Okay. Good morning, everyone. My name is Eric Schmidt. I'm one of the Cantor Healthc are analysts. I'm joined by my colleague, Imogen Mansfield, and on behalf of the Cantor Healthc are team, I wanna welcome you back to day three of our conference and our next fireside chat. We're delighted to have with us the Incyte management team. Here with us today is Hervé Hoppenot, the company's Chief Executive Officer. We also have up on stage to Hervé's right, Steven. Sorry, Hervé's left, Steven Stein, the company's Chief Medical Officer. In the front row, we have with us also Christiana Stamoulis, who's the company's Chief Financial Officer, as well as Greg Sherr, who's representing the IR team today. So the full group here. Thank you very much for coming.
We're all here. Thank you for inviting us in.
Thank you. Wonderful to have you. Hervé, a lot going on at Incyte, and, you know, I'd say in particular, it's been a very eventful last three or four months, with some major, you know, new corporate initiatives. You bought back a fair bit of stock. You made an acquisition of Escient. You're also gone through a pipeline reprioritization. So what's behind... What's the grand scheme behind these changes, and, and how does this fit with your longer-term strategy?
No, thanks for inviting us. Thanks for the question. I mean, the backbone of everything we do is building Incyte 2030, and, obviously, is the pipeline. So when you think about all of the- including the buyback of shares, including our resource allocation, everything is based on how this pipeline has been evolving, and the pipeline includes a commercial portfolio, where we have now seven sources of revenue, if you want. Two of them are obviously driving the top line. It's Jakafi and Opzelura, and we can speak about that because both of them are doing fairly well.
And then you have the near term, what we call the near-term pipeline, basically going to impact revenue starting in 2025 and 2026, so in the relatively short term, and that's where we had a lot of good news in some way with some of the data that was shown at the ESMO on the retifanlimab. We have obviously upside on new indication coming soon. Some of them have been, you know, in the very short term, the pediatric atopic derm, some of the phase IIIs are ongoing. Axa was approved by FDA just a few weeks ago, very important in the cycle of how to improve over Jakafi in GVHD.
Tafasitamab, which was acquired in its entirety at the end of last year, while MorphoSys was acquired by Novartis, and we got it for free, literally, is now moving with positive phase III studies, and we have another phase III coming in early in 2025. And then you have povo, which is obviously very important because it, we believe it has the potential to be a major driver of our revenue, with three indications already in phase III and progressing all very well. So that's the short term. There is a side of it that is about lifecycle management of Jakafi with axa, BET, and ALK2, that most people are very familiar with, and is also progressing well, and we can speak about the timeline and when it could impact us.
And then there is the earlier pipeline, which I think has been driving a lot of what you are describing in terms of resource allocation, where we have seven products that could potentially be very transformative in their own field, and that includes CALR, JAK2 V617F, CDK2, where we had the first data being presented just a few days ago, and KRAS G12D and TGF-beta/PD-1, and then the two products we acquired from Escient. So you have the early pipeline that is really exceeding our expectation in some way because we have always this sort of assumption that many products going to the clinic will end up not being viable, and we see a lot of progress happening there.
We have this short-term pipeline that has been exceeding expectation in some aspect of it, like retifanlimab and tafasitamab, that we are certainly doing very well. And that led us to a pipeline prioritization. We had some project we decided to stop completely, either driven by data or by resource allocation, and that led us to the buyback of some of the shares because we have a very good cash flow generating existing business today. And we thought that it would be a very good allocation of that resources to reduce the number of shares of Incyte at that point in time. So that, that's really the big picture, is a very good momentum of both the top line and the pipeline, and a very good and sound financial situation for the corporation.
So pipeline, pipeline, and more pipeline.
Yes.
I'm a stock guy. You get paid to represent shareholder interests. The stock's reacted somewhat to the news flow over the last six months or so, so it's bounced pretty good off the bottoms. But I sense there's still a you know a fair bit of investor skepticism and maybe you know from your standpoint probably also not a lot of happiness with where the shares are right now.
Mm.
What aren't investors getting? What do you think we're missing when you look at that longer-term strategy?
No, what I read is that I think there is a fair amount of skepticism about the revenue line over time and the ability of Incyte to be growing from where we are today in the long term. And I think it's understandable. I mean, I'm not, I'm not commenting on that, but when we look at our own assumption with very reasonable probabilities of success for the what I just described, which is like 14 projects we are running in parallel, we think we have a very good case for, you know, being a fast-growing innovative, which is very important for corporation over the next 10 years. So that's what we are building, and I think the building blocks for that have been evolving positively over the past few months, which explains some of our own decision in terms of capital allocation.
