Good morning. Thank you, everyone, for joining us. We are starting our Goldman Sachs Healthcare Conference today and kicking it off with, with Incyte. And with us, we have Christiana Stamoulis, CFO, and Pablo Cagnoni, President, Head of R&D. To start here, maybe a high-level overview. You know, investors have been focused on the outlook for the business in the context of Jakafi's upcoming LOEs. And then given where you stand today with Opzelura launched in two indications and a broad but generally earlier stage pipeline, walk us through your forward strategy for the company and, and confidence in managing through these LOEs.
Great. So I'll kick it off, and Pablo can add. But if you look at what we have been doing over the last five years, we have been focusing on diversifying the revenue stream, bringing in and expanding the commercial portfolio, bringing in additional assets through our internal activities as well as certain external activities, and also evolving the pipeline so that we are in a position come 2029 when there would be generic competition for Jakafi to have a number of programs that could add to the revenue and continue to drive the revenue growth of the company. So if you think back five years ago, on the commercial side, we had one product in the U.S., Jakafi, and one smaller product, Iclusig in Europe. And then a pipeline that had a number of different programs that we were looking to move forward.
Fast forward to today, we have six commercial-stage products in the U.S., and a number of them also commercialized in Europe. We have expanded our commercial focus beyond oncology to autoimmune inflammation with the introduction of Opzelura that is targeting dermatological indications. We have been evolving the pipeline. So now we have a number of programs in development in three key areas: oncology, MPNs, and autoimmune. The portfolio includes not just early-stage programs, but late-stage, mid-stage, and early-stage programs that could have a significant impact on our revenue. A number of them launching around the time of the patent expiry of Jakafi. So looking at those programs to add to the revenue gap left by Jakafi and continue to drive the growth of the company. So we feel that we are in a good place.
We expect, or we see the potential for, the over 10 potential approvals by 2030. And these are all programs that could have a significant impact to the revenue.
Great. So maybe starting here with Jakafi, 1Q sales, was impacted by a combination of seasonal net pricing dynamics and a channel inventory drawdown. However, you reiterated the ability to hit fiscal year 2024 guidance, which represents about 5% year-over-year growth at the midpoint. Can you speak to your ability to make this guidance and the underlying dynamics that we should think about as you look to the remainder of 2024?
So the dynamics that we saw in Q1 were all anticipated, and we had commented on those during the fourth quarter year-end call. So the higher gross-to-net that we see at the beginning of the year was anticipated very much in line with what we saw in the prior years, due to the reset of the deductibles and our contribution to the donut hole, very much in line with other years. And the drawdown in the inventory was again anticipated because of the built-in inventory that we had seen at the end of 2023 in anticipation of patients that have moved to free drug at the end of the year, moving back into paid demand at the beginning of the year. And that's exactly what happened. And those were the dynamics that we see in Q1.
So there was nothing that wasn't anticipated that would impact our view on the guidance. That's why we reiterated the guidance for the year. When you look at the guidance, it midpoint is at around 5% growth. In terms of the growth drivers, this is purely demand growth that we expect to drive the Jakafi revenue. We have given a guidance range of $2.69 billion-$2.75 billion that puts Jakafi very much in line with the long-term peak sales guidance of $3 billion plus by the time of by 2028. So very much on track to achieve that. In terms of the drivers of the demand, we see PV and GVHD to be the drivers, with PV being the biggest driver of growth and MF continuing to have a stable demand.
For PV, in addition to the room to continue to penetrate the PV market that we always have been looking at, we believe that the IRA changes would have a positive impact, because they would enable patients to get better access to oncology drugs in particular. So, in the two changes that will play a role here is what happens to the out-of-pocket of those patients in 2024 and then even more so in 2025. So in 2024, the patients no longer contribute to the catastrophic, so they would be able to have a cap of a little bit over $3,000 for the year. And so we believe that that would enable, especially in the second half of the year, patients to have better access to therapies after they have gone through the $3,000 plus out-of-pocket at the beginning of the year.
When you think about the impact that out-of-pocket has had in terms of access, it has been much bigger on patients in PV because these are the patients that can decide not to get on therapy, delay therapy, delay treatment, so that they don't have to pay the deductible. So we believe that with a better, with a lower copay, they would be able, or out-of-pocket, they would be able to get on treatment. And then in 2025, the out-of-pocket will not only go that further down to $2,000 and cap there, but will be spread through the course of the year. So patients will have to pay less than $200 out-of-pocket to get their therapy. And that would help them even more to get access to a therapy like Jakafi, which should drive further PV growth.
