Incyte Corporation (INCY) Earnings Call Transcript & Summary

Okay. We'll get started with the next session. Welcome back to the 45th Annual TD Cowen Healthcare Conference. I'm Marc Frahm from the biotech team. We're really happy for the next session to have the team from Incyte. We have Christiana Stamoulis, CFO; as well as Steven Stein, CMO, with us. Maybe just to start off with, Christiana, do you want to give the high level -- the earnings was a week or 2 ago. Just kind of takeaways from the last quarter and kind of -- and some of the guidance that you gave, and then we'll dive into some of the specific questions that I have, but also anybody from the audience, we love to have your participation if there's any questions as well.

Okay. Absolutely. So we recently wrapped up 2024, which was a year of very strong progress and execution across all fronts. So on the commercial end, we delivered $4.2 billion in revenues, representing a 15% year-over-year growth. That growth was driven by demand across the portfolio, but especially Jakafi and Opzelura, where we saw demand growth across all indications. On the regulatory front, we made significant progress, starting with Niktimvo for which we go to regulatory approval for third-line chronic GVHD. And we recently launched for the indication. And we also disclosed positive data from 3 other programs filed for approval. And these include Opzelura for pediatric atopic dermatitis. Monjuvi in third -- in relapsed/refractory follicular lymphoma and Zynyz in squamous cell anal carcinoma. And we expect, hopefully, to be in a position to commercialize this to receive approval and commercialize in the second half of this year. And then on the development front, we made significant progress across the pipeline, which puts us in a very good position to be able to have a number of readouts this year in 2025. Basically across most of the programs in the pipeline. So it is a very significant year for us and also positions us well to be able to launch more than 10 high-impact programs by 2030.

Okay. And I think the next readout of those is in the next maybe a month or 2 is povorcitinib data in HS. So Steven to start out with what are your takeaways from the Phase II data that has been shown in terms of how povo kind of stacks up against some of the most recent entrants to that space?

Yes. So I think if you look at our Phase II data set, we used the standard regulatory endpoint of HiSCR50, but we also reported HiSCR75, HiSCR90 and then at 1 year, HiSCR100. And we think that profile, if we replicate that in Phase III, is a best-in-class/best-in-disease profile. If we get those sort of numbers, certainly, if you look at our HiSCR100 number, which is disappearance of abscess and nodules, we had a 30% rate at 1 year. The other side of the equation is the drug works really quickly. And in terms of symptom relief, we and only one other competitor reported out the pain score. And our pain score even at 12 weeks is an appreciable improvement. So that's what we're aiming for, and that's what we'd like to get in the Phase IIIs. I mean the next obvious question is how much do the Phase IIIs differ from the Phase II. And there are 2 differences that may not matter in terms of efficacy, we will see. One is the Phase III is a slightly worse population of patients. So there are no Hurley ones. It's all Hurley 2s and 3s. So it's more severe. We'll see what that does to the efficacy read, but it may control the placebo rate as well because there's less placebo response in the more severes. And then the other difference is biologic exposure. So about 25% to 30% in the Phase II where prior biologic exposed mostly TNF in Humira. In the Phase IIIs, we don't have the data yet, but we think it will be around 40% that will be prior exposed and not all TNFs. It will be IL-17s as well in a minority. And that's intentional as well because for reimbursement in Europe, we'll need that population to get a decent price. So those are the 2 main differences, studies well conducted. They're done. And as you pointed out, we'll get the data pretty soon.

You mentioned kind of the Phase II that you think that represents a best-in-class profile from -- especially when you look at the longer-term data HiSCR100. Do you think you need to replicate that in Phase III that this needs to be better than BIMZELX to be a compelling option? Does it need to be equal to or could it even be a bit worse and be pretty compelling still?

I mean I don't know that they don't want to be defensive or overpredict. But I think all of the above. I think we'll see what they read out, 15%, 20% placebo-adjusted differences are probably fine. This is not a sensitive a marketplace to small differences in efficacy like oncology is. People tend to bucket things together. So I think it's all okay, coupled with to be repetitive that pain response to have a nice profile for the drug. Obviously, the studies have to be positive and statistically significant to file. But other than that, I think we're okay. Now will the efficacy drive use? Of course, it will, to some extent, will people choose IV over oral in some instances or systemic over oral? Yes, and I think that's fine. We think they're about 300,000 patients potentially eligible for the therapy in the U.S. Ultimately, unfortunately, this is a chronic disease, we will lose control and will cycle through therapies. So I think there's space for everybody.

