Incyte Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 2, 2023

Key Takeaways

  • Incyte’s Q1 product revenues grew 14% year over year to $693 million, driven by 7% underlying demand for Jakafi and a 4.5-fold jump in Opselura net sales.
  • Despite Q1 gross-to-net headwinds and a temporary channel inventory drawdown, Incyte raised the low end of its full-year Jakafi revenue guidance to a new range of $2.55 billion–$2.63 billion.
  • The launch of Opselura continues to exceed expectations, with Q1 net sales of $57 million and growing dermatologists’ familiarity and patient activation through a direct-to-consumer Vitiligo campaign.
  • Incyte is consolidating its R&D portfolio around eight first- or best-in-class programs, discontinuing six projects to accelerate development and boost efficiency in key immunology and oncology assets.
  • The FDA issued a complete response letter for ruxolitinib XR over bioequivalence Cmin concerns, delaying its approval and necessitating further regulatory discussions.
AI Generated. May Contain Errors.
Earnings Conference Call
Incyte Q1 2023
00:00 / 00:00

There are 13 speakers on the call.

Operator

Hello, and welcome to the Incyte First Quarter 2023 Earnings Call and Webcast. 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. Please go ahead, Christine.

Speaker 1

Thank you, Kevin. Good morning and welcome to Incyte's Q1 2023 earnings conference call and webcast. The slides presented today are available for download on the Investors section 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 to differ materially, including those described in our reports filed with the SEC. We will now begin the call with Herve.

Speaker 2

Thank you, Christine, and good morning, everyone. So we'll be moving to Slide 4. And during the Q1, product revenue grew 14% year over year. The growth for the quarter does not fully reflect the strength Of the underlying patient demand for Jakafi and Opseloram, which I will discuss in the next slide. In hematology and oncology, the ongoing launches of Pemazir and MINJUVY ex U.

Speaker 2

S. Drove the 17% year over year growth. We also received additional approval including our first indication for DYNIS in Merkel cell carcinoma in the U. S. And more importantly, the approval of OXELURA for vitiligo in Europe with an excellent label.

Speaker 2

Zynis is available commercially in the U. S. And OXELOIA will be launched in Europe in the next few months, starting with Germany. Moving to Slide 5, taking a closer look at the Q1 dynamics that affected net sales in the quarter for Jakafi and Opselor. Jakafi patient demand was strong across all indications growing 7% on a year on year basis.

Speaker 2

On gross to net, we had the typical Q1 negative effect with higher deductions due to an increase in Medicare coverage cap rebates and patient deductibles. We also had an increase in 340B Purchases. Separately, channel inventory fell below normal level resulting in an $11,000,000 impact. Given the strong underlying patient demand, we are confident in our full year outlook and are raising the low end of our guidance to a new range of $2,550,000,000 to $2,63,000,000 for the full year. Turning to Aptelwa, there are 3 components to fully understand the dynamics of the Q1.

Speaker 2

First, we saw a continuation of strong trends in weekly prescription growth in the quarter. 60,000 new patients were treated with Opcellular. 2nd, as you can seen in the TRx graph on the right, refills were being pulled forward in December and this resulted in lower volume in the 1st 2 months of the year. And 3rd, net price in the quarter was impacted by an increase in commercial co pay and the higher Medicaid utilization. So the outlook is strong for both Jakafi and Occelora as we expect to drive further growth throughout the year.

Speaker 2

Moving to Slide 6. With our R and D pipeline growing and advancing, we have recently decided concentrate our resources behind the project with the highest potential to drive our revenue growth in the next few years. These 8 programs are 1st or best in class candidates, have large potential with multiple indications such as Seulaura, povercitinib and oral PZ1 or alternatively they address a significant unmet need in an existing franchise like the Limber program with ALK2, bet, axotilumab and CALA. We are discontinuing 6 program This concentration of our internal and external resources will increase speed and efficiency for the 8 hypertension programs and allow us to further accelerate our promising early clinical programs like CDK2, CGF beta PD-one bispecific and oimolimab. With that, I would like to pass the call to Barry.

Speaker 3

Thank you, Herve, and good morning, everyone. Turning with Jakafi on Slide 8. Patient demand for Jakafi was strong across all indications. New patient starts, which are a strong leading indicator for growth in future quarters grew 8% year on year to reach an all time high. Unit demand as shown by the chart on the bottom left shows good growth in Q1 versus the past 2 years.

Speaker 3

Turning to OXOLORA. Net sales in the quarter were $57,000,000 On the right are total prescriptions as reported by IQVIA. Launch trends continue to be strong with robust growth seen in both March April. As we continue to drive further awareness and adoption of the brand, the number of dermatologists gaining experience with OXOLLORA continues to increase. Turning to the lines to Slide 10, I want to take a step back and recognize the significant achievements we have been able to accomplish with the launch of Opselorra.

Speaker 3

When reflecting on the 1st 18 months of launch, Upsilora outperformed other brands prescribed by dermatologists On a launch aligned basis, the rapid adoption of OXOLORA highlights its compelling product profile and its ability to address significant unmet needs. In addition, we were able to secure payer access far quicker and any other recent launches in dermatology. Looking at Slide 11, the momentum with Opselor is strong and we are continuing to see very positive trends in terms of uptake, awareness and reception for the brand in Vitiligo. We launched our 1st TV direct to consumer campaign for Vitiligo on February 12 this year and Early data supports the success we've had in just a few weeks. Based on a survey conducted of approximately 100 dermatologists, NPs and PAs, indicated that nearly 20% of their vitiligo patients requested OXOLLORA and that 85% of those patients requests are filled.

