Incyte Corporation (INCY) Earnings Call Transcript & Summary

Greetings, and welcome to the Incyte GRAVITAS-301 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Mike Booth, Head of Investor Relations for Incyte. Please go ahead, sir.

Thank you, Kevin. Good afternoon, and welcome to Incyte's conference call to discuss the results of the Phase III GRAVITAS-301 trial of Incyte's itacitinib for patients with steroid-naive acute graft-versus-host disease. This conference call is being recorded and is also being broadcast as an audio-only webcast. I'm joined on the call today by Hervé, Steven and Christiana as well as by Peter Langmuir from our clinical development group. Peter leads all of our GVHD clinical development efforts, including the REACH and GRAVITAS programs. Hervé and Peter will make some introductory remarks before we move to Q&A, during which I ask that you limit yourself to 1 question, and if needed, 1 follow-up to allow as many of you to ask questions as time allows. Before we begin, we'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements we may make regarding our expectations for 2020 and beyond, the commercialization of our products, our development plans for the compounds in our pipeline as well as the development plans of our collaboration partners and potential future product launches. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our 10-Q for the quarter ended September 30, 2019, and from time to time, in our other SEC documents. I'll now pass the call to Hervé.

Thank you, Mike, and good afternoon, everyone, and thank you all for joining us to discuss the press release that we issued this afternoon. So the results of the GRAVITAS-301 trial shows that itacitinib in combination with corticosteroids did not result in a statistically significant improvement in overall response rate at day 28 compared to steroid monotherapy in the overall population. In addition, the study showed no difference in the key secondary endpoint of improvement in nonrelapse mortality at month 6. These results are disappointing. In the next few minutes, we'll discuss with you what we currently know from an initial analysis of the trial results and place this in context of the overall GVHD program and our broader itacitinib clinical development plans. Peter will now provide more details on the trial results that we know today before I offer a few additional thoughts to place today's announcement in perspective. Peter?

Thank you, Hervé. I'll start by running through the trial results as we know them today. The trial was initiated on the back of Phase II data shown at ASH in 2016, which suggested that adding itacitinib to corticosteroids may increase efficacy in patients with acute GVHD. The results announced today suggests that inhibition of JAK1 with itacitinib in combination with steroids does not provide a clinically meaningful increase in efficacy over steroids alone as initial therapy for patients with acute GVHD. Although there was a numerically greater response rate at day 28 for itacitinib combined with steroids compared to steroids alone, this difference did not meet statistical significance. The response rates were 74% and 66%, respectively, with a P value of 0.08. The response rates observed with itacitinib plus steroids are consistent with the Phase II study. Our assumption for the design of GRAVITAS-301 was that steroids alone will provide a 56% response rate. However, the 301 study showed a higher-than-anticipated response rate for steroids alone. We have not identified any subgroup of patients that had a significantly greater or lesser benefit from the addition of itacitinib to steroids. The complete response rate was 53% for itacitinib plus steroids versus 41% for steroids alone. There was no significant difference in the longer-term efficacy endpoints including in the key secondary endpoint of nonrelapse mortality at month 6. No new safety signals were identified, and the safety profile of itacitinib in combination with steroids was similar to that expected for the combination or for patients suffering from GVHD in the post-transplant setting. The most common adverse events were thrombocytopenia and anemia. Let me now move to what the result means for itacitinib and other GVHD settings and beyond, and I'll start with some background on GVHD. GVHD occurs when immune cells transplanted from a nonidentical donor, the graft, recognize the transplant recipient, the host, as foreign, thereby, initiating an immune reaction that causes disease in the transplant recipient. The pathogenesis of GVHD is a complex multistep process but is primarily a T cell-mediated process. Development of moderate grade 2 and, more importantly, severe grade 3 or 4 acute GVHD after stem cell transplantation is associated with a significant decrease in survival. In addition, once GVHD occurs, it may not respond to treatment. As such, all patients undergoing allogeneic hematopoietic stem cell transplantation require GVHD prophylaxis. Now the biology and clinical manifestations of acute and chronic GVHD are different. Acute GVHD is primarily manifested as a maculopapular rash, weight loss, diarrhea and/or hepatitis usually within 100 days of transplantation. Pathologically, acute GVHD is apparent as an inflammatory T cell infiltrate with associated tissue destruction and apoptosis. The transplantation conditioning regimen, innate immune system and gastrointestinal microbiome all contribute to the pathophysiology of acute GVHD. Chronic GVHD, on the other hand, is manifested as fibrosis of skin, lungs, GI tract and soft tissues that generally presents at least 100 days after transplantation. Pathologically, tissues affected by chronic GVHD are relatively acellular and fiber proliferative, and development of chronic GVHD is a complex multi-phase process that involves various cell lineages and types of injury. Now we already know from the success of the REACH1 and REACH2 trials of ruxolitinib that JAK inhibition results in a significant benefit over best available therapy in steroid-refractory acute GVHD. And the results of the REACH3 trial of ruxolitinib versus best available therapy in steroid-refractory chronic GVHD are expected midyear. The results of the GRAVITAS-301 trial are obviously disappointing, but for the reasons I just highlighted, it is not clear that they have any read-through to other studies of itacitinib in chronic GVHD or GVHD prophylaxis. We have an ongoing Phase III study, GRAVITAS-309, which is evaluating the combination of itacitinib and corticosteroids compared to corticosteroids alone in the frontline treatment of patients with chronic GVHD. This trial is designed to enroll 246 patients in the randomized part of the study with a primary endpoint of overall response rate at month 6. As is common in randomized pivotal trials, the GRAVITAS-309 trial includes suitable interim analyses to manage risk versus benefit. For prophylaxis, the Phase II GRAVITAS-119 study is ongoing, evaluating itacitinib in combination with commonly used prophylaxis regimens, and we are exploring opportunities for studying itacitinib in future trials in this setting. I will now pass the call back to Hervé.

