Incyte Q3 2021 Earnings Call Transcript

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Provided by Quartr
November 1, 2021

Key Takeaways

  • Incyte reported Q3 product and royalty revenues of €778 million, up 25% year-over-year and nearly 50% since Q3 2019, driven by an expanded product portfolio (from 3 to 7 approved drugs).
  • The newly launched Opselura (topical JAK inhibitor for mild-to-moderate atopic dermatitis) shipped ~3,000 tubes in its first four weeks, with 76% target HCP engagement and 61,000 website users; broad payer coverage is expected by Q1 2022.
  • Jakafi sales grew 12% to $547 million in Q3, and full-year guidance of $2.125–2.17 billion was reiterated; the recent approval for steroid-refractory chronic GVHD opens ~14,000 additional patients.
  • The FDA accepted the NDA for parsaclisib in relapsed/refractory marginal zone, mantle cell, and follicular lymphomas (PDUFA dates April 30 and August 30 2022), after strong response rates (57–75%) and manageable safety.
  • Positive Phase 3 TRuV data for ruxolitinib cream in vitiligo showed significant repigmentation at 24 weeks, with EMA MAA validation and US sNDA in progress, positioning another dermatology growth opportunity.
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Earnings Conference Call
Incyte Q3 2021
00:00 / 00:00

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Operator

Hello, and welcome to the Incyte third quarter 2021 earnings call and webcast. At this time, all participants are in listen-only mode. A Q&A session will follow the formal presentation. We ask you please ask one question and one follow-up, then return to the queue. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Christine Chiou, Head of Investor Relations. Please go ahead.

Christine Chiou
Christine Chiou
Head of Investor Relations at Incyte

Thank you, Kevin. Good morning and welcome to Incyte's third quarter 2021 earnings conference call and webcast. The slides presented today are available for download on the investor section of our website. Joining me on the call today are Hervé, Barry, Stephen, and Christiana, who will deliver our prepared remarks, and Dash, who will join us for the Q&A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements and are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our 10-Q for the period ended June 30, 2021, and from time to time in our other SEC documents. We will now begin the call with Hervé.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

Thank you, Christine, and good morning, everyone. I'm happy to report today on an important quarter for Incyte. Before we do that, I would like to take a moment to speak about the significant transformation our company has undergone over the past two years. From the third quarter of 2019 to today, Incyte has more than doubled its number of approved products from three to seven, and has increased the number of approved indication from five to 12, a significant achievement for patients around the world. Within the same time period, quarterly product and royalty revenues have grown nearly 50% from $534 million to $778 million in the most recent quarter.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

This $778 million in product and royalty revenue for Q3 2021 does not yet reflect revenue contribution from our two most recent U.S. approval, Opzelura in atopic dermatitis and Jakafi in steroid refractory chronic GVHD. In addition, we expect further growth from the recent approvals of Pemazyre in Europe and Japan, and Minjuvi in Europe, where the launch is ongoing in Germany and will expand to other countries as reimbursement is secure. As you see on slide five, we have provided long-term guidance for some of these products, and there is significant upside to the current sales number. Within hematology oncology, our MPN GVHD franchise, which includes Jakafi and other innovation, is expected to surpass $3 billion in peak sales. Additionally, Monjuvi, approved for the treatment of relapsed or refractory DLBCL, has the potential to reach $500 million in this indication in the U.S.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

While we have not provided guidance in Minjuvi, Pemazyre and Iclusig, these products represent additional growth potential and generate further value to our business. Turning to dermatology, over the past year, we have successfully established our dermatology commercial franchise in the U.S. Given the product profile of Opzelura and the talented commercial team we have in place, we are confident in the potential for Opzelura, and we expect peak sales to reach at least $1.5 billion in the United States in atopic dermatitis. While still very early in the launch of Opzelura, the initial uptake has been strong and Barry will be providing details in his prepared remarks.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

Looking ahead into other areas of our portfolio, we are anticipating multiple regulatory decisions in 2022, including ruxolitinib cream in vitiligo in both the U.S. and Europe, parsaclisib in three non-Hodgkin's lymphoma indication in the U.S., as well as once daily ruxolitinib late in 2022 or early 2023. These 2022 regulatory decisions, which closely follow multiple product approval in 2021, position us well for further growth and diversification of our product revenues in the coming year. Our partners are also making headway. With Novartis, ruxolitinib is currently under review in Europe and Japan for acute and chronic GVHD, and capmatinib is under review in Europe for non-small cell lung cancer. In addition, Lilly is planning to submit an sNDA to the FDA for baricitinib in alopecia areata by the end of this year.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

If approved, these opportunities will provide valuable growth to our royalty revenues, which have already surpassed $400 million during the first nine months of this year. As you have seen, 2021 has been an important year of commercial, clinical, and regulatory success for Incyte. With that, I will hand over to Barry to cover the individual product performance.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Thank you, Hervé, and good morning, everyone. Jakafi sales grew 12% year-over-year to reach $547 million for the quarter, and we are reiterating our full-year guidance range of $2.125 billion-$2.17 billion. Jakafi was the first approved treatment in myelofibrosis, polycythemia vera, and steroid-refractory acute GVHD, and years later remains the standard of care in each of these indications. Growth across MF, PV, and GVHD continues to be strong. As you can see on the left, new patient starts have returned to pre-pandemic levels. With patients staying on therapy longer and new patients coming in, the total number of patients on Jakafi continues to increase year-over-year.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Myelofibrosis patients, the largest proportion of patients on Jakafi, comprise 45% of total patients, while polycythemia vera and GVHD patients accounts for 34% and 14% of total patients respectively.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

