Everybody. Good morning and thanks for joining us again here at the Bank of America Healthcare Conference. I'm Tazeen Ahmad, I'm one of the senior SMID Biotech analysts here. Our next presenting company is Incyte. Sitting up here on stage with me are two members from the management team. To my right is Christiana Stamoulis, who is Executive VP and CFO. To my left is Steven Stein, who is Chief Medical Officer. Christiana and Steven, good morning and thanks for making the trip out west.
Good morning.
Morning.
Thank you for inviting us.
I think Incyte is a pretty well-established company, but just for formality, maybe you can talk about the company for about two minutes, and then we can go straight into Q&A.
Yeah, absolutely. It's a company that has been going through significant transformation when you look over the last five years. If you think back in 2017, we were a company focusing on oncology, with two commercialized assets and at around $1.5 billion of revenues. Fast-forward to today, five years later, we have eight commercial stage programs approved for multiple indications, most of them in two therapeutic areas, oncology and more recently dermatology with OPZELURA. We have a broader geographic footprint with commercialized assets in the U.S., Europe, and Japan. The revenues that have more than doubled during that five-year period to $3.2 billion annual revenues this past year in 2022.
That growth doesn't even reflect any meaningful contribution coming from OPZELURA, which is our first term product that we got approved for atopic dermatitis almost a year and a half ago, and for vitiligo less than a year ago. We recently got approval for vitiligo in Europe, and now we are preparing to commercialize or to launch in the first country in Europe, Germany, by the end of this month. There is a lot of growth all still coming from our already commercialized assets, and especially OPZELURA, that we are very excited about.
In addition, we have a very rich and exciting pipeline with a number of high potential products, both in dermatology and in oncology, that we're looking at as potential future growth, revenue growth and revenue diversification drivers. When you look at the dermatology pipeline, I would highlight two programs that are very exciting for Incyte. One is OPZELURA, where we are expanding it by developing it for additional indications. That's a way to maximize the potential value that we see in the program. The second is povorcitinib, that we are moving into registration studies for HS and vitiligo. Another very exciting program that I'm sure we'll spend more time discussing in dermatology and a significant future growth driver for the company.
In oncology, we have the programs that are focusing on improving over Jakafi in MPNs, especially MF, and these include ALK2 and our BET inhibitor. Both are in development, and we are looking for additional data later this year and for moving, progressing these hopefully to later stage of development. Our program axatilimab, that is for GVHD, we expect data mid of this year. We are initiating clinical development of our mutCALR program also for MF. A lot happening under the MPNs umbrella. In other oncology programs, one that is worth highlighting is the oral PD-L1 program, where we are again expecting data later this year. We have already shown efficacy and an attractive safety profile.
This program is the first oral PD-L1, to be developed, and we are looking to expand, development and, proceed with the combination studies later this year.
A lot going on.
That gives you a good-
Yeah.
Summary view of what's going on at Incyte.
Let's try to go through some of these in a little bit more detail. Let's start with your current commercial products, with Jakafi maybe. That's now a quite mature asset. You're approved on multiple different indications. It's a steady eddy in terms of the revenue contribution that it makes. Can you talk about where you think the remaining legs of growth are, either by indication or just by opportunity dollar-wise, for upside from relative trends this year, and maybe you can wrap that in with how you got to your sales guide for this year too?
Sure. When you look at Jakafi, even though it's a program that we have commercialized for a number of years, there is still continued growth in the product ramp, where we recently announced our Q1 results, you saw that the new patient starts continue to grow.
Mm-hmm.
at 8% year-over-year. The growth came across all indications. We saw growth in MF, PV, and ET. The fundamentals of Jakafi continue to be very strong. The growth in the program growth continues to be very strong across all indications. When you think about each one of those indications, in MF, there are around 18,000 patients that are eligible for Jakafi, and currently 55% of those patients are on Jakafi.
Mm-hmm.
25% of those patients right now are not treated. They take a more watch and wait approach. You can see that there is growth left in MF, even though we have a very nice share already of the patients eligible for Jakafi. In PV, there are around 25,000 patients eligible for Jakafi. We have a you know, 25% of those patients that are currently treated with Jakafi, there is significant-
Mm-hmm.
-growth still remaining in PV. PV patients tend to be the ones that stay on Jakafi and are treated for a much longer period of time. Finally, ET, there you have, at around 4,000 patients with active ET, and around 14,000 patients with chronic ET. When we look at Jakafi, at around 4,500 patients currently are on Jakafi.
Mm-hmm.