In this case, you're accounting for impact from Part D redesign and how you qualify for a small biotech phase-in. Is that how you're thinking?
Exactly.
Let's move over to Jakafi lifecycle. There's a few assets that are in development here. Can you just walk us through where the various assets stand and your relative confidence in them at this point?
Certainly. So for Jakafi, the plan is, and we've highlighted this a number of times, is pretty straightforward. The current proposition of Jakafi, as you know, is established standard of care for patients with MF and PV with improvement in survival and improvement in thrombosis-free survival in PV. It's been supported by a vast amount of data. So the three steps we're taking going forward is number one, we think there is still room to continue to improve what Jakafi does in combinations. The two main things that we're trying to improve is, sometimes some of the patients on Jakafi have reductions in hemoglobin to prevent that anemia. We're combining Jakafi with an ALK2 inhibitor. That data has been presented a couple of times already. We expect to have what we would define as proof of concept data later this year.
What that would mean is additional data in patient treatment-naive patients in combination with Jakafi and our ALK2 inhibitor at the right dose, which we expect will be approximately 600 milligrams. Then to conclude, hopefully, that there is an effect in prevention that preventing the anemia due to Jakafi so we can move forward with the next set of studies. The other side of the combination therapy is in combination with our BET inhibitor. Obviously, as good as Jakafi is, there's still room for improvement in terms of spleen reduction symptom improvement. I think everyone is aware of the palliative data and the stage of development of that molecule. We think we have a terrific BET inhibitor. We provided an incremental update at ASCO just recently. And what we've committed to is later this year to initiate a phase III study in combination with our BET inhibitor.
We believe the symptom data looks terrific, for those of you that had the opportunity to go by the poster at ASCO. The spleen reduction continues to look to be incremental to what Jakafi does. So we think there's a path there. We will define after interactions with FDA what the best path forward is. The options are obviously in combination with Jakafi in first line or in suboptimal boundaries to Jakafi. As part of the Jakafi strategy as well, we are developing a once-a-day formulation of Jakafi. Our commitment was to complete the bioavailability study with a new pill and then follow that with a bioequivalence study inside of two years. We are on track to do that at some point in the not-too-distant future. We may provide an update, but that continues to be on track. So that's a near-medium term.
Continue to improve on what Jakafi does by combining with other medicines and by developing a simpler formulation for patients. The other part of the strategy is obviously to transform how MPNs are treated. And for that, as you well know, we introduced in the clinic two really important programs. One is a mutant CALR antibody. It's a very common mutation in patients, as you know, with MF and ET. That program has now been in the clinic, is going very well. We're escalating the dose to try to define the recommended phase II dose for mutant CALR antibody. And our V617F inhibitor, it's also in the clinic. We started with healthy volunteers to define the right formulation. We'll rapidly move into MF patients. That's the most prevalent mutation in MF and obviously in PV patients.
So that's what we believe is a very robust lifecycle to first continue to incrementally improve on Jakafi and then completely shift the goal of therapy in patients with MPNs to really eradicate malignant clones and hopefully change the natural history.
Moving to Opzelura, sales are now annualizing at about $350 million in atopic dermatitis and vitiligo. At a high level, how are you thinking about longer-term strategy and growth outlook for this drug?
So first of all, we continue to see growth in the uptake of Opzelura both in AD and vitiligo. I believe the rate that you're using to come to the annualize is the Q1 results. And Q1, a couple of things. First of all, we saw year-over-year growth of over 50% total, and then in the U.S. over 40%. So it continues with robust growth across AD and vitiligo. However, the results were impacted by both the typical, again, seasonality that we see and the Q1 dynamics that we see every year. And also by Change Healthcare that we discussed, the cyber attack that had an impact of around $5 million in net sales.
This is something that already when we had the call for Q1, we indicated that we saw being able to that we were returning back to the normal course of growth and scripts getting through. We continue to believe that we can get to the $1.5 billion in peak sales for AD that we have indicated as potential. So we hadn't been given guidance yet for vitiligo in terms of long-term guidance or near term, but we see this as another significant opportunity. In AD, there are a few things happening. First of all, one of the areas that we are trying to continue to improve and enhance is access. And there are a number of different activities there to improve access in the U.S. The second is we will be filing for approval for pediatric.
