Incyte Corporation (INCY) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. Andy Berens, senior biotech analyst at Leerink. Welcome to day 2 of our Global Healthcare Conference in beautiful Miami. We are very excited to have with us Incyte. We have Herve Hoppenot and Pablo Cagnoni from Incyte. Thank you, gentlemen, for joining us.

Thank you for inviting us.

For those not familiar with the company, can you just give a general overview of where you've been and the focus going forward?

So Incyte is about innovation. I mean if you think of already what we are doing, it's a company that is growing. It's a company that is expanding geographically, expanding in terms of portfolio of product in -- on the commercial side and R&D and reinvesting a proportion of this revenue into our own R&D. So in 2024, we grew at around 15%. That led us to a revenue of $4.2 billion in 2024. And we reinvested in a pipeline that hopefully, we can speak about, which will be delivering a number of launches in the short term, the number of new Phase III study we are initiating this year and the number of proof-of-concept studies that also will be coming this year. So 2025 will be a year where a lot of the visibility on the pipeline will improve because we'll get approval, we'll get a number of new data that will be important. And it's a year where we will continue to grow through the new launches that we have and the growth of Jakafi and Opzelura.

Great.

That's sort of the picture of Incyte today.

Great. Well, thank you, Herve. We will certainly talk about Jakafi, but I think that the company has definitely entered a period where there's pipeline assets people are very excited about and you want to hear about those. Why don't we start, I guess, with Jakafi since that's really been the backbone of the company. What are you seeing in the core indications? There have been a number of new drugs that have been approved, but Jakafi seems to be continuing to be very strong. So what's the commercial dynamic there from competition?

So there are 3 indications where Jakafi is used mostly. It's MF, PV and GVHD. So in GVHD, we launched just a few years ago. We are still growing at a reasonable rate. It's a disease where most patients will be cycling between different products, and we were very happy to be able to launch a new product this year, Niktimvo just a few weeks ago that we will be adding to that franchise in GVHD. So the GVHD part now is becoming a franchise game where, obviously, we want to continue to grow Jakafi, but we want to combine with Niktimvo and also we want to grow Niktimvo as a single agent by itself. So that's sort of one of the franchises that is growing and where there is a lot of promise to continue to grow for the long term with Niktimvo. In myelofibrosis, Jakafi is the standard of care. There were some number of new JAKs that have been introduced over the years like fedratinib and pacritinib and momelotinib. But that did not move the status of Jakafi because it's the only JAK that has shown survival benefit and long-term benefit. And it's a product that is very well tolerated with a high level of response. And it has been -- in spite of all of this new competition, it has been keeping its position as the standard of care in first line. And then many of the other products are used in subsequent lines of therapy, and that's what we have seen recently. So we see that as the slowest growing part of the brand for the long term because by definition, more patients are already treated with Jakafi, but it continued to grow last year, single-digit kind of growth, but it was good. And then there is PV. So PV is a place where polycythemia vera where Jakafi is also the standard of care, but many patients are just not receiving treatment yet. And here, we are in a sort of a market expansion mode where the goal is to make sure that patients are appropriately treated early in their disease because we have shown in data that was available like 2 years ago that, in fact, you can improve thrombosis-free survival if you treat earlier. And what we have seen is that, that part of our Jakafi franchise has been growing faster than the other two, and it's now going to become the largest indication for Jakafi in the next 2-3 years.

Great. A concern of investors has been Jakafi has been very successful, but all successful drugs, they eventually lose exclusivity. Maybe we could talk a little bit about your efforts to extend the [ IP ] through the LIMBER trial. You just had some positive top line results from a bioequivalence trial with Jakafi XR. So maybe we could talk about the strategy there?

Speak little the data on XR?

Yes, we can start there. As you know, part of the program was to develop a once-a-day formulation of Jakafi. That's -- we call it XR. And we ran a bioequivalency trial with 55 milligrams a day. We met bioequivalency. We reported the data at the last earnings call. We discussed the data, obviously, with FDA. We submitted top line data. And based on those conversations with FDA, we decided now to move forward towards the end of the year with the submission for an approval. We need stability for the new tablets. So they are being manufactured there on stability. Once the date comes, which is later this year, we'll submit that. So that's an important part of the story because, obviously, we have plenty of time, assuming a 6-month review because this is a response to a complete response letter, if you remember, assuming a 6-month review time line, we think sometime in middle of 2026, we'll be able to launch once a day Jakafi. And that will give us about 2.5 years before the LOE to really start every patient, every new patient ideally with MF and PV, ideally, obviously, graft versus host as well on once-a-day formulation. And if you remember, the average duration of therapy for an MF patient is about 2 years and for a PV patients is about 40, 46 months. That would imply that a lot of the patients when the LOE comes will be on once-a-day branded Jakafi. And we think that not all of them will be switched to generic abruptly like it would happen otherwise. So that will, in a way, smoothen the cliff a little bit on the back end after the LOE. That's part of the strategy.