Again, significant growth potential in ET as well. In terms of the guidance, and the guidance we have provided, it assumes growth, a continued growth across all indications, and it assumes a growth to net at around 23% average for the year. It is a range. We always provide a range of at around $100 million between the low and the high end, especially early in the year. When you look at the midpoint of the range and the high point of the range, they imply incremental revenues of $180 million-$220 million over last year. When you look at historical data, how much incremental revenue we get year-over-year, it's along the same.
Mm-hmm.
-lines. Given the performance of Jakafi in the first quarter of the year and the strong growth that we have seen in demand in new patient growth, we actually increased the low end of our guidance range by $20 million to that new guidance range of $2.55 billion-$2.63 billion for the year.
you know, given that sales are clearly well beyond the definition of blockbuster, I think the pushback that we tend to get when we talk to investors about Jakafi per se is the upcoming IP expiration later this decade. How does Incyte think about what sales will look like post that expiration? And what do you think could be, you know, mechanisms by which that tail can be extended out, you know, even by a few years into the early twenty-thirties, let's say?
When we look at the revenue curve for the company and for Jakafi and how we extend beyond Jakafi, we're not looking only at the programs that we're developing to improve over Jakafi, but we're looking at the overall portfolio.
Mm-hmm.
There are programs already that are commercialized, like OPZELURA, that are going to be one of the drivers of future growth and the drivers for extending the revenue curve beyond the patent expiry of Jakafi. There are a number of different programs that are aimed at improving over Jakafi, for specifically for MF and MPNs. There are other programs that we are looking to, you know, get to market before the patent expiry that again, would contribute to revenue and continue to drive that growth curve and fill any gap that may have been left once you take the new product that will.
Mm-hmm.
-improving over Jakafi and, you know, extend that Jakafi specific curve. Stephen, you may want to comment on the programs, especially the ATN-related ones.
Yes. As sort of part of this LIMBER effort, there are 2 important ones within the myelofibrosis space. 1 is the BET program.
Mm-hmm.
you know BET clearly an active agent in myelofibrosis, both in terms of spleen reduction and symptom improvement. We'll have a recommended phase II dose at the RUX by the end of this year and declare, you know, where we go in terms of regulatory path. The ALK2 program is a completely different MOA. It's about addressing the anemia of both the underlying disease of myelofibrosis plus the drug-induced anemia from JAK inhibition. again, in dose escalation at the moment, we're seeing hepcidin decreases, hemoglobin improvements. We can keep dose escalating, same sort of timeframe, declare a dose towards the end of this year in a registration path there. The other effort that's going only into clinic this year, but has enormous promise if it's safe and works, but is mutant CALR. It'll be first-in-class there.
It's about one-third of MF, about one-third of ET. It could be completely disease-modifying for those patients with the mutant KRAS mutation. Just as part of LIMBER includes graft-versus-host disease for us. axatilimab will deliver its data middle of this year in terms of third line graft-versus-host disease. We haven't given up on RUX. You know, we'll continue to address, you know, the deficiencies the FDA found, and we can get that in well within the expiration date in terms of getting that across the finish line as long as we address the issues there.
Okay. I mean, you've talked about a lot of programs. Is it the right assumption to make then that you would like to address any drop-offs in expected Jakafi sales in the future with your own pipeline advancements rather than through biz dev?
I mean, Christiana can talk about biz dev. I mean, the promise of all of, y ou know, BET is about improving efficacy in terms of spleen and symptoms. ALK's addressing the anemia component, so they, you know, potentially a huge deuce. Christiana said, you know, in MF, currently, there are about 18,000 patients in the U.S. RUX is using about 55% of them.
Mm-hmm.
There's opportunity in that. In PV, you know, as Christiana said, the current penetration's about 25% of the 25,000. Again, opportunity there. Yes, absolutely. In terms of BD, you know, LIMBER is one area we'll always look at.
Yeah.
Yes, absolutely. We are looking at BD as a way to supplement-
Mm-hmm
our internal portfolio and activities. We always look for interesting assets that will fit well, not just within LIMBER, but the other areas of focus, broader oncology, as well as dermatology. We don't rely on BD to continue to grow as a company. It's good not to have to depend on business development. We have our internal growth engine, but also we can supplement with external opportunities. We have the ability, we have the cash position and the strong balance sheet to be able to do that.
Yeah. In some of my conversations with investors, I think people have brought up things related to LIMBER. Companies that might have had profiles that could have been complementary to Jakafi, I don't know, like Sierra, like Imago or anything related to that. I mean, I'm sure you have a team that looks at everything that's out there, but what is the hurdle that Incyte believes needs to be achieved in order to make an acquisition of an external asset worthwhile relative to the, you know, investments that you're making in your own pipeline?
