Incyte Corporation (INCY) Earnings Call Transcript & Summary

Excellent. Good afternoon, everyone, and welcome to the fireside chat with Incyte Corporation. It's my pleasure to introduce Hervé, Christiana and Peter from Incyte. As they know, and I've been telling our investors, we never know who is involved, who is listening in, whether they know Incyte or not, so I'd love to take, call it, 2 to 4 minutes, Hervé, if you can, just give us a good global sketch of what Incyte is about.

Okay. Yes. No, thank you for the invitation. And I mean describing Incyte in 4 minutes is a little bit challenging. But basically, the whole idea behind Incyte is that discovering new products can translate into changes in the practice of medicine, obviously, and create a very fast-growing and diversified portfolio for the future in our case. So we are a company that is heavily inclined into doing drug discovery and drug development. We have now received FDA approval for 2 new products over the past few months, capmatinib and pemigatinib. We have another 2 products that have been on the market for a while and are going very well, ruxolitinib and baricitinib. And what you see on this slide for -- with the blue curve on the left is how the revenue of the company has been evolving over the past few years since 2015. And obviously, it has been a very fast-growing portfolio, led by our Jakafi franchise, both in the U.S. and outside with our partner, Novartis. So the goals we have for the next 5 years, if you just look at it to that horizon, is to continue to grow quickly, to continue to improve our P&L structure and to diversify our sources of revenue. And we are well on our way to do that with literally the Jakafi franchise, which is our current product that we are working on to try to improve in terms of safety and efficacy of treatment for MPN with a number of strategies and combinations, with a number of new products in oncology and hematology coming soon, are just being launched as we speak and with a new franchise in dermatology that is emerging and is, in fact, very important because it's basically creating a new division for the corporation. On top of which, we have a number of partnerships that are basically giving us royalties on baricitinib, capmatinib and ruxolitinib ex U.S. So that's the 4 components of the portfolio. They are expanding very well. And we had over the past few months, as I said, very good success with the publication of our data in dermatology with our atopic dermatitis franchise with RUX cream. We have capmatinib approved for FDA, first-in-class MET inhibitor for lung cancer, which will represent a new source of income for Incyte from our partner, Novartis. We had the approval of pemigatinib, a new first-in-class FGF inhibitor for cholangiocarcinoma. So it is also -- it's a relatively small indication, but it's the first of what could be an expanding franchise. We had very good publication in the New England Journal of Medicine for GVHD, where we had our acute randomized Phase III study published recently, and we are launching, as we speak, in the U.S. And we are in the process with our partner, MorphoSys, to -- in order to process the review of the FDA for tafasitamab, which could be -- it has a PDUFA date in August, so it could also be a relatively short-term additional opportunity in hematology for us. So it's a fairly busy time, but it's a time where we are realizing what our strategy is about, which is growth and diversification. And I think we are in a very good track from that standpoint.

For investors to know that this is a playbook that I guess you guys know well, right? So Jakafi was originally approved in MF, then expanded to PV, then expanded to GVHD. And so that's definitely something that you know how to do. I guess just before jumping into the data, this is a post-ASCO, post-EHA conference and before jumping into the LIMBER program, when we think about life cycle managements, clearly, Jakafi is the 800-pound gorilla. It's a significant part of the revenue. There are different strategies one can take. You mentioned -- you touched upon it, Hervé, about how you might want to look at combinations here to maintain that. The other is, of course, new assets entering. And it seems like you're -- you have a nice mix, I guess, of both sort of strategies. Is that how we should be expecting things going forward? Or do you favor one over the other?

I think -- so Peter can speak about the data and all the different approaches. But the overall idea is that today, we have Jakafi as a standard of care for patients with PV and MF in general. And what I think will happen is that we are able to have better treatment in terms of safety or efficacy, and we can speak of all the different approaches we are doing that will fragment that market into subgroups, where some patients who are suboptimal responders to Jakafi could have a better opportunity. And it could be, we hope, one of the combination we are developing in the form of a fixed-dose combination. That would be something that is very credible based on what -- some of the data you have seen at EHA with PI3 kinase delta, and we are doing other programs with other mechanism. It could be the same for patients who are suffering from anemia, where we have an ALK2 combination. So that could become the standard of care for this other group of patients and so on and so forth. So what is today a big Jakafi franchise could, in fact, over the next 6, 7 years, be fragmented into smaller subgroup, where there is a superior option for patients. So that by 2025, '6, '7, we will be in a situation where the Jakafi alone, the twice-a-day Jakafi that we speak about, will not be a big part of that new franchise that will include different types of -- different strategies depending on the specific needs of the patient. So the way I see it is that, over a period of time, there will be ways to improve over Jakafi alone for some subgroups of patients and it's going to break the what is now one product into smaller layers of products that are better clinically for that patient subgroup.

