Incyte Corporation (INCY) Earnings Call Transcript & Summary

My pleasure to have my next presenting company with me for the next half hour, Incyte. Presenting from Incyte this afternoon will be Steve Stein, who is of course Chief Medical Officer; as well as Christiana Stamoulis, who is Chief Financial Officer. Steve and Christiana, good afternoon.

Thank you for having us.

Thank you.

So there probably are very few people who don't know that much about Incyte, but on the off chance that we have some people on this webcast that don't know the story quite as well. Maybe could we ask you to give a 2-minute or less overview of the company and the platform and then we can go into some more specific questions if that's okay.

Sure. Maybe I'll start with an overview of the company and our commercial portfolio, and then I'll turn it to Steven to provide an overview of our clinical development pipeline. So for whoever doesn't know us we currently operate in 2 therapeutic areas. The first one is oncology, hematology. And there, that includes MPNs, other blood cancers and GVHD and solid tumors. And then the second area is inflammation and autoimmune, which also includes our recently established commercial franchise, which is dermatology. We currently have 4 products that we commercialize ourselves, and these are Jakafi in the U.S., which we are commercializing for MPNs and GVHD is an internally developed -- discovered and developed program, and we commercialize it in the U.S. This is our largest product to date. In 2020, we generated close to $2 billion in revenues for Jakafi and is a product that continues to have a very nice growth profile across all indications for which it has been approved. The second product in our commercial portfolio is Monjuvi, which currently we are commercializing in the U.S. for relapsed refractory DLBCL. It's a product that we brought in through our collaboration with MorphoSys. And in the U.S., we are commercializing it together with our partner, MorphoSys. The third program is Pemazyre. Pemazyre is another internally discovered and developed program for cholangiocarcinoma. We have received a regulatory approval in the U.S., Europe and Japan. And this is the first product that is internally discovered that we are commercializing ourselves in multiple territories. And finally, it's Iclusig, which is approved for blood cancers, and we are commercializing in Europe. In addition to these programs, we have 3 of our internally developed -- discovered products that are commercialized by our partners, and these include Jakavi, which is Jakafi ex U.S. and Tabrecta, which are commercialized by our partner, Novartis. And then Olumiant, which is commercialized by Lilly. And for these products, we receive royalties and milestones. So when you look at our revenue coming from those products, both the net product sales as well as the royalty revenue this past year in 2020, we had close to $2.5 billion in revenues, growing at around 18% year-over-year. So fast-growing revenues, all products that I described are continuing to grow. Some of them were launched in 2020. So there is significant growth still ahead of them and others like Jakafi, even though has been in the market for a number of years, continues to grow at a very high rate. And in addition to the growth coming from our commercial stage products, we have a number of products in our clinical pipeline, some of them late stage, and we're waiting for some regulatory decisions in the very near term. And so I'll turn it to Steven to describe these.

I know we're running over our 2 minutes, but just quickly, we have 3 under priority review at the FDA, RUX cream in atopic dermatitis PDUFA late June; oral RUX in chronic graft-versus-host disease, PDUFA late June; and retifanlimab in squamous cell anal carcinoma with a PDUFA late July. And then 2 at the EMA tafa in diffused large B-cell lymphoma and retifanlimab in squamous cell anal carcinoma. And then we expect to do submissions second half of this year parsaclisib in non-Hodgkin's lymphomas and RUX cream, again in vitiligo. So the regulatory cadence is great. Clinical trial execution, the LIMBER program continues to execute and be very, very important to us as well as several IO programs in derm and inflammation autoimmunity. So a very busy regulatory front with several actions coming up and cross operationally across the development program also lots to do.

Okay. Yes. There is a lot going on and a lot to talk about. So let's dive into some specific questions. Let's start with Jakafi and its approved indications. Nearly all of our companies have talked about the impact of COVID to their commercial organization and sales efforts. Can you give us specific color as to how Jakafi sales have been impacted by COVID? Is it more so that new patients have been slowed down and being added on? Or are you also noticing other elements such as persistence or refills maybe being delayed?

Yes, the impact that we saw from COVID for Jakafi has been primarily around new patient starts. So in 2020, we saw a slowdown in new patient starts that impacted a little bit sales, even though we ended the year at the top end of the range that we had provided. But there was some impact because of a slowdown in new patient starts. Where we are right now and what we saw in Q1 is a recovery in new patient starts. So we start getting to levels that are in line with pre-COVID levels in terms of new patient starts. But we were impacted by the compounded effect of the slowdown in new patient starts in 2020. So the patients that didn't start in 2020, didn't become continuing patients coming into '21. So that's the impact that we saw. However, we -- again, we are seeing a recovery in new patient starts. We were expecting to have some impact from COVID at the beginning of the year, in the first half of the year, but we are expecting recovery in the second half of the year and that's why when we discussed our Q1 results, we reiterated IR guidance for the full year. The slowdown was something that we were expecting. And as we are -- and we have built a recovery in the second half. So we continue to be comfortable and confident in the guidance that we have provided for the full year.

