Incyte Corporation (INCY) Earnings Call Transcript & Summary

Greetings, and welcome to the Incyte First Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Greg Shertzer, Investor Relations. Please go ahead, Greg.

Thank you, Kevin. Good morning, and welcome to Incyte's first quarter 2025 earnings conference call. Before we begin, I encourage everyone to go to the Investors section of our website to find the press release related financial tables and slides that follow today's discussion. On today's call, I'm joined by Hervé, Pablo and Christiana, who will deliver our prepared remarks, Matteo, Mohamed and Steven will also be available for the Q&A. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. I'll now hand the call over to Hervé.

Thank you, Greg, and good morning, everyone. The first quarter of '25 was very important for Incyte not only because of the good performance of the commercial portfolio, but mostly because Q1 '25 puts us on a great trajectory for long-term growth with the continuous expansion of Opzelura, the successful launch of Niktimvo and the successes of the Povo pivotal studies in HS and proof-of-concept study in CSU. The financial performance was very strong with growth above 20% in both product and total revenues. Our cash position at the end of the quarter reached $2.4 billion. On the commercial side, Niktimvo's successful launch is 1 of the 4 planned launches for Incyte in 2025 in the U.S. On the R&D front, we report significant progress so far this year with several key data positive readout, XR bioequivalence for ruxolitinib, proof-of-concept data in chronic spontaneous urticaria for Povo and Phase III results for ruxolitinib cream in prurigo nodularis and Povorcitinib in HS. In Q1, product revenue grew 26% with total revenues increasing 20% year-over-year to $1.05 billion. This growth was driven by the ongoing demand for Jakafi and Opzelura and the initial launch of Niktimvo in third-line chronic GVHD. Moving to Slide 7 and the first quarter commercial performance for Jakafi. Jakafi net product revenue in the first quarter grew 24% year-over-year to $709 million. Total patients increased 10% when compared to the same quarter in 2024. Due to strong demand and the expected continued growth of Jakafi, we are raising the full year '25 net product revenue guidance to a new range of $2.95 billion to $3 billion. Turning to Slide 8, I am looking at Jakafi weekly dispenses by indication during '23, '24 and the first quarter of 2025. As you can see, unit growth remains robust across all three indications. Myelofibrosis showed growth again this quarter, while the most significant increase was seen in polycythemia vera. We expect PV to become the largest contributor for Jakafi over time, supported by the data from the Magic PV study, which underscores the benefit of early intervention with Jakafi and its impact on Thrombosis Free Survival. Moving to Opzelura on Slide 9. Total Opzelura net product revenue in the first quarter were $119 million, up 38% when compared to the same quarter last year driven by continued growth in the U.S., increased contribution from Germany and France and the more recent launches in Italy and Spain. In the U.S., the annual prescription trends for 2024 and the first quarter of 2025, as shown on the right of Slide 9 reflects continued growth of Opzelura for both atopic dermatitis and vitiligo. Effective March 1, Optum premium added Opzelura to their preferred formulary, which means Opzelura is now preferred on 2 out of the 3 big PBM national formularies. This change has enhanced our commercial coverage from 86% to 94%. On Slide 10 and our newest commercial product, Niktimvo. Niktimvo is the seventh product commercialized directly by Incyte after Jakafi, Opzelura, Iclusig, Pemazyre, Monjuvi and Zynyz. This nobel medicine launched at the end of January for patients with third line chronic Graft-Versus-Host Disease addresses an important medical need, and it has significant long-term growth potential. After 2 months of commercialization, Niktimvo net product revenues in the first quarter were $14 million, driven by high patient need and strong commercial execution, along with our partner, Syndax. We are seeing positive early launch metrics with widespread product awareness and interest, 95% of top BMT centers are using Niktimvo, and 70% of all BMT centers have ordered. Niktimvo is the first anti-CSF-1R antibody approved to target the inflammation and fibrosis associated with chronic GVHD, and we are already seeing the impact it is having for patients, giving us increased optimism for the long-term potential of this product as it is moving to earlier line of treatment. On Slide 11, a reminder of a 2025 will be a pivotal year for Incyte with numerous defining catalysts set to create a significant inflection point. The launch of Niktimvo has already shown strong initial success, and we are preparing for three additional launches this year, collectively offering important near-term revenue potential. We plan to initiate at least 3 Phase III study, and we anticipate that seven early-stage programs will generate informative data. These developments have the potential to transform our company. Finally, before I turn the call to Christiana, I would like to address the topic of tariffs. 7 years ago, we started the strategy to establish dual sourcing for key Incyte product with the goal of having backup FDA or EMA approved facility in case of technical issues. This approach is giving us today flexibility for key products to manufacture in the U.S. for the U.S. market and for Europe, from Europe for ex-U.S. Therefore, we expect the impact to Incyte of any potential tariffs on pharmaceuticals to be minimal. Finally, our exposure to China is now limited to some starting material for some of our drugs and we currently hold inventory of starting material to support our forecasted supply needs over a multiyear period and have alternative sources of supply of starting materials that we could consider moving to if needed. Now I will hand over the call to Christiana for the financial update.

