All right, great. It's Michael Schmidt again with the biotech team, from Guggenheim. The next presenting company is Incyte. I'm very excited to welcome Christiana Stamoulis as well as Steven Stein. Welcome guys, thanks for joining us.
Thank you.
Thank you for having us.
Maybe jumping right into questions, sort of, in continuation of yesterday's earnings call, Christiana. Starting with Jakafi, which obviously has continued to deliver strong growth last year, and guidance looked very strong as well. I guess maybe talk a bit about in a commercial setting now, what is the main driver of growth of Jakafi? I know you've added patients across the board, it sounds like, but what is the single most important growth driver this year and then longer term as well for Jakafi?
What we saw in 2022 was continued growth across some indications in terms of new patient starts, but more significant growth in chronic GVHD, given that it was a new indication that we launched Jakafi for in September of 2021. 2022 was still the launch year in that indication. When you look at the level of incremental revenues we achieved in 2022, it was at around $275 million. When you look at how much we have been adding year-over-year over the last five years, it's at around $200 million-$250 million. You can see the incremental bump because of the chronic GVHD indication.
As we look now going forward, we are continuing to see opportunity to grow across all indications. MF, there we have at around 55% penetration, but there are still at around 25%- 30% of patients that currently are not on treatment and are waiting. There is opportunity to continue to grow within MF. In PV, they are at around 20,000-25,000 patients that could be eligible for Jakafi. We have a penetration of at around 20%, so you can see that there is significant room for a continued growth in PV. The PV patients tend to be the ones that stay on therapy for a longer period of time than MF and GVHD.
Finally, GVHD, we see again, both significant growth that we have already been experiencing, as well as potential for further growth, at around 2,500 patients are on Jakafi. You have 14,000 of patients in GVHD. 50% of them tend to require something beyond steroids, so you can see 7,500 patients. We are at 2,500. There is again there room for continued growth.
Okay, great. Maybe sticking with commercial products for now. OPZELURA, you know, met, I would say, street expectations, in terms of sales, yesterday in the fourth quarter. You said you did reach the target, growth to net adjustment of 50% around year-end, but there was a little bit of debate on the free drug program that you initiated in the fourth quarter. Can you talk a little bit about how you think product or patient demand, you know, will evolve, as we think about those as those programs kick in?
Let me step back to just quickly review Q4, because it's very important to look at the fundamentals here that are very strong. The launch has been going very well, very strong demand. We see an increase in demand quarter-over-quarter of at around 34%. We are also seeing, and by the way, the demand, the increase in demand is across the board. AD is growing at double-digit rates, and we're seeing increasing contribution for vitiligo. On the payer front, we have continued to expand payer coverage. In Q4 on average, we had 73% of scripts that were covered by payers. That's a significant achievement over the course of a year since the launch of OPZELURA.
That increase in coverage was reflected in the reduction in the gross to net discount. The average was 57% for Q4, and we exited the year at 50%, which we indicated is a reasonable assumption for an average level for 2023. We continue to see a lot of enthusiasm and very positive feedback for OPZELURA, both from the AD side as well as vitiligo.
AD, the feedback has been very, very positive and I think thinking back at the decision that we made at the beginning to launch OPZELURA and put in place the full buy-down program in order to get OPZELURA to patients very quickly, even though when there was little payer coverage, was very important because it got patients to experience OPZELURA, to see the benefits, to go back to their physicians, and that helped, you know, reinforce the efficacy profile, the safety profile, the effect on each, and get more and more physicians to prescribe OPZELURA. We are continuing to see a lot of, you know, positive feedback from OPZELURA in AD. In vitiligo, it's very exciting because, as you know, there are no other therapies that have been approved for repigmentation.
OPZELURA is the first one. There is a significant need there. Again, there is a lot of enthusiasm both by prescribers versus well by patients. There are two sets of patient populations for vitiligo. One is the 10% of patients with vitiligo that have been actively treating, seeking treatment, and these are the ones that have been visiting the dermatologist and are probably the first ones that would be going to get on OPZELURA. Then you have 90% of the 1.5 million- 2 million people with vitiligo that have been inactive. These are the patients that we are looking to activate, to make them aware that now there is an efficacious treatment for repigmentation so they can go and visit the dermatologist and get on OPZELURA.
