Incyte Q1 2022 Earnings Call Transcript

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Provided by Quartr
May 3, 2022

Key Takeaways

  • Incyte reported Q1 product and royalty revenues of $728 million, up 20% year-over-year, driven by a 17% increase in Jakafi and 24% growth in its hematology and oncology portfolio, and raised Jakafi full-year net revenue guidance to $2.33–$2.40 billion.
  • The launch of Opzelura in atopic dermatitis delivered over 68,000 prescriptions and treated 57,000 new patients, achieved a 12% new-patient market share (surpassing Eucrisa and Dupixent), and expanded coverage to 146 million lives.
  • Incyte secured FDA approval for a CBE-30 manufacturing process change and qualified a second supplier for Opzelura to resolve texture issues, and plans to resume the patient sample program in the coming weeks.
  • Updated 52-week data for ruxolitinib Cream in vitiligo showed 52% of patients achieved ≥75% VASI improvement with no new safety signals, and the U.S. PDUFA date is set for July 18, 2022.
  • The oral PD-L1 program advanced by prioritizing compounds INCB028280 and INCB0318 after observing tumor shrinkage without peripheral neuropathy, with data updates expected in the second half of 2022.
AI Generated. May Contain Errors.
Earnings Conference Call
Incyte Q1 2022
00:00 / 00:00

There are 16 speakers on the call.

Operator

Hello, and welcome to the Incyte First Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Christine Cho, Head of Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, Kevin. Good morning, and welcome to Incyte's Q1 2022 earnings conference call and webcast. The slides presented today are available for download on the Investors section of our website. Joining me on the call today are Herve, Barry, Steven and Christiana, who will deliver our prepared remarks and Dash, who will join us for the Q and A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward looking statements and are subject to a number of risks and uncertainties that may cause our actual results

Speaker 2

Thank you, Christine, and good morning, everyone. Incyte's strong momentum in 2021 continued into the Q1 with Product and royalty revenues up 20%. Jakafi grew 17% year over year with patient demand driving growth in MF and EV as well as in GvHD following the successful launch in the chronic indication. Our hematology and oncology portfolio grew 24% year over year, driven by our new product uptake, consisting of multiple new launches, including Pemazir in Europe and Japan And MINJUV in Europe. The OPTELORAL launch continued to be very successful with strong uptake by dermatologists, High satisfaction reported by both patients and physicians and significant advancement with payers, which Barry will address in his remarks.

Speaker 2

We made progress across all stages of our pipeline with important updates that include positive 52 week data for ruxolitinib Cream in Vitiligo, The prioritization of 2,80 and 3,18 in our oral PD L1 program And the start of our CDK2 clinical program. Our royalty revenue remains strong growing 20 3% year over year contributing to our growth profile. Turning to Slide 5. As you can see on the left, we are still in the early phase Launched for many of these products, including Opzelra in atopic dermatitis, Pemazyr and cholangiocarcinoma, where we are expanding geographically, And MINJUVI, which is just starting to launch in Europe and Jakafi, where we have recently launched in chronic GVHD in the U. S.

Speaker 2

There is ample room for growth with each of these new launches. On top of that, we have new potential indication That we'll be providing additional growth opportunities with Opcella and Vitiligo and with our partner product Where we have new indication being planned over the next few months for Olumion, Taparecta and JAKAVI. In addition to these launches, There are a number of programs in our mid and late stage pipeline as shown on the right that could have a meaningful impact on our revenue. Before handling the call to Barry, I would like to provide an update on Opzeira Manufacturing. We have recently received FDA approval and have implemented a new manufacturing process to improve the dissolution of API for Opdivo.

Speaker 2

In addition, consistent with best practices, we have received FDA approval for a second manufacturer of Opselorad to We are also preparing to reintroduce samples in the U. S. Now to share more details on product performance and outlook, I will turn the call over to Barry.

Speaker 3

Thank you, Herve, and good morning, everyone. The launch of OXOLAR in the U. S. Is off to an excellent start with over 68,000 total prescriptions written through the end of the Q1. More than 38,000 new patients were treated in the Q1, bringing the total number of new patients treated with OXO LR to over 57,000 Since launch, we attribute the robust uptake and the very high satisfaction of both patients and physicians, which is fueling the positive feedback loop and driving demand.

Speaker 3

Patients are requesting refills, which accounted for roughly 23 percent of prescriptions in the last week of Q1, another good indicator of long term growth potential for Opsilara. On the payer front, we have added coverage of over 75,000,000 additional lives since the end of January. This brings the total number I've covered lives to 146,000,000 highlighting the progress we have and continue to make in the early months of launch. Turning to Slide 8. Multiple leading indicators are supporting the long term potential of Optelora, including market share gains For new patients and positive feedback on patient experience, in just 6 months since launch, our 12% new patient share Now it exceeds that of EUCRISA and DUPIXENT, highlighting the unmet need for more efficacious treatments for atopic dermatitis patients.