Okay. And the other part is potentially co-formulation.

Indeed. So the one piece of data we updated everyone at the end of last year at ASH was our BET inhibitor data. We presented more safety and efficacy data with single agent and in combination with Jakafi. What we've said recently at the earnings call is we're now pushing forward with the second-line study with single-agent BET in combination with best available therapy. We think that's a very important for the population of patients that either progress or intolerant to Jakafi to really have an option. And so that's going to be a second-line trial. We are doing additional work in first-line in combination with Jakafi. We haven't made a decision yet as to whether we're going to move into first line. If we do, obviously, we have the option to either co-formulate or co-package with once-a-day Jakafi.

Okay. And part of the issue, I think, with other BET inhibitors has been Jakafi does improve symptoms very dramatically and improving on that is a high hurdle. Do you think that there's any potential to convince the FDA to not require TSS scores? Or is that something that they just are not convinced that a splenic reduction is enough to?

Yes. Our assumption today is that you still need both endpoints or both components for an approval. The data we disclosed -- if you look at -- our main competitor, as you all know, is pelabresib. And if we put aside the Phase III data of MANIFEST-2 and you look at the MANIFEST-1 data, so about similar population, similar stage, open label and you put our data side by side, the SVR35 at week 24, we think numerically, we're a little bit better. And if you look at the TSS50, we think it looks clearly better, at least numerically. Obviously, there are side-by-side comparisons, and we have to be careful. So based on that, we are cautiously optimistic that we can hit both endpoints, which is why we designed the trial, and we're going to go as fast as possible in this context. Now first line is different because the baseline of Jakafi, as you know, is excellent. The combination data that we have, again, with the caveat that it's open label looks very, very impressive when it comes to symptom improvement and spleen reductions. But I think we need a little bit more data before making the decision whether to launch a first-line trial.

How important -- I mean, one of the differences you have from the other BET inhibitor is you're dosed daily, you don't have a drug holiday. We had talked to MorphoSys about this. And I know that they measure the symptom scores, I think, on an iPad every day, but they never disclosed like was there any change over that...

I mean we agree with that principle, as we discussed before, that when people ask, why do you think you're better on symptoms? Well, I'm not sure we are better. We're numerically better in side-by-side comparisons. If we're better, we turn out to be better, I think it's because of what you mentioned, which is continuous dosing. I mean, look, it makes sense that if you stop a drug a week every third, you're going to have -- and the half-life is relatively short, you're going to have some rebounding symptoms. I mean I haven't seen any data, as you pointed out, but it does make sense that dosing continuously will be helpful.

Right. And I think they actually measured the measurement was taken during the drug holiday, too, to complicate it even further. That's my belief. I don't know the way to... Okay. Well, and then in terms of before we move on to some of the pipeline and Opzelura, maybe the CALR program and some of the other efforts you're making to change the disease. I guess it would be good to frame that in the context of how much of the Jakafi population do you think that these drugs could eventually capture? And what's going to be the role in the treatment paradigm?

Go ahead.

What I can say is that there are 2 mutations in MF, PV and ET that are more than 95% of all patients and that's 617F and CALR. So basically, we are addressing both with two different strategies. One is an antibody for mutant CALR. The other one is a small molecule for 617F. If you dream that this -- both of them would be successful, it would not be replacing Jakafi in part. It would be exceeding by far the size of Jakafi today because it will be addressing all of the same patients we are speaking about in MF and PV, and it will be adding the ET population, which is a fairly large population. And the idea for both of these is to be disease defined or more than that. I mean it could be functional cure, if you think of what we have seen in the preclinical model. And that would be changing the entire treatment for patients with any of these 3 disease that are targeted by this mutation. So the way now it's evolving is that we are more advanced with the CALR antibody. We are a little behind with the 617F small molecule. But during this year, in the next 10 months that are left, we will be seeing data showing whether or not it does what we saw in the preclinical model, which obviously would be very meaningful in terms of business opportunity.