A lot of the focus this year would be around patient awareness, around DTC. We have multi-channel activities in order to get that activation of that patient population that we believe represents a very big opportunity.
Yeah. Just going back to commercial sale, the... I think there was some investor concern that, you know, if you lower your gross to net rate, that it could impact demand negatively, I guess, in a way. You know, as you, as you roll out the free drug program, which is, you know, I think commercially done, you know, to what degree does that offset or perhaps even drive additional growth, demand growth for the product?
The growth to net rate, gross to net discount rate, just to make sure that there is a clear understanding of the components, has nothing to do with demand. There are three main components to gross to net. One is the discount PBMs. We have the contracts in place. The discounts are set. We know that. The second is the discounts to wholesalers and some other fees from pay, et cetera, that again, are set, are pretty small contributors to the overall gross to net discount rate. The third is the co-pay assistance. Co-pay assistance is the level that we pay between where a payer may, a plan may set the co-pay for a patient and the $10 per tube that we have set. We are paying the difference.
That is not impacting in any way the patient or demand. The improvement that we have seen here is because we have been getting OPZELURA on the formularies, we got a payer coverage, and now we're working on improving the co-pay level, bringing down the co-pay level so the co-pay assistance becomes smaller, required to get to the $10 per tube.
Okay, perfect. As we think about 2023, you know, at what point, I guess, you know, how should we think about the pace of new prescriptions in AD versus vitiligo? Is vitiligo, you know, growing at the same rate at this point, or is it, is it trailing the AD, growth opportunity?
I think it's too early to comment on the growth trends. As I said, we are seeing double-digit growth in AD. In terms of vitiligo, is we are at an early stage in the launch. We are seeing increased contribution. What we have said in the past is don't expect bolus of patients coming in, mainly because it does take time for patients to be able to make an appointment, see the dermatologist, and get prescribed. That's for the active population. The question that we have is, and we want to see, by the way, before we can provide also more guidance, is how quickly the inactive patient population will get activated and at what rate will come in to start to seek treatment.
The treatment duration in vitiligo, which is meaningfully longer than in AD, has that tracked with your expectations?
Vitiligo, again, is very early into the launch. What we have said there is that we expect patients on average to be using 10 tubes a year. In the case of AD, it would be two to three tubes a year. You can see that a vitiligo patient will have a much higher number of tubes than an AD patient per year.
Yeah. You know, the potential label extension into the pediatric population is kind of the next big step for OPZELURA. How significant is that opportunity relative to the approved label at the moment?
I mean, the label at the moment is 12 years and above. Pediatric study addresses two to 11 years of age, and that in the United States is an additional 2 million patients. On top of the 5.5 million , it expands the total available AD population to 7.5 million total.
Yeah. Okay, perfect. Sticking with dermatology, you know, you're also planning a phase III trial for povorcitinib in vitiligo as well. It sounds like it's a complementary market to the OPZELURA indication. Is that correct?
Yes and no. You know, the OPZELURA indication for repigmentation is in patients with body surface area involvement of 10% or less. It's stipulating the label. You know, the endpoint was a facial improvement. These people who seek treatment tend to have facial involvement or hand involvement. For povorcitinib, it's a different population. It's 8% and above body surface area involvement. The population Christiana was talking about, if you look at the 1.5 million vitiligo patients, about 80% of them are 10% or below body surface area. Because of the slight overlap, 8% and above incorporates about 30% of that population.
There, because of the more extensive involvement, total body involvement, in fact, in the study, and some of them have upwards of 30%, 40% involvement in terms of, you know, depigmentation. The therapeutic ratio will tolerate it will be different. That's why, you know, and you can't apply that much cream. It's actually almost physically impossible. That's why we're using an oral JAK inhibitor there. Knowing, you know, that the FDA doesn't, is likely to impose, you know, black box warnings, et cetera. The level needed to repigment is so great that the oral is felt to be the, you know, warranted.
Okay. You know, we'll get some data for that this year. Can you talk a bit about expectations, you know, how many patients are enrolled and, you know, is it a dose escalation or is it a phase II? If you would mind us of that?
