Good morning, everybody. My name is Andy Chen, one of the SMID Biotech Analysts here at Wolfe Research. Today we have Incyte. We have Bill and Pablo from Incyte joining us. We're very excited. Maybe starting from the big picture, right? Incyte right now is benefiting from a lot of products moving toward the pivotal stage, moving toward the launch mode. Can you maybe talk about just basically the overview here, how you're viewing the business right now compared to, let's say, last year?
Sure. It's a good question. It's nice to see you, Andy. Good morning, everyone. We laid a framework out at the beginning of the year that I think is still intact and has progressed significantly over the past 12 months. The framework was, we have a core business, JAKAFI, that serves as a foundation, and that's on track to reach at least $3 billion-$4 billion by 2030. We report on that business each and every quarter. In fact, in the third quarter, that business was up north of 30% on a year-over-year basis. It's supported by several launches that'll be important. We have the XR launch, the povorcitinib launch, and then OPZELURA in the international markets.
The second part of our framework is our pipeline, and over the past 12 months, we've moved several compounds from phase I development into phase III, and that includes 989 for MPNs, G12D in pancreatic cancer as well as colorectal cancer, and then TGF-beta bi PD1 for colorectal cancer, and then latarcibart. You look at those four assets, I would say, especially for 989, G12D, and latarcibart, those are high PTRS projects. So on a risk-adjusted basis, they have a great deal of value when we think about the recovery, and the pipeline will drive the recovery. TGF-beta bi PD1, we shared very impressive data at ESMO. It was response rate data, and if that response rate holds up, that is an outlier opportunity inside of Incyte. On a risk-adjusted basis, it's not quite as valuable as the other three that I just mentioned.
You put those two pieces together, a $3 billion-$4 billion core business, you layer on a pipeline that on an unadjusted basis doesn't require heroic assumptions to believe it could be, on an unadjusted basis, $8 billion-$10 billion, and we will have sort of created a recovery for Incyte post-2029 where the company can grow at a top quartile rate, call it a 10%, 15% CAGR. The last pillar part of the framework is business development, and we'll use that like any company does, which is to supplement what we're doing internally. We're focused on assets that can be approved in the 2029 to 2032 window and be accretive during that period of time. Pretty agnostic as it relates to therapeutic area. Hematology, oncology, and immunology are relevant to Incyte, and we have the capabilities to operate in all three areas.
Then as it relates to stage of development, we can do early-stage deals with less upfront capital or later-stage deals with more upfront capital. We have about $4 billion on our balance sheet, and that will grow to $6 billion if we don't use it. We believe we have all the ingredients to transition the company away from JAKAFI. I think what we're focused on is increasingly execution. The biology risk is not zero, but it's a lot lower than what it was at the beginning of the year.
You talked about the current business, you talked about the outer years and where it could be in the future, but what about, let's say, in the next one or two or three years? What are you hoping to unlock in 2027, 2028, 2029?
Yeah, I'll break it up between core business and pipeline. In the core business, what you want to watch for, and what we're judged on, is the launch of povorcitinib. We expect to get an approval in early 2027. We think that is going to be a very important growth driver for the company. Watch the conversion rate of XR on a quarterly basis. We'll provide an update. We're at about 3% right now. We expect that that's going to land, broadly speaking, between 10% and 30%. If it was 15%, that would be the midpoint. That would be a solid outcome for the company. We expect some data on povorcitinib in PN at the end of the year, which will be another indication for that product in addition to vitiligo, so it would be a three-indication JAK inhibitor.
We'll have data on OPZELURA in HS, in mild to moderate HS also, towards the end of the year, and those are catalysts for that core. As it relates to the pipeline, we'll provide updates, and Pablo can go through this, on 989, G12D, and latarcibart, which will be advancing into phase III, and we have to convert these phase III programs into FDA approvals and then ultimately revenue earnings and cash flow.
Maybe we can talk about each of these products, right? Maybe starting from JAKAFI XR, so 3% share so far, but it has only been four or five months. Can we extrapolate from that 3% for the next two years? Because I think we can get to more than 10%, right?