Speaker 3

Over 7,500 physicians have now prescribed OXOLLORA. We continue to increase our prescriber depth week over week, gaining an average of 200 to 300 new writers each week, our high decile prescribers, Those who see the highest volume of AD patients each week and who have written a script for Opselorora have initiated an average of new patients of OXOLLORA since launch. This repeat prescribing shows positive experience and confidence that physicians Our having with Opselorra and is supported by recent market research from the field. We are receiving very favorable feedback from the physicians About the efficacy of Opselor resulting in a high rate of satisfaction among both patients and physicians. In a recent survey, Over half of physicians indicated they expect to increase prescribing of Opselara in the next 3 months With over 60% of our top dermatologists indicating OXOLORA will more than double in the coming months.

Speaker 3

Moving on to our progress with payers on Slide 5. Since our last update Earnings Call, we were able to get NDC blocks removed with 1 national PBM, One large national health plan and multiple key regional plans, adding approximately 53,000,000 commercial lives, which are now covered, including our progress with Medicaid and government channels. Our total number of lives covered has Increased by $75,000,000 to reach $146,000,000 which is outstanding progress in the short amount of time. As a final note on OXOLLARA, we are also preparing to reintroduce samples in the United States. Turning to Slide 10 and Jakafi performance.

Speaker 3

Jakafi net sales in the Q1 grew 17% year over year to $544,000,000 Total patient demand grew across all indications and the growth in new patient starts of 12% versus the Q1 of 2021 remains above pre pandemic levels. New patient starts in GvHD grew 25% year over year with strength coming from the launch in the chronic indication. With the strong demand for Jakafi, we are raising The bottom end of our Jakafi full year net product revenue guidance from $2,300,000,000 to a new range of $2,330,000,000 to 2,400,000,000 Turning to Slide 11. MONJUVY net product sales in the U. S.

Speaker 3

Grew 21% year over year to $19,000,000 in the Q1 and we are continuing to see uptake in new and existing accounts, more second line use and a gradual improvement in duration of therapy. MINJUVY net sales were $5,000,000 with the launch ongoing in Germany, and we continue to seek reimbursement in other countries. TEMAZIR grew 34 percent to $18,000,000 with the duration of therapy continuing to drive its performance. And with that, I'll turn the call over to Stephen.

Speaker 4

Thanks, Barry, and good morning, everyone. Starting with ruxolitinib Cream on Slide 13. Last month, we presented updated 52 week data for ruxolitinib Cream in Vitiligo At the American Academy of Dermatology Annual Meeting. As a reminder, during the 24 week double blind period, Patients were randomized 2:one to receive ruxolitinib Cream 1.5 percent BID or vehicle. After the 24 week visit, all patients crossed over to active therapy.

Speaker 4

At 52 weeks, approximately percent of the patients initially randomized to ruxolitinib Cream experienced at least a 75% improvement in their VASI score from baseline And nearly 1 third of patients experienced at least a 90% improvement in facial VASI. No new safety signals were seen And ruxolitinib Cream was well tolerated with no serious treatment related adverse events reported. These data demonstrate potential for substantial improvement in repigmentation with a longer duration of treatment with ruxolitinib cream. Also at AAD, we presented data from our population based VALION study, which aim to better understand quality of life burden faced by In studies, anxiety and depression were reported in up to 68% 62% of patients with vitiligo respectively. The psychological impairment that may result from Vitiligo can be similar to that of other skin diseases such as psoriasis or eczema and can impact patients of all types, indiscriminate of skin color, percentage body surface area involvement or the area affected.

Speaker 4

Many patients with vitiligo have stopped seeking treatment due to a lack of approved therapies. We are excited the potential to bring the 1st FDA approved therapy for repigmentation to people with vitiligo and to be able to offer them a new choice of therapy. Ruxolitinib Cream is under review Both in the United States and in Europe with the PDUFA date in the United States of July 18th. Moving to Slide 15. We are initiating a study in Vitiligo to evaluate the benefit of adding phototherapy This is a 48 week trial where patients will receive 1.5% ruxolitinib Cream twice daily for 12 weeks, followed by ruxolitinib Cream plus or minus phototherapy.

Speaker 4

Rounding out dermatology, INCB-fifty four thousand seven hundred and seven It's in Phase 2 studies for vitiligo, higher adrenitis suppurativa and prurigo nodularis, where there continues to be high unmet medical need And the lack of effective therapies or in some cases no approved therapies at all. We expect to present data for vitiligo And higher adenitis suppurativa in the second half of this year. Turning to Slide 17 and our oral PD L1 program. Last year at SITC, we presented data on the 3 compounds in our oral PD L1 program, where we demonstrated the first clinical activity With an oral PD L1 inhibitor, we saw evidence of tumor shrinkage with all three compounds and in the case of 86,550 An increased rate of peripheral neuropathy. Based on clinical data from ongoing studies and positive therapeutic ratios seen for 280 and 318, We have opted to move forward with these 2 compounds.

