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Wells Fargo Healthcare Conference 2023

Sep 7, 2023

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

All right, good morning, everyone. We'll get started with the next fireside discussion. My name is Derek Archila. I'm one of the senior biotech analysts here at Wells. I'm very excited to have with us, for the next discussion, Incyte. From the company, we have the Chairman and CEO, Hervé Hoppenot, and also the CFO, Christiana Stamoulis. Thank you so much for joining us.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Good morning. Thank you for inviting us.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah. Well, look forward to the discussion, but maybe, Hervé, if you want to just start by kind of giving us kind of a state of the business, where you guys are, and what you guys are executing on, and then we can kind of start to dig into the questions. That'd be great.

Okay. So yeah, so where we are, I mean, basically, it's like, the usual, two big question is, how is the business doing? How is the portfolio and the pipeline, evolving? So on the business side, obviously, Q2 was a very strong quarter, and it was, you know, the top line was growing north of 20%, which for the size of our base business is very good. And it is basically coming from, I would say, finally, coming from diversification out of Jakafi. So Jakafi is growing, but it's growing at a lower rate of growth than the rest of the portfolio, and most of the growth is coming from the success of Opzelura, which is obviously something that everybody is watching. So it's a very good sign.

We can, we can go into the details on what's happening on the-

Sure

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... Opzelura fronts, but you have basically the base business with Jakafi that is still growing, and we can speak about that-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Because it's important for the next few years. And you have now the new oncology business launching in many countries in Europe, outside of the U.S., and Opzelura, where the U.S. is the main driver of the growth, and all of that is really evolving very well. On the pipeline side, we had two pivotal studies with positive results that were announced during the quarter. One is atopic dermatitis in children for Opzelura, and the other one is a new product, axatilimab in GVHD, where we had data that potentially could be used for registration, and it was, in fact, very good data in terms of efficacy and safety. So that's, that's important for the late-stage pipeline.

We have a number of projects that are moving very well now in what we call LIMBER, which is our life cycle management for MF, GVHD, and PV. And obviously, with other mechanism where we are making good progress, like povorcitinib in multiple indication and oral PD-1 in also many indication in cancer. So both on the IAI and on the cancer side, now the company is well-balanced with top-line growth and with an evolving pipeline that is doing very well. So it was Q2 was an important quarter for us because it was a proof of the potential of Opzelura, which I think is something everybody has been waiting for.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

At the same time, a lot of progress in the pipeline.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. Excellent. So maybe just to start off and kind of on the Jakafi front, that base business, where do you kind of see the growth drivers for Jakafi here, you know, in the near to medium term? You know, ultimately, you have some more competition starting to come in in kind of the MF area. How are you guys thinking about that market also as kind of being either a future growth driver, or is it more, you know, an area where you might see flatter growth?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So there are three different components of the business for Jakafi, in the US, GVHD, PV, and MF. As we have spoken about, MF is the largest now. It's probably 45%-50% is coming from MF, then PV, and then GVHD. GVHD is the fastest growing because we were just launching over the past two years. The largest potential is in PV.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Okay.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

And so if you think of the dynamic of each of the three components, what we are planning to see happening is PV growing faster and at some point becoming the largest of the three indications, followed by MF, followed by by GVHD. So that's something that has been happening slowly. I think it will be accelerated by the IRA. In fact, the, the reduction in the copay out-of-pocket will have a disproportionate impact in PV.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Okay.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

