Incyte Corporation (INCY) Earnings Call Transcript & Summary

RBC Capital Markets. We're really pleased to have our next presenting company Incyte here with us today. Representing Incyte, we have Christiana Stamoulis, their CFO, and Steven Stein, their Chief Medical Officer. Christiana and Steven, thank you guys so much for being here.

Thank you.

Thank you.

So there's a lot to talk about. A lot going on in the commercial and strategic and R&D front. And so we'll try to touch on as much as we can in the next 25 minutes. But maybe we can start with Opzelura, you're coming off of first quarter earnings. And where I would love to learn a little bit more about the overall dynamics that you're seeing with Opzelura, we continue to hear very favorable feedback from clinicians, especially in the atopic derm indication where you've been in the market for some time. And would love to learn a little bit more about what you guys are seeing on the ground with regards to demand, discounting, Medicaid utilization, true-ups inventory. Maybe all the factors that are influencing translation from pace demand and physician interest to revenue? And how you see that evolving from the first quarter throughout the rest of this year?

Okay. Great. So the Opzelura launch is progressing very well. As we shared during our Q1 call in the first quarter of this year, we saw over 60,000 new patients starting on Opzelura, and these were both AD and vitiligo patients. We continue to see growth across both AD and vitiligo. The feedback that we are getting from patients and physicians for both indications is very, very positive. In AD, the hallmark of Opzelura is itch reduction, very rapid itch reduction that I think it's fair to say up to now, it has been unparalleled. And this address a very significant unmet need in AD patients. And in the case of vitiligo, there are no other therapies that have been approved for re-pigmentation. You've seen the data. It's very positive, very strong data in terms of how it can re-pigment skin. So very positive feedback. We see the growth on the demand side. When it comes down to Q1, we did see some dynamics that are overall, very Q1 typical dynamics. So when you look at copays and deductibles, they were higher in Q1. That was something that was expected and as we were giving guidance last -- at the end of the year for this upcoming year, we said that we expect Q1 to be higher than the subsequent quarters and average out around 50%. And that's exactly where we are. We expected Q1 to be higher because the payers -- the plant restarted the copays and deductibles at the beginning of the year. So we have -- we are paying those down, so we have to pay down bigger amounts. So very typical Q1 dynamics. You saw it with Opzelura Jakafi, you see it across all products for all companies. The other thing that we saw that I would also characterize it as a typical QR dynamic course that at the end of '22 in December, we saw an acceleration of refills. And that's what you often referred to as a shoe boxing effect. You get patients that try to accelerate refilling their prescriptions before the year-end that they then don't have to deal with the higher deductible copays at the beginning of the year. So we saw that happening in December, which impacted refills in January and February, so 2 months of Q1, we've seen already the recovery in March, and we continue to see that in April that continuing now. So these were the Q1 specific dynamics. The other thing that we saw was that the Medicaid utilization was higher than we were expecting. And this is because eventually, we were expecting always that we will get to those levels of Medicaid use, but there was a much more rapid uptake of Opzelura by Medicaid. Now there is coverage across all 50 states, it does highlight the benefit that they see in the product and also the great work that the team has been doing in getting Medicaid coverage so quickly, but it was more rapid than expected and it did have an impact in Q1, a disproportionate impact and because it was both a Q1 impact and some true-ups associated with Q4 and Q3. So that's what you saw. In terms of now moving forward, we do expect a gradual decrease in those copays and deductibles through the cross of the year, and that's why we indicate that we continue to see an average gross to net of around 50% for the year.

Got it. And then what are you guys hearing from physicians? You alluded to the resonance of the itch reduction. What are you hearing in terms of how Opzelura is being used in the atopic dermatitis setting? Is it being used sort of more broadly? Is it in more niche areas of the body and combination perhaps with systemically delivered agents? And what does this all mean for your expectation for the number of tubes per year in average patient is going to be using now that you have several quarters now of experience.