That would be this year and then, hopefully approval next year, which would add another contributor to the AD indication. And so these are expected to help continue to drive the growth in AD. In terms of vitiligo, there are a couple of things happening. First of all, we are continuing to see growth. We are very early into the launch in a new area where there is not an established market. So there are a lot of activities that we are pursuing to activate patients to get them in to see their dermatologist, to see whether Opzelura is the right treatment for them. And then there are a lot of initiatives, teams around improving adherence, which has been an early issue with the use of Opzelura.
We see patients not appropriately using the cream, not sticking to the therapy for the period of time that they need, experimenting. So all are things that don't allow us to see the real picture of the use of Opzelura for vitiligo, and we are working to improve that. And this would be a significant driver of growth for vitiligo. The second is the ex-U.S. launch. And we are already seeing nice contribution from Germany and France in Q1, at around $6 million came from ex-U.S. And in the second half of the year, we are also going to see contribution from Italy and Spain as well, way ahead of when we were expecting those countries to start contributing. So things are going well.
Again, early in the launch, and we see a lot of drivers that should continue to drive Opzelura in those two indications. And then obviously we are developing it for additional indications as well.
Just to follow up on that, you provided about $1 billion in peak U.S. sales for, in terms of guidance for atopic dermatitis. Any thoughts about vitiligo and where that might end up and then maybe when the next indication comes?
So, as I was saying, vitiligo is very different because it's not an established market. There are no proxies to be able to look at. There is only 10% of the patient population that in the past has been seeking treatment for vitiligo. So here is a market that we need to create, like we did with MPNs actually, and Jakafi at the beginning when it first launched. And it was very hard to give a good sense of what the opportunity could look like. Actually at that time, the expectations for Jakafi were $350 million in peak sales. And now we are looking at $3 billion.
So rather than going out with a number at the beginning without having, before we have a better sense of the factors that would impact the size of the opportunity and how they play out in the real world, we want to wait to see a bit more. And the two key factors is, on the demand side, how quickly patients will be able to get on therapy and not just patients that have been actively seeking treatment in the past, but the inactive population. How, what percent of that inactive population will get activated and how quickly could they get into the system? Because that has been also an issue. It's very hard to go and get in a dermatologist appointment. It can take six months. So that also delays the uptake. And the second is utilization in the real world.
We had commented in the past how based on the clinical experience and adjusted for real-world compliance, we were expecting that patients will be using on average 10 tubes a year for vitiligo. And again, because of the dynamics that I was saying before, them experimenting or not adhering to the proper use of the cream or to the duration of therapy, we are not yet there. So we have a number of initiatives to help them appropriately use the cream and stick with to therapy. And we want to see once they start doing that, what would be the utilization in terms of the tubes a year. And that would enable us to have a much better sense of how it plays out in the real world and give guidance that makes sense.
For benefit and payer and coverage dynamics and how that's impacting uptake as well as competitive dynamics with recent market entrance?
So in terms of the payer dynamics, we very quickly moved to get broad coverage. So we are at around 85% covered lives for commercial and it never gets to 100%. So basically we are there. We put the three contracts with the large, just, three PBMs in place very quickly. There are other companies and established players that are talking about a couple of years before they start seeing net sales. We did that in less than a year. And now we are in the process of enhancing the placement of Opzelura within the formularies like we did with CVS Aetna. And we believe that that will help even further. So these are the type of initiatives on the payer side that we believe will help.
You had a second?
Competition. Competition. In terms of the competition, vitiligo, obviously there are no competitors. It's the only and first approved therapy for repigmentation. In terms of AD, the biggest differentiation of Opzelura is the speed of its reduction. There are no other therapies that have, have that effect. And this is very important because that's one of the biggest issues for patients with atopic dermatitis. And so we believe that differentiation would continue to make the Opzelura very competitive.
Before we jump further into the pipeline here, could we talk about your BD strategy and stock buyback strategy as well? So post the recent acquisition that you did of Escient, you initiated a $2 billion stock buyback program. Could you speak to the thought process behind this, how you're thinking about further BD, and where you'd be most focused on that front?
