Greetings, and welcome to the Insight Second Quarter 2018 Earnings Conference Call. 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 is now my pleasure to introduce your host, Mike Booth, Vice President And Investor Relations.
Please go ahead, Mike.
Thank you, Kenneth. Good morning, and welcome to Insight's Second Quarter 2018 Earnings Conference Call and Webcast. The slides used today are available for download on the Investors section of insight.com. Stephen is not able to join us this morning as he is currently recovering after a bicycling accident this weekend. So I'm joined on the call today by Urvet, Barry, Reed, and Dave, who will deliver our prepared remarks.
And by Peter Langmuir and Lance Leopold from our clinical group who will participate as needed in the Q And A session. Before we begin, we'd like to remind you that some of the statements made during the call today are forward looking statements, including statements regarding our expectations to 2018 guidance, the commercialization of our products, and the development plans for the compounds in our pipeline, as well as the development plans of our collaboration partners. These forward looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially. Including those described in our 10 Q for the quarter ended March 31, 2018, and from time to time in our other SEC documents. We'll now begin the call with Ernie.
Thank you, Mike, and good morning, everyone. So on slide 4, I'll start with, the growth of the organization and the financial strength. So we continued our strong start to 2018 in the second quarter by delivering 29% year on year growth in product related revenues. This dynamic top line growth is driven by 4 sources of revenue where 2nd quarter sales of Jakafi increased 25% over last year, and Iclus it grew by 27% year over year. Royalties increased by 61% over the same period last year, we begin to see the effect of Olumiant commercialization in addition to the strong ongoing performance of Jakavi ex U.
S. Today, we reported a balance of cash and equivalents of $1,200,000,000, which allows us to progress our portfolio while forwarding us the flexibility to be opportunistic in business development. Our reported cash balance at the end of June does not include a it triggered 100,000,000 milestone from Lily, following the US approval of Olumiant for Moving to slide 5, Jakafi and Jakavi have already provided significant benefits to thousands of MPN patients and maintaining our leadership position in MPM is an R and D imperative for Incyte as we seek to drive additional benefits in this patient population. We believe there are multiple avenues that we might be able to pursue to expand our leadership position in MPNs beyond the next decade. We are already working on new potential formulation for OXcelity monotherapy.
We are assessing OXcelity based combination strategy And we are also working internally and with collaborators on NPM targets beyond Jack Innovation. And an example of our approach Roxetinib based combination is our ongoing trial evaluating roxetinibplus50465. We recently presented preliminary data for this combination, which shows that adding a delta inhibitor to ruxolitinib could bring additional benefits for refractory MS patients And we have also filed patent application for these doublets that could if granted provide additional patent protection for this treatment of myocardial disease patients. Slide 6 illustrates our vision for insights in the future, which is led by our diverse development portfolio with multiple candidates being evaluated in later stage clinical trials. We have several near term opportunities such as ruxolitinib and itacitinib in GvHD, and that will add GFR inhibitor in cholangiocarcinoma and bladder cancer that if approved, has the potential to add meaningfully to our top line growth in the next few years.
Looking a little further out, we are pursuing later stage compounds across the total of in new indication, and our earlier stage portfolio could also provide us with additional important optionality. I'm confident that we have the right team in the appropriate geographies to deliver transformational revenue growth. With that, I'll turn the call over to Barry for a moment later on Jakafi.
Thank you, Irvin. Good morning, everyone. Jakafi continued to perform very well with net product revenue of $346,000,000, in the second quarter of 2018, representing growth of 25% over the same period last year. Sales continue to be driven by robust prescription demand. And in the second quarter, we saw a year on year increase of approximately 16% in total patients being treated with Jakafi.
We're very happy with our sales performance in 2018 to date and are pleased to reiterate our Jakafi net product revenue guidance for the full year of 2018 which is a range month, we are preparing the sNDA submission to the FDA seeking approval for Jakafi as a treatment for patients with steroid refractory acute GVHD.
The the
sNDA is expected to be submitted before the end of the 3rd quarter. We have breakthrough designation from the FDA, which we expect to provide us with a shorter review period, if approved, We will be ready to launch Jakafi in this new indication immediately. Our field force has already been optimally sized and structured in anticipation of approval and the map on the left hand of Slide 9 shows the areas where we will be focusing our efforts should approval be granted. Allogeneic stem cell transplants are largely concentrated across the top centers in the United States. For example, the top 10 centers by volume conduct nearly 30% of transplants and the top 50 centers, which are shown here, conduct about 70% of transplants.
Our team is currently preparing for this potential launch by developing robust plans for these key accounts as well as appropriately engaging with payers and reimbursement authorities for coverage upon the launch. I'll now pass the call over to Reed for an update on our portfolio. Thanks, Barry, and good morning, everyone. I'd like to use my time today to briefly touch on some of the important takeaways from our recent investor and analyst event as a means of summarizing progress across the development portfolio. We continue to work hard to satisfy the needs of MPN patients.
We are addressing this through both discovery and development initiatives and have also partnered with key academic centers and companies in order to extend our efforts. The objectives here are to improve patient outcomes, reduce disease burden, and where possible improve hematologic tolerability. Our collaborations with Syros, Moffett, and Vanderbilt seek to discover new targets and new combinations that may yield benefits to patients. And we are already aiming to improve outcomes through ongoing clinical trials of ruxolitinib based combinations. Last month, we shared some early, but interesting data from the ongoing ruxolitinib plus PI3 kinase delta trial in refractory NF patients, and we look forward with the potential for broad application across multiple diseases.
