Okay, great! Let's go ahead and get started. Welcome, everyone. Thanks for joining. This is the Fireside Chat with Incyte. My name is Vikram Purohit. I'm one of the biotech analysts with the Morgan Stanley research team. Before we get into the discussion, let me read a brief disclosure. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, happy to have with me on the stage, Christiana Stamoulis, CFO, and Pablo Cagnoni, Head of R&D from Incyte. Thank you for joining us. Really appreciate it.
Thank you for having us.
A lot to talk about, a lot to unpack for Jakafi and your pipeline, but before we go there, maybe we could just start with some opening remarks on, I guess, key areas of focus for the business from your standpoint, coming out of 2Q, heading into the end of the year, and what you think people should keep top of mind for the time being.
Okay, great, so first of all, as you know, 2024, not just Q2, 2024 has been a very busy year for Incyte, and a year where we have made significant progress, and both on the commercial side as well as on the development front. Commercial year- to- date or in the H1 of the year, we delivered almost $2 billion in revenues, representing a 9% year-over-year growth, driven by both Jakafi, where we continue to see growth in demand, especially in PV and GVHD, and Opzelura, where we continue to see growth in both AD and vitiligo. 50% year-over-year growth in Q2, so a significant progress and progress that we continue-- we expect to continue to see through the course of the year.
So that's one of the areas of focus, execution on the commercial front. We also recently announced that we received FDA approval for axatilimab in third line, chronic GVHD. This would be a new program in our commercial portfolio, and we expect to launch over the next few months. Now moving to the development front, a lot is going on there. Just recently, we shared the update on three Phase III studies, where we had positive top-line results, and these are retifanlimab in anal cancer, and also lung cancer, and tafasitamab in FL.
And we will be disclosing or sharing data from those studies in the near term, starting with ESMO, where you'll see data from the Reti study in anal cancer, and then later this year, we'll be sharing data on tafasitamab as well. In terms of the rest of the pipeline, this year, earlier this year, we added two additional programs to the IAI part of the pipeline. We now have four programs in development, Opzelura, povorcitinib, and the two programs that we acquired through Escient, which have all best-in-class and blockbuster potential.
We expect to be sharing data on a number of those programs over the next six to 12 months, with data from the Escient acquired programs in 2025 , and also starting to show pivotal trial data from povorcitinib, starting with HS, early in 2025 . And then you look at the rest of the pipeline, the oncology side of the pipeline, where in addition to the two legacy programs, tafa and reti, we have been significantly evolving the rest of the pipeline to focus our efforts on programs that we view as high potential impact programs, programs that have first or best-in-class potential and represent blockbuster opportunities, like mutant CALR, JAK2 V617F, CDK2, and others.
And over the course of the next six to 12 months, we expect to be sharing data on all of those programs, starting with CDK2, where we will be sharing data at ESMO next week. So there is a lot going on with the pipeline and a lot of additional visibility that we will be providing on each of those programs over the next six to 12 months. And as you know, we decided to really focus on aggressively pushing forward those programs and deprioritize others that didn't, you know, meet those high bars that we have set for programs in our portfolio.
Great. Great. It's a helpful overview, and a lot to talk about. Maybe we can just start with Jakafi and some of the label initiatives you have underway. So on Jakafi, you know, you've historically mentioned that the peak sales here in the U.S. could reach roughly $3 billion before LOE. Based on the growth profile you've discussed recently, do you think there could be upside to that number?
So we expect that by 2028 we would be at $3 billion+ . And when you look at the growth trajectory that we are on, the guidance that we have provided for this year, they all are consistent and towards that $3 billion+ type of peak sales potential. We're seeing growth, as I mentioned, be driven primarily by PV and GVHD, and stable demand in MF. And we expect this growth to continue, and especially PV growth, where starting in 2025, given the IRA changes to the copay for patients, we expect that that would have a positive impact on PV, given that it there would be improved access for patients with PV.