Thank you. So what does today's announcement mean for Incyte? We have worked diligently to significantly expand our development portfolio over the past several years, which now includes a diversified set of late-stage assets with the potential for multiple launches over the next year. In the past 12 months, we received approval for ruxolitinib in steroid-refractory acute GVHD, followed by the success of the REACH2 randomized Phase III study in this indication. We have also provided positive data from pemigatinib, leading to FDA submission in cholangiocarcinoma. And Novartis provided positive updated data from capmatinib last year, which would make it the first Incyte-discovered molecule to be submitted to FDA. We also announced a positive randomized Phase II study with ruxolitinib cream in vitiligo, which led to the initiation of the Phase III program, and we made good progress with our PI3-kinase delta and PD-1 program. Coming up in the next few months, we are looking forward to the result of the REACH3 trial of ruxolitinib in steroid-refractory chronic GVHD around midyear this year. The PDUFA date for pemigatinib in cholangiocarcinoma is in late May, and we are expecting initial Phase III results from ruxolitinib cream in atopic dermatitis in the coming weeks. We also have a REACH mid- and earlier-stage portfolio and a very active and successful discovery team. This development portfolio diversification strategy enable us to continue to build for long-term growth. Furthermore, Jakafi is performing very well in the U.S., and we remain very confident in our ability to reach our long-term Jakafi revenue guidance target of $2.5 billion to $3 billion. Royalty revenues from Jakavi ex U.S. and Olumiant globally are also growing very strongly. The strength of Incyte in 2020 and beyond will come from the revenue growth from existing commercial products combined with a number of potential near-term launches and significant data readout as well as optionality from the earlier-stage portfolio. Even with reduced expectation for itacitinib, we are on a great trajectory as we continue to build a fast-growing, innovative and profitable biopharmaceutical company. Operator, this concludes our prepared remarks. Please give your instruction and open the call for Q&A. Thank you.

[Operator Instructions] Our first question today is coming from Cory Kasimov from JPMorgan.

This is Gavin on for Cory. Just curious if you can provide context around both arms and baseline characteristics. Anything worth highlighting that would -- between the 2 arms that you saw?

