a randomized study in that setting. And as was on the slide deck, that would be against investigator choice chemotherapy, of which there are numbers, this single agent paclitaxel, topotecan, liposomal, doxorubicin, etcetera with a time to event endpoint like progression free survival. And we like the profile of the drug there.

Speaker 6

The other setting that's of extreme interest to us and we spoke about it at ESMO quite a lot is the platinum sensitive ovarian cancer setting, particularly where bevacitumab maintenance is used. And it's the disease gets a little complicated there because you look at HRD proficient and HR deficient patients in terms of use of PARP inhibitors. But if you just focus on the majority population there, the HR deficient patients, the majority of those are cyclin E1 positive. We're doing safety work now with CDK2 and bev maintenance. And that's an enormous interest to us.

Speaker 6

There's need there. We can potentially improve cure rates and it would be a pretty simple construct in terms of design. It will be bevmaintenanceplusplaceboversbevmaintenancepluscdk2 and we're doing the enabling work for that now. That is obviously a longer study and we'll deliver later. But we like the profile of the drug there that we've seen so far in terms of its therapeutic ratio.

Speaker 6

So those are the areas of interest in terms of study designs. On the companion diagnostic, haven't given details per se on what our cutoff is, but there's 2 ways of looking again at this population. You can look at the gene in terms of amplification, the CCNE1 gene and others are doing that Or you can look at protein overexpression by IHC, so I can E1 expression and that's where we focused. And that is a much bigger population. With our cutoff, it's probably more than half of ovarian cancer right now.

Speaker 6

But we need to have more discussions with regulators and CDH on our companion diagnostic and the cutoff we're using. But the data we showed at ESMO was using our assay with the cutoff that we've determined internally. Thanks.

Operator

Thank you. Next question is coming from Andrew Berens from Leerink Partners. Your line is now live.

Speaker 7

Hi. This is Emily Schutman on for Andy. So with the upcoming HS readout for povo, just one question looking ahead to the commercial dynamics. So the efficacy looks strong relative to other agents being developed for HS even though it's oral. I was wondering how you see the safety of povo and if the JAK class concerns are reflected on the label, how might that impact the drug commercially?

Speaker 7

I guess I'm asking if you anticipate a black box like other JAK agents? Thanks.

Speaker 6

Yes, Stephen, I'll address that. I mean, we've spoken a bit about how well the studies are going. The Phase 2 profile we saw with the HISCO-one hundred upwards of 29% and in fact enrollment is going very well. It is an inflammatory disease. So there is a reasonable chance or more than a reasonable chance that it will have class effect labeling in terms of a black box.

Speaker 6

But so we do expect that to be the case going forward. If you look at the profile of a JAK STAT inhibitor versus a biologic, which will only attack by definition one pathway, for example, IL-seventeen, here we can have more broad coverage of different interleukins and then potentially that would result in better disease control as we saw in the Phase 2 data. And that's the data set we'd like to replicate. Thanks.

Operator

Thank you. Our next question is coming from Andy Chen from Wolfe Research. Your line is now live.

Speaker 17

Hey, good morning. Thank you for taking the question. I'm curious if you can remind us the size of your sales force and how it's split across heme and derm and others. I'm trying to figure out if your SG and A would trend up as you get your topical into pediatric AD, into PN and also your JAK inhibitor. Are you going to double down on the derm sales force?

Speaker 17

Or are you going to capitalize on the existing synergies? Thank you.

Speaker 2

So I guess in the U. S, Matteo can speak about that. I mean, the big picture is that we have established around the world, in fact, now in most of the European countries, in the U. S. And in Canada, we have dermatology, AI teams that are in place and are sized in a way where we anticipate that they will be able to be the to do most of the work required for the launches of the new indication absolutely clearly for Occellular.

Speaker 2

And when povo comes up, it may be marginal increase, but nothing that is very high. I mean, how many people do you have now in the U. S, Matteo?

Speaker 9

The full footprint across all teams is around a couple of 100 people. It's we see it in line with other competitors. We also saw competitors staffing up a full field force dedicated to HS. We look forward to see the Phase 3 data next year. But from what it looks like now, it's going to be a mix of exactly staffing appropriately while capturing synergy with the current footprint we have.

Operator

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

Speaker 18

Hey, congrats on the quarter and thank you for taking the question. Since you have a number of catalysts in the near term that could reshape the future top line growth, Can you talk about which 1 or 2 catalysts are most important? And are there any gaps in your portfolio? And how are you thinking about business development strategy over the next year? Thank you.