Thank you, Hervé, and good morning. In the first quarter of 2025, we delivered total revenues of $1.05 billion, up 20% versus the same period last year. Total product revenues of $922 million in the first quarter represent an increase of 26% year-over-year, driven by strong demand growth for Jakafi and Opzelura as well as initial contribution from the commercial launch of Niktimvo during the quarter. Turning to Jakafi on Slide 16. Jakafi net product revenue was $709 million for the first quarter, representing 24% growth versus the first quarter of 2024. Paid demand increased 10% versus the prior year period, reflecting continued growth in all indications. Net product revenue growth also reflects a positive gross to net impact from the removal of the Part D coverage gap liability under the Inflation Reduction Act and Incyte phase in participation in the Part D initial and catastrophic phases, partially offset by growth in 340B. As a result of Jakafi qualifying for the small biotech exception, Incyte's participation in the Part D coverage is limited to 1% in both the initial and catastrophic phases in 2025. We expect this growth to net favorability for Part D to be limited to Q1, and for the remaining quarters in 2025, we expect the Part D coverage liability to be in line with 2024. Lastly, the year-over-year comparison of net product revenue includes a 7% positive impact due to less destocking in the first quarter of 2025 versus the first quarter of 2024. At the end of Q1 2025, Jakafi inventory levels were within normal range. Turning now to Opzelura on Slide 17. Net product revenue for the first quarter was $119 million, representing a 38% increase year-over-year. U.S. net product revenue of $95 million was up 20% year-over-year, driven by a 24% increase in paid demand, partially offset by a reduction in channel inventory. Channel inventory levels ended the quarter within normal range. Ex-U.S. net product revenues of $23 million were driven by continued uptake in Germany and France as well as the recent launches in Italy and Spain. Turning to Slide 18. As in prior years, Opzelura first quarter results reflect the typical seasonality we see in the first quarter of each year driven by the reset of insurance plan annual deductibles in the U.S. as well as holidays and other events that negatively impact scripts. Turning now to other hematology/oncology products on Slide 19. Net product revenues for the first quarter were $94 million, representing a 30% increase year-over-year. This is primarily driven by the commercial launch of Niktimvo during the first quarter of 2025, which contributed $14 million in net product sales. Growth from Monjuvi in the first quarter of the year primarily reflects a full quarter of Incyte recording net product revenues in the U.S. versus 2 months of net product revenues in 2024 as a result of the acquisition of the exclusive U.S. rights to Monjuvi that closed in February 2024. Moving on to Slide 20 and our operating expenses. Total GAAP R&D expenses were $437 million for the first quarter, an increase of 2% year-over-year, driven by continued investment in our late-stage development assets, offset by the timing of certain expenses, which favorably impacted Q1 2025. Moving to SG&A. Total GAAP SG&A expenses were $326 million for the first quarter, representing an 8% year-over-year increase primarily driven by timing of consumer marketing expenses and certain other expenses. Finally, total ongoing operating expenses in the first quarter of 2025 increased 6% year-over-year compared to a 20% increase in revenues during the same period, leading to further increasing operating leverage and margins. Moving on to our guidance for 2025. We are increasing our full year guidance for Jakafi from a range of $2.925 billion to $2.975 billion to a new range of $2.95 billion to $3 billion. We are reiterating our full year guidance for Opzelura, our other hematology/oncology products, COGS, R&D and SG&A. For R&D, our guidance excludes the impact of the recent deal we signed with Genesis, which is expected to add $15 million to our full year R&D spend. I'll now turn the call to Pablo for an R&D update.