What is the right size pipeline for your company? I mean, 14 programs progressing in parallel, that's a lot for anyone-
Mm-hmm.
-especially a company that is still somewhat modest in its market cap and modest in its revenue potential from current products. So how do you make that trade-off between greater pipeline investment versus further return to shareholders? And are we right where you wanna be right now?
I think we are able to do both, so that's a good thing of the current situation. We are generating free cash flow around $1 billion a year, more or less, so that's, you know, the current growth of the revenue continues to fuel that. And we have been chronically, and it's not true every quarter, but we have been chronically trying to grow our expenses at a lower rate than the growth of the revenue. So we are basically trying to land the P&L in a position that would be totally normal, you know, going with the norm in that field.
Where today we are investing in R&D a little bit more than the average of the companies of our size, and we think if the revenue continues to grow, we'll be able to normalize that over a long period of time. At the same, I must say in the same spirit, we are looking at, does it make sense, project by project, to invest in this? So if you look at the list of what I described, each of these project is vetted on its own merit. There is no target R&D budget, and there are cases where it leads us to make prioritization like we have done in the past few months.
It's also prioritizing our internal pipeline for a few months or maybe years versus external acquisition, because you know, when you acquire, you know, $3 billion German company, it's the same cash as two years of R&D for Incyte in some way. So that's what we are also looking at and, trying to look at what are the best trade-off we can do. And again, the quality of the pipeline is what's driving the current way of thinking.
Is there still more business development to come from external?
Mm-hmm.
Yes?
We have $1.5 billion in cash, so there is the possibility to do a transaction. We are not going to do it at prices that are higher than the value we see in the asset, which has been sometimes a reason why we have not done some of the transactions that have been publicly known, and we are also looking at technology, early stage, and maybe smaller type of transactions that could be useful to our longer term growth in terms of what we do and what we can do on the technology side, on the platform side.
I guess, as you're thinking about the pipeline prioritization, how do you think about assets that fall into therapeutic areas where you already have a presence with myelofibrosis and with dermatology versus other areas? So for example, ovarian , it seems fairly agnostic to the commercial plans.
We look at cancer as one franchise.
Okay.
That includes dermatology and oncology. I know it's different from other companies, but we truly look at it that way, and we believe that if one of our product is leading us to pancreatic cancer, it's fine. If it's leading us to lung cancer or colorectal cancer, it's okay, and then we can adjust the commercial model, and we have the flexibility to do that. There are some, you know, differences, but it's really feasible. In terms of dermatology, we are there. When we look at the IAI, there are, you know, sometimes priorities being given to things that are closer to where we are.
But if we have a breakthrough in an indication that is meaningful, as we have done with our dermatology team, I think there is a financial rationale for saying it's, it still makes sense to go there. I mean, so that's something we are also open to, open to doing.
Maybe, let's touch on the... I don't think we have time to touch on all of your commercial products, but let's touch on the two most important, just starting with Jakafi.
Mm-hmm.
Some changes through the IRA landscape in 2025 that might be favorable for you. What's your outlook for growth next year?
So Jakafi, you know, we guided years ago, saying it will, it would be exceeding $3 billion at some point. We are we are very much on track to going there. What's driving Jakafi today is new data in PV, and that's new data that has been generated just a few months ago and is in fact driving earlier adoption of Jakafi for patient with PV. And that goes together with the new cap on out-of-pocket copay for Medicare patient, which is very important. And part of the IRA is something that people have been questioning, saying it's not good for the industry, but part of it is the cap on copay. And in the case of PV, so the same indication that is growing the fastest, it has, it has an impact on the adoption curve.
We see it already this year, and we'll see more of it next year when the $2,000 cap is going to be implemented. So that we think is very important for the brand. The GVHD franchise is still growing, and this is mostly driven by the duration of treatment, which is way longer than what we were expecting. MF is very stable. We are growing at 1% or 2%, and now it's basically a mature franchise for Jakafi. So that's the picture. I think we will see that continue to grow over the next years, and it's a fairly stable with inside with the-
Quite steady or stable growth. Would you expect an inflection based on some of the trends you just noted, the recent PBM data, as well as the IRA?
I think the growth rate can, you know... I don't know if it's going to increase because the base is increasing. So with a base of, like, $2.7 billion last year, I mean, it's becoming percentage-wise-
Okay.
It's becoming more challenging to grow as a percentage.
You're still working on the once-daily formulation that we had, obviously, a delay some years back on that. What would be the impact of that once-daily for franchise extension?