This is Peter Langmuir here. So there were no major differences in baseline characteristics. It was quite a large study with 439 patients recruited. So actually the largest randomized study ever done in this patient population. And as you might expect from the size of the study, the baseline characteristics were well matched between the 2 arms. So -- and across the subgroups that we looked at, we didn't see any significant difference in the response outcomes between those subgroups.

Our next question is coming from Brian Abrahams from RBC.

I'm just wondering if, coming out of these results, there might be any strategy you might look at to continue to pursue the drug in acute GVHD, for instance, uptitrating the dose, looking at certain combinations.

Yes. We -- at this point, it's probably too early to say. I think in terms of uptitrating the dose, what the Phase II study that we presented at ASH back in 2016 showed was that when we looked at both 200-milligram and 300-milligram doses, we did see more cytopenias at the higher dose, which is what you would expect by going up on the dose. And particularly in the acute GVHD setting, where patients are still engrafting, many of these patients come in with cytopenia. So we wanted to try to avoid any additional cytopenias from the drug in that setting. So uptitration may not be an option. But at this point, I think we're still looking at what else we may be able to do. And we're still looking at the data, in general, to see if there are any clues from there we might be able to take forward.

Yes, Hervé here. Just a comment in general. I mean we have the top line results. That's what we are sharing with you. But obviously there is an enormous amount of data that will be analyzed over the next weeks to identify any potential next steps that will be appropriate in that setting. I mean so there is a lot of work in front of us on that front.

Our next question comes from Tyler Van Buren from Piper Jaffray.

So it's clear that maybe a pure JAK1 inhibitor is not enough for the acute setting. But as we look to GRAVITAS-309 in the chronic setting, is there anything mechanistically unique about JAK1 relative to JAK2 that would perhaps make it better suited for the chronic indication?

I don't think we know that answer. I think the data that we've seen preclinically suggests that both JAKs may play a role, and the JAK1 may be the more important of the 2 JAKs. But in terms of relative effects of the 2, I don't think we know the answer to that. And I don't think it's actually clear in acute either because you remember that itacitinib was studied in a somewhat different setting from ruxolitinib where itacitinib was studied in the front line treatment, adding it on to steroids. So basically, adding it on to what is already a relatively effective treatment, whereas ruxolitinib was studied in the steroid-refractory setting. So we haven't directly compared the 2. But there's very clearly a role for JAK inhibition in chronic GVHD. And so that's what we're looking to study in the 309.

Okay. And for a quick follow-up, you mentioned the suitable interim analyses for 309. Can you provide any more color on those?

Yes. We don't have the full details on those. But basically, there will be an interim analysis to look for futility based on the 6-month response endpoint. So we will have an opportunity to stop the study if it is not effective.

Our next question today is coming from Marc Frahm from Cowen and Company.

First, if you can just clarify, you mentioned that there was no difference in the nonrelapse mortality in this trial, but you gave the numbers on the other endpoints. If it's possible, would you be able to give the nonrelapse mortality rates by arm if there was any trend either for or against itacitinib?

Yes. So there was not much of a trend there. I mean for nonrelapse mortality, we saw 18% in the itacitinib arm and 19% in the corticosteroid-only arm. So remember, lower number is better. So -- but it was certainly not a statistically significant difference. And consistent with what we saw in the response rate, the nonrelapse mortality of 18% for the itacitinib plus steroids was consistent with our expectations. And once again, it was the placebo steroid-only arm that performed better than what we had anticipated.

Okay, great. And then recognizing your comments earlier that how you think maybe some of the cell types are involved and things like that make chronic setting kind of qualitatively different than the acute setting. Can you maybe highlight what of the cell types you think might be more potent or more amendable to JAK inhibition and therefore, give us more hope that 309 might be positive where 301 failed?

I'm not sure it's necessarily that the pathogenesis in chronic would be more successful. It's just -- it's different, and the effects of JAK inhibition related to B-cell regulation may play an additional role beyond what you see just in acute GVHD. So I think it's just a -- it's a different pathological setting in which we know, based on preclinical models, that JAK inhibition can be effective.

Our next question today is coming from Alethia Young from Cantor.

