Incyte Corporation (INCY) Earnings Call Transcript & Summary

All right. Thanks for joining here at the Cowen Health Care Conference. Before anything else -- at Cowen Health Care Conference. Really excited to start off the company presentations today with -- fireside chat here with Incyte. We have Steven Stein, the CMO; and Christiana Stamoulis, the CFO, with us.

Maybe just to start off, Christiana, if you want to talk -- a year or so ago, some investors were worried that the launch of INREBIC could kind of increase the rate of Jakafi discontinuations and really impact kind of trends on Jakafi. So maybe if you can -- now that we're about 7 months into the launch, say, discuss how INREBIC has actually changed the market, good, bad or your insight for Jakafi trends? And any impact on pricing flexibility kind of moving forward?

Okay, great. Is this working? Yes? So let me start with an overview of Jakafi's performance. First of all, 2019, we saw continuing strong performance for Jakafi with revenues or net sales up 21% year-over-year. When you look at Q4 2019, net sales were $466 million, which implied a 23% year-over-year growth. And going into 2020, we have provided guidance for Jakafi of $1.88 billion to $1.95 billion, which, at midpoint, implies $230 million of additional revenue. So as you can see, we continue to expect strong performance of -- from Jakafi. And in a year where gross-to-net is expected to increase by 1% point of average versus 2019 to 16%. And there, just a reminder, we expect the gross-to-net adjustment to be significantly higher in the first quarter of the year relative to Q4 of 2019 and relative to the following year -- quarters of 2020. So all in all, you can see very strong performance in 2019, and we expect that strength to continue in 2020. So we haven't really seen any negative impact from the launch of fedratinib. When you look at the profile of the 2 drugs from both an efficacy and safety profile, Jakafi is superior. And we are seeing fedratinib being positioned as second line, even though the label is broad -- is positioned as a second-line therapy to Jakafi -- after Jakafi. And Celgene and BMS reported 2019 sales for the 7 months of the launch of $11 million. So you can see there what it means in terms of performance.

Okay. And then on the PV side of the business, in 2019, ran some DTC ads in some targeted markets, which I think the company said, they view as -- you view as successful and therefore, you're expanding in -- you've been expanding this campaign nationally. Who is the incremental patient that's being pushed to care? And kind of how do you quantify that, that's successful? And how are you going to really evaluate it going forward on this national basis?

So this is a disease awareness campaign. We started, as you said, by launching it in 5 key markets. And based on the activity that we saw, we decided to take it nationwide. In terms of the activity, it's hard, especially at this point, to translate the impact of the disease awareness campaign into revenues. But what we saw and the reason that we expanded the campaign is a significant pickup in the access to our website, where we have patient education, physician education, disease awareness materials as well as access to the tools that we have for patients to track their symptoms to be able to track and report those to their physicians. So that increase in activity is what led us expand the patient awareness campaign to nationwide. In terms of growth in PV, when you look at the guidance that we provided for Jakafi for 2020, we continue to expect PV to play a big role in the growth of Jakafi, and we'll continue to look at PV as the biggest of the third indications for Jakafi and also the one with the longest duration.

Yes. Okay. Maybe, Steven, to bring you into the conversation, longer term for Jakafi and the franchise, the LIMBER program. Can you just lay out for everybody the kind of the catalyst path in 2020 from the various different combinations that you are running and the long acting as well?

Yes, sure. So as you just heard, I mean, it's obviously critically important to us, both in terms of the financial side as well as patients. I mean we feel like we know the myeloproliferative neoplasm space very well and we might as well just keep up the momentum there. So you're right, the LIMBER program is life cycle management in myeloproliferative neoplasms beyond ruxolitinib. There are sort of 3 pillars to it. The first one is probably the least sexy, but it's formulation work, and it's been going very well. So we have a once-daily formulation, multiple strengths that has gone through bioavailability over the last year and is now in bioequivalence testing. And then we'll lay down stability and we'll file mid next year, mid-'21, and should hopefully get an approval for that mid-'22. So give us that formulation, but beyond that, its importance lies in the potential to do -- fix those combinations. So we developed any other once-daily combination that is successful, we can then do an FTC of the once-daily RUX with whatever we do in and that will be a new chemical entity. So that's its other use. In terms of the combinations themselves, they built around either enhancing efficacy or safety or both. So let me try to explain that quickly. So the one that's most advanced for us is RUX plus PI3 kinase delta. We've declared proof of concept. We've shown data that we think shows a very encouraging signal for the addition of delta to RUX in terms of spleen response as well as symptoms. And we'll be going to probably one, maybe 2 pivotal studies this year. The first one is likely to be in RUX suboptimal responders. So at least 3 months of ruxolitinib, either increasing spleen or symptoms or both. And then you'll either get randomized to RUX alone or RUX plus delta with an end point that's suitable to that second-line setting. And then we potentially will do first line as well of RUX plus delta versus RUX. We'll get proof-of-concept data for RUX plus PIM this year, and we'll start combinations of RUX plus our own BET inhibitor and RUX plus our ALK2 inhibitor. The latter one talks to building around the enhancing tolerability because ALK2 inhibition modulates hepcidin, which should decrease the anemia. So there's a tolerability play, but if you can -- the one of the main reasons people discontinue RUX is because of anemia. So if you can alleviate that, then you'll get more RUX use and you'll probably enhance efficacy as well. So those are our own combinations that will go in and, as you heard, going pretty well. And then the last piece is around potential new targets. Are there areas we should go after, including the epigenetic targets that are relevant either to MF or PV or both. And that we don't lean into a lot because we don't have R&Ds that are filed yet. So those are the 3 pillars of that program.