At our investor event in June, we touched on multiple areas for 50465 could provide benefit to patients, both as monotherapy and in combination with other agents. Slide 12 highlights 2 of our later stage programs in oncology. Firstly, and as part of the comfort clinical trial program, evaluating ruxolitinib based combinations and NPMs, We are testing ruxolitinib in combination with 50465 in patients with refractory myelofibrosis. We presented early data from 10 patients last month, which showed that most patients had improvements in both spleen length and in their disease related symptoms. Updated data are expected later this year.
The Citadel program is evaluating 50465 monotherapy in follicular lymphoma marginal zone lymphoma, and mantle cell lymphoma. In phase 1, we were encouraged to see rapid, deep, and durable responses in these 3 diseases. But we also observed immune related and likely on target toxicities after several months of therapy. We have since adjusted the dosing regimen which appears to enable patients to remain on therapy and hence continue to benefit from the potent activity of the molecule. We look forward to sharing these data as they become available.
In June, we announced that REACH-one, the pivotal trial of ruxolitinib in steroid refractory Acute graft versus host disease met its primary endpoint. This trial is important for a number of reasons. First, it is the only prospectively designed pivotal trial of a JAK inhibitor in graft versus host disease to be completed. And second, These positive data and to the growing body of knowledge of the of the benefit of the inhibition of JAKKS in GVHD. We are working with Novartis to recruit patients into Reach 2 and Reach 3.
The 2 ongoing pivotal trials of ruxolitinib and steroid refractory acute, and steroid refractory chronic graft versus host disease, respectively. At the same time, we are also recruiting patients into the gravitas program, which is evaluating itacitinib, our JAK1 selective inhibitor in newly diagnosed GVHD patients. Reach 2, Reach 3 and gravitas 301 are all expected to read out next year. On slide 14, we summarize the clinical trial schema for our FGFR inhibitor, which is now known as Pemagatinib, Last month, we presented initial data from the FIGHT 202 trial in FGFR2 mutated cholangiocarcinoma. These results showed a disease control rate of 82% and an objective response rate of 24%, which included 11 PRs, as well as a 6.8 month median progression free survival.
With second line chemotherapy generating an objective response rate of less than 10% And at PFS of approximately 3 months, we are excited about the potential impact of this compound in this setting. Should the data warrant, we are planning to file an NDA with the FDA in 2019. Therefore, pemigatinib has the potential to be the 1st selective FGFR inhibitor approved in cholangiocarcinoma. As previously announced, we are also planning to adjust the FIGHT 201 study in FGFR3 mutated bladder cancer to include a continuous dosing arm. We expect that this regimen may enable a greater degree of patient benefit and data from the continuous dosing cohort are expected next year.
FIGHT 201 may support an initial regulatory submission in the U. S. For second line patients, and our ultimate intention is to develop pemigatinib as a first line treatment for patients with FGFR mutated bladder cancer. Development plans for our PD-one inhibitor are detailed here on Slide 15. And recently declared our intent to run 3 registration directed development efforts.
Patients with microsatellite instability high endometrial cancer will be further expanded at a 500 milligram every 4 week dosing schedule. And in addition, we are planning to open phase 2 studies in Merkel cell carcinoma and anal cancer later this year. We're also planning to evaluate 012 in a number of combination settings, leveraging our own portfolio we are planning combination studies with both small and large molecules. We expect that having an in house PD-one antagonist will speed our decision making and could update the need to either buy supply from the third party and or to share any plans or data with them. By capitalizing on our drug discovery and immunology expertise, Insight is establishing a specialty focused business and inflammation and autoimmunity.
Following positive phase 2 data of ruxolitinib cream and atopic dermatitis, which are expected to be presented at the EADV meeting later in September. We are currently preparing to initiate a pivotal trial in this indication. Additionally, a phase 2 trial in patients with Vitiligo is ongoing, and we expect to be able to announce data from this trial in 2019. We believe that 54707 is a differentiated JAK inhibitor due to its selectivity as well as its longer half life compared to ruxolitinib or itacitinib. We've initially chosen to study 54707 in hydrogenitis suppurativa.
Which is an inflammatory skin disease characterized by lesions in the axilla in the groin and under the breast area as a result of inflammation and infection of the sweat gland. Lastly, we are interested in studying Delta in addition across a variety of B cell mediated and antibody driven diseases outside of oncology. We feel that there's a potential to differentiate from CD20 antibodies based upon the mechanism of action and the ability for reversible suppression versus long lasting depletion. We expect to begin proof of concept clinical trial work later this year Slide 17 shows our full portfolio illustrating our 3 drug discovery platforms on the left. Our 4 sources of revenue on the right and our robust group of post proof of concept assets in the later stage portfolio.
While most investor focuses rightly on these later stage molecules, It's also important to recognize that the optionality inherent in our earlier stage portfolio. I won't go through each molecule, but I will say that we are pleased with the progress these programs are making. As expected, our LAG-three antagonist recently entered dose escalation trials and both Tim-three and Axlemar are slated to enter the the coming months. We continue to make data driven clinical decisions being prepared to terminate programs as we have done recently with both JAK1 and AML and our PRD program, while also being prepared to make rapid go forward decisions where appropriate. I'll now pass the call along to Dave review the financials.