Yeah. The way I look at it, just mathematically, there are 26 months between now and we lose JAKAFI IR. If we converted IR to XR 50 basis points a month, that is 13, add it to three we got, we are at the midpoint. If we do a little bit better than 50 basis points a month, we can get to the upper end of the range. The most important step in 2026 was formulary coverage, which by the end of this year, we will have all the formulary coverage we needed, which will be 80%-90%. So that is a positive. Now, we have to actually convert, and that is done through obviously a sales organization. As you get into early 2027, we will have a much better sense of where we are going to land in that range.
Got it. After JAKAFI, you have your non-JAKAFI heme-onc business, a lot of the smaller products, but is there anything that is easily missable by investors here that you want to emphasize?
I think that NIKTIMVO, MONJUVI, and ZYNYZ collectively is a very sizable business and important part of growth. You see the results that we're posting on those three products each and every quarter, and they're on a good trajectory. Each one is in their third year of launch, and so there'll be some growth moderation, but nothing there that anyone should be surprised by.
Right. With future indication expansions, would MONJUVI be one of the top growers?
Yeah, it's a good question. We have two indications right now, relapsed and refractory DLBCL and follicular lymphoma. We are expecting an FDA action in early 2027 on frontline DLBCL. Obviously, that market has evolved significantly in terms of competition, but there's only two large phase III studies in the frontline DLBCL setting. You have EPKINLY and POLIVY and MONJUVI. A relatively modest share of frontline DLBCL could double the size of MONJUVI. An important part of the growth outlook for MONJUVI will be getting the frontline DLBCL. If we weren't to get it would still be an incremental contributor to the core business.
Got it. Upcoming data, which is most important to you, will be ASH data, mCALR data. Can you maybe frame for us what is good, what are you looking for, and what's going to easily convince physicians that this is going to be a good first-line product?
We have the update on CALR at ASH is a little bit broader. You are asking about 989, which is obviously the lead program, which is already in pivotal trials in second-line ET and second-line MF. We are also going to provide, for the first time, a view on 798, our next-generation CALR antibody, which improved all the properties, all the key properties of 989. There is a potency, as well as half-life, and we can talk about it in more detail. To 989, what we will have at ASH for the first time is a large group of patients, JAKAFI-eligible, frontline MF treated with 989. As you know, at EHA, we presented a cohort of patients that were JAK ineligible, treated with 989. That sort of set the floor where you should expect the SVR35 and TSS50 rates. But this is a different population. These are JAK-eligible patients.
These are the patients that are going to be represented in the pivotal trial in frontline MF that we intend to launch in the first part of 2027. Importantly, the abstract has been already disseminated. I think it is important to be patient, wait for the actual meeting. The data cut at ASH has four more months of follow-up, and we know that 989, particularly in MF patients, takes some time to solidify its effect and that the efficacy continues to deepen over time. I would ask you to wait for that data, and then we can talk about it in detail. We will have the usual endpoints, SVR35, TSS50, of course, will have effect on hemoglobin, et cetera. And we think that all in, this data confirms our view that there is a path to get 989 approved in frontline MF.
We just have to execute on a frontline study that will finalize the design next year. The two elements that we need to finalize the design are the data that I just described, what is the efficacy in eligible frontline MF, and the second part is to finalize conversations on an endpoint with the FDA. Once we have those two things, we will finalize the design. Just to be clear, we will do a frontline study in MF. The only question is that going to be in type 1 or all-comers? Is that going to be a two-arm study or a three-arm study? Those are really the two questions that remain, and obviously, what is the primary endpoint? We will put all that together in the early part of 2027, and then we will disclose the design of the study, which will launch in the first half of 2027, towards the middle of the year.
Pablo, you mentioned the second-line JAK ineligible data that you saw previously. To me, that data looked numerically quite good.
Yeah.
Can you talk about whether that's a good forward predictor for what you're going to see in first line?
Well, it is. Directionally, it is. You always hope to do better.
Yeah.
Those patients were JAK ineligible, and that ineligibility is usually because they don't have It's usually because of anemia. Some of those patients tend to have a lower symptom burden, so it's harder to improve the symptoms in those patients. But overall, yes, directionally it is. We certainly hope to do better than that, and we'll show the data in just 30 days.
Yeah. You have a second-gen molecule with some, I think, preclinical data coming up and starting phase I next year. How do we think about that molecule, and what we see next with the preclinical data, is that going to be useful for how we think about the future next-generation product?
