Incyte Corporation ($INCY)

Good morning, everyone. My name is Etzer Darout, Senior Biotech Analyst at Barclays. My pleasure to have Incyte joining us today, day 2 of our conference. With me, I have Bill Meury, President and Chief Executive Officer at Incyte. And to my far right, we have Pablo Cagnoni, Head of R&D at Incyte. Welcome to our conference.

Thank you.

Bill, I'm sure most of our listeners are fairly familiar with Incyte, but maybe provide some introductory remarks, maybe some of the key points around the business and the pipeline over 2026.

Yes. I mean we think about Incyte across 3 dimensions or therapeutic areas, hematology, which I would describe as the central identity of the company. We have an emerging solid tumor oncology business that really started to declare itself in 2025 at ESMO with our G12D inhibitor for pancreatic cancer and our TGF-beta/PD-1 for colorectal cancer, which are now in frontline Phase III studies. And then we have an immunology business that is anchored today by a topical JAK inhibitor called Opzelura. We expect to get an approval for povorcitinib at least by the end of 2026, early 2027. And so in that area, we'll have a topical to oral solution, what I think is an advantage across 3 different immune-mediated skin conditions. We think about the business in 2 parts. We have a core business ex-Jakafi, which by 2030, we expect will be as big as Jakafi. That business in '25 did about $1.2 billion, was up 50% year-over-year. Maintaining the health of that business is critical to navigating this transition in 2029 when we lose exclusivity for Jakafi. And the other part of the business is our pipeline. And we have 7 assets in development where 80% of our R&D investment is centered on. And those programs are continuing to declare themselves. And so we take our core business, we layer on our pipeline and the company has the potential to go way beyond Jakafi and essentially set a new high watermark for Incyte. That's how we think about the business. The last point I'd make as it relates to business development, just like in any company, it will be used as a multiplier and to extend or strengthen the core business.

Great. Let's maybe start with Jakafi. And when you think about sort of -- it's a major source of revenue today, as you pointed out, but not sort of the growth engine longer term. When you think about sort of how you would internally measure sort of success maybe post Jakafi, is it about revenue replacement pipeline advancement, margin preservation. How do you think about sort of the bar for success for the replacement, if you will, ultimately of Jakafi?

Sure. It's a good question. We're not looking for a one-for-one replacement on Jakafi. If you really think about what we're solving for, it's top-tier growth post '29 and durable revenue earnings and cash flow, which is to say we want to minimize our LOE exposure. And there are 2 parts to the solution. I mentioned this core business ex-Jakafi. That business has the potential to grow at a 15% to 20% 5-year CAGR. So between now and 2030, it should approach $3 billion to $4 billion. And that is about managing the business on a day-to-day basis at a very detailed level. Now growth is not linear. What's important in that core business is 4 product launches over the next 12 to 18 months. Jakafi XR, frontline DLBCL for Monjuvi, where we just reported top -- well, not top-line results, but released the results of our study, moderate AD indication for Opzelura in Europe, which will be an important incremental growth driver and then povcitinib. Those 4 launches are important in terms of continuing to drive our core business. And then as we look at our pipeline, we made a lot of progress in 2025. When we started the year, we had no proof-of-concept data on 989. We had no proof-of-concept data on the G12D inhibitor, our TGF-beta by PD-1 -- we had no Phase III data on povorcitinib or combination data with Niktimvo and Jakafi at least from a safety perspective. We have all of those things now. And so what it means is we have much more visibility into the growth profile of the company in order to go beyond Jakafi. And we'll measure our success this year, next year and the following year in terms of advancing those programs. But right now, we've fundamentally changed the shape and maturity of the pipeline. And I think it's probably more focused and strategically aligned than ever before. And then like I said, the next part of that equation is always BD, which will again will be targeted and selective and it will be used to extend the core, not looking to fill a revenue gap, looking to build the business into the 2030s that is an all-weather business essentially.

Great. And obviously, one of the areas of focus for Ensign is myeloproliferative neoplasms, right, given your position with Jakafi. You presented some NASH data suggesting benefits across spleen benefits, symptoms, anemia benefits for your mCALR program. And when you think about conversations with regulators across these different endpoints, if you will, what do you think ultimately matters most for patients, where if you think about sort of what a pivotal looks like, where you can really sort of highlight the benefits of like an mCALR program in that population of patients with [ MF ]?