Okay. And what would the development path? I know you guys are probably still figuring out with the FDA what -- how to get it approved, but what do you think the trial design would be?

Look, there's a couple of different ways to do this. And the reason why I'm a little bit vague is because I think it's going to be better to have that conversation once we show data. But potentially, they can be developed both a single agent and a combination, right? I think that if you think about MF and PV, the one thing Jakafi does many things very well, but one of them is rapid improvement in symptoms. Patients feel better very quickly. And so one could envision potentially an induction with Jakafi in combination with the mutant CALR antibody and then a long-term sustaining and deepening of those remissions with the CALR antibody. And the reason why that's really important for patients, obviously, and for us is you're talking about a completely different duration of therapy. I mean I just mentioned the average duration of therapy in Jakafi is about 2 years in MF. And unfortunately, despite of the fact that Jakafi improved survival in patients with MF, everybody with MF eventually progresses and dies of the disease. We're trying to change that. So not only we can expand the population, but you're talking about a much longer duration of therapy with the mutant CALR antibody potentially, which we think obviously is going to be really good for patients and expands the market enormously. So that's one way to think about it. Obviously, we can do a rapid trial in Jakafi failures with either mutant CALR antibody or with the 617F inhibitor. So once we have -- we start disclosing data over the course of the year, as Herve mentioned, we'll talk a little bit more about the plans. But potentially, these medicines can be developed with single agent or combinations with Jakafi if we so choose.

Okay. Do you think that the FDA might be open to looking at the genetic information, ctDNA showing suppression? Is there enough of a link between that surrogate and the clinical outcome of these patients? Or is that still kind of an evolving area?

This will be a conversation we want to have and the best way to have it is to have some of the data. We're measuring allele burden in these patients. We think it's important to show evidence of allele burden reduction over time in these patients because it's part of the thesis, we've shown that in preclinical models and as part of the thesis how we're developing these medicines. And once we have the data, we need to sit down with FDA and see if there's a path forward. Obviously, we're going to try to accelerate the approval of these new medicines because it's critical for patients. And if there is a way to do it by using a surrogate endpoint like it has been done in other diseases by using basically a reduction of the legal burden, reduction in the number of cells that carry the mutations basically prior to having some longer-term endpoints. If there's a path to do it, we're certainly going to explore it with FDA.

Okay. Yes. No, I mean, the history of the company has been you got Jakafi approved very quickly by creating an endpoint that...

We [indiscernible] so we will do that again. Yes.

Okay. Why don't we shift to...

The comparison is more -- a little more. I mean, you can hear that behind the words is what happened in CML when Gleevec was introduced and the concept of molecular response became the endpoint that FDA accepted. It took years. It didn't happen in a minute. But -- so there is this same vision of saying, if we are showing that the allele burden is going down, then we are basically going to be working on validating that as a way to judge new products.

Right. That was the analogy I was thinking of CML. So why don't we switch gears to Opzelura. You've had launch in several indications. You had some data recently reported in PN. I guess why don't we talk about the commercial launch and then the data and the implications of that?

Okay. Those are launches -- so -- now it was a few years ago when we started with atopic dermatitis in the U.S. And the beauty there was the speed of relief for itch from eczema, which is unmatched. And frankly, I urge everybody to try it with their friends who suffer from eczema. It's literally extraordinary to the point where now we count it in minutes of time to itch relief is very, very fast. And that's something unique, and that's what patients are looking for. That's what physicians are looking for. And that's what's going to help also in the pediatric indication where we know the itching, scratching, bleeding cycle is what really keeps eczema a big problem. So that launch has been going on for a while. The key issue we -- that to continue to accelerate, which is what obviously we are planning for is not only the new indication in pediatric AD, but it's also simplifying the process for physicians because physicians are notoriously not willing to spend hours on the phone on prior authorization process. So the big thing for us is how do we make it smoother for the physician to prescribe Opzelura for atopic derm, and that's part of our formulary positioning, and we are making a lot of progress. So it's a good -- it looks good. On top of it, we did -- and then we have vitiligo. So vitiligo was -- is a completely different story. It's a place where patients -- most of them have been living with vitiligo for a number of years, suffering without very good options to treat their disease. And we heard yesterday, there are more people now sort of coming out, speaking about their vitiligo. It requires going back to see your dermatologists, which in many cases, takes time. So the vitiligo story is a story of building progressively a new franchise, a new indication where there was never any effective FDA-approved product, and it's happening as we see it. The access issues are less of an issue than in atopic derm because it's one prescription and then there is 1 year of treatment after that. It's mostly patients going back to their physicians and physicians educating patients about how to use the product, how to continue to use it because it takes time to see the effect of the product. So it's almost the opposite situation than what we see in atopic dermatitis. Vitiligo is where we launched Opzelura in Europe. That's the indication we used as a first indication, and that was driven by reimbursement situation in Europe, and it ended up being very successful where we have seen a very good progress in Europe, where it's now in Germany, Italy, Spain, France reimbursed and where it's doing well. So the picture with Opzelura in the U.S. is to continue the growth in both AD and vitiligo, which is now like 55-45 in terms of proportion of the two indications for the total volume of the brand, continue the launch in Europe with vitiligo and get the new indications approved by FDA, and we can speak of the data we had at AD. I must say, I just came here from Orlando at the Dermatology Congress. I mean the level of noise and enthusiasm for Opzelura is very high. I mean people speak about it. It's one of the products that people are excited about. We are in a good place now.