Thanks, Fareed, and good morning, everyone. The financial update this morning will include GAAP and non GAAP numbers. For a full reconciliation of GAAP to non GAAP, please refer to our press release. Our financial performance in the second quarter was very strong. We recorded $522,000,000 of total revenue on a GAAP basis.
This is comprised of 346,000,000 Jacquafi net product revenue, $20,000,000 in Inclusive net product revenue, $47,000,000 in Jakavi Royal Fusion Novartis, $9,000,000 in Lumi of Realtius from Lilly and a $100,000,000 of contract revenues from the milestone earned from Lily for the FDA's approval of Olumiant. Total revenue for the quarter on a non GAAP basis were $422,000,000, and exclude the $100,000,000 milestone from Lilly. 2nd quarter Jakafi net sales of 346,000,000 represents 25% growth over the same period last year. In 2nd quarter, Jakavi royalties of 47,000,000 represents 39% growth over the same period last year. Our gross rent adjustment for the quarter was approximately 13%.
And we expect that our gross and adjustment for the full year 2018 will be approximately 14%. Our cost of product revenue for the quarter was $19,000,000 on a non GAAP basis, This concludes the cost of goods sold for Jakafi Deficig and the payment of royalties to Novartis on US Jakafi Net Sales. Our R and D expense for the quarter was 500 and $253,000,000 on a non GAAP basis, primarily driven by clinical development programs. The $13,000,000 decrease in non GAAP R and D expense from the first to second quarter is primarily due to lower costs associated with our Epicastat program. Our SG and A expense for the quarter was $96,000,000 on a non GAAP basis, which is lower than the first quarter due to donations to independent charitable foundations, which typically decline as the year progresses.
Moving on to non operating items, We recorded GAAP to non GAAP net interest income of $6,000,000 in the 2nd quarter. Our net income for the second quarter on a non GAAP basis was $57,000,000. Looking at our year to date results, our net income on a non GAAP basis was $54,000,000. A quick comment on the balance sheet, we ended the 2nd quarter with one point $2,000,000,000 in cash and marketable securities, excluding the $100,000,000 milestone from Lilly for Olumiant, which we expect to receive in the 3rd quarter. We expect to end the year with a summary reconciliation from GAAP to non GAAP metrics.
And as I mentioned, a more detailed reconciliation is provided in this morning's press release. The next slide provides a summary of our current financial guidance, which is largely unchanged from the prior quarter. And Arvay will now conclude our prepared remarks by summarizing our upcoming expected news flow.
Thanks. So slide 26 summarizes our current expectation for data readout over the remainder of the year. First, we are expecting Phase 2 data from ruxolitinib, topical cream in mild to moderate atopic dermatitis to be presented in September at EADV. And we are expecting to report additional clinical data in patients with cholangiocarcinoma and better cancer at decimal. Later, in the second half of 'eighteen, we are expecting to present the reach 1 data for ulcerative in patients with steroid refractory acute graft, successful disease as well as updated data from the study, evaluating 50465 in combination with retroactive in patients with refractory myeloid fibrosis.
I close with our exciting schedule of protected regulatory submission in the coming year. We have the potential to submit a total of 6 product candidates for approval in up to 15 indication over the next 5 years. And while we have a lot of work to do to execute on this plan, we are encouraged by the data we have shared with you so far and we look forward to sharing additional data and updates for from our programs as they evolve. In the second quarter, We delivered strong product revenue growth, and I believe that we are very well positioned from both revenue and clinical perspective to build sustainable value for all our stakeholders. Operators that concludes our prepared remarks Please give your instruction and attend the call for Q And A.
Thank you.
Certainly. We'll now be conducting a question and answer session.
You.
Before pressing the star keys. Our first question today is coming from Cory Kasimov from JP Morgan Chase. Your line is now live.
Great, thanks. Good morning, guys. Thanks for taking the questions. I've two of them for you. I guess first one, I wanted to ask about the combination work you're doing in MPN, so bigger picture.
So in addition to providing an improved option for your existing patients, do you believe this also opens up a material number of new patients to your therapies, while also I guess potentially extending your overall runway. I guess I'm getting at how much of this market remains untapped at this point and how far do you think you could possibly extend that runway? And then I have one follow-up.
Sure, Cory. It's Barry. So, we think that, we could, in fact, extend the duration of therapy for patients who are on Jakafi by combining with some of our pipeline products, like our Delta product, for example, where patients who are getting an inadequate response, perhaps to, Jakafi or our, our, progressing on Jakafi could now be recovered and get a better spleen response in MF. So we could certainly stay on for, a longer duration of therapy and perhaps even provide them significant improvement, maybe even survival advantage, for those patients if we can, complete these, studies with our PM3 gene delta, they're sitting there and so forth.
Okay.
There's a big screen that I could call you, maybe I can that's something. I mean, there's a big picture here is that obviously track a file is you're here at the approved product today for MS and TV. We believe there is still a lot of progress that could be made and we see for us as a leader in this field an opportunity to expand the duration of treatment as as Barry was describing. But I'm sorry to provide an option for patients who are today. There is no master of Jakafi failure or where patients cannot, be treated with with Jakafi.