Yes, it's a good question. I'll make a couple of comments and then just turn it over to Pablo to expand. First, I think with the data that we shared at ASH at the end of the year, 2025 in both MF and ET, it's a pretty sizable Phase I program. I think we've answered all the threshold questions on 989, our monoclonal antibody targeting mCALR. On the ET side, we have a very complete -- a very high complete hematological response with pretty pronounced impact on BAF, so both the clinical and molecular end. And I think that the approval of 989 second-line ET is going to quickly reshape the use of hydroxyurea, which is an imperfect treatment. It's the best they have right now. On the MF side, whether it's spleen volume reduction, SVR35, symptom relief, TSS50, anemia response. What you saw in that Phase I study is frontline efficacy in a second-line setting. And for hematologists out there, Jakafi has been a remarkable drug, made a big difference in patients' lives, but it's a trade-off treatment. You increase the dose, you control symptoms, but cause anemia. If you don't increase the dose, you avoid the anemia, but you don't control the disease. And symptom relief is common in the treatment of MF, but molecular response is rare, and we have the potential for both with 989. We're going to be starting Phase III studies. We expect to start Phase III studies in the middle to the end of the year in both ET and MF, and we're currently in interactions with the FDA, and I'll let Pablo make a comment on where we're at.

So our goal, as Bill mentioned, is to start at least 2 Phase III studies this year. We started conversations already with FDA. Those conversations have taken place. And we're finalizing the protocol for the second-line ET study. And the important thing is what aspects are we reaching agreement with FDA. So we need to agree on the population. This study is going to be in all comers, both type 1, type 2 and non-type 1 type 2 patients. We are reaching agreement with the agency on the dosing strategy. We agree with the comments that have been made that when you see the data that were presented at ASH, it seems like patients with type 1 respond at a lower dose. So we want to take that into account in this study, but we still want to keep on study. The endpoint -- the primary endpoint is pretty straightforward here. It's going to be some version of complete hematologic response. But what we're trying to do with the agency is 2 things. We're discussing maybe accelerating the readout of the endpoint. The traditional approach has been 52 weeks. And then on the other side, incorporate in some manner, not as a primary endpoint, but in some manner, VAF as an endpoint to just get started with the clinical validation of VAF as an endpoint in patients with MPN. So those things will be -- I'm confident will be finalized by the end of the month. At the latest, we will present the details of the next earnings call in the second half of April, we'll give you full details of the design of that study. In the second half of the year, as Bill mentioned, our intention is to start a second-line MF study. Those conversations will take place soon with the agency, but we're finalizing a data package. And then we're making a push to start a first-line MF study, whether that's very late this year or early next year. It's a little bit in flux right now, but we're certainly moving as fast as we can. And I would be remiss, if I don't comment real quick. The other important aspect of the development plan for 989 is a subcutaneous formulation that's going to enter the clinic this month in healthy volunteers. We're going to then move to patients as soon as possible. And by the second half of the year, probably early -- late third, early fourth quarter, we'll have not only the formulation, but we'll have the device, the subcutaneous device that we intend to use at some point. We're going to incorporate as soon as we can into pivotal trials.

And I think I wanted to talk about the anemia response, particularly in MF. When you think about that as it looks like a differentiator to us relative to sort of what you see with JAK1s. Is it really maybe a commercial story? Or could it be viewed as really just game-changing or transformative, I guess, for the patients that can see that anemia response benefit. How do you think that response gets positioned commercially?

Yes. I would say that I mentioned earlier that hematologists will sometimes describe JAK inhibitors as trade-off treatments. And it's because that anemia is a negative prognostic indicator for survival. In fact, if you look at patients with MF and severe anemia, their median survival is quite a bit shorter than those who have MF without severe anemia. The big difference is we're not just avoiding anemia. And I think Pablo speaks to this quite eloquently, it's proof of mechanism that not only is 989 shrinking the spleen and improving symptoms, but it's restoring normal bone marrow function and red blood cell production. So I think it's a crystal ball into how 989 works. I think the community is going to have to look at the totality of the data. It's not just about anemia. It's not just about the conventional endpoints, SVR35 and TSS50. But across the continuum, you have what appears to be a superior treatment to the current standard of care. And I think your comments about anemia are, like I said, really effectively describe the benefit that 989 provides relative to anything else to add Pablo.