So there is a simple impact. It is basically the curve of after generics of twice a day. The curve would be less vertical. So that's one aspect. That's a very basic thing about it. We believe, like, new patient can be started on once a day, too, and new patient will be started on generic when it's available twice a day. So you can build a curve, and you will see it's a fairly valuable thing to do. More importantly, knowing that there are products that are once a day that can be combined with Jakafi in myelofibrosis, we are looking at the possibility, obviously, to do a co-packaging or to do a combo tablet with both component in it, and that's something we continue to look at.
It will depend on the clinical data we get with BET and ALK2 and maybe some other mechanism.
Okay. And then moving to Opzelura, another very key and important growth product for you. How are things looking, between the two major indications you have, atopic derm and vitiligo, and what's the outlook for sort of peak sales potential here?
Basically, you have two businesses that are fairly different. In atopic derm and vitiligo, we are going to get pediatric atopic dermatitis in 2025, and we are going to get new indication where we have phase IIIs ongoing, if positive, obviously, in prurigo nodularis and HS. It's fairly unique in HS. It's a mild form of HS that we think can be treated with a topical product. When you look at the brand Opzelura, overall period of 10 years coming, it will be building on this new indication. In vitiligo and atopic derm, we have in atopic derm, a dynamic where the product profile is recognized by everybody, patients and physicians, as being excellent, from safety, efficacy, speed of action, and the sustainability of the response.
The issue is to make it easy for physicians to prescribe it, so it's all of the prior authorization, reimbursement, and all the steps that are there to try to control it. So that's the trade-off we are doing with, you know, agreement we make with PBMs and payers on how to make it easier for physicians in exchange for sometimes some additional discounts. And you can imagine it's a fairly important and complex process. We did one new contract this year that led to an increase of volume that was more than compensating for the discount. So we are sort of looking at that as one of the options that could be attractive because there is a very, very large volume of patients today who could benefit from Opzelura for AD. Vitiligo is completely different.
There is no other product approved for vitiligo. It's getting patients to the dermatologist office, and believe it or not, it's not absolutely obvious, easy to do, and it's keeping patients on Opzelura, continuing to apply the cream twice a day, and it is a challenge. We have made a lot of progress. We have, as you know, we are monitoring the number of tubes per patient that are being used, and it has been increasing, but we are not yet where we want to be. So that's one of the big subject for the team, the marketing team, the patient compliance team, to improve on that. But frankly, we see this product as a very promising product.
We have a long patent going to 2041, and we think it will be part of this contribution to the revenue of Incyte in the long term, and it
In the fairly early days of Jakafi launch, you were giving long-term peak sales potential guidance.
Of $500 million, which-
Very-
We are at $3 billion now.
You've done better.
I remember.
You've yet to start that on.
Yes.
- on Opzelura.
I mean, part of it is the number of tubes in vitiligo, frankly, because it... I mean, you can imagine it's a multiplier. I mean, it will change the number, and it's a moving number at this point. So it's very difficult. We could give a low number. It's always easy. If we want to give a number that will make people interested in the subject, I think we don't have all the components yet.
Okay.
What do you see as vitiligo being the long-term share of Opzelura scripts?
No, we think it's close to 40/60 or 60/40 or 50/50. I mean, somewhere there, because it's not 100% clear, but it's around 50/50, let's say. And we think both of them are growing for different reasons.
Mm-hmm.
at the same speed now.
Okay.
So yeah.
Steven, lots and lots going on in the pipeline. Way too much for a twelve-to thirteen-minute discussion, but you're fresh off ESMO. I know you were there in person. You had your webinar on Saturday on CDK2 inhibition. Tell us about this drug and why it's interesting.
Yeah, I mean, firstly, we presented quite a big data set, north of 200 patients. On the safety side, you know, we managed to do dose escalation, you know, through 150 milligrams and got, you know, the expected toxicity and have come back. Our expansion doses are 50 milligram BID and 125 QD. Those hit CDK2 and stay above the target, you know, almost constantly through the dosing range. And then we showed efficacy data, you know, again, across the program, but particularly at those two doses and not to cherry-pick, but in the 50 BID dose, for example, there's north of 30%, a RECIST response rate, and it's hard to even give you a duration of response because most responders haven't progressed yet.
So it's looking very healthy from a, an efficacy point of view in a CCNE1 amplified or expressed, overexpressed population. Using our cutoff, 'cause, which we haven't disclosed yet, because we have to discuss with regulators, it's about half, 50% of ovarian cancer have this degree of CCNE1 overexpression. So we like where we are with the profile, both from a safety and efficacy point of view, and we actually pointed to it at ESMO, at our investor meeting that night, that the three areas, that we, you know, particularly interested in are platinum-resistant ovarian cancer. Obviously, there's an unmet need there, and potentially a single-arm study, which would suffice for the U.S. or randomized study, versus, you know, physician's choice to get across the finish line there.