So we see Opzelura being used very much in line with the label. So in patients that have up to 20% body surface area coverage and who are not well addressed with TCI and TCS. So we see those being the patients using Opzelura primarily. In certain cases, it's mild-to-moderate patients. In certain cases, it's more limited disease, in others, it's more coverage, but very much in line with the label. The feedback, as I indicated, has been very positive. And when we look at the end, that cream is very effective. So the itch reduction is very rapid, that we actually shed some data at the scratch AD a couple of weeks ago. And it showed how you get itch reduction as quickly as 15 minutes and then maximum peak of reduction in 4 hours. So very, very rapid itch reduction. In terms of the utilization, based on the data that we have now for on patients that have been 1 year on therapy, we are seeing on average at around 2 -- a little bit over 2 tubes a year. We -- so the 2 tubes is within that 2 to 3 tubes per year on average that we had indicated. And we expect this to have room for improvement to increase within that range. Given that, first of all, we are pursuing various patient adherence programs, that should help patients make sure that they utilize the cream appropriately, they refill their scripts on time, et cetera. And also as more and more patients get comfortable with the use of Opzelura, we expect the use to be expanded further within label. So all this should help further increase the number of refills per patient on average.

Got it. That's really helpful. And then can you talk a little bit about the vitiligo indication, and I guess, how that's going. It's sort of unique in that there's really nothing else out there that has been shown to improve pigmentation from a medical therapy standpoint. At the same time, there is, of course, the challenges of kind of bringing patients back into back to engagement with their clinicians because there hasn't been any really effective treatment. And the need to be on the drug for a long period of time before you start to really see the maximal benefit. So I guess, can you talk about maybe how you're navigating some of those challenges and whether or not you're starting to see any signals of potential influx of patients getting back to their physicians asking about Opzelura.

So we're still in the early days of the launch in vitiligo. The feedback we're getting is very positive along the lines that you described, the data has been -- has shown a very efficacious therapy, but also now in real life experience, we see patients that have started to self-report about their experience with Opzelura, and they're showing the benefits over time in terms of re-pigmentation. It's very early to say what's the mix is between active and prior -- previously in active patients. We expect that the majority of the patients that we're still seeing now are previously active patients. Patients that have been actively seeking treatment for vitiligo. This represented around 10% of patients that have been diagnosed with vitiligo. The majority of patients in the past have not been seeking treatment because there was nothing available until now. So our objective, our goal is to try to activate those patients, those 90% of the diagnosed with vitiligo patients that previously were not doing anything to seek treatment and to get them to go and see their dermatologists in order to see whether it would be appropriate for them to get on Opzelura. And we're doing this through different activities. One is patient awareness programs. There is -- there are several DTC initiatives that we are pursuing, it's a multichannel approach, including TV, and you may have seen the advertisement on Opzelura for vitiligo. We are providing patient education and general education material to physicians and to patients to help them to get more information on Opzelura and vitiligo. We are working with patient advocacy groups to help increase awareness that there is now therapy or a treatment for vitiligo and we are also supporting copay and deductibles in order to be able to allow patients to get on Opzelura.

Is there a point in time when you'll have a sort of an assessment as to whether or not some of those efforts are indeed drawing those patients into therapy? Is that something we should be looking for maybe towards the end of this year or into next year as of defensive verbal, maybe see a demand inflection?

So it would take some time. Again, we are even early in the launch of a dose DTC type of activities. It would take some time, especially to get the inactive patient population to get to the dermatology offices. Part of the reason is logistics to get an appointment with a dermatologist, it takes 6 months. So it would take some time to see those patients getting on Opzelura. But we are already seeing some very early metrics that we follow, for example, for a few weeks -- couple of weeks after the DTC, the TV campaign, where would be the market check we saw that 1 out of 5 patients that were going to visit their dermatologist were asking for Opzelura.

Got it. Maybe a question for both of you related to Jakafi. Jakafi has obviously been very well entrenched for many years based on strong long-term data and suggestion experiences. When you gave guidance this year, you allowed for the potential increasing presence of additional therapies as additional JAK inhibitors as well. I am curious, what are you guys hearing from KOLs and community clinicians as to how the, I guess, competitive dynamics may continue to play out in this space as we look to the back half of this year and beyond, and what is -- what can you say about the overall data that maybe can enable you to help convince physicians to continue patients on Jakafi and titrate them accordingly, how they're used to doing it if they run into issues like anemia or thrombocytopenia rather than switching to a different therapy?