That's, you know, the way we see it. The new, frankly, the new momelotinib, to be clear, that should be approved today or tomorrow or very soon.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Very soon. Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So we'll see, we'll see what it does. It's, it's just one more product that will be available. It has been studied in patients who have been already treated with Jakafi. It could be helpful, in fact, for Jakafi, by providing a new line of therapy that can be used after Jakafi, because we know in MF there are 35% of patients who are not receiving any JAK type of treatment. And the reason for that is that physicians would rather wait to initiate-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... treatment because they don't have a very good second line. So having better further lines of therapy is always a good thing. And, and we think it will be, you know, another of this, potential treatment after Jakafi. Jakafi is very well established as a standard of care. It has a survival benefit that has been seen.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So benefit is equivalent in patient with or without anemia. So it's not, like, dependent on the anemia status of the patient, and we think it's it has a very strong position, and it will continue to have it. As I said, MF is like half of the, or less than half of the overall business for Jakafi, and we see the growth profile for Jakafi to continue over the next few years.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Like, how do you think about that growth profile? Is that gonna be kind of like mid-single-digit, high single-digit? Like, how does that kind of, you know, evolve over the next couple years?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think with the size of the existing business being what it is, you have been seeing already over the past 10 years-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... the growth rate-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

has a tendency to, in percentage, to go down, obviously. We have had new indications that have been helping over, you know, 4 new... We have 4 indications today, so it has been helping keep the growth. I think that growth rate will continue in a number that will probably be, you know, getting smaller and smaller over time, which is logical, when in fact, the growth, the absolute growth in dollar has been fairly stable from one year to the next. I mean, it has been around $200 million a year over the past few years.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. And then maybe you alluded to it a little earlier, just in terms of, like, the LIMBER programs and life cycle management for Jakafi. I guess, walk us through, you know, kind of the different programs that make up the overall LIMBER strategy.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

That's the most important aspect-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Of this. So we have basically three ways to look at the life cycle management of that franchise. One is the once a day. So the once a day is a very simple way of thinking.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

We have a drug that is twice a day. You can replace it with once a day. It's better. It has a longer life in terms of IP, and that. So we went through, in fact, a fairly disappointing situation here with the FDA asking us to continue to provide additional data or to provide a new formulation to be able to do that. So the program has been unfortunately delayed, but we are speaking with the FDA today to discuss the existing formulation and the new data that we have-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Okay

Hervé Hoppenot
Chairman, President, and CEO, Incyte

- that could be or not fulfilling their needs. I think it's a low probability of success, frankly. And then we are at the same time working on a new formulation that would be helping deal with their question, which is about Cmin-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... and, how we can make it fit, the criteria of bioequivalent. So that's ongoing. In the best case scenario, it could go relatively fast, and as I said, I don't think it's a high probability. In the worst case scenario, it would take probably another 1.5-2 years to get it, fully done.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Okay.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

It will still be in the window that we need-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Right

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Versus the patent expiration. The second aspect is in myelofibrosis to improve efficacy and safety of the current treatment, and that's what we have with the BET and the ALK2, where we are now in a phase where we are finalizing our phase II. We are planning to be in pivotal study in 2024, and where we will be able, on the BET inhibitor, and you know there is another BET inhibitor that will have results relatively soon, where we will be able, hopefully, to improve efficacy in terms of response, symptom, and spleen size. With the ALK2, which is a very different approach, where we are basically modulating ALK2 with the goal of improving anemia.

What it does is first, obviously, potentially reduce the need for blood transfusion, but it also allows us, and that's the most important part of this, to use a higher dose intensity of Jakafi.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So all of that is ongoing. It should be in pivotal studies next year. And then we are looking at outside of the just life cycle of myelofibrosis, new mechanism that can be applied in a different type of MPN, like CALR. So we have the first CALR antibody in the clinic today, and that's a mechanism that could be helping, you know, with the disease-modifying type of mechanism for around 30%, 30% of patients with MF and ET. So that would open a new potential in a different indication. So all of that is evolving very well, and what you can see over the next 5, 6, 7 years, is that the goal will be to have a new franchise-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... in each of these indications, or at least in MF and potentially now in ET, where we will be, in fact, leading with new mechanisms that have a clear clinical benefit.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. And just going back to your comments on the BET, obviously, you know, we have covered more focuses. And, you know, is there any differentiation between the BET inhibitor you guys are, you know, putting through trials and developing versus pelabresib? I mean, I don't know if you've looked at that. I don't know if there's any data out there, you know.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I mean, the schedule of administration is different.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Is that we have a continuous administration-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Okay