Yeah. So, first of all, we do not rely on BD to continue to grow the company. We have a great internal engine and that growth engine is the primary source of new products coming into our pipeline. But we're looking at BD to supplement the internal activities and transactions like Escient where we feel we can really add growth and there is an opportunity to create add value and there is opportunity to create much more value out of the acquisition are the type of BD activities that we like. We have commented in the past how we don't like paying for an asset full value without leaving any room for value creation for the company and the shareholders. So that will continue to be our BD strategy.
We continue post the Escient acquisition and the Escient purchase to have the ability to do additional BD. We continue to have a healthy cash balance. We generate cash flow. We don't have any debt and that allows us to have additional access to capital if we choose to do so. We are looking for assets that are in the areas where we have capabilities, where we have expertise, where we have infrastructure that we can leverage. So that's oncology and autoimmune inflammation, derm and beyond derm.
on, in terms of the pipeline here with your oral JAK1, povorcitinib, we've seen early datasets and multiple indications. Could you just provide some clarity on the development and commercial strategy for this asset?
Certainly. Let's start with the development strategy. So povorcitinib is, as you mentioned, a JAK1 inhibitor, highly selective, potent with a very large volume distribution. And we think that some of the unique differences in our ability to push the dose are going to be very important differentiators as the clinical data starts to emerge. And of course we have proof of concept in a couple of indications already that we presented most recently at the AAD meeting, the prurigo nodularis data. So the plan now is to have three pivotal readouts in the next three years, 2025, 2026, 2027. Those are going to be hidradenitis suppurativa, patients with moderate to severe HS, vitiligo. We think there's the ability of Pova to produce repigmentation in much larger areas of the body as opposed to, in complement to Opzelura.
And then of course the prurigo nodularis data, which is also a readout in 2027. We expect based on the data we have that those three readouts will be followed by three filings and approvals in those three indications. And I would argue today when you look at the HS and PN data, that is best in class, arguably best in disease. And if you go from prurigo nodularis back, what Christiana mentioned about Opzelura and the ability to improve the itch in patients with AD so rapidly, the same thing we're hearing from KOLs in patients with prurigo nodularis is the ability to Pova to really very quickly improve the itching, which is the main problem for patients with PN, which obviously leads to scratching and scarring and the nodules under the skin, which are the big problem. So we think that data looks terrific.
We're going, we're moving quickly in that direction. And then the HS data, when you look at the totality of the data, I would focus on two key elements of it. One is the HiSCR 100, which most, most of our competitors don't even show. We've seen a percentage of patients with complete resolution of lesions, which we think it's a critical difference. And the other one is a very rapid improvement, in pain that we also see in patients with HS. So in addition to those three pivotal indications that are coming in 2025, 2026, and 2027, we have two randomized phase II studies where our proof of concept, one in patients with asthma, which we think it's a potentially very interesting opportunity for a JAK1 inhibitor.
The other one is chronic spontaneous urticaria, which is obviously another unmet need, which we are also going to address with our MRGPRX2 inhibitor, EP262, which came from the Escient acquisition.
And with regard to the Escient acquisition here, that gives you access to two potentially first-in-class drugs to treat mast cell mediated diseases, including atopic dermatitis. Just walk us through how this fits into your portfolio and just your, you know, how de-risked these assets might be at this time point?
So, from the Escient acquisition, there are two programs, MRGPRX2 inhibitor, EP262, and MRGPRX4 inhibitor, EP547. So MRGPRX2, which is a, we believe a really interesting target, is expressed in mast cells specifically in connective tissues. And we think that that will lead to a very, very safe way to block mast cell activations as a result of certain ligands. Okay. The first indications, which are already ongoing, our colleagues at Escient started are randomized phase II study in patients with chronic spontaneous urticaria. We think there's an unaddressed need there by antihistamines. About 50% of patients don't respond to antihistamines. They need better therapies. We're very happy with the safety data we've seen and we think there's a path there. We'll have randomized phase II data by early 2025. Chronic inducible urticaria, both due to friction and temperature. There's an open label study ongoing.
We'll have that final readout also in early 2025. And again, we think that the data so far look very, very, very exciting. And, you know, we look forward to have the full readout in 2025. And there is a randomized phase II study in atopic dermatitis. While atopic derm is considered more of a T cell disease, we think there's a very important component there of the mast cell to produce some of the symptoms. And we believe that potentially maybe even a combination EP262 with povorcitinib, Opzelura could be really interesting in patients, in patients with AD. There are other indications that we will disclose in due course.