At the end of September, Jakafi was approved for its fourth indication for the treatment of steroid-refractory chronic GVHD. To put this in, this recent approval into perspective, approximately 2,000 patients with graft-versus-host disease are currently using Jakafi, the majority of whom have acute form of the disease. There are over 14,000 patients in the U.S. living with chronic GVHD, of which 1/2 require therapy beyond systemic corticosteroids. We expect the recent approval to accelerate new patient starts with Jakafi. Turning to slide eight, Monjuvi sales grew 22% sequentially to $22 million in the third quarter, with growth driven primarily by demand. We are seeing an increase in the number of total accounts across both academic and community settings, and there has been a swift shift towards adoption of Monjuvi earlier in the treatment paradigm.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

We now have a greater proportion of Monjuvi patients initiating therapy in the second line, which should result in patients experiencing longer and more durable responses, leading to a longer duration of therapy. Feedback from healthcare professionals continues to be positive, with efficacy, duration of response, and safety being the key drivers of adoption. HCP awareness of Monjuvi's differentiated profile continues to increase, and the L-MIND three-year results have been well-received by the physician community. As patients continue to return to the office, and as our reps continue to educate healthcare professionals on the clinical profile of Monjuvi, we are confident in our ability to build on this improving momentum. Turning to slide nine, we are very excited to receive the approval of Opzelura, the first FDA-approved topical JAK inhibitor for the treatment of mild to moderate atopic dermatitis.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Prior to launch, we had identified 11,000 dermatologists and high-priority allergists, the top 20% of which are responsible for nearly 80% of atopic dermatitis prescriptions. Our patient assistance programs are in place to help reduce the barriers to access for Opzelura, and our negotiations with payers are advancing well. To date, we have made significant progress with our stakeholders in the launch of Opzelura. Since our launch on October 11th, our field-based representatives have actively engaged with 76% of our target prescribers and have conducted 8,500 HCP calls in the first three weeks of launch, of which 95% are being conducted in person. We're also receiving a significant amount of interest in Opzelura from patients, and in the first two weeks of launch, we have approximately 61,000 unique website users, and this number continues to climb.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Further highlighting the level of engagement from patients, there were over 1,500 patient registrations for our co-pay card program. Lastly, on the payer front, our discussions with PBMs, which include the top three who account for nearly 80% of commercially insured patients in the U.S., have been very positive as they realize the value proposition of Opzelura. As a result, we expect to secure broad coverage in Q1 of next year. In the meantime, during this contracting period, we have multiple efforts underway to ensure patients are able to access their medication. Although it is still early in launch, our efforts are translating into the first signs of a very successful launch. As you know, there are limitations to the accuracy of script data.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

It is important to note that IQVIA's capture rate of prescriptions is underrepresentative of actual demand, especially in the initial weeks of launch. Over time, the capture rate is expected to continue to improve. There are two different metrics that we're using to track performance consisting of new to brand RXs and 867 data. New RX data, shown on the left, captures the patients who are either new to the market or have switched to Opzelura. In the first two weeks of launch, there have been close to 1,000 new-to-brand prescriptions, with nearly 2/3 of scripts coming from patients who were previously on topical corticosteroid therapy. On the right-hand side, we are showing 867 data, which is the number of units of Opzelura 60 g tubes that our wholesalers are shipping to pharmacies.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

While 867 data doesn't translate directly into scripts, we believe it captures demand appropriately, given the low level of inventory retail pharmacies typically hold for specialty dermatology products. Pharmacies order Opzelura when a prescription is received and approved by the patient's insurance or processed through our patient access programs. In its third week of launch, 1,115 tubes of Opzelura were shipped by wholesalers, bringing the total shipped since launch to over 2,200. Based on early data, we are now tracking towards 300+ units shipped in the first four weeks of launch. Now I'll turn the call over to Stephen for a clinical update.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Thank you, Barry, and good morning, everyone. The third quarter brought numerous achievements on both the clinical and regulatory fronts. Starting with the three recent regulatory approvals, Monjuvi was approved in Europe for second-line diffuse large B-cell lymphoma in August. In September, Opzelura was approved in the United States for mild to moderate atopic dermatitis, and Jakafi was approved in the United States for second-line chronic graft-versus-host disease. In addition to these regulatory milestones and successes, we presented pivotal data from our phase III TRuE-V studies of ruxolitinib in vitiligo at the European Academy of Dermatology and Venereology. The full data set highlighted the significant improvements in facial and total body repigmentation seen in vitiligo patients after treatment with ruxolitinib cream. Also presented at EADV was positive pivotal data for baricitinib, our partnered product with Eli Lilly in alopecia areata.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

These data showed that treatment with once daily baricitinib 4 mg was superior to placebo in achieving significant scalp hair regrowth at 24 weeks in adults with severe alopecia areata. We also announced a global collaboration with Syndax Pharmaceuticals, which is pending regulatory clearance to develop and commercialize axatilimab, an anti-CSF1 receptor monoclonal antibody for chronic graft-versus-host disease and other fibrotic diseases. Lastly, we recently announced the acceptance of the marketing authorization application by the European Medicines Agency for ruxolitinib cream in vitiligo. Yesterday, we announced that the FDA accepted the NDA for parsaclisib in three types of non-Hodgkin's lymphomas. We received priority review for parsaclisib in two of the indications, including for relapsed or refractory marginal zone lymphoma in adult patients who have received at least one prior anti-CD20-based regimen, and for mantle cell lymphoma in adult patients who've received at least one prior therapy.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