I think it will be. There will be a poster outlining in detail all the properties of 798, our next-generation CALR antibody. It is very important for us to be the best, first of all, the first approved CALR antibody, and we think 989 is on track to do that. We have an ongoing second-line study in ET and second-line MF. So we are on track to be the first antibody approved. We also believe it is important for us to be the best in class CALR antibody. We think when we look at the properties of 798, that is the case, again, based on preclinical data at this point. So, what we have done here is we continue to improve on the profiles of 989 on three key aspects. One is affinity, but it is not critical. More important than affinity is potency.
You will see a 70-fold more potent antibody against non-type one mutations with broad coverage of non-canonical mutations, and you will see all that detailed in the poster. The second part is longer half-life for convenience for patients, obviously. The predicted half-life at this point in humans is 50 days. Obviously, that is based on non-human primate data. If that plays out, you are talking about at least once a month, maybe even less frequent than once a month. That remains to be seen. Clearly, it will be a much less frequent infusion than 989. 798 will enter the clinic as a prefilled syringe subq, which is again more convenient for patients, and we are already in conversations to develop an auto-injector, a pen.
We expect that if everything goes well, 989 will be approved, 798 will come after, and quite honestly, will make 989 obsolete, once it is approved, assuming everything goes well over the next few years. Our plan, just to complete, and it is to start, if everything goes well, if we can start at the dose that we want, is to start pivotal trials for 798 at some point in 2028.
Switching gears and maybe we can talk about G12D because that is another hotly discussed topic. You have announced the partnerships, and we have also seen some competition data, in the past few months. Can you maybe talk about what you see as the competitive landscape in PDAC and why these partnerships and potential future partnerships would be the best way forward for Incyte?
There is a saying in Talmud, "The gift of prophecy has been given to the fools," right? If you think you can predict the future, you are probably a fool. I do not know what the management of pancreatic cancer is going to be in five-plus years. What I do know is that we want 734 to be a key part of that, and the way to do that is to develop multiple combinations and give physicians and patients multiple options how to treat pancreatic cancer. Our lead indication is frontline in combination with chemotherapy. We can combine with both types of chemotherapy, and by doing that, we think we can cover a big part of what the market is going to be at the time. We recognize emerging data in combination with PRMT5 inhibitors is very exciting, so we put a collaboration in place with BMS to do that.
Preclinical data published earlier this year showed that the combination with PARP inhibitors could be really interesting in this setting, so we put a combination in place with Synnovation for their selective PARP1 inhibitor. We also think, and we have data in colorectal cancer already, and as you know, in colorectal cancer, EGFR is an important driver in KRAS-mutated tumors, so we put a collaboration in place with a next-generation EGFR inhibitor. That, as you pointed out, is just the beginning. Our goal is to give physicians and patients a few years from now as many options as possible how to treat their pancreatic cancer. Those choices will be made on the basis of molecular profiling, personal choice, and efficacy data, to be honest with you, and we want to make sure we play in all those areas.
That is PDAC, right? What about CRC, and the landscape could be a bit different there?
Well, in CRC, we have already data in combination with ERBITUX. We presented that at ESMO. We had a PFS of about 7.2 months, which we think is very competitive in a space that is dominated by things like LONSURF, Bev, fruquintinib, and regorafenib. We are launching a pivotal trial in second, third line colorectal. It will be predominantly third line, to be honest with you, because we are mandated prior Bev exposure. So, it will be a third-line study, and in that setting, when we look at the landscape, we think that the data that we have gives us a pretty good probability of success in a pivotal trial. So that study, we are in the process of launching it because we want to be fast to market. In parallel, we have treated cohorts of patients with frontline chemotherapy in combination with EGFR inhibitor G12D. We will have that data next year.
Those cohorts are fully enrolled. That is one bucket of the colorectal story. The other is the combination with petosemtamab. We think there is probably going to be a very important role for next-generation EGFR inhibitors in colorectal cancer based on the data that our colleagues at Genmab showed at ESMO. So, next year we will make the decision whether our frontline colorectal study is in combination with cetuximab or with pertuzumab. We recognize our competitors are going all out with cetuximab. We think it is worth, in this case, taking a deep breath, looking at the data, and maybe waiting a little bit longer, but launching that study with a next-generation EGFR inhibitor. We will make that decision next year.