And so you mentioned, maybe this is going to end up as 40% or a little bit more biological need, where do you think that IL-17 experience will be? Because I think that will be very different than pretty much any trial that's ever been run?

Yes. I mean obviously, it's where the drug is available and reimbursed. So mostly in the United States as opposed to x. And we don't expect, based on theoretic biology, any efficacy difference. The JAK/STAT inhibition is promiscuous. So it hits multiple pathways, multiple cytokines as opposed to a biologic, which is often directed only at IL-17 or X and Y only. So we don't think that will aggregate biology that you'll see any detriment and efficacy at all. We think it will be the same.

Okay. And maybe walk through the disclosure plan. I mean, obviously, you'll talk to the HiSCR50 in the overall population at week 12 since that's the primary endpoint. But what else should we expect in that initial release? You mentioned the importance of biologic experience for global reimbursement. Is that a likely subgroup? Any further data cuts than 12 weeks that we should also see?

I think, Christiana should comment, you always have this tension between protecting a presentation for a medical meeting and not over disclosing so that you don't get a podium versus satisfying the world on what you put in the press release. As I stand here now, we think it will be the primary end point mostly and not much else, but I don't know what you...

Yes. We'll have to see where that fine line is.

Okay. And so I guess then especially if you're only reporting the primary endpoint, then we should expect a medical meeting relatively quickly because...

Yes. So as soon as we can get an adequately sized dermatology meeting to present it. Yes.

Okay. And then once STOP-HS does read out, what else do you need to gather before you can actually submit the NDA since this is going to be the first approval.

Yes. No, that's a really good question. We don't know. So once we have the data, you sit down with a regulatory agency and you present what your file will look like in terms of content and structure. And the central point here is how much safety for how long. So obviously, us, it's an NDA. It's a new drug application. The most conservative view would be all the patients for 1 year, for example. But you try to negotiate that out because the obviously intent is to do it as soon as possible. One other potential approach theoretic at the moment is trying to do as much as you can get it in this year, and then a 4-month safety update with the more complete, but I don't know, we'll see.

And are there any other nonclinical data sets that you likely need to gather, or is that all in-house?

That's all in-house and ready. It's really the study and the safety follow-up.

Okay. And maybe back to some of the efficacy analysis as we get the secondary analysis reading out. So is HiSCR the right scale to show differentiation for this asset? Or do you think it is pain or something else that's really the key. What will be commercially the most relevant differentiator?

Commercially most relevant to the end of your question, I think people have moved to focus on higher bars now. And you saw this happen in psoriasis years ago and other diseases that can give you many examples. But I think people are more interested in HiSCR75s and HiSCR90 in terms of abscess and nodule disappearance. And then again, to be repetitive, the pain score in which will be important for patients. But beyond that, safety. Just to get it out of the way, it's a JAK in an inflammatory condition. We fully expect to get a black box regardless of the safety profile that's shown in the studies because that's what's been done for everybody else.

So I mean, obviously, yes, as you said, you'd expect to get that black box. In terms of if events are actually seen in this trial, where do you think that line is within HS as to what's acceptable and where that risk could just get to be too much?

Yes. Well, it's a placebo-controlled study. So you'll have to -- if you think it's not drug, events should sort of come out in both except exposures may be different. So people at the primary endpoint, can cross over to the active drug and then you can get unfairly punished because you don't have a long enough placebo period to control for it. But these are patients, unfortunately, with high BMIs, often body mass indexes in the 30s, sometimes 40s. They have the comorbidity that goes with that of metabolic syndrome. They can be prothrombotic we're likely to see those events. Now nothing's happened during the study that the Data Safety Monitoring Board has been worried about anything. But given the population, you're likely to see that as long as there's not a massive imbalance in treated versus nontreated patients, it should be fine.

This trial is going to read out shortly, but there's a number of other Phase IIs and IIIs running for povorcitinib. Do you view this as -- is this the biggest commercial opportunity for povorcitinib? Is it some of these other -- and if so, what's the second biggest?

We are developing povo across a number of different indications and all of them represent significant market opportunities. So as Steven indicated HS is at around 300 -- over 300,000 patients in the U.S. We are developing in Phase 3 of development. We have povo for vitiligo. There for body surface area in excess of 5%. It represents at around 1.5 million people in the U.S. or over 1.5 million people. So you can see a very significant indication as well. And then the third Phase III study is in prurigo nodularis, which is more than 200,000 patients in the U.S. And then we have 2 proof-of-concept studies, 1 in CSU, similar size to HS and 1 in severe asthma, which is over 750,000 patients in the U.S. So you can see significant market opportunities for each 1 of those indications.