Speaker 4

Enrollment is progressing well in both studies with 280 and 318. We continue to observe tumor shrinkage with both compounds and to date no evidence of peripheral neuropathy has been seen. There are several benefits to an oral PD L1, including the potential for better management of immune related adverse events due to a shorter half life, The opportunity of developing oral, oral combinations and the ease of dosing with an oral agent. We expect to provide a data update Our oral PD L1 program in the second half of this year. Moving to early development on Slide 18.

Speaker 4

We are initiating a Phase 1 dose escalation and dose expansion study in advanced solid tumors with our novel, potent and selective oral small molecule CDK2 inhibitor, INCB123,667. CDK2 in complex with cyclin E is a cell cycle regulator, Cyclin E is an amplified oncogene in multiple aggressive cancer types, including ovarian and endometrial cancer. To close, we expect multiple regulatory and key clinical data readouts this year as shown on Slide 19. Specifically for lumbar, the once daily RUX NDA will be submitted in this half of twenty twenty two. The BET and ELK2 combination trials with ruxolitinib are progressing well with data expected in the second half of twenty twenty two.

Speaker 4

The ruxolitinib Cream PDUFA for vitiligo in the United States is July 18th and we expect an EMA decision in the second half of this year as well. For our partnered products, ruxolitinib in acute and chronic graft versus host disease and capmatinib in non small cell lung cancer, Both have received positive CHMP opinions. With that, I would like to turn the call over to Christiana for the financial update.

Speaker 5

Thank you, Stephen, and good morning, everyone. Our first quarter results reflect continued strong revenue growth with total products and royalty revenues $728,000,000 representing an increase of 20% over the Q1 of 2021 and reflecting growth across products Commercialized by Incyte and Incyte Discover products commercialized by our partners. Total product and royalty revenues for the quarter are comprised of net product revenues of $544,000,000 for Jakafi, dollars 49,000,000 for other hematology oncology products And $13,000,000 for Opselura royalties from Novartis of $71,000,000 for Jakavi and $3,000,000 for Tabbrekta And royalties from Lilly of $48,000,000 for Olumiant. Turning to Opselura. In the Q1, The growth in prescriptions continue to be strong, leading to gross product sales of $90,000,000 for the quarter.

Speaker 5

As payers add OXELURA to formularies, we are starting to see the improvement in the gross to net discount rate. The fully loaded gross to net discount rate decreased from 92% in the Q4 of 2021 to 86% in the Q1 of 2022, leading to net product sales for the quarter of $13,000,000 On our Q4 call earlier this year, we showed you our forecast of evolution of the gross to net discount rate as depicted by the dotted blue line. The green line represents our actual gross to net discount, And as you can see, Q1 was very much on track. We expect the gross to net discount rate to continue to decline in Q2 and normalize at a fully loaded rate of 40% to 50% between Q3 and Q4, depending on the timing of the removal of the remaining NDC Blocks by PBMs and the addition of OXELURA on formularies. Moving on to our operating expenses on a GAAP basis, Ongoing R and D expenses of $333,000,000 for the Q1 decreased 13% from the prior year period, primarily due to increased 13% from the prior year period, primarily due to the continued investment in our late stage development assets.

Speaker 5

Total R and D expense of $353,000,000 for the Q1 includes milestone consideration of $20,000,000 For our collaborative agreements, SG and A expense for the Q1 of $210,000,000 increased 36% from the prior year period's total SG and A expense or 49%, excluding the $13,000,000 one time Payment recorded in the Q1 of 2021. The growth was primarily due to our investments related to the new dermatology commercial organization in the U. S. And the related activities to support the launch of Opelura. Our collaboration loss for the quarter was $5,000,000 which represents a 50% share With $2,500,000,000 in cash and marketable securities.

Speaker 5

Moving on to our guidance for 2022 as a result of our Strong first quarter performance as well as signs and expectations of sites reopening and providing us with increased access to physicians, We are tightening our Jakafi guidance range from $2,300,000,000 to $2,400,000,000 to a new range of $2,330,000,000 to $2,400,000,000 We are also reaffirming our other hematology oncology revenue, COGS, R and D and SG and A guidance for the year. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q and A. Thank

Operator

Our first question today is coming from Vikram Porges from Morgan Stanley. Your line is now live.

Speaker 6

Great. Good morning. Thanks for taking my questions. I had a few on Opselura. First, could you speak a bit more about the manufacturing update you began the call with?

Speaker 6

Specifically, At this point, how many batches or what portion of the current commercial supply do you estimate has been impacted by some of the texture issues that you mentioned previously? And For the updated manufacturing process, what is the current thinking around the timeline for getting that up and running? And how long do you think it will be before the sampling program can be reinstated? And then I had a follow-up, but maybe I'll ask you those questions first.

Speaker 4

Vikram, hi, it's Steven. I'll take And I'll just reaffirm some things we said on the actual prepared remarks. And just to reiterate, we know that the texture Issue is due to a very small amount of active pharmaceutical ingredient that had come out of solution and that has obviously been the focus of all our efforts. As Herve said upfront, we have implemented a recent process change via a regulatory process called a CB30 That improves solubility. We've received FDA approval for this and that process is underway and is improving the dissolution of API.