Thank you, Christiana, and good morning, everyone. As we highlighted a year ago and we summarized on this slide, we remain on track to deliver more than 10 high-impact launches by 2030 from programs across the portfolio. In the next few slides, I would like to provide an update on two of these programs. The Phase II, proof-of-concept study of Povorcitinib in patients with chronic spontaneous urticaria with an update on the Phase III results for Povorcitinib in patients with Hidradenitis Suppurativa. We're delighted to announce that policy top line results for the Phase II study evaluating Povorcitinib in patients with chronic spontaneous urticaria. The study met the primary endpoint at the 75-milligram dose of change from baseline in the urticaria activity score summed over 7 days or US 7 at week 12. Treatment with Povorcitinib was well-tolerated with no new safety signals observed. These results open the door to a potentially new treatment option for over 300,000 patients with CSU who are inadequately controlled on antihistamines. We're pleased with this proof-of-concept results, which will be presented in an upcoming medical conference, and we will be engaging with regulatory agencies to determine next steps as we plan a pivotal study for Povorcitinib in patients with CSU. Just a few weeks ago, we presented the results of the Phase III studies, STOP-HS1 and STOP-HS2, evaluating Povorcitinib in patients with moderate to severe HS. The studies showed statistically significant and clinically meaningful improvements in HiSCR at both doses in both studies. Slides 25 and 26 summarize updated results through 18 weeks of follow-up in these two studies. As a reminder, patients on placebo were allowed to cross over at week 12 and were randomized to either 45 or 75 milligrams of Povorcitinib. As illustrated in the chart, for those patients who started on Povorcitinib in STOP-HS1, the number of patients achieving HiSCR increased from 176 at week 12 to 203 by week 18. Among the patients who crossed over from placebo to receive either Povorcitinib 45 or 75 milligrams, HiSCR at week 18 improved from 28.6% on placebo to 57.1% and 57.8%, respectively. Importantly, for the crossover patients, the number of responders increased from 58 to 100 in just 6 weeks, demonstrating once again the rapid onset of benefit produced by Povorcitinib in patients with HS. Similar findings are observed in STOP-HS1 summarized on this slide. For those patients who started on Povorcitinib the number and proportion of patients achieving HiSCR continues to increase from 164 patients at week 12 to 177 patients at week 18. Among the patients who crossed over from placebo to receive either Povorcitinib 45 or 75 milligrams, HiSCR at week 18 improved from 29.7% on placebo to 58% and 55.2%, respectively, while the number of those achieving HiSCR increased from 60 to 99. This week 18 results from both STOP-HS1 and STOP-HS2 clearly show that the response rates in the Povorcitinib arms continue to increase over time. And perhaps more importantly, demonstrated doubling of the responses in patients initially randomized to placebo after they were switched to either Povorcitinib dose level. We previously reported a greater differential efficacy in favor of Povorcitinib in patients previously treated with biologics with an average placebo adjusted difference in HiSCR of 19.1% for Povorcitinib 45 milligrams and 18.3% for Povorcitinib 75 milligrams in the pooled analysis for STOP-HS1 and STOP-HS2. In Slides 27 and 28 show this is true regardless of the type of biologic being considered, either anti-TNF or anti of 17 agent. Shown on this slide is a HiSCR by prior anti-TNF therapy with a placebo subtracted HiSCR of 13% to 23% in the different arms of these two studies. On Slide 28, we see the HiSCR by prior anti-IL-17 therapy with a placebo subtracted HiSCR of 5% to 25% in favor of Povorcitinib treated patients. In all, the totality of the data presented clearly demonstrates that patients with HS have the potential to benefit from Povorcitinib therapy regardless of whether they have received treatment with a biologic and regardless of the type of biologic they received. We're pleased by the positive data that Povorcitinib continues to generate. With positive Phase III data for HS, positive Phase II, proof-of-concept data previously presented for vitiligo, prurigo nodularis, and now CSU, Povorcitinib solidifies itself as a potential new medicine across several indications in development. We're executing a broad development plan and anticipate additional proof-of-concept data for asthma to be available in the second half of 2025. We continue to evaluate additional opportunities for Povorcitinib and plan to share this update in the second half of 2025. As mentioned by Hervé, 2025 will be a pivotal year for Incyte with over 18 key milestones, including four new product launches, four pivotal trial readouts, at least three Phase III study initiations and seven proof-of-concept study results. As you can see on Slide 32, we have achieved several of these milestones with the launch of Niktimvo, bioequivalency data for ruxolitinib extended release, Phase III data for ruxolitinib cream in prurigo nodularis and Povorcitinib in Hidradenitis Suppurativa as well as the Phase II proof-of-concept data for CSU. We look forward to sharing additional updates on these milestones over the course of 2025. I will now hand the call over to Hervé for closing remarks.

Yes. Thank you. Before we close the presentation following Pablo's update on the Povo data in HS, I would like to comment on the HS market in 2027 in the U.S. when Povo will be launched. It's a fast-growing market where there are more than 100,000 diagnosed patients with moderate-and-severe HS who do not yet receive advanced systemic therapies. The illustration on Slide 32 reflects the group of patients on systemic therapy. There are around 3,000 patients who are not eligible for injectable treatment with biologics as research shows that 10% to 15% of eligible diagnosed HS patients are not receiving injectable therapy for practical financial reasons or at the patient's request. Povo will be the only oral treatment approved in the pre-biologic setting, and we anticipate this segment to grow significantly in the years following the approval of Povorcitinib. In 2027, Povo will compete for the 16,000 new biologic eligible patients started on systemic therapies that year in dark blue on the graph with a competitive product profile based on an oral treatment with high HiSCR durable responses and fast pain release. The largest segment at launch in 2027 will be the group of patients in light blue on the right, who have received biologic treatment, including anti-IL-17 and require a new treatment option for lack of good disease control. We estimate that group at 27,000 patients or around 1/3 of a pool of 74,000 patients on biologics that year. This is equivalent to an estimate of average biologic treatment duration of 3 years. In this patient population, as Pablo has presented earlier, Povorcitinib efficacy profile is unique and will drive the early adoption curve. Overall, this estimate shows that Povorcitinib will be potentially targeting 46,000 HS patients in 2027. With a longer-term data from today for new patients with efficacy data maintained in the post-biologic setting, we see HS as an important contributor to the total potential of Povorcitinib with vitiligo, prurigo nodularis, and now CSU as a subsequent indication. To recap, we have delivered a very strong commercial execution in the first quarter in both Oncology and in Dermatology. The successful launch of Niktimvo demonstrates that there is a clear need for new treatments in GVHD, giving us optimism for the long-term potential of Niktimvo. This quarter is when we confirm that Povo will be potentially launched in 2027 for HS with positive data on all primary endpoints in both Phase III studies, a competitive profile in treatment naive and post biologic HS and now proof of concept in CSU. This results reinforced Povorcitinib potential as a multibillion driver of future growth for our company. Our pipeline continues to advance with short-term deliverable for three additional launches in 2025. In 2026 and good progress of the earlier project. And importantly, we have multiple upcoming milestones and catalysts remaining in 2025, which will further shape our trajectory and create additional value. Operator, that concludes our prepared remarks. Please give your instruction and open the call for Q&A.