Yeah, it's phase II, but a large study. We're testing different dose levels of povorcitinib. 15 mg, 45 mg, and 75 mg, which are not dissimilar to the doses tested in hidradenitis suppurativa, except for the lower 15 mg dose. You know, we'll get that readout soon and then look at, you know, which is the right dose to take forward into the phase III vitiligo program with povorcitinib. Even potentially two doses as well, which is becoming pretty common now with the, at least with the FDA, where you kinda see more dose ranging work in phase III even.
Yeah. Okay, great. Switching back to Jakafi and the LIMBER program, which is obviously important to, you know, potentially extend the life cycle of the product. The next thing that's gonna happen here is really the PDUFA date for Jakafi XR, as you call it, in March. Maybe talk about, you know, what kind of flexibility that could provide for you to, you know, to further the potential of the drug?
I'll talk about the clinical development side, and if you wanna address anything else commercially. I know there's the obvious, right? It's an oral, once a day as opposed to twice daily. There's a convenience factor. Not that, you know, there's any problem with people taking twice daily, but there is a subgroup of patients who would prefer from a compliance convenience point of view to take once daily. That's its one appeal. The other thing which is more forward-looking is the ability to do fixed-dose combinations. Whether it's our parsaclisib combination, our ALK2 combination, or our BET combination, they're all once dailies.
We could develop, and we are developing fixed-dose combinations with the XR for those, which would again give the convenience, the ease of use, but also, you know, extend patent life with a new molecular entity quite significantly. That, that has a large upside to it. You know, not yet fully worked out, but we did about nearly 10 years ago now a study with a 25 mg XR, and we saw that, again, not unexpectedly, while you meet the area under the curve criteria, 'cause you have to be equivalent, there was a flatter Cmax. Some people feel that the anemia seen in myelofibrosis is due to that Cmax spike. You know, we'll do in the next, you know, year or so more clinical work to see if that's true in MF, that with the XR there's less anemia.
If that's the case, you know, that's another potential upside in myelofibrosis.
Okay.
Yeah.
I mean, as you roll out QD, you know, how do you think about pricing? Are you trying to actively promote transition over to XR from Jakafi? How do you plan the commercialization in the near- term?
We do plan to commercialize QD rux following approval. We cannot comment on pricing in advance of that point, but we will be providing more on the launch and timing around, you know, the PDUFA date.
Great. Steve, the next phase III trial is the PI3 kinase inhibitor combination in the suboptimum responders in the second half of this year, I believe. You know, to what degree does the phase II data that we've seen so far de-risk the phase III study? What incremental additional opportunity would that address?
Yeah. I think it's a multi-layered question, yours, because, you know, there's obviously no great love at the FDA for PI3 delta inhibitors. Just to deal with that first because it's key. You know, this is, one, it's in a different population. It's not in lymphoma where, you know, their, the drugs ran into problems in terms of survival and were essentially with either withdrawn or development programs stopped. It's in a myelofibrosis population who have, you know, not a different milieu, and they haven't had B cell suppression therapy for a long time. It's a randomized study with an overall survival endpoint, and it's given in combination with rux, which in many ways ameliorates some of the side effects seen with delta inhibitors. We saw that in the phase II.
From a tolerability point of view, you know, you just don't see what we're seeing with delta inhibitors. You know, no long-term colitis, et cetera. Again, the FDA is gonna absolutely wanna see no detriment in terms of overall survival, which is built into these randomized studies. The first one this year is a suboptimal study. These are patients who've had at least three months of ruxolitinib, at least eight weeks of stable dosim, and have an inadequate spleen response or symptoms or both. Then are randomized without any withdrawal to continue rux versus rux plus parsaclisib. If we replicate what we saw in the phase II, which is an SVR25 at 24 weeks of about 30%. A total symptom score of 50% or greater improvement of about 50% at 24 weeks as well. Actually, the symptom improvement was better.
If we replicate that phase II data, which we expect to in the phase III, we'll have a positive study. Then again, to be repetitive, you know, no detriment in overall survival. I think the agencies would be hard pressed not to approve it then. It will be for patients who are inadequate responders meeting those criteria. Then about a year later, sometime next year, the first- line study will report back as well, which is about double the number of patients. About 212 on the suboptimal study, and about 440 on the first- line study. The entirety of that program. The ALK2 program, you know, at the end of last year, we saw, you know, really cool hemoglobin responses, which were both with monotherapy and in combo.