When you start thinking about the biology of CDK2 in other parts of the body, even if you look at the literature, there's a couple of indications that are rather not discussed today, but they're really interesting and very large indications. The safety profile of EP262 could be really interesting in that context. MRGPRX4, the main indication, which is already ongoing, is in patients with cholestatic pruritus, a very common complication in patients with primary sclerosing cholangitis, primary biliary cholangitis that they have intractable itching. Sometimes even these patients end up having liver transplants. As you know, we think there's a path there for MRGPRX4. There's a randomized double-blind study ongoing. We'll have the readout in early 2025. So as you can see, these two programs fit very well with our existing capabilities on the development side.
We think eventually they will fit well in our commercial strategy around dermatology and inflammation.
On the oncology portfolio, you do have a couple of assets that you're working on here. Perhaps give us, in particular, on the CDK2, when and where will we see that clinical data that you're looking at?
Continue to shift more towards treatment effects and where we believe we can have potentially best-in-class programs. The key programs to highlight today, one is CDK2, and I'll tell you more in a second. The other one is our KRAS G12D, which entered the clinic very recently. And we're really excited about the preclinical data and the clinical data that we're seeing. And we also have, I think, a really important program in our TGF-β/PD-1 bispecific antibody, which we will talk about in the future. So for CDK2, what we promised, so first of all, that program has been in the clinic for quite some time. We are in the final stages of refining the dose. We've treated quite a large number of patients at different doses and with different schedules.
We're starting combination therapies very soon in order to define the development strategy. We decided initially to emphasize ovarian cancer, not to the detriment of breast cancer. We've been exploring breast cancer as well, but we believe the competition from, some of our, some of the companies that have other programs in breast cancer as well makes ovarian cancer a little bit easier for us to address rapidly as an initial indication. So what we've guided to is later this year, and we haven't decided the exact timing, but later this year is we will present a comprehensive dataset. It will be a pretty robust dataset of patients with CDK2, different doses, and, what we believe will be the recommended phase II dose. We've seen clear evidence of efficacy in ovarian cancer with clear responses in this setting, not only PRs, but stable disease matter as well.
We've seen very large number of responses in patients with ovarian cancer. We'll present a comprehensive update later this year together with where we're going in terms of further development of our CDK2 inhibitor.
From the audience? I might just jump over to, actually one question on the CDK2 program. We've seen combinatorial approaches starting to play out like CDK2, CDK4. How are you thinking about that?
So as you point out, CDK2, CCNE1 amplification is one of the mechanisms of resistance to CDK4/6, which obviously are mainstream therapy in patients with hormone receptor positive, HER2 negative breast cancer. We're trying to understand what's the best way to combine single agent activity with our CDK2 inhibitor there. That's an area where other companies have made more inroads. We haven't yet decided the strategy there, to be honest with you. What I can tell you is we have single agent activity in breast cancer. We think there's a path there. We're going to push hard in cancer because we have very clear evidence of efficacy. And we can jump ahead of our combination in ovarian cancer faster.
On the questions, why do you think it's best in class? And secondly, how do you think of the commercial market in the context of how the G12Cs have been performing?
So the G12D, you know, when you look at, let's take a step back. If you look at the G12C data, right, and you look at the sequence of programs that have been introduced commercially over the past five years, it seems very clear that potency, which is tied to selectivity, if you're not selective enough, you can't push the dose enough, coverage of the IC90 and maybe even IC95 for as long as possible seems to matter in the clinic. If you compare the data from, let's say, the Mirati, former Mirati program, there's a clear improvement in efficacy as you come up with more potent, more selective molecules that allow you to cover the IC90 or the IC95 for extended periods of time. We believe our KRAS G12D has the potential to do that. Very potent, very selective, highly bioavailable.
We think we can get coverage that will make a difference in the clinic. We're fully aware of our competitors. There's a lot of activity in this space. Now, 40% of pancreatic cancer, a totally unaddressed need for patients, 15% of colorectal disease, a large patient population. We think this is going to be a combination play. We are moving as quickly as we can to define the dose and start combinations in the very near future. It's going to be competitive, to be frank, but we think we have a terrific molecule and we are going to push as fast as we can.
Well, with that, thank you so much, Christiana and Pablo. Really enjoyed the discussion.
Good to be here. Thank you.