And all of that together as we are looking at new target, as you are looking at, you know, fixed dose combinations as we are looking at new formulations, is going to give us a position that will expand potentially our leadership in MPN beyond the Jakafi, single agent option that is available today.
Okay. All
right. Great. And then my second question is for Reid. You mentioned with regard to your FGFR program or Comagatinib, I think you're calling it. That you would file in 2019 should the data warrant.
I guess I'm wondering what else you need to see in the data beyond what's been closed or maybe what kind of feedback you need from KOLs and or regulators to move ahead with that filing?
Yeah. Thanks Corey for the question. This is Reed. I'm going to hand it over to Peter for him to address the the regulatory activities around FGFR. So good morning.
Thank you for your question. Basically, what we've seen so far from the clients of carcinoma data or interim, data So basically, we need to, complete recruitment to that cohort of 100 patients, evaluate the final response rate. And then importantly, look at the overall duration of response, in these patients as well. So that's sort of the the main totality of the data that we'll need to support a potential file next year.
Our next question today is coming from Salveen Richter from Goldman Sachs. Your line is now live.
Good morning. Thanks for taking my questions. So first question is around Jakafi and acitinib. I'm just given you've got both these drugs targeting acute and steroid refractory populations. How big do you think this GBH opportunity could really be?
Well, so for, Jakafi, at least in the United States, obviously Novartis is going for the approval outside the United States force or refractory, acute end chronic GVHD. In the United States for Jakafi for the acute end chronic, we estimate our refractory population is about 1500 patients a piece, for the steroid naive patients with GvHD, globally, at least in the major markets, Japan and the United States and Europe, it's about 15,000 patients. So depending on therapy, you can imagine, you know, you can calculate, what the Jakafi, value would be for GvHD, sorry, and factory GvHD. And then for itacitinib, it's a much larger opportunity for us.
Great. And then just, in terms of topical ruxolitinib, I know we're going to get an update at EABV coming up. What additional data are we going to get versus the EASR score and the IG responder analysis that you provided at the Analyst Day?
Complete, description of all the trial results. That includes those scores over time. There's some other, scoring indices that are used in the space We'll describe those, we'll be describing, I think, many of the components, parts of those scores, which are important to patients, and give you a sense of of overall safety across, the topical ruxolitinib as it relates to increasing dose versus both the vehicle cream and the and the triamcinolone cream. I think you have a good perspective coming out of that as the the potential of the drug in the mild to moderate patient indication as well as this safety profile.
Thank you.
Thank you. Our next question is coming from Ying Huang from Bank of America Merrill Lynch.
Hi, good morning. Thanks for taking my questions. I have a high level pricing question. So in 2017, you took a 2 price increase of 6 percent each for Jakafi in your $2,500,000,000 to a $3,000,000,000 PCO guide or estimate, how much price increase did you bake in? And do you think that's realistic in today's environment?
And then secondly, maybe for the clinical side on PI3K delta program. Given the data you have observed so far in the phase 2 program, how differentiated do you think this compound is existing care treatment drugs such as hygienic toxicity? Thank you.
So thank you, Ms. Barry. I'll take the first question. And going forward, we don't, we don't talk about or we've never talked about our strategy around price increases, but, you know, you could still figure for modest price increases going forward. Yes, Ying, this is Reid.
I'll take your question around Pietri County Delta. We described this a few times 50465 is a is a very potent molecule and has a structure that is quite distinct from adolescence. And and one of the important, features that that structural modification is made is it it's it's eliminated or or significantly minimized, any hepatotoxicity risk. And as you know, that's been a characteristic liability for idyllisib it tends to occur over the 1st few months of dosing and leads to a a discontinuation rate and a and a dose attenuation rate. We've yet to see that, and we think that's a testament to the structural modifications, the molecule that's been made to the molecule.
Second, the tolerability around, on target toxicities that tend to occur later in dosing. And these are, are typically GI toxicities manifesting as nausea, and diarrhea, and and are believed to relate to, an alleviation of immune suppression in the gut just through chronic pediatric kinase delta inhibition. What the team has done, I think very, in a very clever way, very nicely is, has constructed an induction and a maintenance regimen. Where, patients are treated at a reasonably high dose over the 1st 2 months of therapy. And generally, patients are brought into response during that time period.
And then thereafter, they're shifted to a, a dose or a schedule attenuated regimen. And that allows them, we think, to maintain response, to be able to tolerate the therapy long term. So I'd say in sum that the differentiation comes both from the intrinsic properties of the molecule, but importantly, also from the way that the team has gone about, constructing this dose and schedule and and developing the drug, up to this point.
Thank you. Very helpful.
Thank you. Our next question is coming from Catherine Chu from William Blair. Your line is now live.
Good morning. I'm just wondering, what catalyst from the pipeline you think could move the needle to improve, immunosuppence, especially following the, other cat effect, setback. So The other question for Reid, for the PSBK Delta, inhibitor, can you comment on the activity in I rooted failures? Thank you.
We can take the first part and we can Also comment on the, on the CapEx question. I, you know, you can see from the top portfolio of the way it's developing that there is a lot of attention given to GvHD. We have the largest provider in the field. It has a lot of potential from the medical standpoint to literally transform the practice of medicine in this field because it's a very important, curative procedure for cancer patients and the largest drawback is GvHD. And we think by confirming that it can have, obviously, policy effects for patients, but also it can create a meaningful opportunity in term of top line growth for Incyte.