[Operator Instructions] Our first question today is coming from Michael Schmidt from Guggenheim.

I had a question on Jakafi, where PV, as you mentioned, is now the most important growth driver for the product, capturing about 1/3 of sales. And can you talk a bit more about your expectations for how much of that is driven going forward by new patients versus continued use of the drug by patients on therapy. And secondly, there was some recent positive announcement of Phase III data of hepcidemimetic in PV as an add-on to standard of care. How do you expect that potential approval to impact potentially use of Jakafi going forward?

Hi, Michael, Mohamed here. Thank you for the question. Let me just address the PV growth drivers first. The team is doing a really nice job today executing on our PV strategy, educating the marketplace on the importance of treating PV earlier with Jakafi, which results in reducing the risk of thrombosis. And because of that, we're seeing actually new patient growth as well as patients continuing on therapy. So the drivers for growth for us in the future will be a combination of both new patient starts as well as persistency within that. And then from the Phase III data that you're mentioning, look, I think, first and foremost, it's always good to see new treatment options available for patients. That said, the agent that you're referring to is currently being studied in combination with other agents. We think that that's going to be used generally in combination with Jakafi and others, and Jakafi on the other hand, remains the only FDA-approved JAK inhibitor for PV after HU failures or intolerance that addresses both hematocrit and disease progression. That's a really unique profile for us that we think continues to put us in a really competitive leading position. Thanks again for the question, Michael.

Next question today is coming from David Lebowitz from Citi.

In terms of Povo for chronic spontaneous urticaria, ultimately, where do you see it fitting? Is this something that would be before moving to biologics such as Xolair and other therapies, but after things like the antihistamines and Montelukast? Or do you see it more competing directly with the post Xolair crowd?

So let me take that question. So look, I think that -- as you know, most of the patients, more than half the patients fail, not only conventional antihistamines, by next-generation antihistamines and high-dose antihistamine. And those patients, we believe, will benefit from having an oral option to manage their chronic spontaneous urticaria. So I think it will be both populations. I think it will be a patient preference to some extent. Some patients will prefer to try another oral like Povorcitinib before trying a biologic. Other patients, particularly perhaps those with high IgE, which are about half the patients will prefer to try biologic first. Those patients still have a very high failure rate and they could be treated with Povorcitinib as an alternative after that. So I think we will potentially address both patient populations.

Next question is coming from Andrew Berens from Leerink Partners.

And congrats on the new Povo HS data. I know the placebo patients crossed over in this trial, but what would you have expected the control arm to do based on historical data, are you guys going to continue following these patients beyond 18 weeks? And then you also suggested in the press release that there may be increased activity in naive patients crossing over from placebo. Was this the data that you shared in the presentation in patients that have received a prior biologic or were these naive patients?

Good morning, Andy. So a couple of points to address your questions. Yes, we will continue to follow the patients for efficacy and safety to 52 weeks. So as we're not going to provide an update every few weeks, but there will be future updates on the maturity of the data, both for efficacy and safety from the two studies. I think we wanted to provide an update now because our study was analyzed at week 12, which was a little bit earlier than other studies from our competitors. So we wanted to show longer follow-up from both treatment arms and particularly important in this case, the crossover arm, which show how quickly the placebo patients improve when they're crossed over to Povorcitinib, I think that when it comes to naive versus biologic exposed, I think the important point is the overall, the two studies met the primary endpoint, both studies in both dose levels. And that's, I think, important to remember. We wanted to give clarity in the post biologic use because we think that -- we highlighted is one of the areas where Povorcitinib could have a very important role for patients. And so the clarity that it worked very well regardless of prior biologic use and regardless of the type of biologic, we thought it was an important thing to remind everyone of.

Next question is coming from Tazeen Ahmad from Bank of America.

I just wanted to get an update on one of your pipeline assets, namely the CALR compound. You had guided to data for this calendar year. Is that still the plan? And if so, can you just give us a little bit of guidance on what level of data do you expect?

This is Pablo. I think you're asking about the monoclonal antibody. We promised data in 2025, and we will present data this year. It will be a substantive amount of data. We have dose escalation. We're going to have a range of doses. We're going to have data in ET and data in myelofibrosis, and we will present clinical endpoints as well as early data on VAF, variability and fraction burden over time. So I think you should expect a reasonable number of patients with a range of doses that will be presented.

Next question is coming from Salveen Richter from Goldman Sachs.

This is Matt on for Salveen. Maybe just a follow-up on that last question. Could you share any more details in terms of how we should assess the kind of curative efficacy potential for CALR. And then kind of walk us through what is the base case in terms of mono versus a Jakafi combo? And then if I could just on tariffs, it seems like you all are well-positioned from a manufacturing perspective. Is there anything you guys can share in terms of where IP is based and how much profit you book in the U.S.?