Okay. And how important is it in the case of Jakafi that doctors go back to in-person consultations versus tele-visit or phone consultations in some cases?

Less for -- yes. Less for Jakafi than a new product launch. So it is much more important for something like Monjuvi than for Jakafi that is well understood, they are familiar with. And that's why we didn't see such a big impact with the drug. Also, it's an oral that is easier than an IV. In general, I think IV drugs were impacted much more by COVID than oral.

Okay. So maybe let's move on to recent observations that investors have been making about the JAK class in general. It does seem that FDA has become a little bit more inquisitive about the safety profile for certain JAK inhibitors. Can you talk about specifically your thoughts about how any of the actions that FDA has undertaken recently may or could impact Jakafi?

Sure. I can try. So obviously, a lot of -- well, firstly, for RUX itself, been on the market since 2011 in the U.S. more than 10 years of patient experience, more than 50,000 patients treated commercially. And then every year with our partner, Novartis, we get regulatory requests on safety from around the globe to look at things like malignancy, cardiac events and thrombosis. So we're used to it. The Xeljanz' safety readout did sort of ignite the field and the interest again and again, renewed interest from regulators on what we've seen, and we've again provided for oral RUX itself, a safety profile that we're very comfortable with, including the fact that it's used in prothrombotic conditions like MF and PV and doesn't have a signal there to date. In fact, it may actually alleviate some of the thrombosis there. But you saw what happened with the oral JAK reviews in AD. They've all had their PDUFA shifted to the fall sort of timeframe as the FDA conducts further safety reviews. And indeed, we'll be providing data on RUX. And we feel, again, to be repetitive confident in its profile. So it doesn't have a black box nor do we think it warrant one, given our own data, it would have to be a class-type effect. For the topical RUX, which is under priority review with the PDUFA in late June, if you look at its bioavailability versus oral RUX, about 4% to 7% is absorbed. So an average about 5%, again, a very clean safety profile, no in a pharmacologically relevant systemic exposures. And again, given that -- given what we've seen with oral RUX, we don't feel as a company that there's any signal to warrant in any of those spheres labeling around warnings. So we'll see how it plays out. Again, it would have to be classed based on our own data. There's nothing within either the parent or the topical that we think warrants it.

Okay. Yes, we'll talk about RUX cream a little bit later on with a little bit more detail. But to stay on Jakafi for now, can you talk to us about the GVHD indication and how acute versus chronic are different from each other because I don't know that all investors have an appreciation of that.

Sure. From a pathophysiology point of view, the best way of thinking about it is that acute graft-versus-host disease is a condition of cell death of apoptosis. So you get within the liver or the GI tract or the skin cell death. And the JAK step pathway is important there. We now have a full approval there, including based on the largest ever randomized study conducted is steroid-refractory acute showing a benefit. For chronic graft-versus-host disease, the pathophysiology is different. So it's more of a B-cell-mediated disease. It's more of a condition of fibrosis rather than cell death. So it's more dominated by things like skin changes. And indeed, there's a BTK inhibitor, Ibrutinib, approved in chronic based on change in B-cell biology there. Again, we have a large randomized Phase III that has shown a benefit for ruxolitinib in this population. It's under review now, and the PDUFA date will be late June. And based on that data, we feel we have a very important drug for chronic as well. So the JAK [ step ] pathways, although the pathophysiology is different in terms of how the diseases manifest seems to be relevant for both given the outcomes we've had in studies.

Okay. And in terms of sales force, would there need to be any kind of adjustments with this new indication coming on, presumably at the end of June?

No, not at all.

So let's move on to Monjuvi then. So I think, Christiana, you alluded to some of the things that we wanted to touch upon a bit earlier. So this is going to be an area that's much newer to physicians relative to your established Jakafi market. Can you talk about the dynamics of launching this particular drug in a COVID market? And whether or not you would expect to also see a meaningful uptick in new scripts in a market that's not still impacted by COVID?