I guess I was just curious, and maybe it's too early to determine, but maybe, are there any kind of effects from the placebo population that maybe -- or the amount of the different sites or anything that drove an effect here that you could modify in GRAVITAS-309 or in the prophylactic study when it starts things.

It's probably a little early to give you a full answer to that. But at least on the initial look, we haven't seen anything in the placebo population that was particularly unexpected. Now there were somewhat more standard risk patients overall in the study than we anticipated relative to high-risk patients, but that didn't seem to affect the outcome of the study. So I'm not sure that there's anything we can learn from the performance of the placebo arm. I will say just in the prophylactic setting that, that would be a different combination with standard prophylactic regimens, not combination with steroids.

Our next question today is coming from Mara Goldstein from Mizuho.

So I'm just curious as to whether you can posit any reason why you think you might have seen the better response rate in the placebo arm? And then secondarily, within the context of 309 in the interim analysis, is there a possibility to resize the trial based on what you're seeing out of 301?

Sorry, sorry. The second part was possibility of resizing the trial?

Yes.

Okay. So to the first question as to why steroids performed better. It's not clear. And again, as we look into the data in more detail, we may be able to discern something. As I said, there were more patients with standard risk GVHD than we had anticipated. So that clearly can increase the response rate to steroids alone. But again, we didn't see standard versus high risk as being a differentiator in terms of the relative benefit of itacitinib when added on to steroids. So I think when we look into the data in more detail, we may be able to tell a little bit more. And then in terms of the interim analysis for 309, in terms of the possibility of resizing, I think that's something that's often a consideration. However, it's probably worth saying that we've powered the study to look for what would be a clinically meaningful difference already at 246 patients. So we could see a successful study if we increase it dramatically, but then the difference we detect may not be clinically meaningful. So most likely, we would not increase the sample size if it was futile at interim analysis.

Our next question is coming from Andrew Berens from SVB Leerink.

Can you guys give us an idea what percentage of the patients in the trial had a rash versus GI symptoms versus hepatic symptoms in acute GVHD setting? And then as a follow-up, I just -- and I know you've kind of mentioned this a bit, but did you see more of a delta in those patients that had symptoms other than just the rash?

So I don't have the numbers right here. What I can say, it was -- the distribution of the organ systems that were involved were not unexpected or surprising in any way. And we didn't see any obvious difference in outcomes there. But again, that's not something we've had a chance to look at in great detail yet.

Next question is coming from Ren Benjamin from JMP Securities.

Great. Can you maybe provide your thoughts regarding the higher-than-anticipated placebo rate? I mean is it just a better follow-up? Or just any thoughts and whether or not -- and as a follow-up, the statistical assumptions that you have for both 309 and 119, that would be great.

Yes. Again, I mean, I think we need to dig into the data in a bit more detail to understand why the steroid placebo arm performed so well. Again, the -- there were more standard risk patients that we anticipated. And so that's going to increase the response rate to steroids. But the standard versus high-risk distribution didn't seem to affect the additional benefit that you get from itacitinib. So the -- in terms of the statistical assumptions, we had assumed a 56% response rate with steroids alone. And so with that, a 74% response with itacitinib plus steroids we've seen would have looked much more meaningful. So the itacitinib combination have performed exactly as we had expected. It was just the placebo arm didn't -- was better than we anticipated.

Yes, I'm sorry. I meant the statistical assumptions for 309 and 119.

So for 119, it's a -- it's really just a descriptive study. We're looking at just a number of different endpoints related to incidence of acute GVHD, chronic GVHD, need for treatment and so on. And so we'll look at the aggregate data there to decide where we might best look at future studies. So we're in the process of exploring what additional studies in prophylaxis may look like.

Okay. And 309?

So do I have the -- I don't have the statistics. I may need to come back to you on the statistical assumptions for that. But yes, it's basically looking for a difference in 6-month response rate compared to steroids alone.

Got it. And is there any thoughts regarding rux in acute GVHD?

So we have the REACH1 and REACH2 results, which were in steroid-refractory GVHD. So all of these patients continue on steroids as standard of care. But at that point, the steroids are no longer providing any additional efficacy. And so we know that ruxolitinib is effective in that setting. But we haven't studied ruxolitinib in the upfront steroid-naive setting where we studied itacitinib.