Perfect. So with that, let's jump right into the LIMBER program, right, which I think is your program to start stratifying that with -- you guys had some very intriguing data. We got some mixed responses right away, and I'd love to -- Peter, if you could walk us through maybe the key points here. When we were looking at SVR rates, I think people have to remember that this was kind of on top of RUX and maybe give us a sense as to how we should be viewing the entire program. And then specifically, this program in combination with PI3K delta.

Right. So thank you. So the entire LIMBER program, and there's sort of 3 facets to it. I mean one is developing a new extended-release formulation of ruxolitinib that would hopefully be once a day and hopefully have a better PK profile versus the current formulation. Second is looking at additional targets that may be relevant in MF and PV that could provide additional benefit to these patients. But the one that's particularly relevant for today is -- are the various combination strategies. And you're exactly right. We need to view many of these in the context that these are patients who are currently on ruxolitinib, and they've optimized the dosing of ruxolitinib. And RUX is helping them. I mean these patients are better than they were when they started. But they still have some residual splenomegaly. They may have some residual symptoms. And so we're looking at can we find additional mechanisms of action that can help to further improve the outcomes for these patients. So we don't want to stop ruxolitinib in these patients because it's helping, but what can we do to add on to ruxolitinib, something that's relatively well tolerated but can give them further improvement in spleen and further improvement in symptoms. And so we know from preclinical data that the PI3 kinase delta pathway is one of the potential pathways that can limit the effectiveness of ruxolitinib. And so in this study, we looked at adding on parsaclisib, our PI3 kinase delta inhibitor, to patients who are already on ruxolitinib. And it essentially maximized the benefit to ruxolitinib. These patients were all on the drug for at least 6 months. They've been on a stable dose for 8 weeks. And so while they had some improvement versus their original baseline in spleen and symptoms, they still had room for further improvement. And so what we saw is further improvement in spleen volume when we added parsaclisib, and that happened relatively quickly and also fairly quick improvement in symptoms as well beyond what they were getting with ruxolitinib alone. We looked at a number of different dosing regimens. So we looked at starting patients at a relatively high dose and then dropping them either to giving them the same high dose weekly or a lower dose daily to try and prevent some of the long-term toxicities that can occur with PI3 kinase delta inhibitors. What we can see is that, actually, the drug was fairly well tolerated in combination with ruxolitinib, but it was also fairly clear that when we did the low dose daily, you were able to sustain those spleen and symptom responses for longer than when we get an interrupted dosing regimen. We also found out that you probably don't need to start with initial high loading dose, but you can just give a consistent dose of 5 milligrams daily of the parsaclisib and get good spleen volume improvement, good symptomatic improvement and sustain those over a prolonged period of dosing with fairly manageable tolerability. So that was sort of the key message from the data that were presented at EHA. And we're moving forward now with studies, both in this add-on setting, where we'll add it on to patients who already had some benefit from ruxolitinib to try and extend the benefit of ruxolitinib and improve on it; and also look at opportunities in the front-line setting where we could start the combination initially and see if we can get more patients to benefit for quicker and longer.

Got it. It's interesting. So we had done this little white paper. There's a lot of players that are now coming into the space that I think you guys have built. And kind of based on the data you've seen from a competitive perspective and the other drug categories that are being developed, in a world where there are multiple products that may be approved, what drives adoption, let's say, for your combinations versus others?

So people are going to be looking at efficacy. Not only can you improve the spleen responses, improve the symptom responses, but can you sustain those? People are going to be looking at tolerability because we hope to sustain those efficacy improvements over many months. And so you need a drug that's going to be relatively well tolerated in that combination. Potentially, there may -- we're all looking at different biomarkers and potentially, there may be some patient selection that comes out of those where we can tell some patients may do better with one drug versus another. That's probably too early to be able to determine that right now. I think the other advantage that we have is -- and this comes back to what I was mentioning about the sustained release formulation that's a once-a-day formulation that we're developing is the potential to develop a fixed-dose combination pill where patients can potentially get 2 drugs in 1 tablet. And that's something that we will be uniquely able to do if we have 2 drugs in combination from our own portfolio.

Got it. And I may have...

You can imagine that the side effect profile of your combination can be better fit to a certain type of patient. If you have a low platelet at baseline, you don't want to have a mechanism that will add to thrombocytopenia if -- et cetera. So I think that could be, just by the clinical profile of the patients, some better use of certain type of combination versus some other.

Yes. And I think for the PI3 kinase combination, we were mostly focused on improving efficacy outcomes without worsening tolerability. But certainly, for some of the other combinations we're looking at, there's the potential of really focusing on improving tolerability because we know that ruxolitinib causes some cytopenias, anemia, thrombocytopenia. So potentially, for example, the ALK2 combination that we're looking at has the potential for improving anemia outcomes, which is a feature not only of the disease, but is a side effect for ruxolitinib as well. So there are different approaches we can use. Most of them are focusing on improving efficacy outcomes, some more focusing on improving safety outcomes. But potentially if you improve the safety outcomes, that may lead to an efficacy benefit as well.