And when you talk through those combinations that you should have, first kind of POC this year, is that internally? Or is that -- even that we will -- that we should see it ourselves rather than [indiscernible]

Yes. I mean, obviously, our intent is to always publish. So RUX plus delta, we've shown a couple of times. We did show a slide at JPMorgan, which was the last experiment, which was daily dosing for the first 8 weeks and then switching either to weekly or daily, and the daily did better in terms of spleen response and symptoms. We haven't presented that data yet. We'll find a suitable meeting to do it. RUX plus PIM, there's a potential to get it into a median in the second half of the year once we have the proof-of-concept data. And the intent is to always publish. The others will -- we won't have data in 2020, RUX BET and RUX ALK2. It's too early.

And on the BET inhibitor side, so we've seen some data from a competitor compound in combination with Jakafi. Can you kind of explain the rationale for restarting and at a lower dose with your own molecule? And why you think that, that is equivalent to the dose that was being used by competition?

Yes. No, you're right. We think the Constellation data is very interesting. Even if you want to be a little critical of the prognostic groups of patients treated, there's clearly a signal there. The majority of their patients responded in the first-line setting. There was an impetus for us to relook at our own program and resurrect it. What we did is just model off their dose. So their dose in the clinic is 160 milligrams daily. We in the clinic a year ago upped it at 3 to 4x that dose. We were really in a solid tumor construct and we saw a lot of on-target thrombocytopenia. So we've come right down. We're starting at 4 milligrams with our compound, which is equivalent on PK modeling to their 160. And that should give us the effect in MF plus the degree of thrombocytopenia they've seen. Obviously, we have to prove that to ourselves. So we'll do monotherapy safety first and then go to combination. But it's really all on PK modeling. We think there's an effect there. I mean we knew that ahead of time from preclinical work. And so our idea is to get to combination as quickly as possible.

And I guess what is the path there? Since you do have this competitor molecule out there that they're talking about starting a Phase III this year, do you just need to show safety in the combination and you'll rely on the proof of concept from the other in the Phase II, Phase III or do you want to reestablish POC with your own molecule?

I mean that -- yes. No, that would be the idea is to get safety and then go relatively quickly and not have to get to POC with our own compound. We have a good BET inhibitor, as I said, be repetitive slightly. We were just 4x the dose range and we have to come back. The profile, by the way, is on-target thrombocytopenia. Their Grade III rate, I think they reported, is around 8%. So we'll be able to get a sense of safety there as well to make sure we do the same. But we don't need to redo the proof of concept.

Okay. And then, I guess, on the ALK2, that's just -- that's the most recent one to enter the clinic. And what's the path there and how quickly can you get to an answer as to whether that whole hypothesis in the ALK side works -- plays out?

Right. So we know we have preclinical data that we do inhibit hepcidin. We'll do monotherapy likely in an entity like myelodysplastic syndrome. Just to get safety, we can measure hepcidin levels there as well. And then in combo with RUX, we'll go into MF. And then again, you can do hepcidin, but ultimately, it's the hemoglobins that will drive that. And we can get to combination work as long as the monotherapy goes well in the second half of this year. It can again move pretty quickly.

Okay. And then -- I mean so everything we've talked about in kind of life cycle is really just focused on the MF. What -- on the PV side of the business, which the guidance implies is going to be substantially over $1 billion shortly, what's the unmet need there? What's the problem that should be fixed with the second-generation approach that can extend the life cycle?