Speaker 4

In addition, as Herve said on his prepared remarks, via a longer regulatory process called a prior approval supplement, And as is best practice, we've initiated a second manufacturing site and that is coming on board as we speak to answer your question specifically. So those Units from that second site will in the next couple of weeks, will be out in the field and with patients. We absolutely expect also within the next week or so, as Barry said in his remarks, to begin the sampling program as well, Given that now we have a batch made for that. We don't give specific numbers on percentages, but as we have already said in the All 68,000 prescriptions with a very small amount of complaints, the rate is obviously coming down, We expect it to do so now with these improvements as well going forward. Thanks.

Speaker 6

Okay. Got it. That's helpful. And then as a follow-up for Vitiligo, assuming FDA approval in July, would you anticipate providing U. S.

Speaker 6

Sales guidance For Vitiligo, the way you have for AD? And more generally, as you've evaluated the opportunity in Vitiligo over recent months, how do you think the commercial opportunity compares to what you're seeing now evolving in AD.

Speaker 5

Subikram, hi, it's Christiana. In terms of the Vitiligo peak sales potential, I think it's a little bit of a different situation than AD. In the AD, AD is an established market where it was easier to have a sense of Not only the size of patients that are affected by AD, but the number of patients that are actively seeking treatment today and how this Market looks like and how it may evolve. In the case of vitiligo, as we have discussed in the past, there are no effective therapies Now and as a result, the patients the majority of patients are not currently seeking treatment. So it's a little bit harder to have right from the beginning a sense of how quickly that will change.

Speaker 5

And therefore, we may not be in a position from the beginning to give you the peak sales estimate that we did For AD, actually, if you look at Vitiligo and you run the number even for the current number of patients that And you can set see that you can very quickly get to very big numbers like in the €1,000,000,000 plus type of numbers. So we want to see a bit more of how this evolves before we come out with a peak sales potential for Vitiligo.

Speaker 6

Okay, understood. Very helpful. Thank you.

Speaker 2

Thank Our next

Operator

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

Speaker 7

Hi. Thank you so much for taking my question. So So I was wondering now that you're reinstating the sample program, would this continue if and when Opdivura is approved for Vitiligo, Especially given that you might need to use it for a slightly longer period of time versus atopic dermatitis in order to see efficacy. And for OXODURA and atopic dermatitis, as the drug is being adopted and removed through the launch, do you have a better sense Now, of duration of therapy and is there any gap between refills or you're seeing So people refilling at pretty good compliance rate? Thank you.

Speaker 3

So, Kripa, this is Barry. So yes, when we initiate reinitiate Samples for AD, we anticipate we'll still have samples and continue samples throughout the launch of Vitiligo. As far as duration of therapy, it's too early in the launch. I mean, we've launched for 6 months now. We see new patient growth continuing to accelerate.

Speaker 3

We see the refills at 23%. We think that's pretty good for right now. And so as far as duration of therapies, we don't know. As far as gaps between tubes, for example, we also Don't know. We'd have to go back to the clinical trial to see exactly what those patients did, but it may not be in the same in the real world for Duration of therapy.

Speaker 3

What we've said in the past, of course, is that once we stabilize over a period of time as we get into launch, We anticipate that patients will generally get 3 to 4 tubes of Upsilara per year for atopic dermatitis.

Speaker 7

Great. Thank you. And if I can ask a quick follow-up question. One of the KOs we spoke to said that consensus about OXOLURA is Broadly really good, but the black box label may be affecting uptake in community settings. Is that what you're seeing?

Speaker 7

Or Is the use of the drug impacting how community doctors are looking at it?

Speaker 3

No, I can't say that community doctors are any different than academic doctors. In fact, in dermatology, there's very big practices That treat many, many patients and their uptake of OXOLAR. So our highest decile prescribers, for example, continue to use it. They'll tell us sometimes that individual patients might have more questions about the black box, but they're very used to explaining Black Box or side effects or potential side effects that any drugs they use may have. So they're comfortable walking patients Through that, but we really haven't seen it as a barrier.

Speaker 7

Great. Thank you so much for taking my questions.

Operator

Thank you. Your next question is coming from Matthew Phipps from William Blair. Your line is now live.

Speaker 8

Good morning. Thanks for taking my questions. First on the PODIUM-three zero Following the recent FDA AdCom, even though this trial does have a couple of U. S. Sites, it's not really comparing Or defamilumab to the current standard of care in the U.

Speaker 8

S. So wondering if you've got FDA sign off on that trial design or if you'll have to make changes Based on kind of the FDA's pushback of Lilly's sintilumab approach. And then second, at the time of the MANJUVY deal, You had mentioned longer term upside was really from the potential of LUNDUTI plus parseclizum. So I assume given the recent FDA ODAC On PI3 kinases and the decision to withdraw the Parzuclusive NDA that option might be kind of gone now, but just wondering what it means for the top line study? And does the secondary OS endpoints in the myelofibrosis combination studies become really important after that ODAC or does it Maybe not impact myelofibrosis as much.