And we have short term roxaditinib ongoing with the filing in the next few weeks and then we have, obviously, it doesn't need data that will be available next year. So that's important. I would say, I mean, if you look at our JFA inhibitor, our cash, we can use Delta. We spoke about it. It has a lot of different dimensions.
It can go in multiple directions. And then something that we have just disclosed, which is our efforts outside of oncology. So it's starting with atopic dermatitis, but it has a number of other indications where we are doing now, you know, at the clinical research, And in the case of atopic dermatitis, we are planning to be in phase 3, in the next few months, and that can also have a very meaningful effect on our revenue growth over the 2 years. So it is a situation where there are multiple opportunities, meaningful opportunities for inside with relatively short term news flow that would be driving the strategy there. So that's really the way we are looking at it.
I don't know read if you have any additional?
No, I'll take your second question on the Delta inhibitor. So in in short, we are studying both patient populations, both those that are naive to ibrutinib and those that have progressed on on aibrutinib or prior BTKs. I would say up till this point, the data are relatively limited. So I can't say too much other than to to to make the point, and we have to keep presenting this. And prior, meetings that we have seen in responses, post ibrutinib.
As you know, that can sometimes be a very, acute situation in those patients that progress often, progressed with some very aggressive disease, but we have noted some clinical benefit and even responses in those patients in both the the marginal zone lymphoma as well as the mantle cell lymphoma trials that are ongoing as part of the Citadel program. We're including patients that were, previously treated either with or without a BTK inhibitor. So I think as those data mature, we'll be able to make, a more definitive statement as to what the potential is for PI3 Kinney's Delta Edition, postabrutinib.
Thank you.
Our next question is coming from Jeff Meacham from Barclays. Your line is now live.
Hey guys, good morning. Thanks for the question. I have 2 most in a pipeline. For Russ for GBH, I wanted to ask about strategy of filing on Reach 1, does this speak
to the unmet need, or do
you think it's worth it to wait for a stronger profile when you have Reach two data or even putting chronic patient data with Reach 3? And then I have one follow-up on FGF.
So good morning.
This is Peter Wagner again. You know, our feeling is that the data from Reach 1, clearly identify a benefit and meet the unmet need in patients with steroid refractory acute GvHD. And so our goal is to file on those data. The REACH 2 study is obviously a larger study in the same setting, comparing versus best available therapy that's being conducted in rest of world. But again, we believe that the reach 1 data provide compelling evidence of activity in this setting.
The REACH3 study is being conducted in steroid refractory chronic GVHD. So that's a, different, though, related disease. And we hope that that will be a separate file later on once we update it from that study.
Okay. And then on FGF and bladder, Can you guys talk about the opportunities for differentiation that you see thus far with, with erdafitinib, this J and J's product? And And how much of a leading indicator do you think that cholangio could ultimately be, when you look to the bladder, on things like response rates?
So the bladder work is still ongoing. As we've reported, we have some interim analysis data looking at an intermittent dosing schedule, and we're now moving to a continuous dosing schedule to try to improve, the outcomes in those patients with bladder cancer. So we'll need to wait for the data from that, which will be available next year to see how we differentiate from J and J. But in Clanger carcinoma, you know, as we talked about, the interim data look, promising. And so if those data continue to look promising and we're able to show a good durability of responses, we should.
We have the potential for being 1st in class in cholangiocarcinoma.
Just to add a little bit
on the on the molecules. You know, the I think the selectivity profile, of of pemigatinib, it's a little bit cleaner across the isoforms particularly for FGFR4, that may minimize any diarrhea or nausea risk that could come, from from spillover to that isoform. So we'll have to see know, how the safety profiles emerge over time. That's probably, a little bit of a subtlety in the safety profile, but one that could be meaningful for patients, especially if you think about ultimately this class of agents moving to the, to the first line setting. As Peter said, I think we have a a very good chance to be 1st in class in claims of carcinoma.
We're very excited about that. It's a meaningful opportunity, an area of unmet need. And I think we're probably a little bit behind in bladder cancer, but with a movement to continuous dosing, we have every reason to believe that, you know, the merits of pemigatinib is a high quality molecule may will show at the end of the day when we get the full efficacy and safety data in. Okay. That's helpful.
Thank you.
Thank you. Our next question is coming from Jay Olson from Oppenheimer. Your line is now live.
Oh, hey guys. Thanks for taking the questions. I had a question about the GVHD launch preparations. You mentioned that you've been having some preliminary meetings with payers. Can you just talk about sort of feedback from payers that you've gotten from those meetings?
And then I had a pipeline question.
Sure. We've had some market research with payers Barry. We had some market research with payers. We've had some, advisory boards with payers. And, you know, we have to take a lot of time to explain, GVH both acute and chronic surgery, so I need naive patient populations.
But once they understand that this is an unmet medical need and a very limited patient population, we don't see any barriers that would be put in place with pairs from pairs.
Okay. Thanks. And then just a follow-up on pemigatinib and bladder cancer. Since PD-one antibodies are not recommended in the first line setting, for PD-one low bladder cancer patients. Do you know what percent of bladder bladder cancer patients with FGFR3 mutations are also PD L1 low or negative?