I think it's an important distinction, as Bill said, because there are drugs that seem to have some impact on anemia, probably because they're less potent than Jakafi and so they're a little bit less toxic for red cell progenitors. What we showed at ASH is something fundamentally different. As you pointed out, in addition to the spleen shrink as a symptom improvement, we showed that more than 50% had really important improvements in anemia. We're talking about 1.5 gram, 2 grams improvement in hemoglobin over time. And I think one of the questions that has come up is that because of discontinuation with Jakafi? The answer is no. We've talked about this before. We looked at patients with or without a prior washout and the impact on anemia is the same. And we looked over time and the anemia keeps getting better many months after stopping Jakafi. So this is not discontinuation of Jakafi, which is not to say that stopping Jakafi is not a good thing for the anemia, but the effect we're seeing is not Jakafi discontinuation. And the other important part of the story is when you look at in detail of what's going on in the bone marrow, we showed that we are shifting back to normal production of red cells. And that is basically one of the key elements of disease modification that we're seeing with 989. The bone marrow is starting to normalize again and starting to make normal red cells again, and that's why hemoglobin goes up.

Great. And maybe on the 058 program, the JAK2V617F, I think in our discussions, there doesn't seem to be questions around sort of mechanism or rationale, maybe more around sort of the formulation and whether or not this formulation can overcome limitations of the prior work. Maybe your thoughts around maybe level of confidence for the new formulation for 058 as you think about being able to kind of show, again, clinical benefit with that program.

Let me start. I am confident on the mechanism. V617F is a driver mutation in these diseases. When you hit driver mutations hard enough, you get positive clinical outcomes. I mean we've seen that over and over the past 25 years. So the question is, how do we hit it hard enough? 058, we knew entering the clinic, there are a couple of challenges, and we made this very clear. The therapeutic window for 058 is relatively narrow. It's not ideal. We thought it was good enough and still do to achieve what we need to achieve. We knew there was a solubility problem. We put a formulation initially in the clinic that we thought addressed it. It turns out we need something different. We introduced a solid dispersion formulation this quarter, and we will have data by the end of the year. Based on the healthy volunteer data, I'm cautiously optimistic that we'll get to the exposures that we need to see evidence of clinical activity. Now we have 2 backup plans, one internal. We have backup molecules that we think have improved properties over 058. Those are being advanced as fast as possible. And as you probably know, we signed an agreement with Prelude last year that gives us access to their V617F inhibitor programs. They are managing those programs. We have an option agreement. If at some point in the future, they share the data with us. If the data looks strong, we have the option to acquire -- fully acquire the program. So that's how we are addressing V617F. I think one or more of these approaches is going to get us what we need.

Maybe switch gears to lymphoma and tafasitamab with the update you provided for the frontline treatment in DLBCL. You mentioned R-CHOP is still very much used in that frontline setting. And I guess, how do you see the role of tafasitamab involving in that frontline setting?

Sure. The goal, as most people know, in frontline DLBCL is cure. 40% of people still don't achieve cure. As you know, that space is evolving. You have R-CHOP, which is just 50% of treatment. You have Polivy and then, of course, at some point in the future of Epkinly or this year, we should know whether or not it has utility in the frontline setting. We have a strong efficacy signal in terms of PFS. We'll release more data in 2026 in terms of activity in subgroups and a manageable safety and tolerability profile. And so when you think about Monjuvi, think about the community setting, high-risk patients, aren't on our trial, and it simply represents an add-on or intensification strategy. And to put in perspective for Incyte, if we were to get a modest portion of the frontline DLBCL market, call it, 10% or 15%, we could 2x the sales of Monjuvi on an annualized basis. And so I think it's going to play an important role. We don't need to take over the frontline DLBCL market. The data set that we're going to release in 2026 is a fairly competitive or very competitive data set. We'll submit to the agency in the first half of 2026, and we could have an approval at the end of '26, early '27, give or take.

Great. Maybe the I&I franchise with povorcitinib, you have a couple of important pivotal data points this year. Maybe first in PN, how much better does povo need to be relative to a Dupixent, if you will? And just if you think about sort of level setting expectations around that data set and how that can sort of play out or evolve?

I'll make a first comment and then turn it over to Pablo. I don't see whether it's HS, PN or vitiligo sort of a fight to the death or a market share battle or an either/or. I think what's lacking right now in those conditions is an oral anti-inflammatory. And HS, you can take a topical or systemic antibiotic and they got to jump all the way to an IL-17. In PN, there's no FDA-approved oral. And I think there's an expectation of the dermatology community as it relates to sort of clearance and itch with all these conditions in PN, I think it was made for JAK inhibitors. And so I don't really look at it versus Nemluvio or versus Dupixent, but get the first FDA-approved oral JAK inhibitor for PN, and that's going to have a meaningful role in the treatment of that condition. I think the same is true in HS. And the same is true in vitiligo. Do you want to add anything?