Speaker 3

This level of brand awareness and patient activation is substantially higher than almost every other product in dermatology offices. And with our continued efforts, we believe we can reactivate a significant percentage of the diagnosed Vitiligo patient population. Turning to Slide 12. OXOLORA uptake in atopic dermatitis is driven by its efficacy and in particular by the impact on itch. This is the clear differentiator for the brand and OXOLLORA is the only topical therapy with itch reduction in its label.

Speaker 3

To understand how quickly Opselura can work in some patients, this past weekend at the Revolutionizing Atopic dermatitis meeting, we presented data from our SCRATCH AD study. Results showed that patients were able to attain substantial its reduction as early as 15 minutes after the first application of OXOLLORA and peak reduction after 4 hours. We continue to focus our efforts on driving refills and have implemented several new initiatives to further grow the brand. Some of these programs include patient relationship and support programs as well as partnering with pharmacies to help with the education and to drive patient adherence. And lastly, on MINJUVY, MINJUVY and Pembizir on Slide 13.

Speaker 3

MINJUVY sales in the quarter were $21,000,000 up 11% year over year with community accounts making up the majority of the volume. MINJUVY sales were $7,000,000 and the product is now reimbursed in 6 key launch markets in Europe. Amazir grew to $21,000,000 in net sales in Q1 with $5,000,000 coming from outside the U. S. Where the launch is now ongoing in 10 key markets

Speaker 4

including our high potential programs as depicted in the red and blue boxes, segmented by estimated launch timing. Over the next 6 to 18 months, many of these programs will be expanding into new indications, new combination studies and into pivotal trials. By focusing resources on these assets, it could allow for an acceleration of certain timelines and increased efficiency as we bring these innovative therapies to patients. We are well positioned for growth and diversification with multiple launches expected in the near to midterm. Moving to Slide 16, we made significant progress across our high potential dermatology program.

Speaker 4

OXOLURA was approved for Vitiligo in Europe and we presented new data for both OXOLURA and porvocitinib at 2 major dermatology conferences. We also progressed into new indications, including prurigo nodularis with OXOLLURA and asthma and chronic spontaneous urticaria with porvositinib. Now to highlight our dermatology portfolio in more detail, starting with OXOLEURA and the recent European approval on Slide 17. The label was very favorable with regards to both efficacy and safety. The full indication is for the treatment of non segmental vitiligo with facial involvement in adults and adolescents from 12 years of age upwards.

Speaker 4

This encompasses the majority of vitiligo patients in Europe, where roughly 85 of all Vitiligo patients have non segmental disease, where around 60% to 80% have facial involvement. Regarding safety, the most common adverse reaction was application site acne. No black triangle was placed on the label the regulatory agency determined that the class effect identified for the oral class were not considered relevant for Obcellura. And as such, the label does not include any special warnings or precautions as seen with the oral JAK inhibitors. Turning to Slide 18.

Speaker 4

We recently initiated 2 Phase 3 studies evaluating opsilura and paragonodularis, The disease driven by inflammation and characterized by hard nodules and an intense itch. Through PN1 and PN2 of 52 week studies where patients will receive ruxolitinib cream or vehicle for 12 weeks, followed by a 40 week open label extension. The primary endpoint is WINRS, which is defined as a 4 point or greater improvement in worst itch numerical rating scale score from baseline to week 12. There is a strong rationale for opsilurin paragonodularis where we have seen promising early data where there is a ready and regulatory precedent for approval with clearly defined endpoints. With no topical or oral therapies approved, we have a significant opportunity to help a large population of patients who are suffering from this disease.

Speaker 4

Turning to Slide 19. We continue to expand the development of Opcellara into new indications, which has the potential to provide significant value as either the first approved therapy or first topical therapy for patients living with these dermatologic conditions. Moving to porvacitinib on Slide 20, we recently presented positive Phase 2 results at the American Academy of Dermatology Annual Meeting, highlighting the effect of porvacitinib on repigmentation in patients with extensive vitiligo. Substantial repigmentation was seen with porvacitinib treatment and continue to improve with longer duration of therapy, with up to 36% of porvacitinib treated patients achieving a facial VASI 75 by week 36. Based on these positive Phase 2 results, we plan to move into Phase 3 development.

Speaker 4

Being able to provide patients with an effective oral therapy to treat their vitiligo is part of our strategy to strengthen our leadership in vitiligo and to be able to provide multiple treatment options for patients across the entire disease spectrum. On Slide 21, at the European Hyeridinitis SuperTEVA Foundation Conference, we presented Phase 2 data showing that 52% to 56% of patients treated with porvacitinib achieved a Hiscoff 50@week16. Perhaps even more impressive was that up to 29% of patients on porvacitinib reached Hiscar 100 at week 52, which is a 100% reduction in abscess and nodule count with no increase in abscess or draining tunnels relative to the baseline. This is a very high clinical bar of efficacy. We were the 1st to ever present the achievement of HISCAR-one hundred in HS.