Fair enough. I have a ton more questions on this program, but we have limited time. So I'd love to switch gears very quickly to your latest asset currently in development. There was a couple of very nice updates at EHA that, at least from our perspective when talking to investors, was largely either ignored or just people didn't focus on as much. And I'd love to take some time to get your thoughts on this latest data.

Tafasitamab data?

Yes.

Yes. So yes, I mean we're obviously quite encouraged by it. And I think the data that were presented at EHA are very encouraging. We saw overall a 59% overall response rate, a 41% complete response rate and a duration of response of 34 months, which is quite striking. And then alongside that, we see what looks like a fairly manageable safety profile. I mean neutropenia was the most common adverse event, but the other adverse events were not terribly common. And so I think this drug fits a nice sort of window between some of the other therapies that are available. It's obviously -- relapsed/refractory DLBCL is a very competitive space right now. There are a lot of drugs being developed there, and a lot of new agents that have come to the fore. But I think if you look at the response rates, and particularly the duration of response that we're seeing with tafasitamab plus lenalidomide, it's superior to a lot of the other agents that are available there. And then when you look at the toxicity profile, it's fairly well tolerated. So compared to agents like Polivy or particularly CAR-T cells, tafasitamab plus lenalidomide is quite well tolerated. So CAR-T cells, for example, I mean they're extremely effective. But first of all, not all patients have access to them. And secondly, they come with a risk of fairly substantial toxicity. So there's a potential for tafasitamab to give a number of patients some sustained efficacy benefit while avoiding a lot of those significant side effects. So we're quite excited by the data that we've seen and the updates that have been presented recently.

And I think that's -- so you compared some of the other drugs that are in development. I'm kind of curious as to how -- based on this data and just from your discussions and getting ready to sell, where do you see this positioned in the paradigm, right, of DLBCL? Where do we -- how does this start moving forward in the entire paradigm as well?

I mean right now, the data that we have from the L-MIND study and the initial approval will be in the relapsed/refractory setting, obviously. And as I said, I think it's a -- hopefully, it will provide a great opportunity for patients to get a drug that gives them potential for durable benefit with manageable toxicity. But we are very interested in taking advantage of those encouraging data moving upfront into the frontline DLBCL setting. Obviously, it's a very high hurdle there. Chemotherapy is very effective. A number of patients are cured. But given the data we've seen, we're looking at combinations in the frontline setting. So we have the ongoing First-MIND study, which is looking at the combination of tafasitamab plus lenalidomide plus R-CHOP or tafasitamab plus R-CHOP in the frontline DLBCL setting. So that study is ongoing. We're going to be looking very carefully at the safety data from there to make sure we're not exacerbating the tolerability and also the preliminary efficacy from there to make a decision about moving into a pivotal study in the frontline setting.

Got it. And then can you just remind us the current kind of regulatory path, both from a U.S. and EU perspective? And just what the initial commercial opportunity might be if you guys have talked about that?

So the PDUFA date in the U.S. is end of August.

Of August, yes.

So -- and in Europe, the submission has been accepted, so we are in a 1-year cycle there. In the U.S., I think what you hear is that the duration of response, the complete response rate are very important because it's a long duration of benefit, and the safety profile is such that you can give that benefit without having to use chemotherapy. You can do it in the outpatient setting. So it's a chemo-free kind of outpatient treatment with a very high level of response and a very long duration of response. And I think it's unique in the entire strategies that physicians can use. If you're in a private practice today treating DLBCL, half of the patient treated in first-line relapse, so that's where it's important, they are not cured. They are part of this population that we have treated in the pivotal study, and it's around 10,000 patients in the U.S., so that is a fairly large group of patients where we are with this combination, offering something fairly unique, chemo-free, high complete response and longer duration of response with a good safety profile. So it makes it a very attractive balance of high efficacy with convenience and with safety. I mean it's the usual mix of characteristics that are important for prescribers. So...

Sure. Sort of in the last 30 seconds that we have left, investors are always focused on what's coming next. You mentioned the PDUFA date, of course. What are -- what would be the other key things that you would just like to highlight for investors for the rest of the year?

So we have the chronic GVHD pivotal Phase III study coming up in the second half of the year. So that's clear, the cream. So we spoke -- I know it's outside of oncology, hematology, but it's a big event for the corporation because it will be a new division, commercializing this product for vitiligo and atopic dermatitis. The NDA submission is at the end of this year. We spoke about the LIMBER, and one of the aspect is once-a-day where we will have data also before the end of the year, the decision on tafa. And then some new data asset will be available on our I-O portfolio before the end of the year. So the big thing is, obviously, tafa and the submission of the cream from the regulatory standpoint and the big Phase III study in chronic GVHD that is coming also in this next few months.

An action-packed second half of the year, we're really looking forward to it. Thank you, guys, very much for the time. Very much appreciate it.

Thank you.

Thank you.

Thank you.

Adjourned.