We'll get a safe dosing schedule this year and declare where we wanna go in terms of pivotal studies. The BET program we're still dose escalating. It probably lends itself more to suboptimal settings because of on-target thrombocytopenia.
For the delta combination, I guess what incremental additional opportunity are we thinking about here in MF?
Yeah. You know, I think it's for the patients who're gonna come off ruxolitinib, the suboptimal study, for lack of efficacy. That's the population it'll address. As long as the tolerability profile mimics the phase II, you won't have that issue. It, it potentially, you know, Early on, you can have upwards of 20%-25% of people discontinue rux for various reasons, lack of efficacy being one of them, and it'll address that population.
Correct.
Yeah.
Okay. For ALK2, I guess what are you looking for in the data here in the second half, and what are your possible avenues for a phase III trial?
Yeah. No, I, you know, it's just as we presented at ASH, seeing those hemoglobin increases was great 'cause we still had relatively low doses. You know, monotherapy, 200 mgs and above. In combo with rux, we're only at 100 mgs, so we still have a lot of room to go. We don't want to shortchange ourselves in terms of benefit. We'll keep dose escalating this year, see if there is a dose response effect in terms of hemoglobin, and then address the anemia of myelofibrosis, which upwards of 1/3 of patients can have. The drug-induced anemia from rux as well, potentially. You can maintain rux dose intensity. It's a pretty big deal. The three populations that are in scope are anemic patients who're transfusion dependent, very established endpoint, converting them to transfusion independence.
Even anemic patients in general, because of its mechanism action. Enticingly, if it continues to look very clean, even all comers. You could still do rux plus ALK2 all comers. The reason is there is you can capture that rux dose intensity effect and potentially beat rux itself. We'll have to see. Those are all three in scope. The lowest hanging fruit is probably the anemia transfusion dependent patient.
How do you think about other opportunities for this drug outside, MF?
Yeah. We have a FOP program, which, you know, is a rare genetic condition that can be devastating for patients. Or, you know, usually causes their demise in the, around the, just off the second decade of life. We committed to doing that program, it's ongoing. Because of its mechanism on hepcidin inhibition, which is the mechanism of anemia, of inflammation in general. Any anemia seen with chronic conditions, whether they're rheumatic conditions or chronic renal failure, that's potentially in scope. You know, those are early days with that thinking. It's a long way to go. We were just encouraged just last week, you know, that GSK got an approval in chronic renal failure for the anemia targeted drug. Maybe the FDA has been a little more open now to that pathway.
Big studies and a bit of a ways to go there. But very interesting.
Yeah.
Yeah.
Okay. Maybe just one more on the oncology side, around your oral PD-L1 inhibitors. I know that's a decision point coming up this year as well, I believe. You know, I guess where do you see the biggest opportunity to differentiate from the IV or SubQ PD-1s, and what's sort of the key value proposition really for the program?
Yeah. I think monotherapy-wise, things like adjuvant settings, maintenance settings because of the ability to be free from having to come into clinic, no chair time involved, are very, very interesting. In combination, we're starting now three combinations. One with Mirati's KRAS inhibitor, adagrasib, particularly potentially important for first-line lung cancer. Certainly from a tolerability point of view, that plays out. A combo with an anti-VEGF oral, which again, things like renal cell cancer, again, if it's safe, are potentially registration routes. With CTLA-4. IV checkpoint with CTLA-4 are extremely active, nivo/ipi, for example. There's a tolerability problem. With an oral, the ability to switch it off is very enticing. All of those could be potential registration paths in combo as well.
Great.
Yeah.
I'll squeeze one more in for Christiana. You obviously did the MONJUVI transaction a few years ago. Can you talk about how Incyte's approach to business development has evolved, you know, in recent time, and how it, you know, how do you think about that going forward?
Sure. We are looking to bring assets with the objective to add to revenue and growth at the later part of the decade. That means assets that are in clinical development phases right now. Assets where we can leverage our expertise, our infrastructure, our capabilities. In areas, that means in areas where we are currently in, hematology, oncology, obviously MPNs continues to be an area of interest. Then dermatology. There are some adjacent areas as well that we can look at, especially around autoimmune, inflam diseases where we have expertise on the development side.
Great. Well, with that, I think it's time to wrap up. Christiana and Steven, really appreciate it. Thank you so much.
Thank you for having us.
Thank you.