Let me take the first part of the question on CALR. So I think that the data for new interventional, in this case, CALR, anti-CALR antibody for patients with ET and MF. Obviously, we would like to change the treatment paradigm in these patients. And over time, we would like to see evidence of disease modification. That could take time, but we would like to see early on that this is a decrease in the allele burden in these patients. And that's an important part of the studies. However, the immediate benefit for patients are in the near term will be the classic signs and symptoms of these diseases, blood counts, symptoms, et cetera, both in ET and MF. So what we intend to present is a comprehensive data package addressing both sides of that question, the clinical endpoint as well as allele burden reduction. And over time, we expect a sustained and more pronounced effect in these patients, we continue to treat them with the antibody.

And on the tariff question, so as I said, I mean, we have manufacturing available for each of the key products in Europe and in the U.S. So that gives us basically an opportunity to supply the U.S. market from the U.S. And therefore, there is no tariff eligibility there. Regarding IP, the ownership of the patent for our key product is in the U.S.

Next question is coming from Brian Abrahams from RBC Capital Markets.

This is Nevin on for Brian. Just a quick question on Opzelura. It's been the contribution to -- of atopic derm and vitiligo to Q1 for Opzelura, how do you kind of see that moving forward? We've heard from some physicians that access to AD continues to be your hurdle. So how are you currently working to improve some of the access to Opzelura and AD?

Yes, the two-part question. This is Matteo. I'll take, the first part on the contribution of AD versus vitiligo. Right now, we see the split to be pretty constant as both indications are growing at pretty much a similar pace. In terms of access to AD in the future, there are two components of it that we're working on. One is the formulary position that we have, particularly on the commercial plan, and as Hervé mentioned before, as of March 1, we had Optum premium moving from not covered for Opzelura to a preferred position. And that brings us not just 2 out of 3 major PBMs in their preferred position, but also as Hervé mentioned, more than 90% of patients on commercial plan covered. The other area of work that we're doing, we're receiving initial positive feedback on improvement, their ACPs and their office staff see on the accessibility to Opzelura is on the patient service that we offer. So we continue to work on both fronts to make sure that the feedback and easy to access Opzelura feedback continues to improve in the coming quarters.

Our next question today is coming from Jessica Fye from JPMorgan.

Curious if you could update us on how the company is thinking about capital allocation and business development. Do you want to see the rest of this year's pipeline readouts play out before making any moves there? And with the stock back in the 50s, is another ASR on the table?

Let me take that. I mean the big picture on capital allocation is obviously our internal pipeline success and/or lack of. So the evolution of the internal pipeline is driving a lot of the way capital is allocated. You can imagine with seven proof-of-concept events happening. Each of them can lead to a Phase III program, and therefore, it will be utilizing a large portion of our R&D budget. So that's the first capital allocation is in our R&D. In terms of external business development, we spoke about it, we would be like we have done recently with Genesis, looking at our research partnership or very early products where we have an interest on the scientific side like preclinical or very early clinical sort of partnership, and we continue to look for that. And regarding future strategies in terms of share repurchase, I cannot comment on that.

Your next question is coming from Marc Frahm from TD Cowen.

Maybe a couple of follow-ups just on some of the earlier topics. On the CALR update. Would you expect to be able to talk about kind of next steps and whether you think there's a pivotal path forward yet? Or is it the state likely to maybe not quite be that level of maturity? And then on the updated HS data, just the potentially better efficacy in the IL-17 experience patients is obviously provocative, any ideas as to how you can kind of prospectively identify these patients that may do very well in a JAK relative to an IL-17 to maybe help them avoid months of what might be an effective IL-17 therapy?

Marc, this is Pablo. On CALR, we'll certainly discuss next steps when we present the data. We always try to do that. That's why we wait to have a reasonable number of patients and some follow-ups, so we can tell you what we're planning to do next. So you should expect the conversation on that to happen when we disclose the CALR data. On your -- the second part or your second question, it's hard to tell at this point. I think that we will look in more depth at the data that we have, which are two large positive Phase III studies to see we can identify any specific baseline characteristics that predict for better results. But it's going to be hard to figure it out ahead of time, which patients are more likely to respond to an IL-17 that through a JAK inhibitor. I think Hervé highlighted very clearly where do we think that patients are more likely to benefit or to use a JAK inhibitor from the start of therapy. And in a proportion of patients, that will happen after now 17 or after the anti-TNF, but it's going to be hard to identify those patients ahead of time.

Next question is coming from Vikram Purohit from Morgan Stanley.

Just following up on the mutant CALR question. We actually had a similar one for the JAK2b617FI program, just wanted to see what level of update we can expect this year for that program? And also kind of what you might be able to communicate on next steps there once we have that data set? And then secondly, I guess revisiting Rux XR, I just wanted to get an update on where that program stands? What next XR and how you would see that moving forward, assuming a positive update from the FDA there?

So on 617F, that program is, if you remember, is behind the mutant CALR antibody program because we started in healthy volunteers. We had to do some work on the formulation, so it started to be tested in patients later than the mutant CALR antibody. So the update that we provide, which we intend to do this year, may be a smaller number of patients than the mutant CALR antibody. We're still going to discuss with the next steps out of that time, but the extent of the update could be more limited. Let me hand it over to Steven to talk about where we are with the Rux-XR program.