Then, potential future collaborations in PDAC? How long are we To what degree do we have to wait until we see the next one?
Well, I can't put a timeline, but there's two sides to these conversations. I think it's important to continue to look for options. One obvious one that has come up in conversations is a pan-RAS, pan-KRAS inhibitor. We are having multiple conversations in parallel. We'll make that decision in the relatively near term.
Got it. Then another molecule that's less talked about, but we like it a lot, it's the TGF, bispecific. We've seen very good response data, but the PFS data is still a bit early. Can you maybe talk about your confidence behind this molecule, and when are we going to see PFS separation?
Look, we are This, Bill always says, this is potentially the molecule with the biggest upside in our pipeline.
Yeah.
It hasn't been fully de-risked yet. The response rate, as you pointed out, Andy, is very strong. I think the 71% in all comers, 83% in patients with liver mets, the subset of PD-L1 positive patients, which are the vast majority, is also over 80%. I haven't seen a response rate with an eight in front in MSS colorectal cancer patients with liver mets. If it exists, I haven't seen it. We really like that. This is about durability, it's about PFS and survival in the long run, so we need to wait a little bit longer to be fully de-risked. We thought the data that we had was strong enough to launch a large phase III study in frontline MSS colorectal. That study's enrolling ahead of schedule.
There's always been a lot of support for this program, and I think the reason for that, by KOLs and physicians in general, I think the reason for that is we saw a 15% response rate as a single agent in a population where PD-1 inhibitors basically give you zero responses. I think that has generated enthusiasm, and particularly in patients with liver mets, which are even harder to treat. The study's going very well. We'll have the PFS data for you next year. I'm not going to set a timeline yet. These are event-driven analysis, so when it's mature enough and we're confident in it, we'll show it. We're cautiously optimistic everything's going to be okay. This is a program that needs to be fully de-risked, and I think that's going to happen in the first half of next year at some point.
Then, povorcitinib, you're launching that product soon, and I don't think we have seen RINVOQ data yet, but presumably that's also going to be on the market. You have a one-year lead, probably a one-year lead over RINVOQ, right? So, how are you going to launch the product, and how are you going to take advantage of the lead that you have?
We expect the approval in early 2027.
Yeah.
What will be important is that first we have a label in both the pre and post-biologic setting, and almost 70% of the patients in our phase III study were in the pre-biologic setting. That is relevant because it allows you to source utilization from two distinct clinical situations, patients who are on antibiotics and steroids, which is the large majority of HS patients who need to graduate to an advanced therapy. It also positions povorcitinib for patients who are on IL-17s, may have active disease, not consistent pain relief, or have some injection fatigue. We are having conversations with the FDA right now about the label. If we are able to get the broad label, the next step is formulary coverage. Typically, plans will do a PA to a label, so that will be very, very relevant.
I think there is a price point that we will be able to charge for povorcitinib that makes sense for PBMs and plans, and also rewards Incyte for all the work that we did to bring it to market. Then, of course, we have to then launch the drug through a sales organization. Benefit we have is we are an incumbent in the sense that we have over 300 people who are promoting OPZELURA and who will be promoting HS. We have excellent relationships with all the prescribers around the U.S.
We will cover about 10,000 physicians and fully fund and resource the launch. It is a really important launch to us as we think about what we are solving for in 2029 and beyond, and this will end up coming down to execution like any new product launch comes down to. Right now, all the ingredients are in place for a successful outcome here.
Bill, are you implying that depending on the label, right, whether you get a broad label, that is going to dictate how you are going to set the price for the product, right?
There's a relationship, obviously, between price and volume, and obviously that will come into play. But to be fair, there's a fairly narrow corridor for pricing in the HS market. We know what the IL-17s prices are, we know what RINVOQ is, and that range will be somewhere probably in the middle of it.
I also get this question from investors a lot, which is that, so let's assume that you get the pre-biologic label as well, but does that market commercially? Is that a big market given that we have the IL-17s, which work pretty well, and then we have the HUMIRA biosimilars? So, is there a real market in that pre-biologic setting?
I think there is, and I think it's not an either/or.