Yes, thanks. This is Reed. So it's a it's a almost a mutually exclusive population. So patients with f g f FGFR3 mutations or translocation. So that's the patient population that we would be targeting, with pomegatinib.
About 85% of those patients are either PD L1 low or negative. It's only minority of of 10 or 15 percent of patients that actually have PD, L1 high status. Obviously, that has bearing for how we think about moving into the first line setting and what kind of trial designs you could imagine. Interesting dynamics that you just referred to as we, now learn from regulators Across the Globe that that, PD-one axis blockade is not, recommended for those patients. So I think that gives us some opportunities, but we haven't, finalized any specific plans there, but we hope to share those details with you once they become, available.
Thank you. Our next question is coming from Brian Abrahams from RBC Capital Markets. Your line is now live.
Hi there. Thanks for taking my question and congrats on all the progress. And I wanted to just pass along, my best wishes
for, to Steven for a speedy recovery. Couple of early stage pipeline questions, maybe for Reid. I'm wondering if you could provide any update on the partnered
by specifics programs and how those are progressing. And then We also noticed you've recently recently been filing a number of patents, for a set of oral PD L1 inhibitors, with some interesting mechanistic, and preclinical data. Just wondering if you might be able to comment on the status of that program, when it might enter clinic and perhaps how it might be differentiated from the anti PD-one antibodies?
Hi, Brian. This is Reed. Thanks for the question. So I think your second one first, in terms of the patents that you, referred to, looking at PD L1 binders. So you are correct.
We do have a series of patents that are out there that are available on the web. As you well know, we don't comment on our preclinical stage research. So, I would leave it at that. I will say though, with respect to, our small molecule efforts, as well as Maris, the first part of your question, we're very excited by the near term, products in our later stage preclinical pipeline. And I think as we get through the coming, months and quarters, I think we'll have a few new agents that we will be able to talk to you more about and describe.
That'll include both the small molecule as well as the first, bispecific coming from the Meredith Partnership you know, both of the the merits effort, is, just over a year old now. And I'll say that, it's a very, a healthy collaboration. We have, a robust pipeline of preclinical stage programs moving forward. One of which is nearing the IND stage And I think it's, living up to all the hope and potential that we had going into the relationship. And I think for us going forward, it's an area of, of significant innovation and kind of creative white space that we can access new pharmacology that otherwise wouldn't be able to be achieved through, small molecule means or even through standard monoclonal antibody methodology.
Thank you. Our next question is coming from Carter Gould from UBS.
I guess first off,
you touched a little bit
on earlier, but I was hoping you needed to just zero in a little bit more on how you guys are thinking about the clinical, the hurdles for, force 5 plus rocks and and through the, I guess, the hurdle for moving that into a phase 3 study specifically on spleen volume and and total symptom score. And then separately for Irving and David, just your latest thoughts on how you guys are thinking about the importance of demonstrating, EPS growth in here. I know during the uppercadafed days, you're more willing to, to sugar and investment, but maybe just now how that thinking has changed, particularly now as you've shifted clearly into profitability again? Thank you.
Yes, Carter, this is Reed. So I'll start and Peter may things to add on 50465 plus ruxolitinib. That trial design is studying patients who are refractory to ruxolitinib in the first line setting. So these are patients that, have had, at least 6 months of dosing with ruxolitinib have been on a stable dose for 8 weeks and still unfortunately have, either a palatable spleen or or significant disease related symptoms. And so you can imagine that's an area of of unmet need right now.
Unfortunately, rux is a fairly effective drug, and it's not, an incredibly common situation, but when it is, we'd like to be able to bring to those patients a novel treatment. Obviously, that has a benefit, not only of the patient being able to rescue their responses, Barry put it earlier, also to be able to extend, the the treatment duration of ruxolitinib. That doesn't preclude taking a signal there and even considering it into the first line setting. If you have a meaningful benefit with a doublet, it's of course an interesting site clinical question as to whether or not an upfront treatment that may be a more idealized treatment approach. And, that's something that we would certainly pursue as well as the registration path in the second line setting.
Should we have a an actionable signal? I'll let Peter comment if he wants
to listen to what he does.
So I'll turn it over to the the next question. So the next question, I'll I'll take the first part or they'll take the second part, but in terms of, you know, EPS we did mention gave out guidance today. If you take the guidance and and run it through your your model, you'll see it on a non GAAP basis will be between 225,000,000 dollars, $250,000,000 net income. Obviously, that means that the Q3 and Q4 will be slightly higher than the Q2 non GAAP net income. We really haven't talked much about Carter about what EPS would be next year.
We'll give guidance on that, but obviously, we're still going to make substantial investments in the pipeline next year. So I wouldn't expect that you're going to see a big amount of growth in Irvinus, some more comments on that.
No. I just wanted to re there is a thought of the principles we are following. 1 is the fast growth of our top line because that's really what's driving our ability to develop the portfolio to ensure that the corporation will continue to grow faster over the next years ahead of us. And, and that principle, you know, applied to the hydro program where, you know, we were investing and planning to invest to create the leadership positions there. And we would apply the same thing to the programs coming from our portfolio when we see the opportunity.
So today, we have a number of Phase III studies ongoing. Some of them were in the GVHD. We spoke about Kolancocarcinoma. We have programs that we are planning in bladder cancer, obviously, with the FGF. We have a number of programs at that stage of development.