Speaker 2

Yes, maybe I'll take that. I mean, so if you go to the slide that we just presented, the Slide 10, I mean, it's basically saying what has happened recently is the deproembolization of the increase in probability of success for PAFAR, NIQTYMO is approved in third line and ritifenlimab in the CSC. And as I said in my presentation, we collectively, if you put them together, you end up with something that will be around €800,000,000 So each of them are relatively modest if you want to classify them. But when you put them together, this is a meaningful contribution to the top line by 2,030. What we have coming soon is povo, CDK2, ruxolitinib, exa and tafacitamab in first line DLBCL.

Speaker 2

So that's again the number of projects that have been where the probability of success has increased with recent event. I mean for CDK2 clearly the data is good for povacitinib. The Phase 2 data that we have accumulated is showing very good level of efficacy. And in fact the follicular lymphoma data for tafar, which is the first of the CD19, CD20 combination, is in some way improving our chances of success in the first line setting where we are also doing CD19, CD20 combination. So that's the second step.

Speaker 2

And then we go into MKALA X2, 617F, TGF beta PD-one, all the early pipelines that is moving very well. So what it does to us in terms of business development is really looking at maybe early technology type of deals where there are always things we can acquire, learn from that we would be interested in or in the very hypothetical situation where we would find some of that, some very late stage like commercial product that would be also of quality that we would ask for, which is not very common in oncology and dermatology, so and are very expensive. So in some way, we are in a position today where our internal pipeline plus the acquisitions that we have done or the busy we have done recently is giving us a portfolio that works very well for what we need to compensate Jakafi patent expiration around 2029. And we are not looking in the very short term at acquiring new assets that would require a lot of R and D expenses. And that's why we look at either early or very late with contribution to the top line that will come very quickly.

Operator

Thank you. Next question is coming from Kevin Clark Gardner from Evercore ISI. Your line is now live.

Speaker 8

Hey, guys. Thanks for taking the question. Also had one on 262 in CSU. I'm just wondering how many patients are Xolair naive versus experienced in the study? And if you think there could be any potential subgroups with greater efficacy such as IgE low patients?

Speaker 8

Thank you.

Speaker 3

So thank you for the question. So we're not going to provide any details on prior therapy in the study other than to say that all patients have refractory to antihistamines. In terms of the potential for certain subsets to have better efficacy, I'd rather not speculate at this point in time. Obviously, it's a very different mechanism for Xolair, which is as you know an anti GEE antibody as opposed to 262, they're working a different pathway, but I'd rather not speculate at this point into the about the results, the future results of the study.

Operator

Thank you. Next question is coming from Evan Seigerman from BMO Capital Markets. Your line is now live.

Speaker 19

Hi, guys. Thank you so much for taking my question. I'm just thinking about the ALKS program readout in 4Q. I know you don't want to speculate too much, but maybe comment on kind of your confidence in this readout. It feels like this program has a few ups and downs despite the mechanistic rationale.

Speaker 19

And maybe highlight what gives you the confidence in the update and really in the program overall going forward? Thank you.

Speaker 6

Yes, Evan, it's Steven. As we've been alluding to over the last year, we've sort of had to go to high and higher doses to try and achieve the desired effect of the program, which just to remind you would work potentially through inhibiting hepcidin and then relieving that break so that iron gets released and patients' hemoglobin improves from the underlying disease and then potentially from drug induced disease. And I think it's safe to say at this point in time, we haven't seen to date yet sufficient efficacy to trigger a go on a future registration program. We'll update more data at the end of the year at appropriate meeting and give you more color on that. Just to remind you though, we do have an ongoing program in FOP that continues to enroll with ALK2.

Speaker 6

Thanks.

Operator

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

Speaker 20

Hi, thanks for taking my question. As you think about the HS opportunity, can you clarify for us how you think it would be different for RUX Creme versus povo? And also, do you have a sense, I know it's still a little bit early, but in terms of usage of tubes for RUX Creme in HS, how do you think that will compare relative to what you have seen so far for AD and vitiligo? Thanks.