Sure. So in terms of the launch, we launched Monjuvi in August of 2020. So we are still early in the launch. And we launched it in this COVID-pandemic environment, which definitely presents challenges. But we are very encouraged by the initial data that we see. And by that, I mean, first of all, the initial HCP reception, which has been very positive, very positive commentary in terms of the efficacy and safety profile and the duration that we have shown in clinical trials. We have achieved at around 50% share of voice and our market share is steadily increasing. So we started with our fast growth in the third line of therapy. And now we are seeing continued uptake in the second line of therapy, and we are very pleased with the uptake that we see not only in the academic setting, but also in the community setting. And just to give you a sense of that update when we first launched for the third quarter of 2020 and around 30% of our business was in the community setting. Right now at around 70% is in the community setting. So we see nice growth there. And the profile of Monjuvi is the safety profile and the duration of therapy is especially important for the community setting. So we are very encouraged by what we see here. At the same time, the overall patient volume is -- has been impacted by COVID. It's something that we are not the only one seeing, it's happening overall. So this has been impacted by the fact that most patients don't necessarily go to see their physicians the same way that they were going pre COVID and/or get switched to new therapies during this pandemic period. And also COVID has impacted our ability to go and speak to HCPs and educate them about Monjuvi and the profile and the duration of response, which is very important. So we do believe that with the COVID situation improving and a recovery in the second half of the year, we'll start seeing this translate into greater patient volumes and with metrics that I discussed in terms of market share, in terms of penetration, et cetera, see that translate into an increase in our net sales.

Okay. So can we talk a little bit about the DLBCL market in general? It's an area of under met need, obviously. But there are a few options that are available to patients, which fortunately is a good thing. Where do you see Monjuvi ultimately fitting into the treatment regimen in terms of what line of therapy, doctors would prefer to use it?

Yes, it's Steven. Thanks for the question. I think the data should speak for itself. So if you look at L-MIND, now has a 2-year update, with a 3-year update coming at ASCO this year. And you see this response rate with a high CR rate, but with extremely durable responses, the 2-year update had nearly a 35-month duration of response. Plus a tolerability profile. And now it's label in the U.S. in second line, that's where the data should point towards it being used in that particular setting, given the efficacy profile, given the duration of response and the tolerability profile. You were talking about still being a market where people do various things, different things. They still use a lot of Rituxan chemotherapy-based combinations. And Christiana was alluding to the fact that as post pandemic, the world opens up, we'll be able to communicate more the label and the data sets to doctors. So they realize this option here. So I think that's the ideal place to be used. One of the areas that comes up repeatedly because it's CD19-directed is CD19 expression retained post use of tafasitamab. We've already generated and published some data, and there'll be more coming out soon in a formal publication in a journal to show in the data we generated to date, that CD19 is retained and also that they've been CAR-T responses post tafasitamab. So we think that, that concern shouldn't be there based on the data we have, and we will generate more. There is an administration schedule in the beginning, where people have to come to the clinic often for the initial loading. And then it decreases. That could be one area that's been a little impacted by the pandemic that hopefully will also get better. So I think it sort of stands on its own. And that's why, additionally, we started the first-line study now on the back of R-CHOP, see if we can improve cure rates there.

Okay. And when do you think the launch would be in a place where you would find it comfortable to provide sales guidance on a yearly basis?

So we are still early in the launch. And again, a launch that is happening in this pandemic environment. We would want to see a few more quarters of performance in a more normalized setting before we can provide near term guidance. And as you know, we have commented before on the longer term guidance, how we see this opportunity in the longer term for the U.S. and specifically for this indication, relapsed/refractory DLBCL, where we have indicated that we believe this would be a $500 million to $750 million fixed sales potential.

Right. Okay. One last question on this topic before we move on to upstream. If one were to look at the cadence of [indiscernible] and [indiscernible] , would that be a potential guide for how we should think about Monjuvi? Or are there other -- what should we consider other dynamics and not assume such a thing?

You're talking about the CD79a, the Roche compound [indiscernible] , it has a slightly different label, at least on this side of the ocean, it's third line and greater. In Europe, it's second line and greater, a different tolerability profile in terms of peripheral neuropathy, which we don't see with our regimen, but we haven't done head-to-head work. So within label, it should be used in a different setting, at least in the United States. It is -- there are -- there's an ADC now approved the bispecifics come in in other CAR-Ts. So physicians are going to have to weigh the efficacy profiles and the side effect profiles in terms of making choices. They also have conducted a first-line study on the backbone of R-CHOP and I think that reports out sometimes towards the end of this year. So we'll see in the first-line setting, if they've been able to move the needle, which nobody has to date.

Okay. And the new ADC that you mentioned, which was very recently launched by ADC Therapeutics. Any thoughts on that product and its competitiveness?