The PDUFA date for these two indications is April 30th, 2022. There will be a standard review for parsaclisib in relapsed or refractory follicular lymphoma in adult patients who have received at least two prior systemic therapies with a PDUFA target action date of August 30th, 2022. Let me remind you of the efficacy across non-Hodgkin's lymphoma. In relapsed or refractory marginal zone lymphoma, response rates seen and independently reviewed were 57% with a duration of response and PFS not yet reached. In mantle cell lymphoma, this was a 71% response rate with a duration of response of nine months and a PFS of 11.1 months. In relapsed or refractory follicular lymphoma, it was a 75% overall response rate with a duration of response of 14.7 months and a PFS of 15.8 months.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

All this data is with the once daily regimen of 2.5 mg. Remember, this drug was designed to avoid hepatotoxicity associated with first generation PI3K delta inhibitors, and thus we have seen low rates of liver toxicity with less than a 5% rate of grade three ALT and AST elevations. In addition, cases of serious diarrhea and colitis were manageable and reversible. Turning to the next slide, the clinical development of parsaclisib in hemolytic anemia continues to progress with the phase III study expected to start by the end of this year. The study will evaluate the efficacy and safety of parsaclisib versus placebo with a primary endpoint of durable hemoglobin response at week 24.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Patients must have a diagnosis of primary warm antibody autoimmune hemolytic anemia, hemoglobin levels of 7-10 g per deciliter, and a FACIT-F score of less than or equal to 43. This program represents another significant opportunity to address an unmet medical need where there are currently no approved therapies for patients. Moving to our LIMBER development program. We have multiple studies ongoing looking to improve upon the standard of care in myelofibrosis, polycythemia vera, and graft-versus-host disease. We expect data and/or regulatory action for a few of these programs by the end of 2022, including the NDA submission for the once-daily formulation of ruxolitinib. We also recently entered into a collaboration with Syndax for axatilimab, an anti-CSF1R monoclonal antibody, which is currently being evaluated as a monotherapy in third-line chronic graft-versus-host disease.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

In addition, we will have the opportunity to evaluate axatilimab as a combination therapy with our JAK inhibitors, where the ultimate goal would be to arrive at a safe and effective combination that could lead to a steroid-free regimen for chronic graft-versus-host disease. Turning to dermatology and ruxolitinib cream in vitiligo. The phase III TRuE-V data presented at EADV showed meaningful superiority to vehicle, with 30% of patients achieving a F-VASI75 at week 24, which is in line with our phase II results. As a reminder, F-VASI75 response in the phase II trial continued to improve with ruxolitinib cream treatment with an over 51% response rate at week 52. We expect the 52-week data from the TRuE-V pivotal studies to be available in 2022.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

We are extremely encouraged by these positive results and the impact ruxolitinib cream may have for patients living with vitiligo in the United States and Europe. The MAA was recently validated by the European Medicines Agency, and the U.S. sNDA is in progress. Turning to slide 18 and an update on our dermatology programs. We continue to focus on developing our dermatology pipeline with ruxolitinib cream and INCB54707, an oral selective Janus kinase one inhibitor. Multiple studies are ongoing with ruxolitinib cream in atopic dermatitis, including TRuE-AD3, a pivotal trial in atopic dermatitis in pediatric patients. In addition to our TRuE-V program in vitiligo, we are also looking at INCB54707 in a phase II study in patients with non-segmental vitiligo with a body surface area of greater than or equal to 8%. Additional studies for INCB54707 are currently underway in other indications.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Including two phase II trials in hidradenitis suppurativa and prurigo nodularis. We look forward to updating you on these programs next year. In closing, we had a very successful quarter with a number of clinical and regulatory accomplishments, including three approvals, the FDA acceptance of an NDA for parsaclisib as a treatment for three types of non-Hodgkin's lymphomas, and the EMA acceptance of the MAA for ruxolitinib cream as a treatment for vitiligo. Later this week, we invite you to join an analyst and investor call to discuss our oral PD-L1 program, including data for INCB086550, which was accepted for presentation at the SITC Annual Congress on November 13th. With that, I would like to turn the call over to Christiana for the financial update.

Christiana Stamoulis
Christiana Stamoulis
EVP and CFO at Incyte

Thank you, Stephen, and good morning, everyone. Our total product and royalty revenues for the third quarter were $778 million, representing a 25% increase over the third quarter of 2020. Total product and royalty revenues for the quarter are comprised of net product revenues of $547 million for Jakafi and $48 million for other hematology oncology products. Royalties from Novartis of $95 million for Jakafi and $3 million for Tabrecta, and royalties from Lilly of $87 million from Olumiant. The 12% year-over-year growth in Jakafi net product sales reflects higher patient demand across all indications and a continued recovery of new patient starts as we continue to emerge from the COVID-19 pandemic. The tripling of the Olumiant royalties is due primarily to the use of Olumiant for the treatment of COVID-19.

Christiana Stamoulis
Christiana Stamoulis
EVP and CFO at Incyte

Per our agreement with Lilly for global net sales of Olumiant for the treatment of COVID-19, we're entitled to receive royalties equal to the base double-digit rates applicable to all global net product sales, plus an additional 13% royalty. Moving on to our operating expenses on a GAAP basis. Ongoing R&D expenses of $331 million for the third quarter increased 11% from the prior year period, primarily due to the progression of our pipeline. Our SG&A expense for the quarter of $191 million increased 58% from the prior year quarter, primarily due to our investments related to the establishment of the new dermatology commercial organization in the U.S. and the related activities to support the launch of Opzelura for atopic dermatitis.