You mentioned that CSU trial. I think clinicaltrials.gov indicates the primary completion date is on Friday. Just how quickly do you think you can turn that around to some sort of update of what next steps may or may not be from that program?

Yes.

So CSU would have indicated a readout in the first half of the year.

And that's in terms of updating the Street as to what -- that there is a next step or unfortunately not, would happen within the year, not just internally.

Yes.

Yes. Okay. Maybe now we'll move to MPNs. Maybe starting with commercial. Just historically, Incyte has talked about the Part D design being potentially a tailwind this year. What are you seeing in the -- we're a couple of months in, are patients able to access the smoothing of the out-of-pocket costs. Is that helping in some of your conversion rates?

So it's hard to say around the smoothing in terms of being a tailwind, we already saw this being a tailwind in 2024. In addition to the data from the MAJIC-PV study that showed the benefits of getting on Jakafi early on, and we saw that driving growth in PV. But I think it's fair to say that, that growth was also supported by the Part D we designed already in 2024. And we expect this to continue in '25, It's built into the guidance that we have provided. In terms of the smoothing, patients who need to apply with their plans to get on that payment plan. If they have done it in '24 or '25, then they will be able to benefit from the beginning of the year. If they do it in '24 at the beginning, let's say, of the year, it will take some time to get the application through. So it could take 30 to 60 days during which time they would other have to pay the full out those pockets that they would need to pay or they may choose to postpone getting the prescription field in order to be able to fill it in when they would be on the plan. So we'll see how that would play out we don't expect that all patients got on the plan as of the beginning of the year, and there are efforts in place to make sure that in a compliant way, prescribers and patients are educated about the availability of that payment plan.

Okay. And then maybe going to the opposite end of the development scale, we're expecting Phase I data from the immune CALR program this year. Maybe starting from enrollment, what are the types of patients that you've been seeing coming in? Because this trial does believe allow MF and ET patients, but also what level of like Jakafi experience has happened, or other JAKs beyond Jakafi?

Yes. So if you step back, so it's personalized therapy, you have to have the mutant CALR mutation to get on the study. It's a roughly 55% to 60% of MF and ET, those 2 populations. So those are the populations we target in. Initially because before you have equipoise you tend to get patients who have been prior treated with JAK inhibitors. The ultimate desire now that we have much more safety experience are more comfortable with what we have, and we'll show data second half of this year is to try and get more towards first-line patients because that's a true promise of the agent. So if it works the way we want it to work, and again, we have to show you data is over time, and it's not a rapid cycling disease, but it does cycle is to remove the allele burden. So eliminate the mutant CALR clone and allow normal hematopoiesis to take over. So what we want to show with the data sets are some of standard end points in terms of potentially spleen response symptoms normalization of blood counts. So in ET, the platelets should come down and you should normalize. And then for proof of concept is show allele burden reduction. And so we've waited so that we have a reasonable number of substantive patients with enough follow-up to try and demonstrate that cleanly. That's for mutant CALR. For V617F, specific inhibitor, there was about 6 months plus behind, started in healthy volunteers. And for that, it's a little bit less of MF and ET. They're mutually exclusive. They almost never occured together. CALR and 617F, but it's about 95% of p-vera. So it's most of p-vera. And that's the same deal, initially more exposed patients, but ultimately, the desire once you have more equipoise to treat earlier settings. For both, we're also going to do another experiment, which we think is important, which is to do combination with RUX for both the mutant CALR and 617F. And the idea there is RUX is so good at symptom control and spleen reduction, that particularly early on, we think people make it sort of maximum benefit from the combo and then you withdraw the RUX and leave the personalized therapy on. But we don't know. So we're going to try that experiment because it could end up that these things work on their own that they need RUX in combination all the time or only for a short time. So that will be unknown. That last data set won't be presented this year. It's the monotherapy experience mostly in prior exposed nation.

Kind of what's triggering to show -- obviously, some of that PSC would you expect to have -- if PSC is being established that you have your dose for the CALR antibody, or you have too much...

Yes, we'll see. I mean one thing Pablo has alluded to in prior calls is that it gets pretty complicated in mutation not to broad this audience, but the type 1 CALR mutations in type 2, and the type 1s are a little more sensitive. So there may be a different dosing paradigm for top 1 CALR and ET versus type 2 and maybe for MF as well. So we'll see how that lays out the data.