Speaker 6

So Stephen, on your first question, so there's a spectrum of disease that goes mild, moderate and severe in HS, they called Hurley Stages, classifications by the number of abscesses and nodules, the number of draining tunnels and fistulas. Just to address the mild to moderate for which the cream is targeting, as I said earlier, the abscess nodule count is limited to less than 10. To get on to our particular study, you have to have 3 to 10 abscess nodule count. There are no draining tunnels of fistulas in the mild to moderate population and the HITSCAR-seventy five will be the endpoint and the approximately up to between 100 and 1,000 patients with this with a lot of unmet need. These patients tend to be under diagnosed in the setting and tend to have disease for a long time before getting appropriately diagnosed and seeking treatment.

Speaker 6

And it may need chronic treatment. It's hard to determine now till we conduct the study and get the readouts to exactly how long that would be. In terms of pobacitinib, it's looking at the right spectrum of the disease. So the moderate severe population with higher abscess nodule counts with the presence of fistulas and draining tunnels. And then the endpoints can go towards potentially, as Pablo said in his prepared remarks, complete resolution of everything, abscess and nodules and removal of the draining tunnels and fistulas, which will be called a Hisco 100, obviously, addresses a huge unmet need and takes care of a lot of morbidity.

Speaker 6

And again, chronicity of treatment and how many tubes will be needed will come from the Phase 3 study readout, but it will tend to be long therapy, if you want to just ballpark it at the moment. Thanks.

Operator

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

Speaker 10

Hey, guys. Thank you so much for taking my question and congrats on the quarter. I had a question about the CDK2 program. I know some of the questions were already answered, but one of your peers just announced the discontinuation of their CDK2 program. I was wondering if you can help us understand how you see the competitive landscape given your data?

Speaker 10

And before you have the conversation with the FDA or before you move into pivotal trials, should we expect to see any additional data from either ovarian cancer or any of the other indications that you're investigating the drum in? Thank you.

Speaker 3

Let me take that question. So in terms of competitive landscape, the competitive landscape in our CDK2 is a little bit beyond the mechanism, right? I mean, we think when it comes to ovarian cancer, we are ahead in terms of developing a CDK2 program. We disclose the data, as you know, we have over 200 patients treated. We explore a range of doses.

Speaker 3

We've seen clear evidence of efficacy and a very, very manageable safety profile. So we intend to start registrational studies next year, which I think that puts us in front when it comes to CDK2 inhibition in ovarian cancer and perhaps also in endometrial cancer. We're doing additional work in other indications. Now the company landscape is a little bit more complicated than just CDK2 because there's a number of ADCs being developed in ovarian cancer. Obviously, rivituximab is approved for certain patients with follow receptor alpha expression.

Speaker 3

There are other mechanisms there are other ADCs, the same target as well as additional targets for ADCs. I think that the two points I would make is number 1, there isn't complete overlap when it comes to populations, at least now with receptor alpha positive patients, perhaps for some of the others, the overlap will be a bit more pronounced. But one of the reasons why we believe the maintenance study in combination with bevacizumab is very important for us in the long run is because that might be the perfect setting for an oral convenient, well tolerated molecule such as our CDK2 inhibitor. So while we intend to move aggressively into platinum resistant patients to get a fast to market strategy there, we believe the maintenance will differentiate our CDK2 program not only from other entrants in the same target, but also against ADCs.

Operator

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

Speaker 11

Hey, thanks guys for squeezing me in and congrats on the quarter. I guess just when we think about the potential for positive Phase 3 data from stop HS1 and HS2, do you need even like longer term follow-up data or do you feel that you can file kind of right away? And assuming an approval in 2026, how do you see this being used in relation to currently approved therapies? And what kind of market share do you think you might ultimately achieve? I know Steven has talked about greater than 300,000 patients, but how many patients do you think you might be able to treat?

Speaker 6

So Ren, it's Steven. I'll at least do the first part to your question. And obviously, we can't speak about a lot of the regulatory aspects, but it is an NDA, a first filing. So there'll be safety data that will be needed and we'll provide updates at the appropriate time. But we continue to guide to a 2026 approval for that at the time.

Speaker 6

In terms of, it will be really up to what you see ultimately in terms of the efficacy profile vis a vis other orals or biologics in terms of use. There are a lot of patients with the disease, a lot of unmet need and there'll be a lot of cycling through therapy. I think the numbers we give is between 150,000 to 300,000 patients with this moderate to severe in total in terms of seeking therapy potentially and then use of biologics versus orals etcetera will depend on the profiles of the drugs from the Phase 3

Operator

setting. Thanks. Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to Ben for any further closing comments.

Speaker 1

Thank you all for participating in the call today and 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

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Earnings Conference Call
Incyte Q3 2024
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