Christiana Stamoulis
Christiana Stamoulis
EVP and CFO at Incyte

Our collaboration loss for the quarter was $9 million, which represents our 50% share of the U.S. net commercialization loss for Monjuvi. This is comprised of total net product revenues of $22 million and total operating expenses, including COGS and SG&A expenses of $40 million. Finally, our financial position continues to be strong as we ended the quarter with approximately $2.3 billion in cash and marketable securities. Moving on to our guidance for 2021. We are reiterating our revenue, COGS, R&D, and SG&A guidance for the year. We remain confident in our full year guidance for Jakafi based on our continued recovery of new patient starts and the approval in steroid refractory chronic GVHD. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q&A.

Operator

Thank you. We'll now be conducting a Q&A session. We ask you please ask one question, one follow-up, then return to the queue. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. Once again, we ask you please ask one question, one follow-up, then return to the queue. Our first question is coming from Tazeen Ahmad from Bank of America. Your line is now live.

Tazeen Ahmad
Tazeen Ahmad
Managing Director of Global Research at Bank of America

Hi, guys. Good morning. Thank you for taking my questions. I'm gonna focus on atopic derm. It looks like out of the gate, as you mentioned, the metrics are looking pretty strong. Can you give us an idea of what are the physicians that are picking up use initially? Is there a particular patient population that you're hearing that doctors wanna try this out on first, at least feedback from your sales force? And if you were to say right now, what is your biggest I guess roadblock to pick up? Is it getting on insurance formulary, or is it just trying to educate doctors on the product? Thank you.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Hi, it's Barry. Thanks, Tazeen. The first thing I'd like to say is that I realize I said that we were going to ship in my prepared remarks 300 tubes of Opzelura in the first four weeks, and of course, I meant 3,000 tubes, which would actually make it, you know, on par or better than the last two launches in atopic dermatitis. We expect those 3,000 shipments to pharmacies to actually translate into more than 3,000 prescriptions in the first full four weeks of our launch. What patient population are they really looking at? It's just the indication, essentially, patients who are 12 years or older. There's no difference.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

I've spoken to many dermatologists, and they're confident that they can use this drug in teens all the way up to you know the older adults. The biggest roadblock, patient access is always an interesting problem at the beginning of a launch, but in fact, I think we're making great headway there. As I said in my prepared remarks, I think we will, in fact, have broad coverage in the first quarter of next year. As you know, when new products are launched, particularly products like this in dermatology, sometimes the big PBMs will just block you for six months or more, and we think we can overcome that as quickly as possible.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

We've presented many times to payers across the country, big and small payers, with our clinical data, and they're really impressed by the value that Opzelura will provide to these patients. Even though it is always a barrier, you're worried about patient access, I think we're going to be fine in the relatively near future. As you know, in fact, you know, when they start a new year is really when you want to ensure that your formulary is fully blown out and all of your customers know exactly what's going to be covered and what's on the formulary. We think in the beginning of the year, we'll have good progress there.

Tazeen Ahmad
Tazeen Ahmad
Managing Director of Global Research at Bank of America

Thanks, Barry. Just to clarify, do you know how long it's taking from the time the doctor writes the script to the time the patient is receiving products in the early days of the launch?

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

I don't. It's very early. I can't give you know, a median or an average. You know, some patients obviously have to have prior approval. Other patients go through our IncyteCARES patient assistance program. I'm sure some patients are getting it very quickly, and other patients it might take a few days, but I don't have an average for you yet.

Operator

Thank you. Our next question today is coming from Brian Abrahams from RBC. Your line is now live.

Brian Abrahams
Brian Abrahams
Managing Director and Co-Head of Biotechnology Research at RBC

Hey, guys. Thanks so much for taking my question. I have a question on the MF dynamics overall. Looks like patient volume's been very stable year-over-year in MF for Jakafi, and you're seeing a lot of the growth being driven by the other indications. Just wondering if you could talk about, you know, I guess, what goes into your out-year guidance in terms of overall market dynamics across the indications. Then, as we think about sort of longer term, you didn't talk too much about the ongoing phase II phase I/II for the BET and ALK2.

Brian Abrahams
Brian Abrahams
Managing Director and Co-Head of Biotechnology Research at RBC

Just sort of wondering where those stand and your level of confidence that can drive potential growth and durability in the MF indication. Thanks.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Sure. This is Barry. I'll start and then hand it over to Stephen for a BET and ALK2 and where they stand. As you can see from the slide that we showed, the remarkable thing about Jakafi is that month after month, year after year, the total number of patients on Jakafi continues to increase, whether it's MF, PV, or GVHD. The number of patients who are on MF for a very long period of time is amazing, in fact. We know that we've really only penetrated about 50% of the market. You know, our biggest competition is really watch and wait. Getting physicians to fully understand the survival benefit that Jakafi offers to myelofibrosis patients is really what our challenge is, and we know we're making headway all the time.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