Speaker 4

Based on the Phase 2 results, we initiated 2 Phase 3 trial, Stop HS1 and Stop HS2. Similar to ruxolitinib Cream, we are building a portfolio for porvicitinib around the science, all while leveraging our extensive dermatology capabilities. As mentioned earlier, we are initiating 2 phase trials in moderate to severe asthma and chronic spontaneous urticaria. Given what is known about the involvement of the JAK pathway in the regulation of cytokines and Th2 cells, initiating a study in asthma is a logical next for the development of porvacitinib. Likewise, we know JAK inhibition can modulate mast cell activation, including degranulation and cytokine production, both of which are drivers of chronic spontaneous urticaria.

Speaker 4

Moving to our hematology and oncology portfolio on Slide 23. Looking at our high potential oncology We continue to make progress in myeloproliferative neoplasms or MPNs with our OAK2 and VET program and axotilumab in chronic graft disease. Our small molecule oral PD L1 program is advancing into multiple Phase 2 studies in combination with adagracip, ipilimumab and axitinib. For early stage assets, we recently presented data at the American Association For Cancer Research Annual Meeting for CDK2 and our newly disclosed bispecific TGF beta R2PD-one antibody. And lastly, we recently announced the approval of Zinnies for Merkel cell carcinoma, which is currently in Phase 3 trials in squamous cell anal carcinoma and non small cell lung cancer.

Speaker 4

Turning to Slide 24. We have several programs progressing in MPNs and graft versus host disease. Delugasertib is in dose escalation. We are currently at doses of 400 milligrams once daily in combination with ruxolitinib and we were adding a treatment arm for newly diagnosed patients. We continue to see signs of clinical activity, including decreased levels of hepcidin as well as hemoglobin responses with no dose limiting toxicities to date.

Speaker 4

For our BEP inhibitor dose escalation is ongoing, where we are currently at doses 6 milligrams once daily in combination with ruxolitinib. In monotherapy and in combination therapy, we have seen reductions in spleen length and volume, as well as improvements in both symptoms and hemoglobin, suggesting 57,643 is an active compound. INCA-three thousand nine hundred and eighty nine, our mutant CALR antibody is on track to enter the clinic later this year and the study evaluating selenkostas CK-eight zero four in combination with ruxolitinib continues to progress. Lastly, we expect results from the AGAVI-two zero one study later this year. Before moving on to the next slide, I did want to speak briefly on the CRL for ruxolitinib XR.

Speaker 4

The FDA determined that while bioequivalence was achieved in the area under the curve or AUC, they had questions around semen and its correlation with efficacy. We will work with the FDA to determine the appropriate next steps and we will provide an update at that time. Turning to Slide 25, preclinical data from our CDK2 and TGF beta R2 PD-one bispecific. INCB123,667, a selective oral small molecule CDK2 inhibitor is in a Phase 1 dose ranging study in advanced solid tumors. CDK2 in complex with cyclin E is a cell cycle regulator, which when inhibited has been shown to suppress tumor growth, mainly in Cytony high tumor models in vivo.

Speaker 4

On the right is INCB33,890, at TGF beta R2PD-one bispecific, which has been engineered to avoid the known toxicity of broad TGF beta pathway blockade. 33,800 has a 10 fold higher affinity for PD-one and TGF beta R2 and blocks TGF beta signaling in cells coexpress in PD-one, thus potentially protecting normal tissue. Preclinical in vivo data presented at AACR showed that 33,800 has a greater antitumor effect than individual benchmark antibodies or a simple combination of these. Turning to Slide 26. For the remainder of the year, we expect numerous data readouts and important strategic decisions for many of our high and we look forward to updating you throughout the year.

Speaker 4

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

Speaker 5

Thank you, Steven, and good morning, everyone. Our first quarter results reflect continued strong revenue growth with total product revenues of $693,000,000 representing an increase of 14% over the Q1 of 2022. Total product revenues are comprised of Jakafi, other hematology oncology products, which include Iclusig, Pemazir and Minjuvi and Opsilura. Jakafi net product revenues for the Q1 were $580,000,000 which reflect continued Both contributions to close the Medicare gap and commercial co pay assistance, in line with prior year's 1st quarters as well as an increase in 340B. The quarter was also impacted by lower than normal channel inventory at quarter end due to the timing of certain customer purchases.

Speaker 5

Other rheumatology oncology net product revenues were $57,000,000 representing a 17% increase compared to the Q1 of 2022, driven by patient demand, partially offset by unfavorable changes in FX rates. On a constant currency basis, the other hematology oncology net product revenues grew by 22% over the prior year period. Finally, Opsilura net product revenues for the quarter were $57,000,000 representing a 4.5 fold increase year over year driven by increased patient demand and expanded coverage. This year over year growth was partially offset by an acceleration of refills at the end of last year and by higher gross to net deductions as a result of higher Medicaid utilization and higher commercial co pay assistance, which is a typical Q1 dynamic. Turning to royalty revenues.

Speaker 5

Total royalty revenues for the quarter were $116,000,000 and are comprised of royalties from Novartis $77,000,000 for Jakavi and $4,000,000 for Tabrecta and royalties from Lilly of $34,000,000 for Olumiant. Jakavi and Olumiant royalties for the quarter were negatively impacted by FX headwinds, while Olumiant royalties were also impacted by a decrease in net product sales of Olumiant for use as a treatment for COVID-nineteen. Excluding the impact of COVID-nineteen related sales and currency fluctuations, on a GAAP basis. Ongoing R and D and total R and D expenses were $404,000,000 $407,000,000 respectively, for the Q1. Total R and D expenses increased 15% year over year, driven primarily by the progression of our pipeline, including the expansion of the clinical development program evaluating raxolitinib cream in additional indications and the progression of provocitinib into pivotal studies, and were partially offset by lower upfront and milestone expenses in 2023.