And you said data -- the presentation is likely in the second half.

Yes. This year, we say.

Okay. Maybe just on ET. I think people are maybe not familiar with that disease. You want to speak to what the unmet need is there. And you started to touch on what PSC looks like, but is it just...

It's a condition where people can have very normal lifespan and actually sometimes require very little to no therapy just to manage expectations, yes. But on the most severe spectrum of it. So older people, which are defined as greater than 65, people with higher white cell counts and people with a prior history of thrombosis, which is the major morbidity in ET. Those people need therapy to prevent the major morbidity causing substantial harm again, thrombosis. So it's not just about controlling the platelet count alone. It's about making sure that you also prevent the morbidity. So if you look at sort of competitive programs at a completely different MOA, and I'll just point you to LSD1, the Imago compound with Merck, there, it's about hematological control of the count plus prevention of thrombosis in that setting. When people need therapy for ET, the dominant first therapy used is actually a very old one, hydroxyurea just to lower counts usually with an aspirin, usually a baby aspirin to prevent thrombosis. There is an approved second-line therapy anagrelide, which is not used a great deal because of its side effect profile, that's cardiac side effects. But beyond that, there's nothing available for the disease. So the unmet need repetitive people with high risk profiles, thrombotic events.

Yes. So you mentioned in ET, part of the PSC is normalizing the platelet count. Is that something that if you really disease modifying in MF, we should also going the opposite way, right? Many of these patients do have suppressed platelets or red blood and/or red blood cells at baseline. Should we see those recovering?

Yes. That would be the ideal scenario. Conceptually, if you think about the bone marrow as a factory that's making blood cells and you have a large component doing abnormal work, you crowd out the good guys. If you can eliminate the bad component to let the good guys do their work and count should normalize. That's the ideal scenario. In ET, it would be normalizing platelets, but in the other conditions you point out, it's hemoglobin as well.

Okay. And -- I think we kind of worked through the maturity of that data in the CALR side that's likely to get presented later this year. Just given that the JAK is -- started a bit behind, should we expect that to be much less mature data, or is there kind of nuances of the trials and dosing that makes it maybe get to similar mature?

I'm smiling because we're trying desperately hard not to position this as another JAK because it isn't. And otherwise, you're going to be talking about sort of RUX, pacritinib, fedratinib, momelotinib. This is not that drug. This is a V617F specific inhibitor that hits it in the pseudokinase domains that causes cell kill there. So it's very important we frame it that way. It started in healthy volunteers. We did some formulation tweaking, then moved it into MF patients and now in combo with RUX as well we're doing work. But you will see a smaller data set. It will be more like Phase I dose escalation type data this year.

Maybe just on LIMBER. Investors are generally pretty dismissive of the BET inhibitor program, in part because of the experience with MorphoSys and Novartis. But you guys are pushing forward the Phase III. What are -- what do you think people are missing?

Yes. I think there's still unmet need. As we always try to point out is people aren't cured of the myeloproliferative neoplasm, not of MF. Patients all ultimately progress. They often evolve into acute leukemias and they still need and they're still post-JAK need. We've done a reasonable job now gathering monotherapy data with BET in the post JAK setting, showing what we think are good numbers for SVR35, really good numbers for symptoms, which may be some bias because open label, but the symptom response is outstanding and then hemoglobin improvement. If you can achieve that in a post JAK setting where there's unmet need, we think that's a good place to go, and we're going into a registration study this year in that setting best available therapy. Now it looks like to us at least that Novartis is communicating that the pela program is potentially going to have to do another completely new study, which gives us the space to sort of work in that project setting. Additionally, because we've just been talking about mutant CALR and V617F, if they keep going the way we want to go, those are the first-line drugs that will be important there. So we're not rushing into a first-line BET study, although we're developing the data to potentially enable that. And then the last thing I'll say is if this leukemia signal that pela saw is in any way real, it's a much better therapy to use in a more refractory setting than first line. So for all of the above, unmet need first now in the race and good profile that we've seen to date and the safety part of the drug may be more lend itself to second-line post JAK.

Okay. This is more a Christiana question. Just turning to Opzelura. You issued guidance $630 million to $670 million for the year. Just which I think some investors saw is relatively conservative, given the strength that you had in the back half of the year in '24. Just what are the major kind of pushes and pulls there that factored into that guidance? What would need to happen to kind of exceed it? Or...