On the extended release, as we communicated earlier this year, the key component that we had to achieve was to meet bioequivalence, which we did and we have in writing from the regulators that, that was achieved. What follows is to lay down stability and complete that towards the end of this year and then immediately file that response towards the end of this year. It's a response to a CRL, the time line clock on that from a regulatory point of view is 6 months. So we expect approval for XR should that all go well by the middle of next year.

Next question is coming from Kripa Devarakonda from Truist Securities.

This is [ Alex ] on for Kripa. In reference to the slide of the HS market with the 46,000 eligible patients that could be treated by Povo, is that a facet of the current market? And when we think about penetration into the different segments there, is it equal penetration that you see Povo going into for all the three different segments? Or do some stand out more than others? And how do you see the landscape evolving in the future?

Maybe I mean -- and Matteo can complete the response. The way the slide was really to give you a picture 2027. So it's when Povo will be launching. And the area is to show that, in fact, there is three different segments that are part of where Povo could fit and would be competing. One of them, the first one is for patients who don't want to get injection for many reasons, but and that's not nothing. It's around 10% to 15% of newly diagnosed patients who are moving to systemic therapy today. We have some research on that. So that's the top line -- at the top segment, it will start at around this 10% to 15%, which is 3,000 patients. And obviously, as the other piece, which is the dark blue in the graph is evolving is a place where newly started patients who are eligible to biologics. And that's where basically the competition will be between starting with the biologic versus starting with Povo. And I think that will take time. So at the beginning, we will be dealing with patients who are not eligible for injectable therapy and a lot of patients who are basically coming out of the pool of existing biologic treated patients. And what I wanted to say with this slide is that, that number is, in fact, the largest of the three and that's a place where, as you have seen, the data from Pablo was speaking about on the prior biology exposed patients, we think the first pool of patients treated with Povo will be there. In addition to the 3,000 early patients, so the light blue. And then over time, the dark blue, which is the newly started patient on systemic therapy will be evolving to oral treatment when people are comfortable with the profile of Povo. So that's what we're trying to say that there is a market with biology exposed patients. There is a small segment who don't want to receive injectable. And then over time, we will be gaining share in the third segment, which is the newly treated patients.

I can complement on a couple of comments on the evolution of the landscape. As Hervé said, we are already seeing now in 2024 at beginning of '25, quite a dramatic increase in the churn of patients that go from IL-17 to TNFs and vice versa. And we see that continuing to grow all the way to 2027 when we expect to come with Povo and beyond. And that's actually the segment in terms of penetration that we see the highest unmet need from the very beginning. So we're very confident in the market growth that we see in front of us for Povo.

Our next question today is coming from Matt Phipps from William Blair.

This is [ Madeline ] on for Matt. Related to Povo and CSU, how does the efficacy profile you're seeing compared to the profile with MRGPRX2 inhibition, and does the positive data with Povo change your view on the potential to develop backup X2 antagonist programs?

So we'll discuss how the data compares with the data sets once we show the data later this year. I think that related to the X2 program, we have no intention to restart in this program. We're very happy with the results of Povo and CSU. We think this proof of concept is very important for Povo for patients with CSU and we intend to advance to pivotal studies. We'll talk about the details of the data later this year.

Next question is coming from Ash Verma from UBS.

So I had a question on Monjuvi, just on these Phase III in the first line and relapsed refractory DLBCL would be in the front mine studies. Just if you can share what are your expectations share in these studies in terms of the efficacy that would be great.

Thank you. It's Steven. So Tafasitamab now obviously has positive data in relapsed/refractory diffuse large B-cell lymphoma, and that indication is approved, and then more recently at ASH last year, the inMIND study in follicular lymphoma with really outstanding efficacy in terms of hazard ratios, et cetera, and now waiting for the first-line study to report out. It's event-driven. It's a large study. And we've guided to having data potentially in the first half of this year as soon as we have sufficient events. Should that be positive, we would be moved very rapidly to complete a submission package and get it across the finish line. But we really like the way the CD19 antibody is shaping now as it moves sort of forward and, as I said, in relapsed/refractory follicular and now potentially in first-line and with more and more evidence accumulating that CD19 expression is not affected by treatment with this antibody. It's maintained. And so people can, for example, use CAR-T directed against CD19 after the therapy. So it's a profile that we've become increasingly encouraged by.

Our next question is coming from James Shin from Deutsche Bank.

Maybe one for Steve and Pablo. For the week 18 Povorcitinib update, it looks like about half of the placebo patients crossed over, do these crossover patients experience rapid pain reduction from the week like -- we saw in week 12. And if I recall, around 36% to 37% of the placebo patients were post biologic exposed -- can you give us a breakout of pre and post biologic for these placebo crossovers?

Yes. Thank you. It's Steven. I'll take that question, Pablo may add comments to what he had in his prepared remarks. We thought this was a really important update to reiterate what Pablo said to demonstrate drug effect because once you have the 28%, 29% placebo rated week 12 and then introduce those patients to either the 45 or the 75. You can see in 6 weeks, this dramatic 20% to 30% absolute improvement in his HiSCR rates and that really demonstrates the drug effect of placebo versus active drug there. So that's really, really encouraging. What's more is because of the market breakdown that Hervé illustrated in the different eligible -- potentially eligible populations, whether it's naive or biologic exposed, again, we thought it was important to illustrate the data in biologic exposed patients, both to TNF-alpha inhibitors, IL-17 potentially to both and again demonstrate the really encouraging and potentially even better activity in those populations as demonstrated by the data. You're absolutely right about 1/3, 35% to 40% of patients on the whole of biologic exposed. So the majority of the population 60% plus is naive. That's an important population to study. It was really important for Europe in terms of getting reimbursement there as well. So we -- the breakdown in the naive versus experience, we didn't tease out directly, but you can indirectly work it out. And again, activity is shown across the board. Thanks.

