Incyte Corporation (INCY) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Brian Abrahams, one of the Senior Biotech Analysts here at RBC Capital Markets. It's my pleasure to introduce our next company, Incyte. Representing Incyte will be their Chairman, President and CEO; Hervé Hoppenot; as well as their Executive Vice President and CFO, Christiana Stamoulis. Hervé and Christiana, thanks so much for joining us today.

Thank you. Good afternoon.

Great. So why don't we hop right in? Let's start with Jakafi. It seems like there's been relatively limited impact to the commercial business from the pandemic. And I was wondering if you could maybe talk a little bit about how the dynamics between the MF and PV markets, in particular, have evolved since the pandemic began and how you guys are approaching marketing for Jakafi in this new virtual environment.

Yes. What I -- what we can say, obviously, it's evolving. And as of today, things look a certain way. But it's important to remember that we are dealing with cancer. And obviously, we know that cancer treatment has been maintained as much as possible by physicians to their patients. It's also important to realize that it's an oral drug. So it was possible and it is possible to ship it directly to patients without having to go or facing the issues that some of the injectable product had to face. So 2 very strong aspect to it. And what we have seen, obviously, in Q1 is the continued growth of our base of patients, the new patient flow, et cetera. But as you know, Q1 was only modestly impacted by the COVID situation. So we need to continue to monitor it. If we -- we can speak about COVID a little bit specifically. But if you look at the beginning of the year, we have a continued growth of each of the 3 indications where ruxolitinib, Jakafi is approved. MF is growing around 5% inpatient base. But PV is more around like 16% growth of the patient base and so growing a little bit faster than MF. And obviously, GVHD is growing very quickly. And in fact, now GVHD is becoming an important part of the mix for the brand. And there was a new England publication about the reach to the pivotal study that was done recently, which frankly, is helping very much. Now since COVID started, what we are seeing around the country is a very fragmented situation where some cities, New York City, you can imagine, and -- but not generally one, it's also two, probably a little bit in Boston, and maybe in some other cities. But where we have seen that the new patient flow is slowing down in that city. Now how much it's impacting the national number is obviously -- it's very much diluted. So it's not very clear yet, but we can say that what we expect to see in Q2 is a reduction in the number of new patients versus what we have seen or would have seen without the pandemic, but that's still a very small number compared to the overall prescription base for Jakafi, which is mostly on ongoing patients versus the flow of new patients. So that's where we are. There is probably some effect on the flow of new patients. We don't see a huge difference between MF and PV from that standpoint because it's probably accessibility to the office. If any, it's going to be relatively small, assuming that we can see a rebound in the end of this month and the next quarter.

Got it. And then as we look further out, as you guys build upon your Jakafi life cycle strategy, how much is your focus on combinations versus new ruxolitinib formulations versus building on the existing IP and patent estate? And I had a few follow-up questions on that as well.

Yes. It's connected, in fact. So there are really 4 components today in the clinic. They are more than that because we are doing a lot of additional research and additional work, but the ones that are visible in the clinic is first once-a-day formulation. So it is a new PK profile for ruxolitinib. It could have impact on the clinical profile because we have data from a few years ago, showing that, in fact, with a smoother PK profile, you could have less anemia. And that's well explained by the peak to trough difference of the 2 formulations. But it's not the main goal. The main goal is also to have a combination partner for once-a-day other products. So that project is ongoing. We are planning to do the studies, bioequivalent studies. This year, we need to do to finish the stability studies, and we should be able to file in 2021. So next year. So that's once-a-day. It's an important project. It has IP attached to it, and it's interesting by itself, but it's also very interesting as a combination partner with the 3 other projects that we have ongoing. In fact, there is -- there are 4 of them. So I will not speak about the PIM combination because we don't have the proof-of-concept yet. But the most advanced and there is an [ EHA ] abstracts on it is PI3-kinase delta. So we are planning to start a Phase III study, pivotal study before the end of this year of ruxolitinib plus PI3-kinase delta in patients who have a suboptimal response to ruxolitinib. So that will be comparing -- continue RUX versus add PI3-kinase delta. It's a good design. We are finalizing, discussing with FDA, but we plan to start it before the end of the year. And then we are also considering doing a first-line study in MF, where we would be also comparing ruxolitinib as approved today to, starting with the combination of ruxolitinib plus PI3-kinase delta at the dose of five milligrams. So you can imagine that that's an interesting program. It could have broad consequences. And obviously, it's opening the option to do a fixed dose combination of once-a-day RUX with once-a-day PI3-kinase delta. So 2 other program earlier. One of them is a BET. Those are BET inhibitors or bromodomain inhibitor. We are basically working on a hypothesis that was raised by another company working with a BET inhibitor. We have our own in our pipeline, and we are doing the -- we have -- we have ongoing study with single-agent BET inhibitor in MF. It would be followed by a combination of these drugs, which could be starting before the end of the year. And then we will be assuming we get good data doing a randomized study that could be potentially next year. And the same applies in terms of timing, but for a completely different mechanism to ALK2. So ALK2 is a target that we are looking at with a specific product, a very potent ALK2 inhibitor that would be helping manage anemia, in patients treated with ruxolitinib. And as you know, it's not just a safety play. It's also a way to maintain the dose intensity of ruxolitinib. And we know that higher doses of ruxolitinib have better results in MF. So we are doing that study of ALK2 plus ruxolitinib, that's also should be starting before the end of the year. So that's 4 projects that are moving relatively well. And obviously, we'll be addressing different needs of different subgroups of patients with MF, and I'm very happy to see the progress. And also, I'm fairly confident that it will help improve treatment of MF and potentially PV. And -- but it's also going to give a lot of strength to our franchise over a long period of time. So it's a good progress.