And as portfolio is maturing. If we see opportunity, we will certainly invest in them to make sure that we realize the potential for this for this project. So that's sort of the driver. At the end of the day, you know, over a long period of time, the goal is to have multiple growth driver for the top line and to be able to be in a position where we would be profitable in a sustainable way. And that's, that's really a direction that we will be following with, you know, in a window of 2 to 3 years.
Thank you. Our next question is coming from Mark Fron from Cowen and Company. Your line is now live.
Hi, yes, thanks for taking my questions. First on the FGFR, just the data expectations moving forward, in the past, you've mentioned a 20% hurdle that the FDA wants to see in response rate with reasonable durability in cholangio. Can you talk about what you think the FDA wants in bladder cancer to see? And then kind of related to that, how big of a differential do you think is acceptable is not necessarily differentiated versus Earthicinib. Either on the downside that you guys are still close enough to compete or on the upside that it's, you know, not a meaningful difference between the two of you.
Good morning. This is Peter Langner again. I I think for bladder cancer, we we don't have a clear hurdle that we need to be at. Obviously, her definitive has showed data so far around 40% response rate, so we'd like with our continuous dosing to get up to that range. I think clearly that's the potential we may be differentiated on our safety profile.
So so potentially there could be differentiation there if the response rates similar, but we can show a better safety profile, but obviously we'll have to wait for the data, to come out with that. So we should have data from that continuous servicing schedule by next year.
Okay. And then maybe for Barry, on the on Pemigatinib, just can you talk about what the kind of sales infrastructure, your thoughts are there, what you're going to need for cholangio and maybe, you know, any of that process has started yet, where where things stand?
Well, that's
a good question. We have, 125 sales in the field now, many of the customers that call on currently treat both hematological malignancies and solid tumors. So we actually think we have a Salesforce in place that could actually handle cholangiocarcinoma, a relatively small patient population, but we do have plans to increase both on our medical affairs side and maybe on the commercial side, our understanding of the diagnostic market so that we, know exactly how to communicate, to, the healthcare professionals that that are taking care of these clinical carcinoma patients of, what testing they need to do and, how to how to get that done quickly.
Okay. And then one last one for various.
You've, you know, started to do
this market research and the acute GvHD. In our checks, we've heard about a fair amount of off label use, in this refractory setting. So I mean, do you see much of an immediate growth opportunity, or is this really laying the groundwork for the earlier lines of therapy that will come ultimately with the other REACH studies and the gravitas studies reading out?
There is some spontaneous use in both acute and chronic GVH of Jakafi today, but we do think that with the approval, and with any barriers removed from payers, there is a significant opportunity in even the steroid refractory, patient population.
Our next question is coming from Peter Lawson from SunTrust Robinson Humphrey. Please proceed with your question.
Hi, thanks for taking my question. David, just you had a nice beat on Jakafi this quarter. Anything in that beat or the second half around pricing, volume or competition that kind of held you back from raising guidance? Well,
So, you know, the top end of our guidance is $80,000,000 more than what we, than what we sold in the first half. So we had 660,000,000 in the first half. And if we get towards the top end of our guidance, that's another 80,000,000. That's 12% growth. We still think that a half over half still think that's, very nice.
So there's nothing that's holding us back. We just think that's a, a prudent, guidance to remain in place for today.
And how should we think about pricing going forward? Sort of kind of in this price sensitized world, how should we think about moderate pricing and how should we think about growth moves into other indications?
We think that we've been prudent in our pricing, in the past. And moving forward, we will continue to do that. Jakafi as, is in the same price range as other oral cancer drugs. That provides the benefit, to patients, that we believe, Jakafi provides to patients. And in fact, we're actually below the median meeting our average price of oral cancer drugs.
So we think the the innovation, the fact that, we're the only drug approved for myelofibrosis, the only drug approved for polycythemia vera and, the, potentially, the first drug approved in acute surgery refractory graft versus host disease and and hopefully, the first drugs approved in, other areas of graft versus host disease that, you know, the, our price currently, represents the value that JAK5 brings to these patients.
Great. Thanks. Thanks for taking the questions.
Thank you.
Our next question is coming from Matthew Harrison from Morgan Stanley. Your line is now live.
Great. Good morning. Thanks for taking the questions. I wanted to ask, just one on the PI3K program. Can you just talk about given that all these are monotherapy studies that you've talked about, then being potentially registration will give it.
What sort of a the response rate bar that you need to be able to file these and and how are you thinking about that? Thanks. Good morning. Peter Langer again. So we don't have a specific, hurdle necessarily because I think a lot of it is also going to be to the long term tolerability and ability to sustain responses, over a long duration.
So clearly, we're going to look at this in the context of other therapies. But again, it's an overall risk benefit profile that will be important when we're looking at this compound in monotherapy.
Thank you.
Thank you. Our next question is coming from Tyler Van Buren from Piper Jaffray. Your line is now live.
Hi, good morning. Thanks for taking the questions. I guess I want to ask a question on Fedratinib. Celgene continues to talk about the potential for it to compete in the first line setting in the past. We all said that you're quite confident that they're going to just stay in WEXO failure.
So just wanted to hear you maybe reiterate your confidence that they won't compete in the first line setting anytime soon or perhaps asked another way, what would they need to show in the first line in future studies in order to compete in your opinion.