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... where, in fact, pelabresib has two weeks on, one week off.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So it's a different way of using BET inhibitor. It's a different way of managing what is the dose-limiting toxicity of thrombocytopenia, which is on target-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... so you cannot avoid it. I think the clinical data will tell us if there is a differentiation. At the end of the day, what we see is that even if they are aware of the same type of clinical benefit, I mean, we would have, obviously, the advantage of being able to combine it.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... so that in a, in a fixed-dose combination, and that would have certainly a commercial effect that is very, different. The other aspect is where, with what type of patients you develop it in. So it will be interesting to see their data, I think it's before the end of the year.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Correct. Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... to see that data, in the first-line setting. We believe, in fact, the best use of this type of products, and we have the same, way of thinking with the parsaclisib, is more in the suboptimal responder than in the first-line setting.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

... Interesting. Okay. And when will we see more data for both the ALK and the BET?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think you will see it as we are now in this phase of dose escalation.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

-dose optimization, combination with Jakafi to prepare for the pivotal studies. I think you will see it as we go in, you know, in the conferences coming up. Yeah.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. So maybe shifting gears to Opzelura. So obviously, you talked about that earlier in your comments about, you know, that's kind of helping drive the growth. Maybe you can just kind of give us the state of affairs there in terms of, like, how that... You know, we're kind of deeper into the launch now, how that's looking, and then also, kind of the uptake in vitiligo. Obviously, you know, a very interesting opportunity. I think first drug approved there, so, you know, definitely a very, you know, interesting kind of launch story going on there. So maybe you can provide some color there.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think both atopic derm and vitiligo are very interesting launch stories. I mean, so we started with atopic dermatitis in eczema. The efficacy profile of Opzelura is unmatched.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I mean, the speed at which this product is dealing with itch and inflammation and has a long-term effect, 80%+ of patients that is on Opzelura never go to another product, which in atopic derm was not known. I mean, most of the patients had to rotate through different type of products. It's not the case. So it has a deep effect on, on the life of patients with, with eczema and on the whole sequence of treatment that has been seen for a number of years. It's unique in term of safety because it's topical, so it has a very, very, very low level of absorption. So physicians are using it now in more and more patients. The new data we will have in, in the pediatric indication is going to help.

It's going to get to, you know, increase very meaningfully the size of the patient population that can be treated with Opzelura. So we are not in this mode of saying AD doesn't matter, and now it's all about vitiligo. We are literally looking at it as two different dynamics, very different dynamics, and two different indications. So the growth in AD is one of the key aspects of the future of Opzelura. And then in vitiligo, obviously, it's one of the situation where there is a medical need, and it was maybe not fully recognized-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... because there was no treatment. It's very typical. We see it in many different instances where when a product becomes available, in fact, the medical need tends to be emerging, and people start speaking about it very much. What we have seen and observed and documented is the life of patients with vitiligo is impacted by their vitiligo in a way that is way beyond the cosmetic aspect. It's very deep. It's very profound. It has all kind of impact that frankly are, in some cases, life-altering in many ways. And we are bringing to these patients, for the first time ever, a product that can restore the pigmentation of their skin to what it was or what it should have been. So it's not a small thing.

There are 1.5 million people, or maybe more, suffering from vitiligo in the U.S., and we are at the beginning of the beginning of getting these patients through a dermatologist to discuss their new options. Frankly, from the patient's standpoint, there is a good fair amount of skepticism because they have been told many time, you know, "Oh, yes, there is this new thing that will be working," and none of that has happened, except that today it's true. You can see it if you follow patients on, you know, different social medias; is that there is this, like, surprise of saying, "Look, we see the repigmentation happening," and it is happening fairly quickly after you start applying the cream. That's where we are. It's it has been very successful. The...