Great. And then moving on to Pemazyre recently approved. Can you talk a little bit about how we should be thinking about the launch? And maybe anything -- any ways that you're approaching the launch in its first indication in light of this current environment and the likely need for a virtual launch?

I must say it's -- for us, it's a first. It's an exotic launch because we are launching virtually entirely. It is interesting is that we have been able to mobilize our field force virtually over the past 9 weeks, I guess, now 9, 10 weeks. And we are making a lot of progress. So we are able to speak to physicians. We are able to organize programs. We are able to invite speakers, external speakers, all of that virtually through the Zoom or some other website, I don't even know. And obviously, at the beginning, it was a little different from the usual physical presence of the reps. It is -- we are making progress, and I think we are getting attention from the customers. And frankly, having a new drug to launch is very helpful to get meetings to be accepted because it's a rare disease, but it's a disease that is also treated by the same group of private practice hematologists, oncologists who are using Jakafi and where they want to know how to use it. So there is literally an educational effort on teaching how to use it, at which dose, what to watch for, how to dose, adjust based on which side effect, et cetera. That is catching a lot of attention, and we get a good number of this interaction taking place. We have seen prescription already. And we are relatively satisfied. Obviously, it's a little strange compared to what we are used to, but we have been relatively satisfied by the dynamic of the launch and the level of interest from our customers. I think we are under pressure. It's a sort of a darwinian thing. We are learning under pressure to adjust and to adapt the way we do this customer interaction. And frankly, I think we are learning new ways, new avenues to work with our customers to provide them the right information, the right access to speakers and do that in a way that is different from what we were doing earlier. At the end of the day, the cholangio second-line indication is the U.S., as you know, is relatively modest in size. So we should not raise expectations too much. But we are also very happy with the dynamic of the launch and how it was executed by the team. So it's a good feeling about it. And certainly, we can hear the questions, the number of -- the need for information for this type of new products that are addressing an unmet medical need where nothing was approved before.

And I guess kind of as you look to further grow pemigatinib, can you just talk briefly about some of the future indications you have in the pipeline? I guess, I'm curious where you see it as potentially differentiated in bladder cancer? And how you're thinking about the likelihood of success in the, I guess, the largest -- potentially largest tumor-agnostic group?