As I said in the beginning of my prepared remarks that myelofibrosis, PV, GVHD, the standard of care is Jakafi, and it will continue to be that way. PV patients, same thing. They continue to grow year after year, month after month. GVHD, especially for chronic GVHD, we know is going to grow very well. The prevalence of those patients are greater than a prevalence of acute GVHD patients. Chronic GVHD patients stay on for a much longer period of time. I'll hand it over to Stephen now for BET and ALK2.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Thanks, Barry. Brian, thanks for your question. Let me deal with each separately. Firstly, I'll start with ALK2, which is a mechanism now, you know, we have data in hand that we understand in more and more. If you look at iron metabolism in humans, hepcidin, the way it works is high levels of hepcidin inhibit iron absorption from the gastrointestinal tract and stop its release from macrophages. There's less iron available to make red blood cells. If you are able to inhibit that hepcidin pathway through an ALK2 inhibitor, iron's released and made available, both from absorption and both from macrophages to make new red blood cells. We've shown that this compound does that from a mechanism of action point of view. Where we are, we're very excited about its potential.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

We'll complete the monotherapy safety and then the combo safety, and then we'll be ready, you know, to make more decisions on the path forward in terms of more pivotal studies, which I've said repeatedly, will hopefully address both the anemia of the underlying disorder, which we think is hepcidin-mediated, plus the anemia induced by ruxolitinib, which we also think is hepcidin-mediated. If we achieve both of those, you'll get, you know, the safety aspect and less discontinuations when it works, and then maintain ruxolitinib dose and enhance efficacy. The program really has a lot of potential. We hope to have a recommended phase II combo dose ready to go early next year and then make those decisions.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

For the BET program, again, a compound we've had in our hands for a long time. Years ago, we dosed it to much higher multiples in patients with solid tumors. The dose-limiting toxicity there, as we know with BET inhibitors, was on target and was thrombocytopenia.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

We now, you know, dosing it at 20%-25% of where we were before, gathering monotherapy safety in myeloproliferative neoplasm patients and then combo safety. We'll again, just like with the old program, have to make decisions on where to go, looking at the competitive space as well. You know, would we be looking, given its profile at suboptimal patients, and in addition, would we consider first line. Those data sets for the mono safety and the combo safety will be available in 2022. As soon as we're ready and put up on clinicaltrials.gov, we'll be able to show you our clinical programs there. We're comfortable where they are at the moment. Thanks.

Brian Abrahams
Brian Abrahams
Managing Director and Co-Head of Biotechnology Research at RBC

Stephen and Barry, thanks so much.

Operator

Thank you. Our next question is coming from Cory Kasimov from JPMorgan. Your line is now live.

Cory Kasimov
Cory Kasimov
Managing Director of Biotechnology Analyst at JPMorgan

Hey, good morning, guys. Thank you for taking my questions. I wanted to go back to Opzelura. You know, now that you're early on in the launch and deepened discussions with payers, curious if you're thinking around expectations for gross to net have changed at all, how we should be thinking about this short term and then, you know, kind of longer term trends on this front. The follow-up is, as we think ahead to the anticipated approval of Opzelura for vitiligo, how did the tubes per patient likely differ for a typical patient in that setting versus atopic derm? Thank you.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Hey, Cory, it's Barry. What we're thinking about the gross to net is that, you know, what we said in the past is that long term, we anticipate the gross to net to be 25%-50%. In this quarter in particular, and then as we move into next year, the gross to net will be much higher, just because of the NDC blocks and the patient assistance programs that we provide, the co-pay assistance. As you know, in this therapeutic category, over time, the use of those programs declines as there's broader coverage. Our gross to net will continue to improve. For vitiligo, maybe I'll start out and then hand over to Stephen. You know, we know it's gonna be greater.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

You know, I think we've forecasted, perhaps we said that, you know, we think in atopic dermatitis, you know, three or more tubes will be used per year. 10 tubes per year, perhaps for vitiligo. I forget exactly what the clinical trial was, how many tubes we got. But obviously, we want the patients are gonna use this for 24 or 52 weeks, and we'll see how much further after that. But I'll let Stephen comment as well.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Thanks, Barry. Thanks, Cory. The data in my prepared remarks for the TRuE-V phase III studies thus far have completely replicated the phase II data in terms of the F-VASI75 at 24 weeks hitting, you know, the 30%+ range. We know from the 52-week and the 104-week long-term follow-up on our phase II studies that one of the phenomena with treating vitiligo is continued improvement over time. In fact, most of the patients, the vast majority, elected to go on to long-term treatment in the long-term safety extension because of continued improvement. What Barry is alluding to is continued use over time. Over a one-year period, the current estimate is at least 10-11 60 g tubes would be needed to achieve what I just spoke about.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Then we'll get more data in the second year and as we continue to follow these patients. Thanks.

Cory Kasimov
Cory Kasimov
Managing Director of Biotechnology Analyst at JPMorgan

That's helpful. Thanks, guys.

Operator

Thank you. Our next question today is coming from Srikripa Devarakonda from Truist Securities. Your line is now live.

Srikripa Devarakonda
Srikripa Devarakonda
VP of Biotechnology Equity Research at Truist Securities

Hey, guys. Thank you so much for taking my question. With the approval of Opzelura in atopic derm and the regulatory progress in vitiligo, looks like the dermatology franchise is off to a great start now. You also have additional trials going on. Can you talk about how you're thinking about the future of the derm franchise? You know, given what you've already targeted with rux, would you be looking for something to complement that, or should we expect something more broad? Thank you.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

Right. Hervé here, and Stephen will speak about the specifics of what's going on in derm and beyond dermatology with our current portfolio. I mean, the whole idea from the beginning was that we do research and discovery of new products somewhere in between immunology, inflammation, and cancer. Some products are typically cancer products, but many of the products, targeted therapies type of product, antibodies, et cetera, but many of the mechanism we are studying, in fact, have application outside of cancer. That's where it came, that's where it started. What we see today when you look at the, or, you know, the 10+ mechanisms that we are studying in early studies is that they can have applications outside of cancer. That's what we found with PI3 kinase delta in hemolytic anemia.