Yeah.
There will be three formulary situations that we will encounter, and we will encounter all three of them. There is open access after a steroid or antibiotic. There will be a PA to label, which is, if we are approved in both the pre and post-biologic setting, we may not have to step through biosimilar HUMIRA. Then there will be a step through biosimilar HUMIRA. We will see all three. We do not need to have a complete win as it relates to formulary coverage, but we do believe there will be plenty of situations where there will be access to povorcitinib before biosimilar HUMIRA. If it turns out that we are garnering more utilization in the post-biologic setting, there is still a path to building a sizable product approaching in HS a half a billion dollars.
I think, Bill, you alluded to the fact that you are an incumbent. You are selling OPZELURA right now. Does it resonate with physicians that, in your portfolio, you have a topical, you have an oral? Does that matter to physicians that basically treating the same disease? Does that matter?
I think that a franchise that includes a topical to oral sequencing strategy is relevant. It becomes really relevant if we have a positive study in mild to moderate HS, not moderate to, but mild to moderate with OPZELURA. We know the phase II data were good. We had a 75% HiSCR50. Obviously, the vehicle in these studies also achieves a very high response rate. But anytime you have a franchise, it will be true in MPNs, and it is certainly true here where we can market both OPZELURA and povorcitinib alongside each other in a sort of sequencing way, will create an advantage for us.
So in terms of competition, another company failed in HS yesterday, and then two months ago, I think, another company failed in prurigo. You are going to read out prurigo soon, and I think you are going to have asthma data soon as well. Is the market expanding, right? Just based on whatever is happening elsewhere, is the market expanding?
The opportunity.
Yeah, the opportunity, is that expanding?
The benefit we have, and you said it at the beginning, is we will have the first multi-cytokine inhibitor approved by the FDA that is oral. That doesn't exist in HS, which is one of the more difficult conditions. In PN, it is an itch disease, and we know JAK inhibitors work well on itch, and the other thing they do is they work very fast. I think the setup right now for povorcitinib in HS and in PN, and then we have a third indication, vitiligo, is about as constructive as it can be.
Maybe as a wrap-up toward the end, how are you thinking about messaging after ASH, right? After you present mCALR data, what story is Incyte going to tell in 2027?
Well, I think the most important point for 2027 is we expect to be starting a frontline study in MF with 989. Pablo described the two different pieces of information we are going to need to finalize the design, the size, the study endpoints. The next focus will be on 798, our next-generation antibody, and we should have data on 798 towards the end of 2027. We will have, as Pablo said, first, and what we believe could be the best antibody in the area of Incyte that is the central identity of the company, which is MPNs.
You sound a lot more excited about these than the povorcitinib launch.
I do not think it is an either/or. No, I think we are excited about both. They are just very, very different.
Yeah.
You know?
Yeah, because it's one of the bigger launches at Incyte.
Povorcitinib?
Yeah.
Yeah, you can certainly with HS, PN, and vitiligo, and I've said this a few times.
Yeah
Without a lot of heroic mathematical assumptions, estimate a product could approach or exceed $1 billion in sales.
Yeah.
First step is get the HS approval. The next step is to get the PN and vitiligo approvals, which will be in early 2020, call it early 2028. Successfully execute those launches. You know, one of the things about povo is it's first in HS, it'll be first in PN, and then we'll be in a mini oligopoly in vitiligo. But three indications, novel agent, first in two of them, I think it creates a good opportunity.
You're not worried about future competition from other JAK inhibitors or other orals, right?
There's always competition. I say if you're one of one in a market, you should ask yourself why you're the only one there. There'll always be people in our rear view mirror. I think we just have to focus on executing. I don't think this will become about a market share battle. These are not mutually exclusive situations, and competition is just part of being in a large, lucrative, attractive market.
Got it. Bill, Pablo, any closing remarks?
I think we should be judged on everything we talked about today. Pablo and I were talking about this earlier, we run the company at a very detailed level, and we have made a lot of progress in the last 12 months. We are not done, but I believe that all the ingredients are in place where Incyte, post-2029, could be one of the top quartile growth companies in the industry.
Very exciting.
All right.
Thank you, Bill. Thank you, Pablo.
Thanks, Andy. Good to be here.