Next question is coming from Salim Syed from Mizuho Securities.

Just maybe one for me on Niktimvo actually. So a pretty good beat this quarter. Just curious if you could maybe comment on just some of the dynamics with the $14 million of sales. Was there anything there particularly one-timer that we should just be aware of? And then kind of related to that with the J code going effective 4125, how much of a tailwind has that been kind of through the month of April.

Salem, Mohmmad here, again. thank you for the question. Yes, look, so let me just start by saying we're very pleased with the launch performance so far. Our team has done a really effective job of driving broad and productive utilization Niktimvo, as you heard earlier in the prepared remarks, 95% of our top accounts are using Niktimvo. 70% of all target accounts are already using Niktimvo and from a onetime perspective, there isn't really much there. We're seeing that penetration and productivity continue. As you'd expect, Niktimvo, this early on is used primarily in that fourth line plus patient. And there's obviously a bolus of patients with an urgent need for these new treatment options. I think that's where you're seeing the Niktimvo rapid uptake really take fold. The great news, though, is that -- these patients are seeing a rapid response that's very favorable, which is going to naturally encourage providers to use Niktimvo earlier in treatment. And then the last thing maybe I'd touch on from a one-time perspective. As you know, we have a generous EAP program. In the first quarter, only 50% of those patients moved on to paid drug, and the other 50% or so will come in Q2, and then as you would expect, when a new product is launched, there's certainly an inventory dynamic that you see in Q1. So about 1/3 of our sales is Q1 also coming from some inventory build, but we expect that to be stable for the rest of the year.

Our next question today is coming from Gavin Clark-Gartner from Evercore ISI.

I just wanted to quickly follow up on the TAFA first-line Phase III DLBCL trial. I believe on the slides, you noted the data got moved to the second half of this year. I think, Steven, you may have noted data was still in the first half potentially. I just wanted to confirm the latest guidance and also clarify if a [0.73] hazard ratio from Polivy's trial is a reasonable benchmark.

Yes. Gavin, it's Steven. It's always tricky with event-driven studies to be precise, as you know, when data will ultimately come especially and it spans a quarter change. But you can read in the marks -- from my remarks that we expect it sometime soon, we're getting close to the required events to trigger the analysis -- what will then follow is database closure, cleaning independent review of radiology, et cetera. So it may track a little later, we see, and that could be a positive thing if those obviously, delay of events is due to activity. I think the -- the quality effect in first-line diffuse large B-cell lymphoma is probably in the ballpark of a reasonable benchmark because it's a similar population of the more severe people with this disease, so the IPI higher scores in terms of prognostic index. And it was -- just to remind everyone, the first positive study increasing cure rates in first-line diffuse B-cell lymphoma in a long time, obviously, with the CD79 mechanism, we're really interested now in July inhibition of '19 and '20. We've shown data just to be repetitive in relapsed/refractory follicular and now we'll see what the first-line data shows. We will announce because of the materiality of this data as soon as we have it available, and we're waiting for those events.

Our next question today is coming from Jay Olson from Oppenheimer.

Congrats on the progress. For your CDK2 inhibitor, what are the key data points we should be looking out for in your ASCO update? And -- what are the gating factors to starting the Phase III study in ovarian cancer and especially if you could talk about the companion diagnostic and how that's progressing.

So thank you for the question. So what you will see at ASCO is an incremental update. And you remember, we presented a very comprehensive data set at ESMO last year and ASCO will provide a little bit more data, more follow-up in some of those patients. I think more importantly, to the second part of your question is we are in the process of implementing the pivotal trials in platinum-resistant ovarian cancer. So that's moving forward. We are moving forward with the diagnostic as well. That's advancing very well. And we are conducting a combination Phase I study combination with bevacizumab which is necessary to launch platinum sensor ovarian cancer stage. So all those things are moving forward as we speak.

Our next question today is coming from Kelly Shi from Jefferies.

This is [ Claire ] on for Kelly. Congrats on update on the initial launch performance of no. So for No, I want you to share some key physician feedback you are seeing more rather of experienced patients or rather of naive patients such [indiscernible] dynamic to evolve over time. So apologies if I missed it, but what's the time line [indiscernible] submission.

So the question was about [indiscernible] where it's used on the launch.