Speaker 8

Thanks.

Speaker 4

Matt, hi, it's Steven. Thank you for your question. So just for everybody else, PORTIUM304 is our IV checkpoint ritafanlimab in non small cell lung cancer. It's a replication, if you will, of The initial pembro approval in that indication in that it's combination with chemotherapy versus checkpoint inhibitor alone. And as you point out, it's a global study with sites all over the world, including in the United States.

Speaker 4

So we think that is the central difference from the Lilly issue they had with their checkpoint inhibitor, where it was China only data. So we have representation across Western Europe, Eastern Europe, Asia and a small amount of U. S. Sites. So we think from a diversity Of subject point of view, we're well covered with that.

Speaker 4

The modeling of the study is exactly from So we feel We are in a completely different position to what was the central complaint against the Lilly submission With their checkpoint inhibitor in non small cell lung cancer, given the diversity of our population across the world, the size of the study, Replication of the statistics to achieve the same endpoints, which again wasn't exactly the case with the ODAC you referenced. For tafasitamab in combination with parcelicib, we remain interested despite Some of the negative halo on PR3 Delta inhibitors, for a number of reasons. Firstly, because We know this is a tremendously active doublet from work that MorphoSys have done before with tafasitamab With idialisib, in that having upwards of 100% response rates. So we are absolutely continuing to look at our data In top mind, which is ongoing across different disease segments, including lymphoma, including Chronic lymphocytic leukemia. But you are right.

Speaker 4

I mean, there is a large increase in the safety of Delta inhibitors, and it's something We'll have to consider very carefully before going forward with any bigger study there. We hope in the second half of this year To have decent data sets for the different subgroups of diffuse large B cell lymphoma, low grade lymphomas, chronic lymphocytic leukemia With that doublet, and then we'll have to make decisions in keeping with the context you alluded to. I'm glad you also brought up the mnematopibrosis Because, again, it's RUX in combination with parcocilisib in 2 different settings. So there's a first line study, which enrolling very well. It's a goal enrollment of around 4 40 patients and it's very clean study in that it's rux Plus pacificus rux alone in that indication with SVR 35% decrease primary endpoint.

Speaker 4

So the differences again, Given the milieu you talk about with PI3 Delta inhibitors is that this is a randomized study, at a different dose of a Delta inhibitor. There No induction therapy. It's a standard constant dose. It's a defined treatment period. The Studies were agreed to and signed off with regulatory authorities and does have, as you point out, also the ability to capture Overall survival.

Speaker 4

So we think we're well covered in that indication. The suboptimal study there is in about 220 patients So enrolling very well, should complete next year, different endpoints, again, a randomized study And in CAPTURE, primary endpoints as well as secondary endpoints that will include safety. So again, a different dose and we think we will cover there as well. But we're not immune to the fact that the road for delta inhibitors will be extremely safety focused as they should be. Thanks.

Speaker 8

Thanks, Dean.

Operator

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

Speaker 9

Hey, thanks. This is Leonid on for Brian. So thanks for providing all the gross to net color. I was just wondering if I could ask a little bit more on that. I guess In previous calls, you mentioned that you have levers to adjust gross to net on your end.

Speaker 9

So I'm curious if the improvements in gross to net are largely from Better insurance coverage or if also you're adjusting any of the patient assistance programs? And I guess for how long and to what degree do you expect these patient co pay And then if I can just squeeze in one more. Have you had any sense that there might be patient and doc perceptions Because insurance isn't covering Upsellor, that's actually limiting willingness to write scripts. And so I guess when you see better coverage, are you expecting that there might be Script inflection as well for Epsilonara? Thanks.

Speaker 3

So Leonid, it's Barry. So on the gross to net, so as we said, As we continue to get better coverage as the NDC blocks are removed, our gross to net, as Christiana said, is going to In the Q2, in the Q3 and in the Q4, so we have 146,000,000 lives that are covered now. So they have access to the drug and as far as our full buy down program goes, we Knew from the very beginning when we launched this drug that we wanted to have a generous program patient assistance program, Whereas a dermatologist wrote the prescription, the patient would be able to get it regardless of NDC blocks. As those NDC blocks are removed and utilization criteria are written, then we take down There's full buy down programs and that actually does improve our gross to net over time because it's just unnecessary. Now Insurance companies are going to pay for it.

Speaker 3

As far as coverage goes, I mean, just as I said, The prescribing is not impacted. We did not want it to be impacted because we had a generous patient assistance program in place And there really hasn't been any barriers as prior approvals, of course, come into place. Dermatologists and their offices are very familiar Going through the prior approval process, every prescription for psoriasis, every prescription for Atopic dermatitis or branded drugs, I'll have to go through prior approval. So there really isn't the barriers And we tried to remove those barriers as much as we could, so people could get great experience with Opselor. And we know that they're really having Great experience with Opselor.