Speaker 5

Total SG and A expenses were $316,000,000 for the Q1. SG and A year over year growth was driven primarily by activities launched at the beginning of the year to support OXELURA NID and Invitiligo and the timing of certain other expenses. Strong demand growth, we are raising the bottom end of our full year Jakafi guidance range of $2,530,000,000 to $2,630,000,000 to a new range of $2,550,000,000 to $2,630,000,000 We are affirming our other hematology oncology revenues, 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

Operator

Certainly. We will now be conducting a question and answer session. Our first question is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Speaker 6

Good morning. Thanks for taking my questions. Two questions here for me. One is, given the Q1 headwinds for OXOLLURA where you saw an increase in commercial And maybe you could discuss the disconnect with IQVIA scripts and whether this is driven purely by higher Medicaid utilization. And then secondly, with regard to the CRL for QD Jakafi, what is your view on the base on the path forward here and how does this impact the combo program with BED and ALK2 in terms of your registrational path?

Speaker 6

Would you run a Phase 3 combo with BID, Jakafi, and then do bridging studies or is there or does the path you have ongoing kind of they'll stand on the floor. Thank you.

Speaker 5

Hi, Salvini, it's Cristiana. Let me take the first two questions on gross to net and IQVIA, and then I will turn it Stephen, first of all, regarding Oksalura gross to net, there were 2 main factors that impacted gross to net in Q1. First one is the higher co pay and deductibles at the beginning of the planned year, and this is typical. We see it every for every product in the Q1, those deductibles and co pays are higher and we are paying them down, which are impacting gross to net. The second is an increase in Medicaid utilization, and that was driven by the very rapid up take that we saw for OXELURA across all 50 states.

Speaker 5

That increase in Medicaid utilization had 2 components that impacted Q1. The first one was the utilization that we saw for Medicaid in Q1. And the second one is related to the actual claims for Q3 and Q4 received during Q1, which were higher than we were expecting. And therefore, there are certain true ups related to those Claims for Q3 and Q4 that are reflected in Q1. So the average gross to net for the quarter was 60 percent.

Speaker 5

But as we look at the average for the year, we continue to expect this to be at around 50%. The first factor, the higher co pays and deductibles that we saw in Q1 are expected to come down through the course of the year. And in terms of the Medicaid, even though the utilization will be higher, the true ups that we saw in this quarter are not expected to continue at the same level in subsequent quarters. So that's in terms of the gross to net. Regarding IQVIA, as we have discussed in the past, The IQVIA data is not fully reflective or accurate relative to our actual numbers.

Speaker 5

So it's good to look at it directionally, but there are a couple of things that are happening with IQVIA data. One is it includes free drug. And as we have discussed in this past, expect that that is at around 20% of the total scripts that you are seeing. The second is that there is an overestimation. We were I think this to be at around 5% to 10%, which is typical for newly launched products, but we see some variation in the level of estimation during the quarter and that can be as high as 20%.

Speaker 5

So it's better to look at the IQVIA data more in terms of the trend.

Speaker 2

But the trend, Herve here, the trend is sort of Reflecting the demand that we are observing ourselves. It's just that IQVIA is in fact overestimating A little bit by 10% to 20% depending on the week.

Speaker 4

And then, Salveen, in terms of your question on the CRL for ruxolitinib XR, As I said in my prepared remarks and the FDA was clear that we had met the area under the curve criteria for RUX XR versus IR, but had concerns on the lower Cmin, theoretical concerns that it may potentially impact efficacy. In terms of base case, it's hard to say right now how long it will take, but we're absolutely marching forward for the intent to get ruxxor approved. We'll work with the FDA on the various options, which may include modeling or some other work that needs to be done. We'll update you as soon as we know. It does not impact either the BEAT or the ELK2 program.

Speaker 4

Those continue to march forward, again, as I said in my prepared remarks. And in terms of moving into pivotal studies, you are correct. We will proceed with the rux IR with the intent to do bridging work on the back end to an FTC. Just to mention that the fixed dose combination work is not impacted by anything to date and that continues to move forward for both 2 as well. Thanks.

Speaker 5

Thank you.

Operator

Thank you. Next question is

Speaker 7

My first is also on the gross to net and more specifically on the shift towards Medicaid. Do you expect this to continue into Q2 and for the rest of the year, is this likely permanent?

Speaker 5

Hi, Eva. It's Cristiana. The Medicaid utilization Or the uptake was faster than we were expecting. So now we have OXELURA available under Medicaid in all 50 states. So the increase is not expected to be at that same level, but we would expect to continue to see those levels of Medicaid utilization.

Speaker 5

So it go to the levels that we were expecting eventually, but the uptake was faster than we were expecting.

Speaker 7

Great. Thanks. And to follow-up on the full year expectation for gross to net to be roughly around 50%. So given that Q1 was 60%, is the assumption correct The rest of the year, the average should be around in the high 40s.

Speaker 5

So you would expect the gross to net to gradually come down through the course of the year.