You can see the curve, you know, the adoption curve has been good. We are in the process now of seeing patients come back and we feel the numbers are starting to build up, so it's very important if you think of it from the business standpoint, because the number of total tubes per patient per year is what's going to be one of the key driver of the success in vitiligo. And I must say, I mean, it's from the community standpoint, from the physician standpoint, it's doing very, very well, and it has obviously a very large potential. So...

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

I know you've talked about this before, but you expect obviously the tubes per year in vitiligo to be higher-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Oh, yeah.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

-than AD.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

We do, yeah.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah. And then also, I guess, do you—as you kind of think about the ramp in vitiligo, is that kind of tracking ahead of what you would have expected, maybe initially? Like, is it going faster or kind of being on...

Hervé Hoppenot
Chairman, President, and CEO, Incyte

It's doing— Yeah, no, it's doing very much where we think it, it would be-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... and it's growing, both the new patient flow and the refill rate because the refill rate is very difficult to model before you just see it-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... in a commercial. We had this guidance, or we gave, we gave everybody a saying, "In atopic dermatitis, it will be two to three." So what we see today now, after more than 18 months, is that we are already at two. I don't know if it's going to go very much beyond that because, I mean, the effect of the product is such that in fact, many patients don't need more than one or two tubes for atopic derm. And in vitiligo, we spoke about 10 over a period of 12 months, so we are not there yet, obviously, because we don't have enough patients with, you know, that first prescription 10 or 12 months ago. But we are seeing that number evolving in the right direction. So we are still, we still believe we will get there.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. And then just in terms of, like, activating the docs to prescribe, I mean, are you seeing more and maybe, like, faster activation of docs to use it in vitiligo versus AD, or is it fairly the same? I'm just kind of curious, like, you know-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think the patient flow in vitiligo is one of the issues.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Okay.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Many of these patients are not seeing a dermatologist, so they have to make an appointment.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... to see their dermatologist, and if you try to get an appointment to a dermatologist as a new patient, you can see i t will take a number of months before you get it. So, the flow of the patients who are already seeing their dermatologists are clearly discussing Opzelura, yeah, with vitiligo, because that's, that's the subject of today. The flow of new patients is still relatively slow, but we know why. It's because it is a slow process to get back into the patient pool of dermatologists in the U.S. today, so.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. I mean, have you seen, or at least, you know, heard from some of the derms, like, you know, they're getting more inbounds from patients? 'Cause, I mean, obviously, I see the ads for Opzelura.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Oh, we see-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

So, like, I think you're reactivating the patients, so that's already-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

A lot of patients are basically asking by name Opzelura for vitiligo and for AD, by the way.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah. Then maybe for the pediatric, like, population, obviously, you know, it is a topical JAK. I mean, are docs gonna be, and maybe parents, gonna be sensitive to, you know, Opzelura in, you know, commercially in kids? Or, you know, how do you kind of have that conversation or how are the docs prepared to have that conversation?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think the efficacy data will drive the adoption because that's really, I mean, we know obviously the safety has to be clean. That

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... that's almost an assumption that we make. On the efficacy side, I think you have a number of kids, where in fact, itch is driving the evolution of the disease, you know, itching, scratching, infection, et cetera. So the ability of ruxolitinib, of Opzelura, to deal with the itch in minutes, we are not speaking of hours-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

-is something that has a lot of value in, in the pediatric indication. So I think, I think it will be a very useful addition to what, people are using today.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. And then maybe just talk beyond atopic derm and vitiligo. I mean, Opzelura in itself seemingly could be a pipeline and a product.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