And the data in PN, you had one trial that was successful and the other had a high placebo response. What -- why do you think that, that occurred? And what are the implications potentially?

I wish I knew exactly what happened. Look, we presented -- so it was a late breaker, the True PN Study 1, met the primary endpoint and all the secondary endpoints. What it showed is that in patients with prurigo nodularis, there's a rapid and substantial improvement in itch as well as resolution of the lesions, which is with the IGA, the Investigator Global Assessment tells you. So really important to show that a topical agent for the first time can show -- can really provide important relief to patients with this terrible disease, which is persistent itch. The itching scale is from 0 to 10, 10 is the worst imaginable itch. The mean at study entry was 8.5. So these patients have very, very severe itch. So that was really important. The second study, the primary endpoint, basically, what happened is the highest -- as far as we can tell, the highest vehicle is different than placebo, but vehicle response in any major Phase III trial that we have been able to find. So if you look at approvals for nemolizumab or Dupixent, this was a much higher rate of response in the vehicle arm. Our team has continued to investigate and try to understand why that happened. I'm afraid I don't have a definitive answer for you today. But the important thing is that all the secondary endpoints trended strongly in the direction. Some of them, the nominal p-values were there. In others, there was a strong trend towards the fact that Opzelura indeed improves symptoms in this disease. So I think when you take the whole picture, what we know about RUX cream about Opzelura in patients with atopic dermatitis, what we know from the Phase II randomized data we showed in HS last year and what we know from these two studies that this is an incredibly important topical medicine for patients with a range of dermatological conditions. We're going to sit down with the FDA. We're going to review the data on the PN studies, and we're going to try to find a path forward here so we can bring this to patients as quickly as possible.

Okay. And I guess we'll get an update when you have visibility on that. Well, the unpredictability of drug development, a lot of factors. One of the probably the most promising assets that I get questions from is povo. You've got a number of readouts coming. The first one is in HS. So why don't we talk a little bit about that? I think there was some people reading the tea leaves on some of your comments, Pablo, on the earnings call that you didn't seem so confident maybe and how confident are you in this readout? Because I think it is a very -- even aside from the Jakafi patent clip, I do feel like it's one of the things that could make people less concerned in the revenue stream for the company because this could be, at least in our assessment, a multibillion-dollar opportunity is important.

You're correct. So the first readout for povo this year is Phase III -- two Phase III studies in HS, then we have the data in chronic spontaneous urticaria that will come later. The -- look, I'm very confident about HS. What I'm not willing to do is speculate as to what the placebo subtracted response is going to be. But we're confident based on the randomized Phase II data that povorcitinib is going to be an important addition for patients with hidradenitis suppurativa. Once we have the results of the study, we'll sit down and discuss in more detail. But at this point, I think we -- and we've said it repeatedly, we're confident that we're going to have a path forward.

Right. And I think looking at the other agents, the injectable agents, there's no topical available, no oral available. The range has been from a low of Cosentyx in the, I guess, the low double digits to high of HUMIRA. You guys showed around what was 17%, I think. And I think your comment was you hope to replicate that. But there was also at 12 weeks, there was a 28% delta. So I guess the question is, which part of it do you want to replicate the 17% or the 28%?