Speaker 7

Okay, great. Thank you.

Operator

Next question is coming from Vikram Parovin from Morgan Stanley. Your line is now live.

Speaker 8

Hi, good morning. Thanks for taking our question. So we also had a question on OXOLURA. We just wanted to get your updated thoughts on when in the coming quarters you might feel comfortable providing a breakout of sales and or scripts between Vitiligo and AD? And is guidance for the product, either total guidance or indication specific guidance, something you would consider for this year?

Speaker 8

And then we had a follow-up.

Speaker 5

So hi, Vikram. Let me start and then I will turn Barry, in terms of the guidance for Opsilura, we want to see more quarters of the uptake before we can provide guidance for annual guidance for OXELURA. We are still early in the launch for Vitiligo. We Still want to see how fast patients will be activated and have more information on the refills before we are comfortable to provide guidance. So let me turn it to Barry for the script question.

Speaker 3

So, just Vitiligo, as far as we can tell, at this point, as we estimated, it seems to be about 30% of The total Rxs are related to Vitiligo. Vitiligo growth is continuing and we'll have to have more time to figure out exactly how many the LIGO refills will have for patient. But as we said in the past, we fully believe that on average over time, the LIGO patients should be receiving about 10 tubes.

Speaker 8

Understood. That's helpful. And then for a follow-up, We had a question on the LYMRELK2 combination data expected in the second half of this year. Could you just help us kind of characterize how many patients, what level of follow-up we could see and what you would consider to be a good outcome here? Thank you.

Speaker 4

Yes, Vikram, thank you for the question. So just to separate Each program and deal with it separately. As I said in my prepared remarks, and I'll deal with Beth first, It's really encouraging to see that both with monotherapy, we've seen spleen volume reduction, symptom improvement and hemoglobin response and in combination with ruxolitinib as well. So we aim at an appropriate meeting in the second half of the year to show as much data as we can. It's hard to quantitate that for you right now because different meetings have different cutoffs.

Speaker 4

But you can get a sense of where we are in terms of The combination dosing thus far. And then we'll proceed with registrational intent decisions by the end of the year sort of timeframe. For ELK2, we've seen both again in monotherapy good hepcidin suppression and some evidence of early hemoglobin responses and then in combination as well. But it looks like we're going to have to go to higher doses than we initially projected there. And also, we have no dose limiting toxicity.

Speaker 4

So that's good as well. And the same sort of thing, hard to quantitate for you exactly how many patients, we'll be presenting at the appropriate meeting the second half of the year because of cutoffs, but it's appreciable numbers and we're able to enroll both studies well and the same intent to declare registrational intent programs in that timeframe as well because both are proceeding well. Thanks.

Operator

Thank you. Next question is coming from Kripita Bariconda from Tuish. Your line is now live.

Speaker 5

So I have a couple of big picture questions. When I look at the pipeline mix right now, it seems like maybe it's the time of

Speaker 6

the No,

Speaker 5

timeframe, but there seems to be a gradual switch towards inflammatory diseases, maybe a shift away From oncology and even within oncology, the earlier stage programs seem to be more focused on biologics, with at least a few of the small molecule programs on the proposed EU legislation. I would just would love to get your thoughts on it. And If you think that it could potentially impact Incyte or if Incyte could be immune from it because of the market you target? Thank you.

Speaker 2

Let me take some of that and maybe Stephen can speak and dash on the pipeline. Starting on the EU legislation, frankly, you I mean, What we have seen is a proposed draft. It's not yet even close to be the final one. It has impact on exclusivity, which is obviously the key for the entire biotech industry. So we live with Patents and patent rights and that will be the subject of our effort in Europe to make it Well, for us, I mean, Insight is a company investing in R and D, and the only way we can Be viable in the long term is with enough patent and exclusivity after that.

Speaker 2

So that's the big picture. I frankly, I'm not yet ready to speak about the specifics of it because it's a lot of work on our side to identify where we will specifically be Okay. On the portfolio, it is clear that we have been moving resources into inflammation And dermatology, but not just dermatology. I mean, you have the scope of the program we have for vositinib. We have oremolimab coming also very soon.

Speaker 2

We have Rockstream, which is in dermatology. And they are all 3 very important programs. We are not moving away from oncology, but we are certainly Consolidating our portfolio in immunology, and I think it's an important move for insight over the past few years of sort of becoming now a company that has 2 different franchises that are fueling the growth and the derm or immunology and oncology are coexisting. Remember, we have a lot of synergies in research, Because a lot of the work we are doing there can be leading to products that can be used in cancer and could also be used in non oncology indication. So regarding the biologics, frankly, we have bispecific, we have antibodies and we have small molecule.

Speaker 2

We treat them equally. So there is no strategic goal of moving away from small molecule, for The goal of moving away from small molecule, for example, like you have heard from some other companies. In our case, we are totally committed to each of them. It just happened that some of the targets we are pursuing, and you saw that with CALA, for example, Well suited for an antibody or biologic type of approach and that's what's driving the mix between biologic and small molecules for

Speaker 6

Couple on Jakafi. First, where does duration of therapy with Jakafi in MF stand historically? And have you seen that evolving at all? Is there any change in duration of therapy baked into the 2023 guidance? And then I think you mentioned the change in inventory year over year.

Speaker 6

Was there a sequential change in inventory relative to the 4th quarter?