It is.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Can you kind of talk about the expansion opportunities and for Opzelura?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So you can, you can see, I mean, what we are looking at is to go into indication where today there has been a clear medical need and not a lot of good products available. So we are doing studies in a mild form of HS, and there are a lot of studies in HS-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

with us, with povorcitinib

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

-with biologics. But there is also a form of HS, where we believe having a topical formulation could be useful. So we'll see.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So it's ongoing. Then we have studies in lichen sclerosus and lichen planus, where it's relatively rare, but there is a very large medical need, in fact, and where we believe having... I mean, we believe the mechanism will be efficacious, and there is nothing, in fact, that has been really approved for these patients and where it would be very useful. So, the way we see it over time is a new indication coming, which is important also in term of access, in term of formulary, formulary status, and new indication driving the growth in the next years as we get these new indications to approve.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. And then maybe just shifting more to the pipeline. I mean, you know, you guys have a very exciting, you know, immunology and inflammation pipeline, and particularly povorcitinib, we've, we've done some work there. But, I mean, can you just kind of frame out how you think about, you know, kind of that shift to I and I, but also, again, you have a lot of a deep oncology pipeline and, and kind of prioritizing, you know, both of those, those areas?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Yes, they are not competing. I mean, they are competing for resources, but they are not competing in terms of, you know, where we would like move our priorities. So, the way we do it is that every product is basically going into a funnel, where it will be judged based on, you know, the science, innovation, competition, how does it fulfill a medical need that is clear? And from there, it will then go into the process of what will the FDA ask us to do to get it approved. And what you see is that povorcitinib is now moving in multiple indication-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Where we think there is a real case to be made for meaningful progress versus standard of care of today. And starting with HS, it's also more expanded vitiligo, and then a number of additional indication, prurigo nodularis, probably. And we are even going now to CSU and asthma.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Povorcitinib by itself has a number of indications. Ruxolitinib has a number of indications. And then in oncology, we are working on the LIMBER project we spoke about.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So CALR, BET, ALK2. We have the oral PD-1, PD-L1 project that is progressing very well. So you can imagine that's a very interesting in terms of choosing the right indications-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

-where it could be developed. We have a CDK2 that is still early, but is also moving very well. So both onco hematology, which is for us, one franchise, and IAI portfolios are moving in parallel. And literally, the company now are working, you know, with two franchises that are both, commercial and, in development, having their own pipeline.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it. And maybe just to expand on a couple of these. So, maybe starting with the oral PD-1, PD-L1, can you just give us an update where you guys are on that program? And I guess, are decisions gonna be made or are we gonna see data?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Decisions are being made. There are two parts to it.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

One is as a single agent to basically establish the efficacy. So we have established the safety now.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

You know, we had a first-generation product.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

We moved to the second-generation product. We are now well on our way to show that this second-generation product has a safety profile that is better than the first. So it's well established. So now what we are doing is basically a number of study we call benchmarking study, where we are studying this product, 280, in indication where antibodies, Keytruda or Opdivo, are well established, so that we can compare the level of efficacy we are seeing with the one that you see with Keytruda and Opdivo. It's not obvious, by the way, and you know, it takes a little bit of time.

At the same time, in parallel, we are also developing it in combination where we think it will be very useful because it has this ability to stop the biologic effect of the product if you stop taking the pill, because it's a very short half-life, which you cannot do with an antibody.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

And so this switch on/off effect of the PD-1 is specifically useful when you combine it with CTLA-4. We are doing that study with KRAS, so we are doing a study with Mirati and with VEGF, where we are also doing a study in combination. And that will be. That's ongoing, and that, assuming this will be successful, will be a path to registration in combination that will be also available in addition to the single agent program that we have. So both of them are ongoing and the, you know, the studies are doing very well. And in fact, there is a very good level of enthusiasm from investigators. So this makes it for this reason of being able to modulate the safety profile by stopping taking the product.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

When will we get the next update there? Like in-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think we'll get updates as the studies are evolving.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Got it.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I don't have a specific date.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah. So then-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

- but I think in 2024, we'll certainly have new data that will help us move it to the next step.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. And then, yeah, maybe just touch on povorcitinib. Again, very interesting asset. You've shown some very interesting data in HS.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Mm-hmm.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

I guess, how do you guys think about that opportunity? Like, you know, we've already had a couple of companies yesterday also looking there.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Yeah.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

A busy space, but-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

It's weird, huh?