Hervé Hoppenot
Hervé Hoppenot
Chairman and CEO at Incyte

That's what we see in many dermatology indications. The goal is really to continue on that sort of follow the science type of approach. Obviously, because dermatology of the skin is, you know, the largest immune organ, I guess, we see a lot of applications in dermatology in the short term, but it could also go in other type of inflammatory immune type of disease. Maybe, Stephen, if you want to to speak about it.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Yeah.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Thank you, Hervé, and Srikripa, thanks for the question. Hervé's right. You know, the way we view in dermatology, and I'm glad you called it a franchise, even from an R&D point of view, is absolutely not a one and done. There's life cycle management of the cream itself ongoing within atopic dermatitis and some of the manifestations thereof, like chronic hand eczema, et cetera. There's still questions to be asked and addressed in vitiligo, including, you know, what happens with in patients on for the long term with you know, really good improvements in F-VASI90 and beyond, and what happens with withdrawal in those situations.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Beyond those indications, as Hervé was alluding to, given the mechanism of action of the cream in terms of JAK-STAT pathway, there are a number of other indications that we're extremely interested in addressing, which are actually relatively from an R&D point of view, certainly with an oncology context, really easy to study in terms of time. You know, stay tuned. We view this now as a lifecycle management opportunity with a scale that we can address in a very efficient manner. Because derm is, as others have said, they've alluded to has become really important to Incyte, both from an R&D and then a commercial point of view. It's beyond in terms of our other compounds.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

I alluded to in my prepared remarks with INCB54707, our relatively JAK1 specific oral inhibitor, that there are other indications for which we already have really good phase II data in hidradenitis suppurativa. We have an ongoing phase II-B trial in approximately 200 patients that'll deliver data next year, and then we can make a decision on what to do from a pivotal aspect. We're studying that compound in prurigo nodularis. Again, the mechanism of action is very relevant there. In my prepared remarks for non-segmental vitiligo with body surface area involvement of 8% or greater, we think, you know, the risk benefit may well be favorable for an oral JAK there.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

You can see, you know, the derm, thinking from an R&D point of view has expanded in an appropriate proportional way, and it's relatively efficient to do. Thanks for the question.

Srikripa Devarakonda
Srikripa Devarakonda
VP of Biotechnology Equity Research at Truist Securities

Thank you so much. I appreciate all the color.

Operator

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

Salveen Richter
Salveen Richter
Managing Director and Co-Head of Healthcare and Global Investment Research at Goldman Sachs

Good morning. Thanks for taking my question. Back to Opzelura. Could you just give us any qualitative feedback you're getting on the launch and with regard to, you know, the safety profile and use in the context of which population? Would they be looking to combinatorial use, for instance? In vitiligo, is there any change to the outlook for market opportunity here?

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Hi, Salveen. It's Barry. Regarding the safety in a black box, I guess you're alluding to, is that dermatologists are very used to explaining to patients the difference between a systemic product and a topical product. For most skin diseases, in fact, dermatologists would rather use a topical product. They know that, for example, the safety profile between an oral JAK inhibitor and a topical JAK inhibitor is gonna be very different. They're very comfortable with that. As I said before, I've spoken to many dermatologists. We've gotten a lot of feedback from the field. There really hasn't been a pushback on the types of patients they're gonna use this Opzelura in.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

It's approved for the indication from 12 and over, and that's what they're telling us they're gonna use it for. In terms of combo use, I don't know. Sometimes dermatologists will cycle through different therapies as they're trying to control patients with atopic dermatitis. But we can't say, in the future, what they're going to do. In terms of vitiligo, you know, it's a game changer. It can change patients' lives and how they feel about themselves. It's the only drug that'll be approved for repigmentation of the skin.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

We really think that's going to be something that patients and dermatologists, healthcare providers will want to utilize, because it is such a unique treatment and is going to help maybe hundreds of thousands of patients, if not more, live a better life, I think.

Salveen Richter
Salveen Richter
Managing Director and Co-Head of Healthcare and Global Investment Research at Goldman Sachs

Thank you.

Operator

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

Jay Olson
Jay Olson
Managing Director and Senior Analyst in Biotechnology at Oppenheimer

Oh, hey, thanks for taking the questions and congrats on the three parsaclisib filings and acceptances. Can you comment on FDA's rationale for granting MCL and MZL priority reviews while FL received a standard review? On the last call, I think you mentioned the tumor agnostic program for parsaclisib would transition to a molecular-defined approach. I was wondering if you have any more details on those plans. Lastly, on Monjuvi, can you talk about any impact that you're seeing from Polivy, especially as it moves to the frontline setting and any feedback from physicians in terms of how they compare those two drugs? Thank you.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Jay, it's Stephen. Thanks for your questions.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

On the parsaclisib acceptance of filing, you know, it's one of the biggest submissions I've ever been involved in in a positive way 'cause we submitted all three indications at the same time with the entire package, you know, realizing that the diseases, although under the umbrella of non-Hodgkin's lymphoma in general, are different in terms of some of their pathophysiology and the way they behave. That's exactly what happened in terms of the review cycles you allude to. For both marginal zone and mantle cell lymphoma, given the unmet medical need there, the FDA felt that they warrant a priority review and also given the data we've seen. For follicular, I think, you know, their feeling is maybe it's a little more of a crowded space, less unmet medical needs.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

I think very importantly, it's a condition that they want long, long-term follow-up in terms of the responders. I think that's what's driving the review cycle there being lengthened. Obviously, our intent is to try and march these through all at the same time and get them approved at the same time. If they end up separating out follicular to get longer follow-up on the responders, you know, I think that's what's driving the standard review cycle there. In terms of your second question, I think you were alluding to pemigatinib's tumor-agnostic program, our FGFR inhibitor. We had, you know, a tumor-agnostic study underway for patients either with FGFR2 driven, you know, rearrangements, or FGFR3 or any others.