So the -- first of all, 2024 Opzelura revenues were in excess of $500 million to $508 million. So we -- it represented over 50% growth year-over-year, and it built another solid base off of which we are further growing in '25, the guidance range that we provided implies 24% to 32% growth year-over-year, again, of that much higher base. What is taken into consideration in that guidance range is the continued growth in both AD and vitiligo as well as the continued contribution and increasing contribution from ex U.S., especially Europe. What it accounts for is different scenarios around, especially vitiligo both the patient activation rate, which we have said in the past is an important variable as well as refills. And as we have discussed in the past, around refills, there are a number of initiatives to make sure that patients adhere to therapy. They stick with therapy, they use it appropriately, they stay, they use it twice a day and they stay for a longer period of time. We still have work to do there. And depending on how that evolves, it will affect the guidance range, and that's the $630 million to $670 million. I think what some people are doing, which is not the right way to think about what the next year may look like is that it take Q4 and use that as a run rate for the drug. The issue with doing that is that they don't take into consideration the Q1 dynamics that we see every single year and not just Opzelura, but all drugs in the space. When you look at Q1, it tends to be significantly lower than the Q4 of the prior year and to represent a much smaller share of the total year revenue. So for example, if you look at '23 and if you look at '24, Q1 represented 17% of the full year revenue contribution. So that's a problem with just using Q4 to come up with a rate for the full year, so something to keep in mind there.

Okay. You mentioned the importance of patient activation in vitiligo. Just how have -- you've been on the market for almost 2 years now, right, in vitiligo. Just what -- how a patient volumes changed in that period? How successful have you been in patient activation over that period. Now that there is a commercial therapy for vitiligo?

So the growth in vitiligo has been very good and the same for AD. We continue to see demand growth in both indications. At the beginning, as you would expect, the patients that would get on therapy are the ones that have been actively seeking treatment. And these are at around 10% of the total population that we're out visiting with -- visiting their dermatologists and actively seeking to get on treatment. These were the lower hanging fruit. In the meantime, we have been pursuing a number of initiatives to raise awareness, awareness both around the disease because there are patients that are not even diagnosed as well awareness that there is now a therapy for repigmentation that is available. It takes some time to see the results. But we have been doing both branded and unbranded campaigns. We have been working with patient advocacy groups. And we are seeing that there is a good impact from all those initiatives. So over time, we would expect to see the inactive patient populations start getting activated. But we still need to see the rate of that activation.

Okay. You also have some data already in prurigo nodularis as well as HS. Just when you take the -- and this is the mild to moderate population, obviously, for a topical. You take the unmet need in those patients, the patient numbers, the efficacy data you've shown so far, which of those do you view as the bigger opportunity?

So again, to your point, it's a mild to moderate patient population. For HS is around 150,000 patients and for PN, what we said the overall opportunities more than 200,000 patients. So similar size opportunities, I would say.

And how should we think about duration on therapy. Since that's a big factor, potentially vitiligo versus AD, but how should we think about duration of therapy in those 2 indications?

In the latitude. I think -- and certainly, so we'll wait for the data to be presented at the upcoming meeting. But we already have a lot of anecdotal data on RUX cream being a pretty good drug for PN. I think people will treat to complete resolution of itch and potentially lesions as well thereafter and then do this sort of stop starting. It's hard to estimate an exact real world number, and I don't even have the clinical trial final data, it's coming really soon. And then if your question around mild HS will be -- there's, again, nothing else other than the cream address in this, and that's the essence of your question. I think it will be the same thing as treat to maximum effect and then stop start. I don't -- it's hard for me to put an exact number in terms of months. It won't be as long as the vitiligo, I don't think.

I know we're running up on time. Maybe one -- squeeze in one last question. Just on CDK2, on your call the other day, you did note that you'd likely update the Phase I data set this year. Just how should we think about that update in terms of size and scope? And will it just be ovarian? Or should we expect endometrial...

It's the latter as well. So the ESMO update last year is 205 patients. The study kept enrolling. And so we'll show a more substantive update at the doses we go in at but we're full steam ahead in a registration-directed study in CCNE1 overexpression ovarian. And our endometrial plans will be somewhat dictated by the data we'll show in the second half of this year. And we also have breast ongoing work, both in combo with fulvestrant as well as fulvestrant CDK4/6 plus the CDK2. That's a little earlier, obviously.

Should we expect any data from those...

We should be able to show some RUX data as well.

Okay. Okay. All right. That's unfortunately all the time we have, so we're going to have to cut off there. Thanks, everyone, for joining as well as the team from Incyte.

Thank you.

Thank you.