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

You know, so it's-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think it-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

It's a hot area. I guess, how do you guys think about it, and then-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Where do you think Povo will fit?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Well, I think the HS story is interesting-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... because when we started the program in HS, in fact, everybody had difficulties pronouncing hidradenitis suppurativa-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

hidradenitis.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

It seems to be the place where a lot of new mechanism are being tested. The way we look at it is, we are ahead. We have two phase III studies ongoing, so that very much activity. In fact, they are accruing very well. We have an oral product, so many of the biologics obviously are injectable, and frankly, the level of efficacy, when you compare study to study, it's a little bit difficult to be clear. We anticipate that the level of efficacy we are seeing with povo will be very competitive.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Mm-hmm.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

We have seen it in phase II. There was not only a good level of efficacy based on the so-called HiSCR 50, but there is also more, you know, more patients with Hi SCR 100 , which is not very commonly seen, et cetera. So we are very confident on both the safety, efficacy profile we are seeing. We are more or less, you know, ahead of, or not far from, anybody else in terms of developing an oral product, and we think it will be competitive.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. Maybe the last couple minutes here, just kind of more high-level strategic questions. And, you know, obviously, you kind of talked about, you know, Jakafi and, you know, obviously your life cycle management there and when kind of the patents run off, you know, in the late 2020s. I guess filling that gap. So I mean, obviously the pipeline's starting to come through, like you said, even with, like, povo and, you know, Opzelura, there's going to be these opportunities. Like, is there a gap? Do you need to bridge that with, like, potential M&A or doing some business development, or do you feel pretty good about, you know, the pipeline delivering and kind of, you know, mitigating some of the potential revenue loss with Jakafi after patent expiration?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Both-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... in fact. So it's not exclusive. So there is a good pipeline, and we can speak about BD and what we are looking at.

Christiana Stamoulis
EVP and CFO, Incyte

Yeah, absolutely. And, it is exactly what Hervé said, both.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Yeah.

Christiana Stamoulis
EVP and CFO, Incyte

We have a very nice pipeline that, we feel very comfortable around its ability to fill in the gap, but having more shots on goal is always good. So we are looking at, external assets to bring in to add to the internal pipeline. We have a very nice balance sheet in terms of the cash position, no debt right now, so it gives us firepower to be able to do BD. We are interested in assets that are in areas where we are currently in and have expertise, have capabilities that we can leverage, and also adjacent areas where that expertise can also be leveraged. So the obvious areas are oncology and dermatology, where we are currently, hematology, and beyond malignant hematology, more broadly.

And then we can also look at more broadly the autoimmune inflammatory space. And in terms of stage, we're interested in assets that could add to the growth in the second half of the decade.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. I mean, is there, again, a certain de-risking that you want to see from, like, any sort of asset that you'd buy? You know, do you want to see it past phase II, like again, proof of concept? Or would you go, you know, for an early, more novel target? Like, what's kind of the risk profile or at least the profile of a

Christiana Stamoulis
EVP and CFO, Incyte

It depends on the program.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Christiana Stamoulis
EVP and CFO, Incyte

But, for assets that would contribute to revenue, within this decade would mean that they are assets that, at this point, are at the, at least the proof of concept, stage.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. And then, I guess, what's your capacity in terms of, like, deal size? Like, how big would you want to go, or would you look at things that are also commercial right now as well, or is it only going to be development stage?

Christiana Stamoulis
EVP and CFO, Incyte

The interest is more on the development stage.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Christiana Stamoulis
EVP and CFO, Incyte

But if there is a commercial asset that adds to the growth, we would absolutely look at these. The primary focus is on bolt-on type of acquisitions. We have over $3 billion of cash on our balance sheet. We don't have any debt, so we have the ability to add to the current cash balance. So we have quite some firepower to go.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Gotcha. And then just-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

You know, it's not, it's not like make a wish.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

The problem is like reality-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

... what is feasible-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

- and what does exist? I mean, so obviously the best case is what, you know, something that would be successful, multi-billion in 2028. But the truth is that there are a number of things that may be a mix of, you know, what we wish and what we, we, what we can do. I mean, it's-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Is this how...? How much of a priority is this? Is this like a near term, like within the next 12 months, we're gonna see you active in this area or...