Understood. And in MF, there's been, call it over the past year, a good amount of focus on the impact or potential impact competition could have for Jakafi. Are you seeing any impact, either from a new patient start perspective or from a duration perspective from the entrant of GSK's momelotinib into MF?
We haven't seen any impact on either. You saw the results that we shared since the introduction of Ojjaara; there is no impact on demand. If anything, in Q2, we saw a 2% increase in demand. The demand has been stable or a slight increase since the introduction of Ojjaara. In terms of the duration of on therapy, we haven't seen any impact either. Jakafi is a well-established therapy for MF. The benefit is well understood, well established. It's the only drug where you have five-year survival data on patients regardless of anemia. It's well established. It's hard to move a therapy like Jakafi.
Understood. And to help with Jakafi lifecycle management, I know you've discussed previously a couple of different efforts, two of which I believe you've guided the data on by year-end are the BET inhibitor and the ALK2 inhibitor. Just update us on where those efforts stand and what people can expect to learn by year-end.
Yeah, so the three pillars of Jakafi, I think, just to broaden-
Sure
The answer a little bit is, you know, one is obviously to continue to make Jakafi available to as many patients as possible and, and obviously expand the opportunity for patients with PV. The second bucket is, how can we optimize outcomes in patients that are candidates for Jakafi today? There's three ways to do that. One is we're doing a once-a-day formulation, you know, the XR formulation. We're gonna run a BE study. We'll have the results next year. If that study demonstrates bioequivalence, then there will be a filing, and, and we should have an approval well before the 2028 patent expiry. The second part of that is improving outcomes by combining with two different medicines, as you point out, a BET inhibitor and an ALK2 inhibitor.
The ALK2 inhibitor, what we've said, and we remain convinced, we will have enough data this half to really make a decision what the next steps are for that development. I think it's fair to say that so far the data has not conclusively demonstrated that we can impact what we wanted to do, which was the anemia induced by Jakafi in some of the patients. Now, most patients with MF have anemia at entry. Those patients have been demonstrated to be candidates for Jakafi. Their survival improvement in patients with anemia. So we're aligned on this question about anemic patients on Jakafi. If you look, given the COMFORT data, the median hemoglobin was clearly in the anemic range, and those patients derive benefit from Jakafi. But we're trying to make that even better with an ALK2 inhibitor.
We'll confirm whether that data supports further development or not. With a BET inhibitor, we've shown data, and we'll continue to update you, showing what I believe is pretty clear, which is there's a clear impact on symptoms with our BET inhibitor as a single agent, and there's a clear impact on spleen reduction with our BET inhibitor. What we need is more data in combination with Jakafi. We think we'll have that this year, and then we'll announce what the plans are for potential pivotal trials with our BET inhibitor, whether in combination or second-line or single agent. Going back to your question, and just to simplify it, we will have, we believe, data in the relatively near term to tell you what the next steps are for those two programs.
Got it. For the ALK2 inhibitor, for that combination, is there a threshold you're guiding to in terms of either hemoglobin change or transfusion independence rates, for kind of gauging success for that readout?
Yeah.
Another way to ask the question is also, is that readout going to be accompanied with the actual go, no-go decision?
That's a bit strong right now. I mean, that program needs more data. I mean, the most recent update we've shown, we didn't have nearly enough patients in what I consider the critical group there with the trial called treatment Group C, which is newly diagnosed patients, in combination with Jakafi at the right dose, which we think is at least 600 mg, maybe higher. That's the dose that we've shown can suppress hepcidin, and we believe it's gonna make a difference. If that will work, that's the dose that will make a difference for these patients. I think the possibility of converting transfusion-dependent patients seems that's going to be unlikely to happen, and that's based on data we've shown, and I think I've made that statement before.
Our focus now is to see if we can combine with Jakafi and prevent the hemoglobin drop on Jakafi. If we can keep the dose intensity of Jakafi more consistent over time by combining with ALK2 inhibitor, good things will happen because we know that those patients will have better outcomes, so that's the goal of the program today. I do think we'll have more data this quarter, this half, and that will help us make a decision. Whether it's a go, no-go this half, I'm not quite ready to commit to that.