Speaker 3

Physicians, dermatologists are telling us they're having great experience with Opselor. So we think the uptake that we're

Operator

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

Speaker 10

Hi, this is Gavin on. Thank you for taking our question. There's been a lot of folks in Ospoela, so I'll stay away from that. But just on the pipeline, I guess, the adenosine program and CD73,

Speaker 1

this has been

Speaker 10

an increasingly competitive area of development. Perhaps you can just

Speaker 4

Hi, it's Steven. Thanks for bringing that up. Yes, we have all three components Of the program that's needed or in our pipeline. So we have a small molecule, potent and selective A2A, 2b inhibitor. We have a large molecule CD73 inhibitor and then we have the combination availability With checkpoint inhibitors, either IV and ritafamlimab or oral with the oral PD L1 program.

Speaker 4

So that's somewhat of the uniqueness. Then in terms of the A2A, A2B and CD73, we are slightly behind the competition, but we have the ability To learn from them and see where they go, and you're right, there is a lot of interest in inhibiting adenosine in the tumor microenvironment, Either through a doublet or triplet, as I point out, the dose escalation and expansion phases for the A2A, ATB have gone very well and on track with data this year and CD73 slightly behind, but also on track and now we're doing the doublets. So We're progressing well with the program and expect to provide you some updates in the second half of twenty twenty two.

Speaker 6

Thanks. Great. Thank you.

Operator

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

Speaker 11

Great. Thanks so much for taking the questions.

Speaker 7

I just wanted to ask,

Speaker 11

I know we talked A lot about Uxolura, but I just wanted to get a little bit of clarification on the gross to net steady state at 40% to 50%. And is that So anticipated in a post vitiligo commercialization that that would be sort of the long term steady state. And then also, is there any update on the NDA filing for, RUX QD?

Speaker 3

Sure. I'll take the first part of your question, Mara. So yes, so the gross to net that we say 40%, 50% includes the Vitiligo launch. And going forward with AD and Vitiligo, our gross to net, we'll try to keep In that range as we possibly can, but we're very confident going through the year as we said by the end of the year, Second half of the year, 40% to 50% is our goal. I'll turn the other one about RUX QD over to Stephen.

Speaker 4

Yes. Hi, Maura, it's Steven. So, our rux once a day file is going in now, this Half of twenty twenty two, the critical path was stability, which is complete. We expect a standard 10 month review period. So it should be Q1 of 2023 that we'll be expecting that approval.

Speaker 4

The reason we expect it to be successful Is that from a bioavailability, bioequivalence point of view, we met the criteria that In the FDA guidance for area under the curve, so we're within that range that's required for the multiple dose strength. And now that stability has been complete, We have confidence in that submission and should have it actioned around the Q1 of 2023. Thanks.

Speaker 11

Thank you very much.

Operator

Thank you. Our next question is coming from Mark Fromm from Cowen and Company. Your line is now live.

Speaker 12

Thanks for taking my questions. In respect to Vitiligo's, I guess, a combination of Barry and maybe Steven, just For the label, what do you guys view as kind of the important elements to get in there from a commercial perspective, particularly the DRIVE as Krishnan mentioned that the increased patient flow into the clinic seeking treatment and kind of what are the elements of the TRuV studies that probably aren't going to be in the label, but are going to be important to kind of stress to the community to drive that out?

Speaker 3

I mean, I'll turn it over to Stephen. I'll try to give you an answer to your question. I actually think the most important thing is just that this is the first and only Drug approved for, repigmentation of vitiligo and, it's there really should be No barriers, really other than that. If Stephen has other viewpoints about what should be included or not included in the label, I'm not sure.

Speaker 4

Yes. Hi, Mark. It's Steven. I think if you go back to the eligibility criteria from the 2 large Phase 3 studies, The age would be key, 12 and above. The body surface area involvement up to 10%.

Speaker 4

And in the dosage and administration section, we feel that it's likely to reflect the fact that it's Different from ADN that continuous dosing is needed to achieve the benefits I spoke about in my prepared remarks, which are quite remarkable When you get over time, 20 percent absolute percentage improvement in facial VASI 75 between week 24 And week 52. On the week 52 point, the initial submission was obviously on the primary endpoint on week 24. During the 4 month safety update, we were able to provide some of the 52 week data. But now with the 3 month extension on the PDUFA, We've been able to also supply more of that data. So that would be a good upside, and obviously, it will depend on the FDA and the negotiations that are forthcoming To have the complete 52 week data set in, so reflect the entirety of both the efficacy and the safety data.

Speaker 4

Thanks.

Speaker 12

Okay. That's helpful. And then maybe, Stephen, just for 707, the updates coming in the second half across Some of the other dermatology indications, I guess, what do you view as kind of meaningful responses in hydrogenitis Yes, to move forward with this type of mechanism, given kind of all the labeling concerns around JAKKS. And then On the Vitiligo side, is the long term plan there with that to kind of have people on oral therapy chronically? Or is it more of just Get them to a place where Opsilure becomes a better option for them and then they transition to Opsilure.