Our next question is coming from George Farmer from BMO Capital Markets.

I want to know on the adverse event rate profile, you said it was balanced between the 2 arms. But what about grades of thrombocytopenia, anemia, were the equivalent in both arms?

Yes, it was approximately equivalent. We didn't see very much significant increase in cytopenias overall or at the higher grades of cytopenias between the 2 arms.

Okay. And then have you been thinking about any other possible indications for itacitinib beyond GVHD?

Right. So we have a couple of other studies that are ongoing or just getting started. So one is a study in patients who develop bronchitis obliterans after lung transplants. It's one of the major complications and causes of mortality after lung transplant. And the pathophysiology is very similar to chronic GVHD. And so we have a study that's just opening in that setting. We have a study that's open, looking at cytokine release syndrome after CAR-T therapy. So it's really getting at the potential effect of itacitinib on blocking inflammatory cytokines that cause -- basically the leading cause of morbidity and mortality after CAR-T cell treatment. And then we're also exploring itacitinib in different settings in myelofibrosis as well given its JAK inhibition.

Our next question is coming from Evan Seigerman from Crédit Suisse.

One on duration. I don't know if you had mentioned this earlier in the call. But did you see anything that might be concerning with regard to duration of response with itacitinib? Just trying to get any potential readthrough to some of the other trials. And any comments on the Cmax or Tmax. I know that those were also secondary outcome measures. Anything that you learned there? Is it still too early to tell?

Too early to say anything really about the pharmacokinetics at this point, I mean, other than it looks like the patients did get itacitinib. But we haven't had a chance to explore the PK data in any detail. I'm sorry, the first part of the question was around...

Just anything on duration. I know that was also a secondary outcome measure.

No significant difference in duration of response.

Our next question is coming from Jay Olson from Oppenheimer.

Since itacitinib did achieve a numerical benefit on the primary day 28 ORR endpoint, although it was not stat sig, I was wondering if you saw a similar numerical improvement on the key secondary mortality endpoint.

No. I think -- so we saw a numerical improvement in overall response rate. We saw a numerical improvement in complete response rate. But when we look at the longer-term outcomes, particularly nonrelapse mortality, we didn't really see any difference. So it was 18% versus 19% on nonrelapse mortality. And that could have been affected by differences in subsequent therapy. So we know that many of these patients, after they came off the randomized treatment, went on to other therapies. And so that's something we're looking at in some more detail to try and understand if that impacted the longer-term outcomes like 6-month on relapse mortality.

Okay, great. And maybe as a follow-up, could you comment on the importance of the mortality endpoint in the GRAVITAS-309 study?

It's a little bit of a different setting there. I mean, in the 309 study, the 6-month response rate is the primary endpoint, and so responses take longer to achieve, and also, we hope will be more durable. So that 6-month response rate is the primary endpoint. We're looking at a number of other secondary endpoints, including overall survival, relapse rate, safety, obviously, and GVHD symptoms as well. But the nonrelapse mortality is not something that is as closely followed in chronic GVHD as it is an acute.

[Operator Instructions] Our next question is coming from Michael Schmidt from Guggenheim.

I just had a follow-up to a prior question regarding GRAVITAS-309. I guess how well do steroids work in the acute -- sorry, in the chronic setting? And I guess what is the bar here for itacitinib to improve over and above?

The response rates of steroids are roughly similar to what you see in acute GVHD for the upfront setting. So again, it's steroid-naive chronic GVHD. So it's roughly about a 50% response rate expected with steroids alone.

We reached the end of our question-and-answer session. I'd like to turn the floor back over to Hervé for any further or closing comments.

Okay. Thank you for your time today, and thank you, Peter, for the clarification we could give at this point. As we said, I mean, there is still a lot of work ahead of us to analyze the data in more details and be able to answer questions that we can in the future. And we look forward to speaking to many of you in the coming days at the JPMorgan Conference in San Francisco and on our Q4 earnings call in mid-February. But for now, we thank you again for your participation in the call today. Thank you, and goodbye.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.