Yes. So I will start with the tumor-agnostic group because I think it is the largest in some way, it's a place where we are running ahead of the competition. It is interesting because there are a number of patients suffering from cancer of multiple origin with an oncogenic mutation of FGF. So that's what we are trying to address and to confirm. We know by working -- we have been working in 3 other indications. In fact, there is a very tiny indication called 8p11 MPN. It's an FGFR1. We have been working, obviously, on FGFR2 and FGFR3. And what we see is that in these patients who are suffering from this mutation, having a fusion, in that case, and some translocation. In many cases, this patient will benefit from the treatment. So it gives us a good level of optimism about this agnostic study, which has been accruing very well and it's progressing well. The 8p11 indication is so small. We do it because it's the right thing to do, but frankly, it has no commercial impact. And then there is bladder and bladder is basically very different because, in second-line, we are not first. J&J is already established in that indication. So we are going to need to see how the profile of our product compares to theirs, et cetera. And there are no data that would be emerging for that. And frankly, the first-line setting in bladder cancer has changed in part because of our friends from Seattle Genetics. So we are in a mode where we have, I think, to think again, on the design of the first-line studies that we were planning to execute. That has been started. In fact, to make sure that it is still valid today. So I would describe pemigatinib in saying in cholangio, first-in-class, it has like 2000 patients, maybe around the world, 2,000, 3,000 patients, its relatively small. In the agnostic indication, there is a very large potential to expand. And in bladder cancer, we need to think about how to establish FGF inhibition in the first-line setting because that's where it matters the most, and we are not there yet.

Got it. The tafa program is one that's probably a little bit under the radar for folks that follow Incyte. Can you talk a little bit about why you decided to license the drug? What you like most about it? And maybe help contextualize some of the emerging data that we're seeing on response rates and duration of response coming out of the Yuhan, ASCO abstract?

I can speak with the Yuhan abstract and some of it -- I mean, Christiana, do you want to speak about the rationale around the BD effort we are doing and why this fit was very good?

Yes, absolutely. So as we had discussed in the past and prior to the MorphoSys collaboration, the way that we're looking at BD is we have, first of all, a strong balance sheet before the collaboration with more forces. We had over $2 billion of cash on our balance sheet. So we were -- we have the financial capacity to be able to consider bringing in external assets that could supplement our internal activities. And specifically add to our objective of diversifying the revenue line and continuing to add to growth, both near term, but especially in the 2025 plus time frame. And in terms of areas of interest, our priority is to add to areas where we have knowledge, capabilities, and current existing infrastructure that we can leverage, both in the U.S. as well as in Europe. So obviously, these areas for us are heme and oncology in the immediate term. Even though most recently, we are also considering if there are high science assets on the derm side, potentially accessing an asset as long as it would allow us to kick start our effort, our commercial effort, especially in the U.S. ahead of the launch of RUX cream. So when now you think about the MorphoSys collaboration. It exactly fits all those objectives in terms of the programs, that we are very excited about the data and the potential that tafa has and especially the potential to -- for us was to help or add to the diversification of revenue and not growth exactly at this -- its time frame that that I indicated. So both in the near term, but even more so in the 2025 plus time frame. And in terms of speak, it fits extremely well with our existing franchises and capabilities and infrastructure in the U.S. as well as in Europe. Where in Europe with Iclusig, we have a sales effort and existing presence that targets exactly the same call points, exactly the same physicians that we will be targeting for tafa. So a lot of leverage there, a lot of synergies, great fit and again, a very exciting program for us.

Yes. So maybe just a word on the recent data. So yes, the commercial fleet, the financial aspect of it contributing to the top-line in 2025. And obviously, there is also the ability to combine tafa with PI3-kinase delta, which could be very interesting in many B-cell malignancies. What happened with the [ EHA there ] is that it's an update on the existing data set that has been submitted to FDA and also other regulatory authorities around the world. And that new cut is really very exciting because it's confirming the high response rates of 60%, 41% complete response, which is a number that is very aligned with what you find with CAP 19 type of treatment. And then -- and that was, I think, surprising to many people is the duration of response of 34.6 months and median overall survival of 32 months. So it's great because it is confirming what we have seen. It's saying that the duration of the effect is very, very long compared to many other treatment for that disease. It's increasing the probability of success of the regulatory process, obviously, because the new data is confirming what we had in the file. And I think from the competitive standpoint, it's putting us in a very good spot in that setting of patients, who have been obviously, treated with the first-line and have not been cured because the cure rate, thankfully, is relatively high in that disease. But for people who are not cured, and in the U.S., it's around 10,000 patients roughly. We think we have a profile that is really interesting compared to other existing therapies that are available today. So it was -- I think it's really good news.

Great. Maybe shifting gears to RUX cream. You guys have presented a lot of positive data from the pivotal studies. I know quality life measures and safety are also really important for dermatologists looking at atopic derm and considering whether they may ultimately prescribe the agent if it's approved. Can you maybe remind us what you were seeing with some of those key data that you think resonates most with clinicians? And maybe also talk about your level of comfort that based on the side effect profile and the systemic exposure that the agent may have that you shouldn't -- that you wouldn't require box warning for JAK inhibitor AEs just as a class box warning.