Yes. Thank you, Claire, for the question. Let me take the Niktimvo piece, and then I'll pass the time line for Povo HS to Pablo and Steven. As I mentioned, Niktimvo when introduced in such an unmet need that currently exists, we're currently seeing it used in really primarily in the fourth line plus patients. As you would expect, there's a bolus of patients with GVHD late stage that have an urgent need for a new treatment option. And that's where I think Niktimvo will make an impact as soon as it gets introduced like I also mentioned, the great news, though, is that we're seeing these later-stage patients respond very favorably. Customer feedback has been very positive with some sharing that they're seeing Niktimvo really demonstrate its rapid and broad efficacy profile that was seen in clinical trials in practice, and that will naturally move Niktimvo earlier line. Niktimvo in our perspective, has a key differentiator, which is the mechanism of action, which is completely different pathway than other approved agents, making Niktimvo, I think, a great addition, an option to be used right after Jakafi in the third line. So whether it's in the third line now versus [indiscernible] or not, I think it's soon to be told, but we're really optimistic about the competitive profile and the customer feedback so far. And again, we're really optimistic about it being used earlier in line once providers and patients get more experience with it.

Yes. And [ Claire ], in terms of the time line for the HS submission, obviously, you've seen the efficacy data and the safety profile through week 12 and now through week 18, very clean. The key component of this is negotiating with the regulators as to how much of the safety they'll require at the time of initial submission versus the ability to supplement that at the 4-month safety update. So our guidance hasn't changed. We want to do it as quickly as possible towards the end of this year, tracking potentially into early '26 at the moment. And we'll provide more precision on that when we have more precision.

Your next question is coming from Eric Schmidt from Cantor Fitzgerald.

This is [ Imogen ] on for Eric. Two questions from me. A quick 1 on Axatilimab, could you comment on that $ 14 million of what proportion of that is inventory. It looks like a really strong launch. So congrats. And then one question on Povo and the HS and the longer-term data after week 12. Could you talk about how the dropouts were treated in that later section and whether patients who took rescue medications like antibiotics in the week 12 control period, we then kind of added back in because I think that was part of the nonresponder criteria.

Hi, [ Imogen. ] Mohamed here. Thanks for the question on Niktimvo. In just the first couple of months, we're seeing about 20% to 30% of the sales so far is really made up of inventory. But as I mentioned, multiple accounts have already reordered and that inventory level continues to be stable. So that's what I would expect for the rest of the year.

And then Imogen, thank you on the long-term data. It's really interesting. So we obviously had a very conservative approach in terms of the analysis and the nonresponder imputation in that anybody discontinued for whatever reason was considered a nonresponder. First a more modified approach which some other competitors are using. We will analyze both and at some point in time, provide both. We expect the modified NRI actually to have slightly better numbers than the conservative approach we use. So thank you for that question. It's an important one.

Our next question today is coming from Evan Seigerman from BMO Capital Markets.

[ Malcolm Hoffman ] on for Evan. For Opzelura, you noted a slight reduction in inventory, which may be dampened sales. Could you quantify the impact any further? And then also, can you provide any additional commentary on how you've seen usage in the U.S. progress? I know at the start of the launch, this is highlighted as an expansion opportunity. Do you guys still think we could see more tube usage per patient over time?

Hi, [ Malcolm, ] it's Christiana. Let me take the first part of the question regarding Opzelura and the inventory. As I mentioned in my prepared remarks, in the U.S., the net revenue growth was 20% with a paid demand growth, 24%. The difference came from the reduction in inventory. The reduction in inventory was mainly because in -- given where the end of the year holiday happened -- took place this year, which was in the middle of the week, wholesalers bought before that. So it impacted Q4 and we saw that inventory level coming back down in Q1 of the year. As I mentioned, we look at the current inventory levels as within normal range and expect to continue to be pretty stable at those levels.

And I'll comment on the tube usage over time and what we expect. We expect increased utilization overall in both indications. I think it's driven by two dynamics: our continuous subscription growth, which includes, obviously, additional [indiscernible] over time in both indications, as well as the usage of the tubes across the extensive patient population that we have built so far. And then to continue to close with that is the feedback that we continue to get from -- on the patient side, highest level of patient satisfaction of people that have used Opzelura and on the HCP side, we continue to see the willingness to utilize it more in the coming future. So when we put everything together, we expect higher utilization in the coming quarters.

Your next question is a follow-up from Michael Schmidt from Guggenheim.

Just another one on Povorcitinib. This continued increase in HiSCR 50, out to week 18 obviously looks very interesting. Did you observe a similar trajectory also for the HiSCR 75 outcomes, and the other question I had is just on your KRAS G12D inhibitor, where I know you've guided to POC data later this year. Just wondering how you think about differentiation and the competitive landscape there, just given we've seen some data recently at ACR.

So Michael, I'll start on the Povo HS question through the updated data through week 18. We just showed for efficiency reasons, the HiSCR 50 because that was the primary endpoint, and it's we wanted to demonstrate that over time. We absolutely will have the others as well, HiSCR 75, et cetera. And the trend I can say, is similar to your question. I'll hand it over to Pablo for your 12D question. .

So Michael, thank you for the question. As you know, KRAS inhibition continues to get increasingly competitive. I mean I think there were 57 posters and presentations at AACR and new data continues to be presented. We are very happy with the profile of our G12D inhibitor. That study is advancing very well, and we will have data to discuss with you later this year. I think at that point, we're optimistic that our profile is going to be very competitive. We're advancing not only single agent, but we're starting combinations as well. So we'll have a broader conversation when we have the data. But so far, we're very happy with the progress of that program, and we think we're going to have a very competitive profile.

We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Thank you all for participating in the call today and for your questions. We will be available for the rest of the day for follow-up. Thank you, and goodbye.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.