Speaker 3

Sure. So Jessica, this is Barry. So in terms of duration of therapy, for MF, it's About 21 months as far as we can tell, but many patients are on drug. They've been on drug since the Phase 2 study. So We haven't seen any change at all, particularly if there's a couple of drugs that might be used in the second line setting, we haven't seen it.

Speaker 3

In fact, The growth for MF for this quarter is the highest that we've seen year over year, quarter over quarter. And we'll let the inventory go question go over to Christiana.

Speaker 5

So Jessica, regarding the We ended Q1 with channel inventory levels that were slightly below the low end of the normal range. In the normal range that we see is 2.5 weeks to 3 weeks of hand of channel inventory. And that had to do with the timing of certain customer orders. In terms of the impact, when you look at this Relative to Q1 of last year, the impact is at around $11,000,000 Q4, both this past year and the year before ended up being at the higher end of the range, but within normal levels. And again, this quarter, we fell slightly below the low end of the range.

Speaker 1

Thank you.

Operator

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

Speaker 9

Hi, there. Good morning. Thanks for taking my questions. On OXOLLORA, can you talk about what you're observing with regards to refills in the past few months? Are you Seeing refills normalized in March April, what's your latest thinking on the average number of tubes per year patients will be getting there?

Speaker 9

And then with regards Jack, if I am curious what you're seeing that prompted the raise in the lower end of the guidance range. Any differences in demand versus your expectations, changes in your expected expectations for competitive dynamics in the back half of the year or something else? Thanks.

Speaker 3

Sure. This is Barry. So, Optolora and then Jakafi. So, Optolora, just in terms of, yes, in March April, refills have normalized. So we said in the past, and it seems to be holding up that refills account for at least 30% of the TRxs.

Speaker 3

So that will continue in terms of the number of tubes per patient, it differs obviously between AD and In AD, when we can follow a cohort of patients for at least 12 months, we can see that they average currently about 2 tubes per patient or a little above 2 tubes per patient. For DILIGO, we fully anticipate that patients will in fact be using many more tubes. We've protected or forecasted about 10 tubes per patient. Over time, we haven't been able to follow a cohort of patients for Vitiligo patients to see exactly what the refills are, but we know they'll continue to increase. And as far as Jakafi goes, the dynamics are there.

Speaker 3

I mean, in fact, we're growing at a good rate in terms of demand in the Q1 and going forward. I think as we said before, in terms of new patient growth, it's been the best that we've seen since the launch of the brand. So we're very encouraged by that and that generally carries through to the rest of the year. So we're growing total patients and total demand in MFPV and GVHD. So that's what led to the tightening at the guidance.

Speaker 9

Thanks, Barry.

Speaker 2

Yes, Brian, on the Refill, I think it is the key question To put it in perspective, we had when we launched this calibration of saying it would be 2 to 3 tube for atopic derm, it Could be up to 10 for Vitiligo. What we are observing is that we are now north of 2 for atopic derm. So that's the good thing. And it's evolving. It's a number that is increasing.

Speaker 2

And frankly, for Vitiligo, we don't have enough patients treated over a 12 month period to No, where it is, but it is when you do the modeling, it is the one thing that is giving the curve a very different shape. So a lot of the commercial effort we do today is obviously bringing new patients to their dermatologists asking for Opselor. But the other side is refills and getting the refills done for Vitiligo because that's what's going to impact the revenue for the next year.

Operator

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

Speaker 7

Hi, good morning. Thanks for taking my questions. I have 2. Just to go back for a minute to gross Is it still your expectation to exit the year at 50% gross to net? I know that you're expecting GTN to improve as the year progresses.

Speaker 7

But Given where you started off with the 1Q results, how are you thinking about that guidance for the rest of the year? And then secondly, as it relates to the Limber program, Just with the retirement of your pursuit of Partha, how should we be thinking about, Limber going forward? And can you highlight some of the potential catalysts for that program in the newer term. Thank you.

Speaker 5

Hi, Tazeen, it's Cristiana. I'll take the first part of The question on gross to net, as I indicated, we do expect the gross to net to improve through the course of the year to come down for the 60% from the 60% level that we saw in Q1 and to average for the year around that 50% level that we had indicated in the past. Again, some of the drivers that contributed to the higher gross net in Q1 are expected to improve through the year and that's both related to the higher deductibles and co pays assistance that we typically see in the Q1 of the year as well as the higher Medicaid utilization and especially the true ups related to actual claims for prior quarters received in this quarter.

Speaker 4

And Tazeen, in terms of Limbo program, so as I said earlier, both Bettenelk And then we'll declare registration intent programs for both very important programs with different intents. Just bet in terms of spleen reduction and symptom response and then help to the additive hemoglobin response from that. CALAR will enter the clinic in the middle of the year and will declare itself in terms of safety and efficacy relatively quickly given its mechanism of action and we can follow catar allele burden reduction. And then in graft versus host disease, axotilumab, the AGAVE-two zero one results will come in as well and will hopefully be a filing opportunity in third line graft versus Host disease will continue the RUX XR work and work with the FDA on the path forward and continue the FTC work. So it's still a very active program

Speaker 7

Thanks. Can you clarify what would be good data for the Veth study?