Yes. Let me start with that. In terms of the safety, I mean you saw the data from the pivotal Phase III study at the safety profile is very clean.

Yes.

And it's logical because the systemic absorption is very, very low. And that's a publication that was done when we published Phase II. It is basically trying to measure the systemic exposure to using the cream, and it's extremely low. So the expectation is that there should not be any kind of biologic effect of the low systemic levels that we're seeing. And as you know we have been studying ruxolitinib as an oral drug with a systemic level that are multiple of what we are observing here. And we know what to expect, and it's clearly not happening. There is also something called the maximum use study that we have to go for the submission, where we are sort of as an experimentation, we are exposing patient to a large amount of the cream to measure, to find out what the systemic effects are. Again, we passed that with very low level. So our expectation is what you are describing is that the safety profile coming from all our clinical experience is showing that it has a very low systemic exposure, and that should be translated in the label. Regarding the efficacy, you know the sort of the primary endpoint has been reached very -- with a very large margin. So it's a very efficacious product. And what's really interesting is that the mechanism is both an anti-inflammatory, which has an impact on the primary endpoint, but it's also a product that is reducing each itching in a way that is very significant. And that was part of the publication at revolutionizing atopic dermatitis Congress last month. And I think it's a key question leading to the rest of the quality of life endpoint is saying that most of the issues like losing sleep, and having all kind of different problems related to eczema are, in fact, connected to the itch. So by being able to have such a dramatic super fast, very fast impact on itching, I think, is very important. And that's what will be driving the positioning of the product because it's very unique for that capacity to reduce inflammation and itching at the same time.

Got it. Makes sense. And then just maybe in the last minute that we have, going back to COVID-19. You guys are obviously conducting a study for COVID treatment. Can you just give us your latest thinking on when the RUXCOVID trial might read out. The mechanistic rationale for Jakafi in that setting versus other anti-inflammatory approaches? And then how you're thinking about potential monetization if that trial is potentially positive?

So let's start with the mechanism because that was really the source of this. I mean that was the beginning, is that we have been working on CRS for CAP 19, for now more than a year. We have preclinical model. We have clinical. We have a clinical study ongoing with itacitinib in that setting, JAK1 inhibitor. And obviously, CRS, the cytokine release syndrome from CAP 19 and the cytokine storm from COVID are not identical, but very close. So when we realized that this disease was an infectious viral disease, obviously, but that the manifestation of the disease was very much immune and was translating into the cytokine storm that, in some cases, was the cause of the deterioration of the patient's health. What we did is immediately look at the data that we have to try to think about what kind of design would make sense in that setting. We got data from China, in fact, showing that the dose of 5-milligram is the right dose in terms of safety and efficacy. We were worried about safety of giving potential immunosuppressing drug to patients infected with this new virus. We had confirmation that it was safe, and there was no deterioration of -- or no increase on the viral load. And we decided to start with 2 studies. We contacted Novartis, and we did make that decision together very quickly. In parallel, there were other studies that we have done with baricitinib, some of the anecdotal data, and some mechanistic data about other ways that baricitinib could prevent internalization of the virus in the lung. So now we have 3 studies ongoing, one with baricitinib, Lilly, and NIH. And that's a new study that is the NIH is conducting in combination with Gilead's antiviral drug. And we are with Novartis doing 2 studies -- no, we are doing 1 study with Novartis with ruxolitinib in the pre-vacuolated population as the goal is to stop the cytokine storm before it's pushing people into mechanical ventilation. And we are also doing a study with -- for patients in the U.S. only for patients, who are ventilated because we have anecdotal evidence that it could be useful. So there are 3 studies ongoing. On the RUX side, we have no monetization objective here. We, frankly, we don't see it as a long-term opportunity anyway, but we also want to make sure that we move very quickly to make these protocols available to patients. We have an early access program where we have already number of patients who have been helped by ruxolitinib in that setting. And frankly, that's really what we are shooting for here more than -- more. There is no ambition of creating a new business line for ruxolitinib in that setting.

Got it. I feel like we can -- we could talk -- speak for another hour, but unfortunately, we're out of time. So Hervé, Christiana, thank you guys so much for joining us, and for all the latest updates. Really good to speak with you, and thanks, everybody, in the audience. This ends this session. Thanks again.

Thank you.

Thank you.