Speaker 12

Yes.

Speaker 4

Thanks, Mark, for both questions. So high rate or not as supertiva, a distressing condition for patients, a lot of unmet need. There is an approved TNF inhibitor, but not widely used in this indication, probably due to somewhat a lack of efficacy with it. It's a condition that involves abscesses, nodules and scarring in areas of the body like the Armpits, axilla and groin, and it can be very distressing psychologically to patients as well. The established endpoint for the one approved drug It's something called the Hiscar endpoint.

Speaker 4

It tends to capture the improvement in abscess and nodule formation And seems to be the regulatory endpoint that's needed. But you're right, it's tricky to measure. There's both object and subject Components to it, but the our Phase 2 data, which we'll show you, we feel is very encouraging for the effect of JAK inhibitor in this unmet need area. Just to address the safety part of what you said, we fully Given that this is an oral JAK inhibitor, Clearly an inflammatory condition that it's likely that we'll be dealing with, black box class labeling language. I mean, that has been No interest for a while now.

Speaker 4

And so we feel the therapeutic ratio is important, right? So in settings of high unmet need with a lot of severity, With the efficacy that we desire, you'll get to the desired therapeutic radio that's needed to use the drug. So that's the HS component. For Vitiligo here, I just want to stress that it's different from the cream indication. So this is for people with more Intensive body surface area involvement, the principal eligibility criteria here is 8% or above body So it's a little confusing because the cream is 10% or below and this is 8% or above.

Speaker 4

So there's a little bit of overlap, But it gets to the therapeutic ratio question again that these are people with extensive vitiligo that there'll be more acceptance To use an oral JAK inhibitor, with a different therapeutic ratio, we know it's efficacious. I mean, you know now from the CREAM data, From multiple reports with oral JAK inhibitors that you get repigmentation here, but you'll have to have suitable safety. And again, we're very likely to be dealing with the black box labeling down the pipe when it gets there and that will fix Factor into our decision making with that particular indication. Thanks.

Speaker 12

Okay. Thank you.

Operator

Thank Our next question today is coming from Jay Olson from Oppenheimer. Your line is now live.

Speaker 13

Hi, this is Chung on the line for Thanks for taking the question. I guess on the oral PD L1 program, I'm just curious any learnings like dosing optimization or tumor selection that you can apply to the development of the follow on molecules you are prioritizing right now. And also between the 2 follow on molecules, would you further prioritize one over the other? If so, when will that happen? Thank you.

Speaker 4

Yes, Cheng, hi, it's Steven. So in terms of dose, I don't know exactly what you're alluding But just to make broad comments, and across all areas at the FDA, but particularly in oncology now, There's Project Optimus. There's a refocus on getting the dose correct. It's likely that everybody in the space now We'll have to do a lot more dose work, a lot more exposure efficacy analysis, a lot more exposure And may even be down the park, an area where we'll be taking more than one dose into pivotal studies. And you cannot argue that getting the dose right is critically important that this effort from the regulators will be a big deal.

Speaker 4

And we've already adapted like many other companies to have the right resources now to do these analysis and get it right. For oral PD-one specifically, we do have a pharmacodynamic marker. We can measure PD-one 1 inhibition in peripheral blood mononuclear cells. So we know that we get in the right degree of inhibition. And just to be clear, we want 90% or above inhibitory concentrations of that PD marker constantly when we dose our drug.

Speaker 4

So we're working on that now with both, 280 and 3 18. Your question around what histologies are important, it somewhat remains to be seen. I mean, Given that we now know these are all active compounds, we've seen activity in areas that are known to be IO responsive. So the hotter tumors, if you will, Microsatellite high tumors are also of particular interest here. So that's currently the main focus.

Speaker 4

As I said in my prepared remarks, given that it's oral, that it may differentiate on safety with its quick off rate, You can do oral, oral combinations. People can go home and not need to come into a clinic setting for infusions. It could lend itself more also to adjuvant and maintenance settings, but we're not there yet in declaring what particular histology is And what area we're going to particularly go after. We hope though to be making those decisions Towards the end of this calendar year, perhaps early next year on where we'll be going from a registration point of view. Your last question as regards Well, we take both forward or only 1 in terms of 280 and 318.

Speaker 4

I still think it's a little premature to answer. We have both in the At the moment, both are enrolling well, both have shown tumor reduction in terms of shrinkage And no neuropathy with either agent yet, and we'll do more of what I was talking about in terms of dose optimization and modeling Before declaring which particular one we'll take forward in oncology. But my own view at this juncture, There may be interest in non oncology settings, for example, enhancing hepatitis B virus directed therapies, etcetera. So there may well be utility down the park And having a second compound for non oncology settings. It's just a little early to declare which way we will go.

Speaker 4

Thanks.