Yes. I think, again, it's sort of been the same thing I've been saying to you. You have to look at both the efficacy and tolerability profile. It's an antibody drug conjugate. It has certain unique toxicity based on that. And the efficacy may not apple-to-apple, may not be in the range we've seen with tafa LEN. So we still very much like the profile of tafa with LEN in the setting by comparison.

Okay. So maybe in the few minutes we have left, let's talk about expectations upcoming for RUX cream. Of course, you have a PDUFA for the first indication for atopic derm. How should we be thinking about what place in the AD market RUX cream could have? And do you consider it to be overlapping in the type of patients that have been going to the injectable therapies up until this point? Or would it be something for more mild patients?

So I'll do the clinical part. So within label and what was studied in the Phase III, firstly, we in adolescence and above, so 12 and above. Then the population that was targeted were mild to moderate, which is a little different from some of the systemic therapies, which were moderate and severe, although there is some overlap. And I think in a good way, it gets a little confusing because we have systemic therapy or Dupixent like activity, albeit with a cream, these outstanding eczema area severity index scores and investigator global assessment scores and a very good safety profile. But we think its main use will be in adolescents and above 12 and above with mild to moderate because its profile in terms of efficacy and the rapid itch relief, which may be the biggest differentiator in that -- people get relief from the itch within 12 hours or less. And that was a predefined endpoint using a validated scale that if approved, should make its way into the label, and we think that will be the biggest differentiator. As you get to the more severe patients, with more extensive involvement when people are considering systemic therapies, moderate plus type patients, there will be a little bit of an overlap in terms of labeling, given what we submitted. And people may use a mix of the therapies of potentially occasionally both together. It's hard to work it out.

Okay. Now I guess how have physicians initially been responding, you can't detail directly, but based on what they know about the profile, have you done any -- or can you share any market data research about how their opinion on RUX cream could be different from, let's say, the Pfizer drug that was similar, but had a lot of other issues that your drug wouldn't have?

Yes, I can start, you can add, if you like. Again, we've done all that testing you talk about. I think the -- both the antiinflammatory and anti-itch effect pop out. The biggest differentiator, again, seems to be this impressive early relief patients get as opposed to one of the competitors you mentioned, which unfortunately, looks like they get more burning on application, which may be why it's not used as much as they had hoped in that setting. I think people are really struck by the profile, the ability to resolve the AD lesions and get that itch relief coupled actually with also improvement in sleep. We'll see whether that makes it to the label or not. It's all around the efficacy profile. I don't know if you have anything to add?

No, no, I think you covered it well.

Okay. And you are obviously going to be using a dermatology sales force for this launch, given that it's your first foray into this specialty. Can you share with us the prep work that you've been doing? And would the sales force be ready immediately upon approval?

Yes. So the commercial organization is in place already. And by that, I mean, the field reps, medical affairs, marketing, payer access and yes, it's the first entry into derm for Incyte, but it's not for any of the people on the commercial side, who have come with significant experience in the derm space. So we have made some fantastic hires and very experienced with dermatology. So we expect to be ready for launch, all the prelaunch activities are taking place as we speak. We are having ongoing discussions so with payers, including the top PBMs that cover 80% of lives in the U.S. These are progressing well, and we expect to be in a position to launch immediately after the potential approval.

Okay. And then really quickly, RevStream will also have data for a second indication, vitiligo, coming soon. What should be our expectations on efficacy here, given that this is an area where there's really nothing available for patients?

Yes. Our feeling is that it's very likely to replicate the Phase II data. I mean, the studies were conducted in similar places with similar populations, albeit slightly lower body surface area in the Phase IIIs. Additionally, it has beyond the facial VASI75 primary endpoint, this very important secondary endpoints, including patient-reported outcomes, which will be important for us to both try getting labeling and also help with reimbursement-type negotiations. So that's the profile we expect, the data is imminent and we'll have a disclosure obligation at some level to press release it. So hopefully, you'll be seeing something relatively soon. And then as you pointed out, this is not atopic derm. There's nothing else approved here for patients who want to treat vitiligo. We've just recently published a 104-week update on the Phase II, which shows continued improvement over time. 60-plus percent of patients getting facial VASI, 75% or greater repigmentation. So a really impressive data set again, for people who want to treat their vitiligo in an area where there's nothing approved and really the dominant therapy with some efficacy used is not easy to use, which is phototherapy, albeit it is reimbursed. So it's something really important to us, and we want to get it out there soon.

Okay. With that, I will wrap up the conversation. Thank you so much, Christiana and Steven for joining us this afternoon. There's a lot going on at the company, and we're going to be looking forward to seeing all of those data updates that we just talked about.

Thank you, Tazeen.

Thank you.

And thanks, everyone, for joining this presentation.