I think what I said is, first, we need both studies to hit the significant p-value that's significant. That needs to happen. We need two positive studies. It's a new medicine. So that's important. And the second is without speculating on numbers, yes, we have to show that it is a substantial level of placebo subtracted efficacy here. What time point exactly and what number exactly is somewhere we're not going to discuss at this point. But I think that what we've been consistently saying, and we're optimistic we will be there is that we're going to hit the p-value to have two positive studies.

Okay. And from our diligence, there really is the doctors do want an oral option for these patients. So I think that is a big value proposition?

It could be useful. Yes, it could be useful because -- I mean, you know from experience in psoriasis in a number of disease that there is a benefit of having an oral product when the rest of the competitors are...

But let me just point one thing out. Obviously, the key is the primary endpoint when it comes to the regulatory interactions. But the whole package here is important. And when you look at the randomized Phase II data, it wasn't just the data at week 12 and week 16 and not just HiSCR50. When you look at patients in povo, particularly over time, the deepening of the responses, the maintenance of the responses, there are almost 30% of patients with HiSCR100 and the rapid and sustained improvement in pain, which may not be a primary endpoint, but it's something that patients obviously that is important for them. The whole package is what I think we need to look at once we see the data, is speed as well as the deepening of the responses, and it's not just the HiSCRs, but the improvement in pain.

Right. Okay. And you did take some -- you did make some changes to the trial design to lessen the placebo response, right? You moved it to 12 weeks, and then you also had more severe patients?

We had a little bit more Hurley 3 patients just to reduce the placebo effect. The percentage of patients with prior biologics is consistent, maybe a little bit higher, about 35%, 40%. So we think it's going to be a representative population. And at the same time, we think there are chances of a placebo effect should be lessened a little bit.

Okay. And those data are coming soon?

Data coming before the end of the half.

All right. In terms of the rest of the pipeline, I mean, I know the...

Just on povo to close -- I mean, the HS is the first indication. I mean there is an entire program on povo. It's a very special drug. I mean it's a very special JAK inhibitor. It's way more selective than existing one. It has a long half-life. It has a very large volume of distribution. So it's a product that we believe has application beyond HS. We have studies in vitiligo. We have studies we are doing in prurigo nodularis and now -- and we have [ pre-POC ] studies we are doing in CSU and asthma. So the way we see it is just HS is the first to consume, but there is a real growth opportunity for povo across a number of indications.

Right. And I guess asthma is obviously one of the largest ones, but also probably the riskiest just in?

Yes, it's a Phase II. I mean we are in the Phase II setting for CSU and asthma and Phase III for the other three indications.

Okay. And the rest of the pipeline, I know you highlighted a number at the JPMorgan conference, which -- with the last minute left, which of the other programs would you like to highlight CDK?

Look, the most advanced is our CDK2 inhibitor. I think we can be first there in ovarian cancer. We presented data at ESMO last year. We've shown clear evidence of single-agent activity with a very tolerable safety profile. Obviously, you expect some heme toxicity, but the number of patients with discontinuations and dose reductions was pretty low, was less than 10%. So we think that speaks well to ability to our CDK2 inhibitor to be administered for long periods of time, which we think it is important as we -- since we're going to start with platinum-resistant ovarian cancer, that's going to be the first pivotal trials we're launching, then to move to early lines of therapy in platinum-sensitive patients. So post chemotherapy in combination with bevacizumab, platinum-sensitive ovarian cancer that is really long duration of therapy. You need a convenient and well-tolerated medicine to do that. And we think we have that in our CDK2 inhibitor. So that's the key driver this year is to get the pivotal trials in ovarian cancer started because we are ahead of our competition, and we want to stay that way. We're generating data in endometrial cancer, and we're combining with a number of medicines in breast cancer to try to understand what the path forward is there for us. And then the rest of the pipeline. I know we're out of time, but we like our KRAS G12D inhibitor. We understand it's a very competitive space, but we think that there's still room for improvement, particularly in combinations, and we'll have data at some point this year. And we continue to be encouraged by our TGF-beta receptor 2 by PD-1 as well. So I think there's going to be a lot of readouts this year as we -- as Herve mentioned at the beginning of the presentation, and we look forward to updating you.

When will be the next update for the CDK2?

We haven't decided. At some point this year, we're going to provide a data update and an update on the regulatory path. We haven't decided exactly when that's going to be. I think some of the options are obvious over the course of the year, but we haven't made that decision.

Okay. Okay. Thank you, Pablo. Thank you, everybody.

Thank you very much.

Thanks for joining us. Thank you, everyone.