Understood. Okay. So assuming that, one or both of these therapies is successful, you want to progress it with Jakafi. What are the commercial approaches that you have in mind to make sure that, Jakafi is used, branded Jakafi is used--
Yeah.
-with the ALK2 and the BET inhibitor, and that you don't have a generic Jakafi being used as one of these medicines?
Yeah. So one of the key aspects for us there is, this is why, one of the reasons why we're developing a once-a-day formulation. And one of the advantages we have with our BET inhibitor is so the dose is much lower than for other competitors, and we believe it's possible to develop a fixed dose combination with those agents, or at a minimum, a co-packaging of those agents, where they're, you know, commercialized as a bundle. So, you know, that's the way we see this evolving going forward. Now, we're several steps between now and then, but that's basically the plan. Essentially, the third pillar of the Jakafi or MPN strategy is obviously our mutant CALR and V617F inhibitors, which entered the clinic recently. We will have data for both next year.
A mutant CALR antibody has been in patients now since the end of last year. The V617F inhibitor entered the clinic early, first in healthy volunteers, early this year. First in healthy volunteers, we're now moving to patients. You know, I think those two programs are really important for patients and for the MPN franchise because we really are trying to change the goal of therapy in MPNs, from simply improving on symptoms and spleen, which is really important for patients, to really trying to see if we can remove, eliminate the malignant clone in patients with different MPNs, improving patient outcomes, and also dramatically expand the addressable population that we would have.
Understood. Understanding it's early, but what could strong POC look like for both programs once we have data next year? What would be satisfying for you to see?
Look, you need to see some impact on traditional endpoints, blood count, spleen, etc . I mean, that some impact on that, obviously, is part of the story here. But the second question is, do we see evidence, even early evidence, that we are decreasing the allele burden in these patients? We know that occasionally, patients on Jakafi, after a long period of time, have a small decrease in allele, but it's rare, it's slow, and you know, it's not, it's certainly nowhere near complete. What we expect to see with these programs is a more clear evidence of allele burden reduction.
Understood.
In addition to the traditional, MPN endpoints.
Got it. Got it. Okay. And remind us, from an addressable patient standpoint, what success with one or both of these could do to how broad your reach is?
Right. So if you take MPNs, myelofibrosis, polycythemia vera, which are both now, Jakafi has proven both, plus, ET, essential thrombocythemia, almost all patients with those three diseases have one of the two mutations, either mutant CALR mutation or V617F mutation. They, they don't overlap, but almost all the patients, 90+% , have one of the two. So basically, the population goes up to a couple hundred thousand patients a year. PV, particularly, almost all patients with PV are V617F positive . So this is a dramatic shift from where we are today, which is MF, and PV, ET is out of the market. It really broadens the population quite dramatically.
Understood. Understood. And could you remind us roughly how far does IP stretch for both of these efforts? Is it pretty long dated?
Disclose IP. These are recent programs. We are really long on intellectual property. There's absolutely no concerns.
Got it.
They just entered the clinic. They were both discovered in-house, so there are no encumbrances. There's very clean path.
Got it. Okay.
Yeah.
That's helpful. Maybe it's a good point now to pivot to INI. Let's start with Opzelura. So how are you seeing sales split between AD and vitiligo, and where are you seeing more of the recent growth that you've talked about come from across the two indications?
The split, as of Q2, was 60/40, 60 AD, 40 vitiligo, with growth coming from both indications. We've seen growth both in total scripts as well as new patient growth. So, you continue to show significant growth and growth in refills, significant growth in refills. So going forward, we continue to expect to see growth in new patients coming into both AD and vitiligo, as well as growth in refills. Where, in the case of AD, we are probably steady state in terms of the number of tubes on average that the patient uses, which is a little bit over two a year, in line with the two to three tubes per year that we were expecting.