Speaker 4

Yes. No, I think the idea is to get to the right therapeutic ratio in terms of bet. So we know that the on target toxicity is thrombocytopenia and in combination with RUX to declare what the right dose is to using combination. You may see a dosing paradigm evolve that is platelet count directed and different doses being used depending on patients' platelet count maybe the right way forward for a bit combination. Stay tuned on that.

Speaker 4

Thanks.

Speaker 7

Okay. Thank you.

Operator

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

Speaker 10

Hey, good morning guys. Thanks for taking the questions. Can you give us an idea as to the split between Medicare, commercial and the 340B And ultimately, call it by the end of the year, what that split might be and what's frankly the ideal split for you guys? And then I have a follow-up.

Speaker 3

For Jakafi? Yes, you mean for Jakafi. So this is Barry. So for Medicare, we are a heavy Medicare drug Just because of the age of the patients and diseases that we're treating, so it's about 50% that is Medicare. About 15% or so of our volume currently is going to 340B Institutions and mostly the rest is commercial, but It's a variety of things.

Speaker 3

And remember that included in the 340B is some commercial patients as well. So it's really that's the rest is just a little bit of VA and other government ordering. And it will continue the same for the rest of the year. The 340B, it grows and it's going to continue to grow for everybody, But to grow at a reasonable rate, we just had a little bit of a bump this quarter and that's why we pointed it out.

Speaker 10

Got it. Okay. And then just switching gears to both MINJUVY and Pembazir, I'm trying to get a sense as to Sticking with Manjivi, the upcoming sort of inflection points, when these trials might ultimately read out and at what point you kind of look at, call it the new indications and either kind of assess whether this will be A commercial success or it's something that you ultimately write off. And we saw some great data, I thought, at Pembazir at AACR. Kind of curious what your plans are in terms of either doubling down on amazir in some other tumor indications or

Speaker 4

I'll take the development side of those questions, Ren. Thank you. So for MONJUVI, both the follicular and the frontline diffuse large B cell studies have enrolled incredibly well. We expect data on in mind, the follicular marginal zone trial in the second half of next year and front mind the year after. Very important studies in this arena to get data on and I certainly feel will be important for patients there.

Speaker 4

Thanks for also pointing out the Pemazir, pemigatinib data at AACR. I think if you have Tumors that are driven biologically by either FGFR1, 2 or 3 and that is the oncogenic driver, then perturbing that with a good inhibitor, which Pembazir is, you can see results. And so we have ongoing work in glioblastoma Where we are seeing activity there and we'll see whether that translates to a more fuller registration program down the line

Speaker 3

So just in terms of the commercial potential for ANGIOVI, obviously, the first line diffuse Lymphoma is extremely important to us. We think we have a good chance of succeeding there. So those patients are In the curative setting, so it's extremely important to us. So the opportunity there is large. We're studying in a particularly high risk population, which I think will benefit everyone in in lymph lymphoma or follicular lymphoma.

Speaker 3

Again, there in combination with R2, Rituxan and Revlimid compared to our drug, MANJUVY and R2, I think we have a good chance of succeeding there as well and we have the opportunity to really take over that market share. As Steven said, for Pembazir, it's a good product. There's few cholangiocarcinoma patients. Now we have an MLN indication, we don't really know how many MLM patients there are. It's a very rare tumor type.

Speaker 3

But in fact, as we have more physicians, clinicians testing for FGFR1 rearrangements, we'll find out exactly how many MLN patients there are. And as Stephen says, we have ongoing work with Pemazir and we have hope that we

Operator

Great. Thanks guys. Thank you. Next question is coming from Evan Seigerman from BMO. Your line is now live.

Speaker 8

Hi, this is Connor McKay on for Evan. Thanks for taking our question. Maybe just one on the OXOLORA launch in the EU. Any nuances there versus the launch in the U. S.

Speaker 8

In terms of SG and A expenses or expectations for uptake? Thank

Speaker 1

you. So,

Speaker 2

yes, so I mean, start the EU, I mean, one of the News today is the quality of the label for Occellular in Europe. It's a very good label. It's for Vitiligo. So the sequence is Very different from the U. S.

Speaker 2

Where we started with AD followed by Vitiligo. There we are Vitiligo first and then Additional indication will come in the future. We have a team in Germany for the next year or so, Like 12 months, most of the activity in Europe will be in Germany because that would be the place where we have reimbursement. So it is, in fact, the coverage of the approval was excellent on the multi TVs and the newspaper. It was I'm seeing fairly noisy there and the team is getting prepared for a launch that could be happening in July.

Speaker 2

So that's the timing. In terms of SG and A or resources, we have them in place, so you should not anticipate an

Speaker 8

We have a question about the Lindber program. What are some of the lessons learned from the Parsiclusive studies? And is ALK2 now the top priority in your Lindber program? And then what kind of patient numbers and duration of follow-up should we

Speaker 4

Jay, it's Steven. Thanks. I think in terms of the past studies, obviously, it's unfortunate that they did not meet the criteria to continue past their interim analysis in terms of futility, in lessons learned, I mean, we always learn from studies and from patients. We learned how to enroll efficiently around the world, find these patients and a lot of learnings on the operational side. On the clinical side, we again had a good Phase 2 signal, which didn't pan out in Phase 3 and that, as you know, happens about half the time in hematology oncology.