Right. No, you're absolutely right. So obviously, there's a lot of new target effort going on there. The disease is -- polycythemia vera is almost predominantly driven by JAK V617F mutations. But there are others like calreticulin mutant as well that are potential targets. So there's work going on the V617F, different ways to target it and beyond. But you're right, the field in PV is relatively quiet. If you look on ClinTrials.gov now, there's not much activity there. And it probably talks to just the lack of adequate targets beyond what's already there in terms of RUX, which is a very good drug in PV. For the -- there's also opportunity to do formulation work. Because obviously, in PV, it's a bit of a catch-22. You don't want to alleviate the anemia. I mean that's a positive effect you want to bring down hemoglobin. So can you develop other formulations that, for example, do the opposite, have a higher Cmax to bring down hemoglobin there. But it's all early days and it is an unmet need.

Okay. Before we leave Jakafi, either a commercial or the life cycle, any questions from the audience? All right. Maybe turning to the oncology pipeline. We can start with the most recent addition, which is tepotinib. Or maybe, Christiana, you can just remind us the structure of how this is going to be commercialized since it's not -- it's a little bit complicated. And then Steven, you can talk to maybe the long-term opportunities beyond just the priority review that you got today or however that can be done in refractory setting.

Okay. So this is a global collaboration around tafa, where in the U.S., we will co-commercialize and share profits 50-50 with MorphoSys. And then ex U.S., we will commercialize on our own in return for royalties and milestone payments to MorphoSys. So an exclusive commercialization ex U.S. driven by Incyte and then a co-co in the case of U.S.

Yes. So just to be brief. So the -- obviously, the first indication is relapsed/refractory diffuse large B-cell lymphoma. The study, L-MIND, required patients to be ineligible for transplant or refuse it. Median prior lines of therapy were 2, but about 50% of patients had 1 prior line. So we'll see how this involves in terms of labeling. It's likely to state patients not for transplantation and maybe dictate the line of therapy, really good efficacy data in L-MIND, 60% response rate, 43% CR rate and a 21.7-month duration of response. And then it's moving up the CD19 B-cell paradigm, so the second study is B-MIND. Also relapsed/refractory diffuse large B-cell lymphoma, 1 to 3 prior lines, the control arm there is bendamustine-Rituxan versus bendamustine-tafa and there's a very important subgroup there. So there's this predefined 50% of the population that are called natural killer cell low, and that subgroup was recently, as part of the whole study, expanded. So the study went from 350 patients to 450. They also developed a companion diagnostic and the preclinical science pointed to the drug being potentially more active in NK low environment. So we're very interested in that. Potentially, first line, the safety works going on now. So to be 1 o 2 regimens, either tafa with R-CHOP or tafa/len plus R-CHOP. Safety work is going on now. Should that be safe given the data we have? You could potentially do a first-line study versus R-CHOP. It would be a big study, pretty long duration, but that would take you approximately...

And that would be potentially an all-comers R-CHOP or a very specific, high-risk...

Yes, so to be determined. I mean so we haven't yet because we're waiting for the final clearance from an antitrust perspective, sit down with more physicians and work out exactly where to go there, but we will pretty soon. And then other CD19 environment, so they've done work in low-grade lymphomas and CLL with a BCL2 inhibitor, they use venetoclax and then they use the PI3 delta inhibitor, idelalisib. Small data set, about a dozen patients in each but had 11 or 12 responses reported at ASH. So one is -- another reason to do the deal was with our delta inhibitor, it was very attractive to them. We have a good delta inhibitor. And we've already declared that we're going to do tafa plus delta in that setting. And then the other area that may be of interest but needs to be worked out down the path are autoimmune conditions, where B-cells are relevant and CD19 is expressed, and that's still to be determined. So potentially different area of the...

Over the long term, I mean, how do you -- there's another antibody -- ADC out, that Polivy, right, from Roche that's launching as well. It has already been approved for about a year. Over the longer term, how do you see the kind of market playing out between those 2 agents?

Yes. So there's Polivy. You're right, approved third line in the label, good efficacy, slightly lesser per day label in terms of duration of response and a different tolerability profile that reported peripheral neuropathy and some PML cases. So we think the differentiator there is our duration of response plus our tolerability profile. But also bispecifics have come in, Roche, Regeneron, Genmab reporting good efficacy, maybe in a similar range, different tolerability profile potentially. They're starting to see things like cytokine release and CAR-Ts as well. So this is a somewhat crowded space, but again, tafa/len's efficacy reported to date plus the tolerability profile, we think, is a really good differentiator.

Okay. The other oncology assay is pemigatinib, the FGFR inhibitor. You are running -- well, one, any updates on kind of the review status with cholangiocarcinoma since our last...