Yeah. Thanks, Tyler. This is Reed. I'll start and I'll turn it over to Barry for some additional comments. We know, quite a bit from the presented and published data for Fedratinib in terms of its overall profile.
And it is a potent JAK2 inhibitor. I think one of the liabilities that has shown is in its safety profile, and that likely comes from off target, kinase inhibition, significant rates of GI toxicity, are probably the most prominent for patients. And I think that, obviously, would be a headwind for any drug moving into the first line setting when you have an established agent without that liability in place for multiple years. There's also, I think, a possibility for, a warranty's risk that is, at least in my mind, still not fully characterized, but certainly, present in the phase 3 data sets will have see how updated analyses there look. But from a profile standpoint, it I don't think it has, in any way, the the safety profile that you would want for a 1st line agent to be able to compete effectively with with Jakafi, and I'll let Barry describe more from the commercial perspective, his thoughts around that.
Yes. So the only thing I can add is, we've heard what what, Celgene has said about, submitting their NDA by the end of the year. Maybe they can get a second line approval. And and if that is, beneficial for patients, who for some reason no longer, are on Jakafi, that would be a good thing, but, the safety profile so far, as Reid said, both in the first and second line setting, seems to be problematic if they were to someday get an approval in the first line setting, in terms of competing in the marketplace, I think that we would be I'm not concerned about that since the safety profile, and the efficacy of Jakafi has been proven in tens of thousands of patients around the world.
Thanks for that. And just as a second question, Herve, in the release, you mentioned later stage development port that may accelerate the growth in the near term and there is some exciting data at the Investor Day and we'll continue to see more through the end of the year. But if you look at Slide 27, it suggests that some of the larger opportunities and some of these exciting programs won't really launch until 2020 or 2021. So I guess as you think about near term acceleration of growth other than the pipeline, is there anything else that maybe investors should keep in mind? Perhaps leveraging the ex U.
S. Oncology infrastructure, or are there any potential smaller near term accretive deals that could be interesting?
Yes, absolutely. I mean, we as we said, I mean, we have a position where we have some cash in the balance sheet. So we have the optionality to do business development. And we are, as we have done over the past years. We are always looking at the potential opportunities.
Now there's nothing today I can tell you on what's going on, but we are looking at complementing what we have from our own pipeline, if any opportunity looks, you know, attractive enough to justify the cost.
Our next question is coming from Ren Benjamin from Raymond James. Your line is now live.
Hey, good morning, guys. Thanks for taking the questions and congrats on the progress. Maybe one for Barry and GVHD. Could you talk a little bit about sort of competitive analysis you have regarding the Abrutinib launch in GVHD. And you talked about rightsizing the field force.
Can you provide a little bit more color. Are there other people that are just dead designated for, you know, these transplant centers or, people splitting their duties? How does that really work? And switching gears to, to read real quick, when you talk about the FGF program, you provide a little bit more color or just explanation regarding the selection and cutoff parameters that you're using and what you're learning there? If I can squeeze one last one, an IP question regarding the current IP for Jakafi and the potential extensions.
Okay. So, ran, I'll start. So as far as the ibrutinib goes in, steroid refractory chronic GVHD, to be honest, any market research that we have or, talking to, external experts currently who are treating GBHD, they don't have much use, foribrutinib in that setting. So the uptake doesn't seem to be that strong. As far as our Salesforce goes, we have an arrangement where we have, 82 territories.
And then we have another 40, people that overlap those 82 territories. So essentially, we have one and a half persons. So we call 1 group oncology territory specialist and the other group oncology area specialist. So the oncology area specialists are gonna be concentrating on those top centers that we highlighted during my presentations. So they'll be, trained, more deeply in GVHD and in, and how Jakafi works, to, to help patients with the chronic and acute GvHD.
So, so that anyway, that's how we're handling so that are assigned to these particular centers. And just remember that more than 50% of these docs that are, transplanters we're already familiar with because they're already, treating myelofibrosis in some way. I'll turn it over to Reed. Yeah. Sure, Brent.
So I'll take your last, few questions. In terms of FGFR and, and, and patient selection, FGFR can be activated through amplification through, a point mutation or through translocation. And all three have shown to be oncogenic in patients. It turns out that in cholangiocarcinoma and bladder cancer, the two areas that we're focusing on, FGFR is activated through mutations and translocation. And we can identify those through sequencing.
And so we're using Foundation Medicine as our, platform for identifying those events And so it's just through deep sequencing. You either have it or you don't. If you have the mutation or translocation, it activates the the gene, then you're enrolled in the the trial. So that would be akin to any ALK or BRAF inhibitor development, then you would expect to see that in the label, of course. In terms of the IP, as you know, the the late 2027 is is the earliest expiration for competition to matter, for the ruxolitinib patent, the cream could go, several years beyond that, perhaps to the early thirties, 2031.
And then anything else on on combinations, whether they be with Delta or other agents and whether they're discrete agents or fixed dose combinations would all be predicated on what that IP is say, how that IPFA evolves, but would be anticipated to have the potential to go well beyond that.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Irvin for any further or closing comments.
Thank you. Thank you all for your time today and for your questions. So we look forward to seeing some of you as upcoming investor and medical conferences. It's from now. We thank you again for your participation with the call today.
Thank you, and goodbye.
Thank you. That does conclude today's teleconference. You may connect your line
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a wonderful day. We thank you for your participation today.