Speaker 13

Great. Thank you.

Operator

Thank you. Next question today is coming from Leon Wang from Bank of America. Your line is now live.

Speaker 14

Hey, thanks. This is Leon Wang calling forward to Zena Mod. I guess one more question on Oxadora Gross to net, you previously mentioned that one of the benefits of talking to payers relating to Vitiligo is That when your current negotiations and when Vitiligo is approved, you don't have to necessarily go back to payers to negotiate brand new contracts. Now if that's the case, and would you say some payers are waiting for the label of Vitiligo To be approved before kind of finalizing the payer coverage negotiations. So I'm trying to understand the cadence of When you might see that next basically percent lives covered and improvement from that dynamic?

Speaker 14

And my second question is, previously you mentioned the gross to net range could normalize anywhere between the 30% to 50%. Today, you said, you expect that to be around 40% to 50% by the end of 2022. But just as a clarification, going forward beyond 2022 DC, I guess, potentially gross net discounting to be somewhere lower, perhaps So, in the 30% to 40% range. Thank you.

Speaker 3

So, Leon, this is Barry. So, as far as negotiation goes for Vitiligo, no, we don't have to go back. So there's a couple of different things. One is that you're talking about Contracts with PBMs for the large part, so that's one part. So those contracts are At least one is fully completed.

Speaker 3

And remember, those are divided into 2 parts. So the 3 big PBMs Really cover about 80% of the commercial lives in the country, but think about that as variable and non variable. About 50% of patients Our, let's call them, variable, where in fact, the plans, the insurance plans themselves, like you and I have, They in fact can make their own decisions and in fact write their own utilization criteria about how the drug is being used. So we don't have to go back and negotiate and then the other half, sorry, are the ones that you might say are a preferred formulary where they have true NDC blocks. So We have one of the big PBMs that are fully NDC block removed and the rest of the variable plans have written their utilization criteria.

Speaker 3

And then we and then in fact, when we launched Vitiligo, we don't have to go back, Negotiate with the PBMs for new contracts, but utilization criteria once Vitiligo is launched will be written by the plans and it will take weeks to months for those Utilization criteria to be written for each of the various insurance plans of which there are many throughout the country. Before launch, no, they're not going to have utilization criteria. Before approval, they're not going to have utilization criteria written For Vitiligo, in fact, even though they know about the Phase 3 data for Optilora and LIGO, they're not going to write a plan until it's approved because they just don't want to take time to do that. But we're educating of course payers That this is in fact coming, and they know it's coming and we know that they're going to Right utilization criteria for it because most of them have utilization criteria already for other products, not all of them, but some of them do, For things like light therapy and so forth. So we know that utilization criteria will be written for Vitiligo.

Speaker 3

As far as the gross to net is concerned, at least For over this year, last couple of quarters, we've always said 40% to 50% gross to net is our goal and that's what we're shooting for, particularly as we Continue to negotiate with the various payers.

Operator

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

Speaker 15

Hey, this is Chris on for Andrew Berens. I was just wondering if we could get a little bit more color on the prescriber details for OXOLURA. How many dermatologists and how many general practitioners are in the mix for OXOLURA? And are Those docs primarily those that you detailed to from the sales force or are you seeing more of a halo effect? And then just as a quick follow-up question.

Speaker 15

Wondering if the new product manufacturing method for OXOLURA is going to change anything fundamental about the drug, the PK or The pH or anything like that? And if so, is that going to concern any of the regulatory agencies in terms of the safety and efficacy?

Speaker 3

So Chris, I'll take the first part and then hand the second part over to Steven. But as far as there's about 8,000 dermatologists in the United States or so. And general practitioners, no, we don't really see any. I mean, they could obviously write for Opsilor, but we really don't see any. All of our detailing, all of our Vocational work goes towards dermatologists and their offices.

Speaker 3

But remember, especially in dermatology, nurse practitioners And physicians' assistants are very important. They are prescribers. There's tens of thousands of them. So when we call on dermatologists' offices, We of course call on the nurse practitioners and the physician's assistants are very important. In fact, the medical assistants as well that are very important, Particularly when it comes to reimbursement.

Speaker 3

So it's all direct education and we're working very well and have reached All of our top prescribers and we'll continue to educate all of the dermatologists, nurse practitioners, PAs in the offices As we move forward for the product manufacturing changes, I'll turn it over to Stephen.

Speaker 4

Yes. Chris, thanks for your question. I mean, The top line clear answer is there's nothing fundamental changed on the drug currently as regards PK or PH. The CBE-thirty change by the regulations is a mild to moderate change that specifically doesn't do that and the prior supplement change was bringing a new manufacturer on board using the same process. In fact, you specifically do not want to do what you allude to because that would require you Redo all your clinical studies, so you have to be very careful to not make changes that affect those in any substantial way, either PK or pH.

Speaker 4

Thanks.

Speaker 15

Got it. Thank you very much.

Operator

Thank you. We reached the end of our question and answer session. I'd like to Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day.

Operator

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