Closer to the lower end of that range, basically because of how efficacious the cream has proven to be, and the fact that patients only need to use it on an as-needed basis. The impact has been very rapid, and then the flares don't come up back for a period of time. In the case of vitiligo, we're still very early in terms of the utilization, and there are a number of programs that we are pursuing to address the current utilization.
There is not the level of adherence that we would like to see, and we're working on a number of programs, and especially physician and patient education, in order to ensure that they understand how the cream should be used. It should be used twice a day. It should be used for a period of time before they are able to see repigmentation, and the importance of sticking, of adhering, with the proper usage, and we expect that those efforts would lead to better adherence and would lead to a higher number of tubes, which would then have an impact on the refill rate.
Understood. And from your clinical experience, patients were using roughly ten tubes per year?
It was higher.
Yeah.
And we had said when we launched, we had said that we expect that in vitiligo, the utilization would be much higher than in AD because it's continuing use and it's twice a day, and we had adjusted the clinical experience-
Right
... for real-world type of compliance, and we had assumed that around ten tubes a year. We need to see how it will play out in the real world. We don't have that information yet because, again, we're still at the place where adherence is not yet where it should be.
Understood. I know in addition to adherence, one thing you've spoken about for the vitiligo story is patient activation. Just getting patients that previously didn't actively seek treatments because they didn't really have anything to seek, getting them back into the treatment funnel, getting them back in front of doctors, so that they can be exposed to or become aware of Opzelura. How is that effort going? What are you doing to kind of help activate the patient base there, and how do you track success with that metric to see if there's new patients coming in that weren't coming in previously?
Yes. So I think it's fair to say that right now, most of the patients we're getting are the patients that have been actively seeking treatment, patients that have been in the dermatologist's office. So it's easier for them to get an appointment and to get on therapy. But we are working on, to your point, activating the 90% of the patient population that has not been actively seeking treatment in the past. And there are a number of efforts that are looking to do that. DTC is one of them, and we are seeing good response to our ads. They are memorable. Patients are going into dermatologist's office and asking for Opzelura, and the majority of patients that ask for Opzelura qualify for to be put on Opzelura. So that has a good impact.
Physician education is very important, and again, we're doing a number of initiatives there, not just focusing on adherence, but getting them educated around the therapy and the benefit that it could have on patients in order to make sure that, when their patients reach out or they can reach out to their patients and inform them of the new therapy that is now available for vitiligo and repigmentation. And we're also working with advocacy groups. That is also a very important part of the efforts to activate those inactive patients. It would take some time, and also it takes time to get them into the dermatologist's office.
Right.
Yeah, to get an appointment takes six months or more.
Right.
This is a funnel that we expect to be fueling growth over the mid and longer term.
Understood. And you're also developing povorcitinib for vitiligo. So a couple of questions there from my side. First, where do you see the oral versus the topical kind of settling out in the market? And then second, do you think this patient activation dynamic, do you think this poses any sort of risk to the commercial opportunity for an oral therapy in vitiligo?
Do you want to start?
Certainly. So there's, look, there's a couple of things. I-- First of all, with Opzelura, as Christiana described, one of the things we're working on is patient adherence. You know, it's not very cumbersome, but I understand some patients have a hard time with twice a day continuously, and it takes months, right, for repigmentation to occur. So maybe those patients will elect to take a pill every day, and that would be simpler.
And in the case of povorcitinib, assuming that data are positive and we get the drug approved, there's a little bit of overlap in the potential indications, patients between 5% and 10%. Obviously, with more than 10%, those are gonna be povorcitinib patients, less than 5%, they're gonna be Opzelura patients. I think for that middle band is going to be patient preference, to be honest with you. For the others, obviously, the labels are different depending on the extent of the affected area.
Understood. Okay, great. Maybe let's pivot then to the assets you acquired through the Escient transaction. I'd just love to get your sense of the rationale for that transaction, what you saw that gave you confidence in these assets-
Yeah
... and looking towards initial POC datasets, what you would guide people to look for when those data readouts are available?