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I think it's a very high priority. We have been actively involved in multiple situations where it ended up not finishing in our favor. Part of it is because we have been very careful on the value of what we buy-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure

Hervé Hoppenot
Chairman, President, and CEO, Incyte

for the price. Sometimes we did not see the fit. I mean, and-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

You can go back and look at transactions that have happened. So we have been careful not to overpay based on our own modeling, and sometimes we can be wrong. I mean, so we recognize that, but it's something we'll continue to do, being careful that we just make sure it fits the financial criteria that we have for an acquisition.

Christiana Stamoulis
EVP and CFO, Incyte

The fact that we have our internal growth engine puts us-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Sure

Christiana Stamoulis
EVP and CFO, Incyte

in a position to be more disciplined when we look at assets.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Have you shifted more to, again, in terms like M&A, BD, versus doing, like, collaborations? Or are you kind of equally looking at those as well in terms of, you know, where you guys want to place some bets in terms of pipeline?

Christiana Stamoulis
EVP and CFO, Incyte

We are agnostic-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Christiana Stamoulis
EVP and CFO, Incyte

in terms of the structure. Whatever makes sense in that particular situation.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah. Gotcha. And then I skipped it, but ataxatilimab on the GVHD, I mean-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Axad- ataxatilimab.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Yeah.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

You had that data, I kind of skipped it, but, maybe just review and again, your excitement around that area and I guess kind of that emerging GVHD franchise.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Yeah.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Um-

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Yes, it's big. I mean, it's obviously something we are very proud of-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

- because frankly, nobody did any work in GVHD for a long time.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

We started with drugs and sort of completely transformed this entire field, chronic, acute, in the salvage mode, and obviously moving, moving to the earlier stage. Axa is part of it. The beauty of Axa is, I mean, the target. I mean, macrophage is really what's involved in GVHD. We are sort of completely differentiated in terms of mechanism. What we have seen a few weeks ago with the AGAVE-201 study is that in fact, we have a product that is very efficacious and very well tolerated, and that's what we are discussing with the FDA now. As we do that, we'll see, you know, what the path to registration could be based on the AGAVE-201 data, and we think it is there for the U.S.

and then we obviously have the next question of how do we move it earlier-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

- in the treatment paradigm, and is it in combination with steroids or in combination with Ruxolitinib? Because that's the two main component of the treatment of GVHD. So yeah, that's a very... I mean-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

I know it was a little bit under the radar.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

Not top of mind for many people, but it's a new drug. I mean, we'll have a new product very soon that has a very unique mechanism, and it's changing outcome for patients with GVHD.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Like, how do you think about that opportunity relative to, like, what Rux does in GVHD, like, in terms of, you know, overall sales, like?

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So in terms of sales, it's always difficult to calibrate even the potential of Rux in GVHD, because in the chronic setting, as you know, it's a sort of a semi-chronic treatment, where patients can be on product for a period of time, then they will go off because of the-

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah

Hervé Hoppenot
Chairman, President, and CEO, Incyte

- the quality of the response that they get, and then they will probably have a relapse or something and then go on again. So what we observe over a period of years is on and off time.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Yeah.

Hervé Hoppenot
Chairman, President, and CEO, Incyte

So it's not fully chronic, but it is, you know, one of the growing franchises we have with Ruxolitinib. Ataxatilimab will be adding to that, obviously, in the short term, and hopefully will become one of the component of the early lines of therapy in GVHD, and that's a, that's a big number.

Derek Archila
Managing Director, Co-Head of Therapeutics Researchand Senior Biotechnology Analyst, Wells Fargo

Great. Well, I think we'll end it there. Hervé, Christiana, thank you so much for joining us for the discussion, and, well, yeah, thanks.

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