We need to believe in the science. We need to believe on the profile of the product and the ability to really address, successfully address a need. Then we also need to make sure that it makes sense from a valuation point of view.
Mm-hmm.
You mentioned a couple of companies. One has an LSD1 program. We have our own LSD1 program.
Mm-hmm
stopped. We didn't see this as a mechanism that made sense. Sierra is a JAK inhibitor, a dirty JAK. We feel that we have programs in our internal pipeline that we are more excited about.
Mm-hmm.
they need to, you know, also on a relative basis to what programs we have internally-
Yeah
to be attractive.
Yeah. Of course. I guess related to that, how do you balance the need to want to invest in your own pipeline that you're excited about while also making sure that you have a robust mid to late stage group of assets that can keep investors excited and bring in new investors?
we do have, what we view some very promising mid-stage-
Mm-hmm
-assets in our pipeline, but we are always looking to see if there are additional assets that we can bring in. When you look at programs like OPZELURA, povorcitinib, these are programs that would be potentially coming to market, whether it is additional indications or getting approvals with povorcitinib, but as a new drug, over the, I would say, next few years.
Mm-hmm
-way before the patent expiry of, Jakafi. I think these, and some of the other programs fall very nicely within that, mid-stage-
Yeah
type of, you know, category that-
Sure
you indicated.
Yeah. On the topic of OPZELURA, let's spend a couple of minutes on that. You know, the, it's a RUX cream that's launched in two skin indications, AD and vitiligo. The very initial trajectory of the launch last year indicated, as our doctor check said, that there's a lot of interest in using the product. I think always in the background, there's a question of what gross to net will end up looking like. I think based on the commentary that your team makes, that is something that you pay very close attention to. You know, you guide to it every year. At what point does gross to net become less of an effort to have to reset every year in order to achieve a target goal?
When you look at, gross to net last year, gross to net improved dramatically through the year.
Mm-hmm
U ntil we got to that exit rate of 50%. That was driven by the expanded coverage. We had our contracts with the PBMs in place, then we expanded the coverage, the payer coverage, by getting additional plans under those PBMs covering OPZELURA, and that translated into this improvement in gross to net. The coverage and a lot of work behind the coverage is already in place. The PBM contracts are, tend to be multi-year contracts. The OPZELURA is now on formularies for the majority of plans. Obviously, we'll continue to work with plans to make sure that OPZELURA is on formulary and is well-positioned within the formulary, and the copay levels are.
Mm-hmm
A re appropriate and improved over time. A lot of our focus is now shifting on continuing to drive demand, both for AD and for vitiligo. The gross to net, as we said, we expect that the average for the year would be at around 50%. You saw an increase in Q1. That very much was driven by Q1 specific dynamics that you see across, you know, products and across the years. You see Q1 always being the high year for gross to net. We expect that now to gradually come down and again, average around 50% for the year. What we are very much focusing is in continuing to drive the uptake in both AD and vitiligo. Vitiligo, it's the newest of indication. Both of them are very new.
Mm-hmm.
Vitiligo, we got the approval, less than a year ago. It's a very exciting indication given that there is no other therapy that has been approved for repigmentation. There is a very big unmet need. It's also a significant size opportunity. There are around 1.5 million patients in the US who have vitiligo. In the past, only 10% of those patients have been seeking treatment because there was nothing that would really help them with repigmentation, except to a certain extent, phototherapy. Now, we are looking at not only getting those patients that have been actively looking for a treatment on OPZELURA but also activate the 90% of patients that in the past were not seeking treatment. We see this as a very big opportunity.
In AD, we have talked about in the past that we expect patients to be using two to three tubes a year, given how OPZELURA is used. In vitiligo, it's continuous usage over a long period of times, and we expect patients on average to be using around 10 tubes a year. You can see how vitiligo patients with 10 tubes on average a year results in a much higher revenue contribution.
Mm-hmm
T han an AD patient. Obviously, getting, vitiligo patients on therapy and getting them to stay on therapy and it would be important. We see, first of all, the actively seeking treatment patients started to come on into the.
Mm-hmm
T o seek treatment. We expect, and we are doing a lot of activities that, to activate the rest of the population. Given the 10 tubes a year, given the 50% gross to net and the price of OPZELURA, you can see how 10,000 patients will translate into around $100 million in revenues. Here we are talking about 1.5 million patients.
Yeah
E ven the, just looking at the active population of 150,000 patients, you can see how quickly you can get to a very big opportunity.
Sure. I guess based on the math that you have, how does the payer mix come in? I think there was some commentary about Medicaid not necessarily being higher than expected, but just coming into your expected level faster than you expected.