Certainly. So look, we obviously have what we believe is a growing and very interesting IAI franchise with the strong focus on dermatology right now, but broadening into other areas. Povorcitinib is in two randomized proof of concept trials in asthma and chronic spontaneous urticaria that are gonna read out, the H2 of next year. So in that context, we had been doing internal work on MRGPRX2 as a target. We had done internal biology work to understand the target. So when we looked at the landscape, we saw that Escient had, what looked at the time and we confirmed, is the first-in-class MRGPRX2 inhibitor. We are aware of the competition, but we are ahead. By any measure, we are already in randomized Phase II studies in some indications.
In addition, we thought the MRGPRX4 biology was very intriguing, and I'll talk about that, those two in a minute, separately. MRGPRX2 is a target expressed on mast cells. There's multiple ligands, including substance P and others, that have a very important role in activation of mast cells. But the interesting thing is, specifically in mast cells, in the skin and connective tissues. So not only is cell-restricted, but it's tissue-restricted, which we think makes it ideal for a range of indications here. There are three ongoing studies with MRGPRX2. The name is EP262, is a molecule number, and they will all three give us data in the first quarter of 2025. There's a chronic spontaneous urticaria study going on. It's a double-blind randomized study, that will show up with two different dose levels.
There is a chronic inducible urticaria study in patients with both dermographism and cold-induced urticaria. That's an open-label study. And there's an atopic dermatitis study going on, again, randomized, double-blind. So obviously, the double-blind trials, the data are not available. Based on the biology and the validation that was done first by the Escient Group and then by us, we obviously are confident in those studies.
And then on MRGPRX4, which is a receptor that is stimulated by bile acids and bile salts, that we believe could play a very important role in patients with different type of cholestasis. It's been tested in, again, a randomized, double-blind study in patients with primary sclerosing cholangitis and primary biliary cholangitis. We will have results for that as well in the first quarter. So relatively near term, about six, seven months away or so, maybe less, we'll have proof of concept on four different indications with those programs.
Understood. That's helpful. I guess on IAI broadly, I mean, given what you have going on right now with, indication expansion for Opzelura, development for povorcitinib, the skin assets, do you feel like the IAI franchise is now more of, in more of an execution mode? Or do you think there's still more kind of earlier-stage programs that could be coming through, into the pipeline over the next year?
No, great question. Look, we are committed to IAI. I think people sometimes question that earlier in the year, you know, we had Opzelura and povo, and a lot more with the Escient acquisition, which we believe emphasizes our commitment to it, and we do have discovery programs in inflammation and autoimmunity. We don't disclose programs pre-IND, but we are doing additional work in this space. So we are committed to IAI as a really important pillar of our long-term strategy, and we'll continue to advance medicines in the clinic in this space.
Got it. Got it. Okay. I wanted to pivot now to a near-term data readout you had that you mentioned with your most recent earnings update, the CDK2 inhibitor. You have a data update at ESMO coming up. The first question there, how has this molecule been designed to be differentiated versus other CDK2 agents in the space?
Yeah, I think the key for a good CDK2 inhibitor is, you know, you always want a potent drug and a drug that has good pharmacology, absorption, good pharmaceutical properties. So that's obviously a given. But the key for a good CDK2 inhibitor is selectivity versus CDK1, right? That CDK1, in this case, gives you toxicity. You want to be as selective as possible. And when you look side by side, at least based on publicly available data, I think our team did a really, really good job designing a very selective CDK2 inhibitor. Then you want relatively, you know, the variability from patient to patient and intrapatient to be relatively small, because otherwise you will hit occasional CDK1. And, you know, a little bit is okay, but if you want to minimize that as much as possible.
So consistent pharmacology, potency, and selectivity. We think we achieved those with this, with this molecule, so that's why, you know, we advanced it as quickly as possible. It's been in the clinic for quite some time, but we've treated now a range of patients at different dose levels and different schedules, and we'll talk about the data literally a week from tomorrow at ESMO. So we're excited about the investor event that we will have next Saturday night, where we'll show the data.