But then moving forward, where we think the profile of the product may be really attractive is in maintenance first-line setting. Dominant use there is bevacizumab maintenance, Avastin maintenance, particularly in the HRD negative population, where again, using our cutoff 60% of CCNE1 overexpresses. So we have to generate that safety data set and then go at that population, and then the potential third population is later use of bev maintenance with chemotherapies. It's a crowded field, as you know. You know, there's ADCs, there are other targeted therapies, but we're really encouraged by the profile of our compound that we showed there.
When will you know whether you can go for an accelerated approval route for that platinum-resistant ovarian cancer population?
Yeah, so we said, as we said at ESMO, and it's subject to some regulatory discussion, we think the territory required is around a 25%-30% response rate that's durable. You know, obviously, the FDA will say that'll be a review issue, but if we confident in that territory, it'll really be our call. The other way of doing it is to do sort of both together. Do a randomized study in that setting, do response rate at an interim analysis, and then the time to event endpoint later on. That'll serve as the confirmatory study for the U.S., and it'll also suffice for the rest of the world and get an approval and reimbursement. So we're somewhere between those two.
To answer your question directly, as soon as we have, you know, the regulatory discussion, which is likely to come soon, you can see the data set we have, then we'll be able to declare which of the two paths we'll take.
Any reason why you think the 50 milligram BID looked better?
You know, I don't, I don't know. You know, the-- you've got to be a little careful there. It's a, it's a more mature data set than the 125 , so obviously, we have a little more experience there. You saw, you know, 31% response rate there. The 125 is a bit lower now, but what happens with this drug, because of the way it works as a cell cycle inhibitor, is some of the responses are coming very late. In fact, we've had PRs convert to CRs at week 32 and week 40. So I think what you have to focus on is the totality of the effect. If you look at the waterfall, there's so much stable disease, it's very encouraging for a progression-free survival type endpoint, and, both the 50 and 125 are well within the target range we want.
So we'll see. You know, that'll be a regulatory discussion, will be really interesting, and within the own co-- within the company, there's two camps on which one's better. I think, I think the 50 is just a more mature data set right now, so it's very attractive to go with that, potentially.
And then in terms of the durability of response, we saw durability for the responders with a PR and a CR, but anything you can share about the durability of stable disease?
Yeah, no, it's the same. You know, we didn't show spiders for everybody, right? But, and we haven't been able to calculate that because most people are still on therapy, plus the exposure, I've just said at one twenty-five is much less. You know, we it looks like, as I said at the meeting on Saturday night, you know, we're north of the twenty-four-week territory. So we're where we want to be, in terms of potentially having response rate and durability for an accelerated, and then to your point, for a pre PFS endpoint, we even potentially even a healthier territory to win in that aspect. Single-agent chemotherapy there is variable, depends on which drug you pick, but, you know, Taxol is the most commonly used.
You know, sometimes, you know, 15%-20% response rates there, but a very short PFS in those settings, four, five months, for example. Yeah.
Stephen, am I right that probably the two biggest pipeline events for Incyte in the next, say, six months are povo in HS and the MRGPRX2 inhibitor or a modulator for CSU?
Yeah. So, povo in HS in two phase III, STOP- HS1, STOP- HS2, approximately 300 patients each. I think based on our phase II data, we had, you know, gangbuster recruitment, and they recruited really well. And then it's a 24-week endpoint, so we'll get it early, you know, in 2025 next year for both studies and deliver that data set. Very important. If we replicate the phase II data, we think we'll have a, you know, close to a best, if not best-in-class product in terms of what it does to HS patients. You know, in terms of HiSCR 100, which is complete disappearance of abscess nodules, no new draining fistulas, you know, we've reported upwards of a 29-30% HiSCR 100 response rate there. So we really, really like that profile.
And then for MRGPRX2 and X4, it's all data first half of 2025 in chronic inducible urticaria, chronic spontaneous urticaria, atopic dermatitis for X2, and for X4 in PBC and PSC. So you're absolutely right. You know, those are very important catalysts for us next year with povo and HS being-
Let's focus on HS just a little bit. I mean, the IL-17s, maybe they're not quite hitting your phase II HiSCR 100s, but they've got very good HiSCR 75s, potentially even directionally better than yours in some cases. So what, what is the right endpoint to look at when we see the data? Is, is there something molecularly about a JAK inhibitor that would, would lead to better clearance, but maybe not better HiSCR 75s?