Yes, exactly. The Medicaid contribution into the mix was expected. What we didn't expect, it was how rapidly they covered OPZELURA, which is great.
Is it?
How rapid the uptake was.
Is it because of AD or vitiligo?
We see broad coverage in both.
Mm-hmm.
Right now, the data is more limited, so we cannot really comment.
Yeah
O n the breakdown. It was great to see that rapid uptake. Obviously, it impacted Q1.
Yeah
M ore because of how faster the uptake was relative to what we were expecting.
Right. Right. With that impact in hand, are you expecting, without guiding, directionally, what the second and third quarters of the year would look like? Do you have a sense for seasonality at all? because, you've only really been on the market for about one year or so on the.
Yes. We don't expect seasonality for vitiligo. For AD, there has been some comments in the past that there may be some seasonality. Steven, you may want to comment on this. We do expect in terms of the gross to net to come down gradually through the course of the year because of the-To one, specific.
Mm-hmm. Right.
D ynamics that we talked about.
Maybe just a general question about the split that you expect longer term between AD and vitiligo. I think people are really interested in that. It's interesting because AD technically has different drug options, albeit not necessarily for the same targeted population, whereas vitiligo has nothing.
Yeah.
Is it correct to think that vitiligo will be the bigger of the two?
We see both as significant opportunities. In AD, sure, there are other treatments. The hallmark characteristic of OPZELURA is a very rapid itch relief.
Mm-hmm.
You see itch relief actually with some data that we have shared within minutes. I think OPZELURA is the only drug that is providing that type of relief, which is very important and very needed by AD patients. Vitiligo, to your point, is the only therapy available for OPZELURA is the only therapy available for vitiligo, so there is a different nature.
Mm-hmm
O f need. We think both are going to be significant opportunities.
What is the initial metrics on vitiligo telling you? Like who are doctors initially prescribing to?
Very early to say. Right now, we have only a few quarters of data. We believe that the first patients that get prescribed are the ones that have been actively seeking treatment, that have vitiligo in areas that are exposed, that can be seen, face.
Mm-hmm
H ands, et cetera. We expect that we'll start seeing more of the inactive patients to come in. Logistically also it takes some time for those patients. It's not just that they need to become aware that now there is a therapy available for repigmentation, but they need to get an appointment with their doctors. A derm appointment can take six months.
Mm-hmm
to take place. It takes some time before we see that, you know, broader population start to come in.
Maybe in the few minutes we have left, Steven, can we talk about the LIMBER updates that are expected later this year? The company has obviously talked about the importance of that for a number of reasons, but which of the updates for LIMBER per se would Incyte be particularly excited about?
Yes. You know, we should have on just about all the programs. Both the BET and ALK2 will have more substantive dose escalation data that we'll present at the end of the year, at a major medical meeting, hopefully end of the year, early next year, you know, indicate the registration paths for both those programs. Mutant CALR will go into the clinic, you know, very soon. I'm not sure we'll have the opportunity to have a public data presentation, but we may be able to communicate in an appropriate forum, you know, once it goes into man, is it safe, firstly in terms of not affecting normal hematopoiesis. Because of its mechanism of action, we can very quickly get a readout on allele burden, in terms of CALR allele burden we can measure.
As Christiana alluded to, the axatilimab registration study, AGAVE-201, will report out in the middle of this year. It's a, you know, product we licensed from Syndax, so you'll, you know, hopefully see positive press releases in that regard. You know, if the timing works, we'd like to get a BLA in right around the end of the year, should it be a positive study. Those are, I think, you know, the LIMBER updates that'll include, you know, medical data presentations plus potentially press releases as well. It's an important year for us. Yeah.
Which of those could be, size-wise the biggest?
Yeah. You know, if you had to look long term in some crystal ball, if CALR works the way it looks pre-clinically, it'll be one-third of MF and one-third of ET, and it'll be potentially disease-modifying quote cure. That, in the long term, if it pans out to what it pre-clinically looks at, is, you know, a huge opportunity. Not to take away from BET and ALK2 in terms of its opportunities in myelofibrosis. Axatilimab initially will be third line graft-versus-host disease, but ultimately its promise may be in combination with ROCK earlier in the treatment paradigm. You know, the biggest would be CALR if it hits the way we want it to.
Okay.
Yeah.
Perfect. With that, I think we're out of time for today. Thank you both so much for coming and presenting for Incyte. There's a lot going on. We're gonna be looking forward to your updates in the second half of the year. I'm sure we'll talk before that.
Thanks.
Thanks everyone for joining us this morning. Really appreciate it.
Thank you.
Thank you, Tazeen.