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

What we saw within that program, although early and small numbers, is some encouraging signals in certain areas like glioblastoma that felt to be more FGFR3-driven and like some areas of non-small cell lung cancer that were more FGFR2-driven. We felt that the likelihood of getting a wide tumor-agnostic indication was perhaps more limited, and it was more efficient to you know stop the agnostic program enrolling across the board and go at those exactly at those two histologies directly. There'll be you know phase II studies underway in both glioblastoma multiforme that's FGFR3-driven and then non-small cell lung cancer that's FGFR2-driven. Then for your Monjuvi Polivy question, I'll turn it to Barry. Thanks.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Sure, Jay. In terms of Monjuvi and how it relates to Polivy, you know, we think. Well, first of all, we're approved in the second line setting for diffuse large DLBCL patients. We really think that our profile is always going to be attractive to patients and to physicians. In fact, perhaps as you know, Polivy reported over the last two quarters that their sales have declined. We actually believe that because we're continuing to make inroads there, but Polivy's approved in the third line setting, we're approved in the second line setting. As far as moving to the first line for Polivy, if they do move to the first line, we haven't seen the data yet, but that wouldn't bother us.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

It actually gives us more faith that our frontline trial will be positive for these patients. Even if they're in the first line setting before we get there, we'd be the choice for them in the second line setting going forward. We really believe that if their study is positive in combination with R-CHOP, our study could be positive in combination with R-CHOP.

Jay Olson
Jay Olson
Managing Director and Senior Analyst in Biotechnology at Oppenheimer

Great. Thanks for taking the questions.

Operator

Thank you. Our next question today is coming from Marc Frahm from Cowen and Company. Your line is now live.

Marc Frahm
Marc Frahm
Biotechnology Equity Research Analyst at Cowen and Company

Hi. Thanks for taking my questions. Maybe to start with one follow-up for Stephen. On your comments of the ALK2, when you were discussing that you've seen pathway engagement of the hepcidin pathway, were you speaking just about iron release or have you seen rises in red blood cell counts in that monotherapy trial? And then for Barry, maybe if you can give a little more granularity on, you know, what you mean by broad access. I guess, one, have any meaningful contracts been signed yet or at least getting very close to finalization, where maybe you can speak to what type of step edits you're expecting to be in those final agreements?

Stephen Stein
Stephen Stein
EVP, CMO, and Head of Late-stage Development at Incyte

Mark, it's Stephen. Thanks for the question. We have not presented publicly data yet on hemoglobin improvements if that's what you were asking directly. We have demonstrated pre-clinically and then in clinical samples that it's doing exactly what we want it to do from an MOA point of view in terms of iron dynamics and ferritin. We don't have the clinical endpoint yet on actual rise in hemoglobin and hope that'll follow, and we'll be able to present that next year to you. Then Barry can answer the second part.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Sure. As far as negotiations with payers, like I said, they're ongoing. We think they're very positive. We think in the first quarter we'll actually have broader access and so we're negotiating not just with the large PBMs, but all of the regional payers that are important throughout the country. I'm very confident that we will, in fact, in the near term, sign contracts. Don't forget, patients do have access to the drug now, not just through our patient support program, but they're being paid for. You asked about step edits. We think that this drug's gonna be used after steroids, and I think that's perfectly appropriate.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

We think, in fact, we have a very good situation where from steroids all the way up to systemics, all of those patients for mild to moderate disease, this will be the drug to use for them. We know that thousands and thousands of patients have already failed steroids, so the patient population is just there for us to, for them to begin to utilize a drug with the profile that, Opzelura has. We're confident about our future market access, and we're confident that patients are getting the drug now, and we don't think that step edits will be a problem or if there is one step edit, just like in our label, that should be used after prior topical therapy. That's exactly where it's gonna be used, and we're fine with that.

Operator

Thank you. Our next question is coming from Andrew Berens from SVB Leerink. Your line is now live.

Andrew Berens
Andrew Berens
Senior Managing Director of Targeted Oncology at SVB Leerink

Hi. Thanks for taking the question. Maybe just a little color on the sample program. What size are the tubes that are being given, and are there any mechanics

Andrew Berens
Andrew Berens
Senior Managing Director of Targeted Oncology at SVB Leerink

The physician has to go through before giving a sample. Just trying to get a sense for how confident you are that the samples are gonna be converted to paying patients.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Well, I'm not sure if I exactly understand your question, but, you know, sample size are in fact 5 g, so it's a very small tube. Healthcare professionals don't really have to go through anything in order to utilize samples.

Andrew Berens
Andrew Berens
Senior Managing Director of Targeted Oncology at SVB Leerink

Okay.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

What we did decide.

Andrew Berens
Andrew Berens
Senior Managing Director of Targeted Oncology at SVB Leerink

Okay.

Andrew Berens
Andrew Berens
Senior Managing Director of Targeted Oncology at SVB Leerink

Right. Well, they don't have to have a longer-term prescription to get the free sample initially?