Speaker 4

And the important thing is just to do things efficiently and focus on doing the right things for patients and their families in terms of the shutdown of the studies, which we're doing now and then pivot into the other programs. Just to manage in terms of what you said, it will not be at ASCO in terms of updates, It's Beth and Elk 2. They're in meetings in the second half of the year. And as I said earlier, it's hard to be precise on patient numbers that we'll be able to present, But both monotherapy and combination work has gone well. And we had doses with ELK To around 400 milligrams in combo with RUX currently, no dose limiting toxicities.

Speaker 4

We are seeing hemoglobin responses, but we can go higher. And that's what so we'll continue to dose escalate there. And I can't give you precision on numbers right now in a meeting yet. Thanks.

Speaker 8

Thank you.

Operator

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

Speaker 11

Thanks for taking my questions. Maybe just another follow-up on Limber. Steve, as you think about the ALK 2 and the bet combinations. How do you think those could be positioned perhaps relative to the emerging competitive landscape in the MF

Speaker 4

So Michael, I'll start. Some of my colleagues may add things afterwards. I think there is Still, no unmet need there despite RUX being a fantastically successful drug and great for patients in terms of spleen symptoms and overall survival. Just to talk individually about the programs, BEST addresses both spleen reduction and associated symptom improvement and it's clearly an active compound both with a competitor and with ours as well as I just alluded to in my prepared remarks. So we'll continue to progress, get to a recommended dose and address those needs.

Speaker 4

ALK2 is a difference. Here, it's about addressing the anemia component of the disease, both the underlying disease of myelofibrosis and potentially the drug induced anemia from RUX as well. And again, as I said in my remarks, we've seen the directionally hemoglobin responses that we want, But we can keep going in terms of dose increases. I think just because you mentioned that in terms of momelotinib, The study the MOMENTUM study is off to rux against Danazole, and it probably works through ALK inhibition as well as far as we can tell, but it is not as good a JAK inhibitor as rux as we saw from the early simplify study where they were non inferior to rux. So we expect and we'll see what the FDA does that they'll have a label post rux there and it's a different need for patients there in terms of that.

Speaker 4

I I don't know if anybody else wants to add anything.

Speaker 2

Maybe I can say well on the the picture is really JAK Inhibitors are the backbone of all the combinations. So and there you see ruxolitinib is obviously the most Important JAK to combine with because it has all these benefits and survival. So there ALK2 and BED, the question is where do you Introducing a combination versus a single agent JAK inhibitor. That's what we looked at with our suboptimal Letting patients start on Jakafi alone and then go to the combination. With ALK2, there is another I mentioned, which is that it could be a very good combination partner in the first line by definition, because it's not adding to the safety profile or the toxicity profile and it could help in trial, but at the end of the day, that's what we are looking at.

Speaker 2

And then there is a question of can you treat patients with MF who are refractory to Jakafi with a non JAK based type of treatment and that's also something that for BET inhibitor we could test in the

Operator

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

Speaker 12

Great. Thanks so much for taking the question. I just had two questions. And the first, I'm curious about your thoughts on any potential change from a clinical either enrollment or trial process in the HS, Arena, given the pending approval for Cosentyx at least in the U. S.

Speaker 12

And it was just approved outside the U. S. And I'm about the planned study for porvacitinib in asthma. And can you speak to where you think the potential opportunity is from a clinical context there?

Speaker 4

Thanks for the question. We saw this povacitinib data that, again, I alluded to in my prepared remarks at a meeting earlier this year, which was incredibly well received. And as I said, with the first time ever reported Hiscar 100 sponsors in terms of complete disappearance of abscess and nodules and no new fistulas. And I think that data It's driving enrollment in the Phase 3 program and stop HS12 incredibly well. I mean, so a lot of interest there.

Speaker 4

I don't see any impact quite frankly from the approvals of biologics there and a lot of excitement for the for the agents and we expect to get those studies done very, very efficiently. Asthma, the pathophysiology here is Again, relevant JAK STAT biology in terms of the cytokines that it affects beyond IL-four and IL-thirteen as well, T helper 2 biology, it's targeting the moderate severe plus asthmatics. So people who are on moderate plus doses of inhaled corticosteroids and long acting bronchodilators and are still having exacerbations on a yearly basis plus still have a sub normal forced expiratory volume. So it's for the more severe patients

Operator

Clark Gardner from Evercore ISI. Your line is now live.

Speaker 8

Hey, thanks for taking the question. So for Jakafi and myelofibrosis Specifically, roughly what percent of patients are on the lower 5 milligram dose? And just wondering if you think these patients could be at higher risk from other JAK competition?

Speaker 5

All I

Speaker 3

can say is that, 5 milligram so I don't know exactly for how many myelofibrosis patients around 5 milligram. What we do know is that, maybe about 25% of the bottles that we dispense are 5 milligram tablets, but as you can imagine, most of those are actually PV and GvHD patients. Now, what's at risk in myelofibrosis? Well, we continue to grow strong in myelofibrosis. We continue to go up in the treatment paradigm, meaning that newly diagnosed patients more often are coming on Jakafi and therefore they're better they're less anemic and they're better able to gain a spleen response and a survival advantage in that particular setting.

Speaker 3

So, regardless of whether patients were anemic or not, their survival benefit, spleen benefit and symptom benefit remains the same as patients who were not anemic. So that's what's most important. We're not we think that Any competitors that are coming will mostly be moved to the 2nd line setting. We've seen that with fedratinib and pukritinib

Operator

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

Speaker 1

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

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