I think you wrote an excellent report on the overall, you know, milieu, and people are moving towards HiSCR 75, and that's fine. I mean, we will, you know, capture HiSCR 50 as a primary endpoint based on regulatory agreement, but we'll also have HiSCR 75 and HiSCR 100 to get as much as possible cross-study comparisons there, which is obviously really important. You know, my own feeling is, you know, an oral versus an IV, you know, you can talk to the risk benefits there. Unfortunately, it's a disease where, you know, most people end up progressing on whatever therapy they're on, and there's, you know, upwards of three hundred thousand patients with moderate to severe HS. So I think there's lots of opportunity for many different parts of the class. IL-17 is hitting one interleukin.
You know, we obviously spread across all the JAK potential interleukins four, eleven, thirteen, thirty-one, I can go on, so potentially, you know, hitting a more broad range of what's causing the pathophysiology, yeah.
Can you be better than Rinvoq?
We think so. You know, again, in your report, you coupled our dose ranging together, but if you look at our higher doses, 45 and 75, with, you know, all the caveats of cross-study comparison, they're limited to their 30 milligram for other reasons. You know, again, with those caveats, we think we have a best-in-class profile there, yes.
One, one thing, this may be an Hervé question around the market, but, as you know, Steven, the biologics are used at double dose and triple dose sometimes-
Mm-hmm.
very high price points.
Mm-hmm.
Though maybe with JAKs and Rinvoq, you're somewhat anchored to a lower price point, or maybe not, well, how are you thinking about-
So we are exactly-
the price in this market?
No, no, that's exactly what you are describing. Obviously, we don't have... In fact, we have not even decided anything in that regard. But there is an interesting situation where there is a big gap between the biologic price and the JAK reference price because of Rinvoq. So the question would be: where do we put our, you know, where do we position ourselves in that trench?
Nope, no comment where you-
No comment. No.
Okay.
No comment.
Maybe just quick update on povo. Everything going okay with vitiligo and PN and the recruitments there? I know they're-
Yeah, no.
not been quite as rapid as HS.
Yeah, vitiligo recruitment is going really well. PN's just started, so it's early, early days to tell you on how recruitment's going. But, you know, I think when you have good phase II data and a very clean study design, you know, it just generally drives recruitment very well. I mean, HS blew us away. Vitiligo is starting to do the same thing, so it looks good.
Okay, and then moving to CSU and CIndU and AD with the MRGPRX2. I mean, these are somewhat different indications, not CSU and CIndU, so AD. Maybe let's start with urticarias. What is the role that you're hoping this drug can play here?
Yeah. So, you know, it's a mast cell inhibitor that should be IgE dependent. We'll have to prove that. So we'll look at both, you know-
Mm-hmm
... high and low populations there, in terms of preventing release independent of that mechanism, which, you know, other compounds are somewhat restricted in that regard. So that's in the chronic inducible urticaria, chronic spontaneous urticaria setting. In terms of atopic dermatitis, it's a little more fluid. It's, again, JAK biology in general. You know, we think a lot of the itch and hives and that that occur in that disease, again, are a lot of these interleukins, four, thirteen, thirty-one, et cetera. So it may have a role to play there, in terms of, you know, mediating that effect. But it... That is, you know, completely new ground for X2 inhibition. We acknowledge that.
What's good data in urticaria?
In terms of UAS7 type scores?
Sure.
You know, I think what absolute numbers that have already been shown or better, you know, patients are really... It's a huge morbidity, obviously, as you well know, from the diseases. You know, I'm not gonna commit to a number. Yeah.
Do you... I mean, obviously, we've seen some big guns, right?
Mm-hmm.
some antibodies that hit the c-kit receptor just have. Is that, is that where you're trying to be?
Yeah, I think that that's a reasonable target, but different therapeutic ratio, right? So this is so far, and again, we're getting more and more experience every day, an extremely clean safety profile. So you're not getting, you know, complete knockout of c-kit and the other effects there. So we'll have to weigh, as we always do in medicine, the therapeutic ratio both the efficacy and safety there.
Okay. And then, in AD, is there still unmet need here?
I think so. I mean, there are millions of patients, and they're, you know, people who still don't benefit from the current modalities, so I think there's room, yeah.
Good?
I'm good. Yeah.
Okay. One last compound that we did not talk about today because we didn't have time, that we should have talked about for next time, what would that be?
I think our early pipeline, as Hervé said, is looking really attractive. You know, KRAS G12D, TGF-beta/PD-1, you know, all progressing, lack of attrition through dose escalation expansion. Want to show data next year for those two, and then across the MF space, particularly, you know, where we go with BET and declare where we go in this. I didn't answer you the one I answered before.
I figured you would not answer that question.