Yes. So the -- publicly, the PDUFA date is May 30. The review is going really well and we'll wait for the FDA action, but nothing that we worry about currently. We then have a bladder program, both intermittent and continuous dosing. That data will mature this summer. And then we'll have to make decisions there where -- potentially go on the monotherapy side. We have an ongoing first-line bladder study that is 3 arms currently. It's PD-1, pembro plus pemigatinib, then pemigatinib alone and the control arm is a mix of either chemotherapy or PD-1 depending on the PD-1 status. If it's high, it's PD-1 alone; if it's low, it's chemotherapy, and that's ongoing. And then a tumor-agnostic program that has 3 arms. It's driven around fusions or rearrangements in the first arm, activating point mutations in the second arm and then all others in the third, and that's also enrolling really well. And that's also a very important program to us because we're seemingly first there in the tumor agnostic space. And then just to mention, not of commercial importance, but we have a myeloproliferative neoplasm that's translocation 8p11 that's FGFR1-driven. That also will have complete this year and be a potential filing we're very proud of. It's a rare condition but a big unmet need.

So one aspects of the cholangiocarcinoma data was -- on the safety side is the ocular tox that did seem in that data set to be lower than what's on the label for Balversa, the drug from J&J. Obviously, there are changes in the dosing, which you just mentioned going in bladder. But when we do see that mature data, what's the difference in ocular toxicity that you think is meaningful enough to really drive differentiation?

Yes. I mean you have to be -- caveat and you make sure you're doing the same definitions before you compare in the same conditions, but they're reporting their label for their 3 conditions that are listed there, 25% rate. Our data to date with different dosing, intermittent dosing in different settings, we're 0.2 percentage to a single-digit ocular toxicity rate. We'll see how it plays out once we do continued dosing and more longer-term follow-up. But I think if you have a rate that's half, then that is potentially a differentiator. It is a MeC-like retinal toxicity that you seem to be either able to treat through or reverses pretty well off-therapy. Not to say it's not important to patients, it obviously is, but that's the context around it. So -- and if we end up with a drug that has a differentiated safety profile, that would be great, but we'll wait for the final data.

Okay. And I guess you did touch on the kind of moving up the lines off of -- both in bladder cancer. I mean given this recent data we've been seeing with [ age groups ] and PD-1s, what is the opportunity there? Where does this fit in going forward?

Yes. I think you know the Seattle Genetics' bladder data looks great and maybe in all-comers. That's why I caveat by saying the ongoing study currently, we may have to adapt it to the environment. That happens, right? And so that's -- it currently has those 3 arms, it has an interim analysis built in. And we'll look how the environment may change, and we may have to make some study changes. Currently, we're not. But when you have really good data, it's really good for patients that may be used across the board in the first-line setting, you may have to adapt your design. It's not -- we haven't done that yet.

And then the last one is the oral PD-L1 inhibitor. I think about a year ago, you had mentioned that you thought you could, by the end of 2019, maybe know that it's an active PD-1 -- PD-L1 inhibitor and then spend 2020 figuring out if it's, in fact, differentiated clinically. Is that an accurate statement as to where the program is today?

Yes, I think it reflects the status of the program. We haven't been able to publish data yet. Our intent is to do that in the second half of this year at an appropriate immunotherapy meeting. It's gone very well through dose escalation. We have a recommended Phase II dose. We're in expansion cohorts now, and we'll see what kind of efficacy we have in areas that are IO-responsive, would be one good place to do it. There are parts of the world where they're either not approved or they're not available from reimbursement reasons and you can treat patients who likely to be higher IO-responsive and see. I think we know from PD work that we inhibit in PD-1 the way we want to. We've seen the right T-cell direction, the right chemokine changes, but ultimately, it will be efficacy that will tell us whether we have a compound or not.

Okay. Any questions from the audience on oncology before we go to the derm? Nothing? Okay. So I guess, we've read out a little bit of data now from the TRuE AD trials. I guess what's your takeaway on kind of how you compare an efficacy to what's out there? And what does that mean for -- what would be a reasonable type of market share do you expect in mild to moderate atopic dermatitis?