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

No, they don't have to. No, they can just write the prescriptions, and many just write the prescriptions up front right away. What we did decide to do, in fact, was to temporarily suspend our sample program. That we had a report for the samples of a texture problem, so we just temporarily decided to stop the samples right now and that we will in fact investigate the root cause of any texture problem. Of course, we have to get the tube to be sent back to us. We have to verify lot numbers and that sort of thing. We just thought it was the best thing to do at this point to temporarily suspend.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Once we figure out what that report really means, then we'll see if we can restart the sample program again.

Operator

Thank you. Our next question today is coming from Michael Schmidt from Guggenheim. Your line is now live.

Michael Schmidt
Michael Schmidt
Senior Managing Director and Equity Research Analyst in Biotechnology at Guggenheim

Hey, guys. Thanks for taking my questions. I just had a clarification on Opzelura and then one on Pemazyre. On Opzelura, of the 3,000 tubes shipped that you mentioned, is there any expected inventory in stocking or built up, or is that expected to directly translate into prescriptions? And then, on Pemazyre, I guess just thinking about market dynamics here in cholangiocarcinoma, given the sort of flattish sequential sales and how much additional growth opportunity you see in CCA, and again, you know, help us understand the opportunity in non-small cell lung cancer and upcoming data disclosures for the Pemazyre program. Thanks so much.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Sure. Michael, for the first one, 3,000 tubes shipped. No, I don't think there's really much inventory. I think all of those tubes shipped to pharmacies will be turned into prescriptions. The reason is simply that a drug like this, they don't keep on their shelf for a long period of time. They're gonna make sure that, in fact, patients have insurance coverage or they have access to the drug before they're gonna order this from the wholesalers. I don't think there's very much inventory there at all. Obviously, there's inventory at each of the wholesaler sites that will eventually go out to pharmacies. In fact, most of these pharmacies are independent pharmacies that are very used to working with dermatologists as that's their most of their practice.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

That's actually very encouraging because the dermatologists like to work with their local pharmacy that's experienced in working with dermatologists. As far as pemigatinib goes, Pemazyre goes, and the cholangiocarcinoma market in the United States, sure there's growth opportunities there. Obviously, we have a first-line study. Moving into the first-line setting would actually mean a whole lot to us. We know that there are patients being tested for FGFR2 alterations and rearrangements, but there could be more patients tested. The more patients that are tested identify that they might have this FGFR2 alterations, then they would be candidates for Pemazyre. So I think there is growth there, but it is, as you know, a very small patient population.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

As far as the lung cancer patient population go, you know, we'll have to see. We'll have to see how many patients actually do have an FGFR alterations in lung cancer. We'll see what the future opportunity is there as we continue to roll out our studies.

Operator

Thank you. We have time for one more question. That comes from the line of Matt Phipps from William Blair. Your line is now live.

Rob Andrews
Rob Andrews
Managing Director and Co-Head of Global Healthcare Investment Banking Group at William Blair

Good morning, everyone. This is Rob Andrews on for Matt Phipps here. Just wanted to follow up on the earlier question there.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Yeah.

Rob Andrews
Rob Andrews
Managing Director and Co-Head of Global Healthcare Investment Banking Group at William Blair

On the sample products and the potential issue there. How is that sample product actually different from the prescription product, if at all? You know, are they produced separately, and are there likely to be any issues with the commercial product at all? Thanks.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

Yes, they're produced differently. Obviously, it's a 5 g tube, you know, it takes different pressure to get into the 5 g tube. They're separate batches and, you know, were produced about 140,000 of the samples. As far as the 60 g, we're investigating all of the batches just to make sure that the texture and problem, if there is any, we can fix and address. We actually do have. We're following up on information that was reported to us that we may actually have a texture problem with the 60 g tube. We're working through that right now.

Barry Flannelly
Barry Flannelly
EVP and General Manager for North America at Incyte

We have to do a root cause analysis, and we have thousands of tubes out there, and we have to know, get them back from the patients or from the healthcare providers, have that analyzed, see what the storing conditions were. Once that analysis is done, we'll go forward from there.

Operator

Thank you. We've reached the end of our Q&A session. Ladies and gentlemen, 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.

Executives
    • Barry Flannelly
      Barry Flannelly
      EVP and General Manager for North America
    • Christiana Stamoulis
      Christiana Stamoulis
      EVP and CFO
    • Christine Chiou
      Christine Chiou
      Head of Investor Relations
    • Hervé Hoppenot
      Hervé Hoppenot
      Chairman and CEO
    • Stephen Stein
      Stephen Stein
      EVP, CMO, and Head of Late-stage Development
Analysts
    • Andrew Berens
      Senior Managing Director of Targeted Oncology at SVB Leerink
    • Brian Abrahams
      Managing Director and Co-Head of Biotechnology Research at RBC
    • Cory Kasimov
      Managing Director of Biotechnology Analyst at JPMorgan
    • Jay Olson
      Managing Director and Senior Analyst in Biotechnology at Oppenheimer
    • Marc Frahm
      Biotechnology Equity Research Analyst at Cowen and Company
    • Michael Schmidt
      Senior Managing Director and Equity Research Analyst in Biotechnology at Guggenheim
    • Rob Andrews
      Managing Director and Co-Head of Global Healthcare Investment Banking Group at William Blair
    • Salveen Richter
      Managing Director and Co-Head of Healthcare and Global Investment Research at Goldman Sachs
    • Srikripa Devarakonda
      VP of Biotechnology Equity Research at Truist Securities
    • Tazeen Ahmad
      Managing Director of Global Research at Bank of America
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