Just to remind everyone, the update will be focused on ovarian cancer and one more tumor type, which is now breast cancer, which we haven't talked about. We'll talk about it next Saturday. But initially, we're not going to talk about breast cancer. We have treated patients with breast cancer. We consider that, for us, a secondary priority based on the competitive landscape, in the breast cancer space vis-à-vis the Pfizer program.
Great. Great, understood. In the couple of minutes we have left, maybe we can talk more broadly about the business. I think one common investor question is, what can... Which programs within Incyte's pipeline are most likely to help kind of offset dollar for dollar, the impact of the LOE that could occur in the late 2020s, early 2030s? From your perspective, what are the key programs that you think people should keep in mind to kind of get confidence that that's going to be a manageable impact to the business?
Look, I think I would divide it in very near term, near medium term, and longer term, right? I mean, so I don't know if everybody's following this story recently, as Christiana summarized it, we have a new label for Retifanlimab, which we think it's a meaningful opportunity, potentially a new label for tafasitamab, which we think it's a meaningful opportunity, and the launch of axatilimab, which even initially in chronic GVHD, even in a later line, is a meaningful opportunity. You combine those three and, you know, you start to get to a reasonable number there in terms of near-term revenue improvement. In the medium term, I think povorcitinib is very important for us.
Obviously, we're gonna have the first pivotal data with povorcitinib in hidradenitis suppurativa in the first quarter of 2025, and then two proof of concepts later in the year, and then data in the other indications, PN and vitiligo, later on in 2026/2027 . So povo is an important part of the near-term strategy, medium-term strategy. Longer term, that's where the really novel pipeline starts to come more into play. V617F, mutant CALR, CDK2, KRAS G12V, which we think we have a competitive program, and a TGF-beta receptor 2 by PD-1 program, which is advancing well in the clinic.
Obviously, we just talked about X2 and X4, the Escient acquisition. So the novel pipeline starts to come more into play a little bit later. I think in the near term, you have these new labels and launches, in the near medium term, povo, as well as potentially CDK2, and then the rest of the pipeline and obviously, continued execution on the Opzelura launch and the Jakafi launch are really important.
Got it. Got it. And Christiana, how important is BD at this point for kind of helping to further kind of diversify the pipeline-
Yeah
-pipeline stream?
As you heard from Pablo, we have a pretty diversified and full pipeline right now. The Escient acquisition was a great addition to the IAI pipeline. It checked all the boxes in terms of the criteria that we had set for BD programs that are best in class, could have a high impact, are in areas where we have knowledge and expertise, and we can help with the further development of those programs. And can contribute in the 2028, 2029 plus time frame, when we start having the impact of the Jakafi LOE in 2029 and beyond. And also are at evaluation where there is significant upside for us to create. So it checked all of those boxes, and it was a great addition to the portfolio.
But now we're looking at a portfolio that is pretty full, and we like how it has shaped up. We feel very good about the potential impact that it would have, and that's why we also went ahead and executed the $2 billion share repurchase that allowed us to acquire close to 15% of our shares outstanding, because we like what we have currently in the pipeline, and because we see a very big disconnect between the value we see in the company versus where we have been trading. So right now, we don't see a need to actively bring on additional assets.
At the same time, we can opportunistically bring in assets if we see something that we like and where we feel that we can create significant value. We still have a strong balance sheet. We have $1.5 billion of cash as of the end of Q2. We don't have any debt, so that gives us additional firepower to be able to, to bring in additional assets, again, if we see something that we like, and it's more opportunistic versus actively looking to add right now in the pipeline.
Understood. Great. And I think that's a great point to close out on, and we're at time. So thank you both for joining us. Really appreciate it.
Thank you.
Thank you, everyone, for listening.
Thank you.
Thank you.
Appreciate it.