I'll let Christiana do the market share piece. I'll just do the clinical piece upfront. No, we were -- it's -- you always -- until you have your Phase III's report out, there's a little bit of nervousness. But the efficacy bar that they hit was almost the same as the Phase III proof-of-concept data. So for both those trends, you have an IGA total response in the 50% range. You have a vehicle response that's in the 10% to 15% range, so that large delta in a mild to moderate population where the 8-week end point was really, really good to see. Couple that with the itch response. There was a 4-point or greater improvement for both those trends that are statistically significant and that's exactly what we wanted from that profile. The remaining caveat is the long-term safety. The safety profile is very clean at the moment. We want that to, obviously, remain the case and over the course of this year, we wait the 12 months that are required before filing. So profile-wise in mild to moderate, 3% to 20% body surface area, with those efficacy numbers, it's just about as good as we -- even better than we wanted, market share-wise.

Yes. I would say it's a bit premature to be talking about market share without having yet a label and dollar potential. But if you look at the market, this is a significant market in terms of size you have at around 10 million patients in the U.S. in this mild to moderate disease. And when you look at current treatment, it's primarily treated with corticosteroid, some cream like Eucrisa, but there is not high efficacy of the current approaches. So there is still a significant unmet need, and that's where we're looking to go and address.

Okay. And I guess from a regulatory perspective, what gives you confidence that the systemic exposure is certainly low enough to avoid a class label with the orals given that -- we don't really know what the mechanism is for the orals and what type of exposure you need to have.

Yes. I mean it would be -- the idea would be obviously not have a black box. We have nothing to point into that currently. We have low systemic exposure. We published already in JACI of about a 3% to 5% that is not pharmacologically relevant. So that pans out over time. This should be the safety profile we have now where genetic determinants and cell counts were nothing untoward. So we have a very strong case to say there shouldn't be [ class label ] into topical cream with the efficacy data we just spoke about, but that's going to be really important to us over this year.

Okay. And you mentioned the age groups that were enrolled in the Phase IIIs, and there's ongoing work to kind of advance it down the age groups. What are the status of those? And could any of that data be ready in time for the filing given that you do have to wait for this long-term path?

Yes. So the -- it's good you reminded. So the Phase IIIs were done in 12 and above. The pediatric work is ongoing, but it will not be ready in time for filing. We're very comfortable with that. The 12 and above, 3% to 20% body surface area covers the majority of the population that Christiana was talking about. Now there's 8 million to 10 million people with mild to moderate. And then we'll do the required pediatric work. Quite frankly, again, it's all about just getting the right safety profile, avoiding any untoward toxicity. We're working very close to the agency to get their pediatric work right, but it will not be part of the initial file.

And then what's kind of the filing time lines outside the U.S.? And I know you, Christiana, in particular has had a lot of pushback from not having an active comparator in the Phase III. Is that something that you ultimately need to do for ex U.S. markets?

So we haven't provided any guidance yet for time lines outside the U.S., and part of this will be driven by our decision on the commercialization side and partnering front. So...

Okay. And then Steven, turning to the next indication for the topical, for vitiligo. If you can give us kind of commentary on the -- where enrollment is in those Phase III and how fast we could get the data.

Yes. So again, the proof-of-concept data was very encouraging for the facial VASI end point, face VASI of 75 or greater. So hopefully, we want to replicate that. There are 2 Phase IIIs, 300 patients each, so it's smaller than the AD studies because we can leverage the AD safety database. We're about -- we're enrolling great. We're about 1/3 in on enrollment, and we'll see how it keeps going. Again, it's a longer end point. We've guided to having data about a year later. So we're currently looking at first quarter next year for the data set. And then the standard would be another year of follow-up and file at the end of next year, and we'll see -- we'll work with the agency to potentially, if we can, make that quicker. But currently, it's hard to comment on.

Okay. And I guess turning to kind of how to think about -- how we should think about pricing for a topical. In AD, we do have -- there's steroids or Eucrisa, things like that, that we can come to. For vitiligo, it's an open state and lots more unmet need. Is that implied that we should think about premium pricing? And how do you weigh, maybe sacrificing a bit of the atopic derm market to get higher pricing in vitiligo?

Again, I would say it's a bit premature to talk about pricing strategy for the 2 indications. There are some differences between the indications. So for example, the duration of therapy for AD is expected to be most likely different than for vitiligo. In AD, we are looking at probably 4 to 6 months of therapy, while in vitiligo, we are losing up 12-plus months of therapy. So that already would start differentiating. In terms of vitiligo, as you said, significant unmet need. There is practically nothing there. The one approach or therapy right now that Is getting reimbursement is phototherapy, where reimbursement is 12 -- is $1,000 per month for a 12-month period, and this is an approach that is very cumbersome for patients and not that efficacious, but at least we gave you one data point for vitiligo.

Okay. That's all the time we have on this, but there -- it will be available probably for a minute or 2 here afterwards. No questions? Thank you.

Thanks, Marc.

Thank you, Marc.