I'll just add one quick comment on PN. I obviously agree with Bill's comments. I think one of the things that povorcitinib does very well, and we've seen that both in HS and in the Phase II and III and in the Phase II in PN is it works very fast. When you look at itch, 2/3 of the effect that by about 2 weeks. And if you look at the median time to 4 points or greater itch improvement at the higher doses, that's 19 days. That's a lot faster than Dupi. And when you talk to dermatologists, they will tell you that Dupixent works, but it takes a long time to work, particularly when it comes to itch relief. And that's the key symptom in PN patients. So I think povo is a great drug for PN. Obviously, we're very optimistic about the vitiligo results that we'll have in the middle of the year. And the speed at which it works, both in HS and PN, I think, are going to be, obviously, in addition to the fact that it's oral is going to be a key difference, I think for patients.

And in vitiligo relative to Opzelura, is it going to be a different patient population, complementary treatment? How do you see those 2 sort of evolving in vitiligo?

Yes, it's a good question. We'll have the only topical to oral backbone. And Opzelura has penetrated a fairly high percentage of the diagnosed and treated vitiligo patients, who have a BSA involvement of less than 5%. But for people with a BSA of greater than 5%, clearly, an oral treatment is more practical than a topical one. And I think we have an advantage going into vitiligo. We're there now. We, of course, have the topical, assuming the data in Phase III are convincing, I think we'll expand that market in terms of diagnosed and treated because you have an oral versus a topical.

Maybe quickly on the TGF-beta PD-1 bispecific program, moving into a pivotal study in colorectal cancer. I think that was a bit of a surprise, if you will, to jump from Phase I to Phase III. Maybe again, talk about sort of what we could see from a differentiation or just data update that can maybe give us more confidence around sort of the pivotal plan around the molecule?

Please go ahead.

So I agree that historically, you sometimes take an intermediate step. The reason why we did this, when you look at the Phase I data, there's a couple of things that are unique. #1, we treated 100 with MSS colorectal cancer. I mean this is not the usual small 12-patient data set that -- so the point estimate for the response rate in that population, I think, is a pretty solid number, which is about 15%, including a lot of patients with liver metastases. And again, this is third, fourth-line MSS colorectal. When you compare that with every other piece of data published with PD-1, PD-L1 inhibitors, pembro, nivo, atezo, the response rate to those agents is 0, not low, it's 0. There are no responders. And even if you look at the recent combinations with novel CTLA-4 inhibitors in addition to PD-1s, they've seen responses, but none in patients with liver metastases. We have about half of our responders have liver mets. So that's the strength of the data. We think we have a drug in this population of patients. We combined with chemotherapy with FOLFOXbev, and we showed that the safety is there, they're well tolerated together. So then the question came, is there enough substance here to initiate a pivotal trial? When you look at the history of development of PD-1 inhibitors over the past 15 years, you'll see that a number of times that they have response rate of single agents in the low -- in the single digits to low teens. When combined with chemotherapy in early lines of therapy, that has delivered about 8 or 9 different approvals. That's the path we're following. We think that the strength of the single-agent responses we've seen in late line, combined with chemotherapy in first line will deliver a positive trial. So at the end of last year, we initiated the study. The study is now accruing patients. And we will provide an update on the data set in combination with chemotherapy towards the middle of this year, just to give you more clarity what we've seen.

And when you think about portfolio construction, the company is going to take some calculated risks. If we're right, it's transformational. If we're wrong, we haven't bet the farm. I think Pablo's point about an intermediate step, given the breadth and depth of the Phase I data set, it made a lot more sense in this case to go into Phase III.

Great. Just maybe lastly on the KRAS program. The early data suggests meaningful activity. How are you thinking about sort of maybe going into maybe earlier line settings, particularly, where you may see lower tumor burden for those patients? How are you thinking about that?

So the data that we showed, as you point out, is a single agent second, third line. We also showed early data in combination with chemotherapy, ASCO GI, showing that we can combine our G12D inhibitor with both main types of chemotherapy in first-line pancreatic cancer, Genmab and FOLFIRINOX. So that's been established. On the basis of that, we are initiating a Phase III trial in first-line pancreatic. We think that is the most important indication. We obviously are in a race with some competitors are going the same path, and we need to get there as fast as possible. We'll provide an update on that data in the second half of the year, again, just to give you clarity what we're seeing in terms of the combination with chemotherapy. At the same time, we're discussing internally what other indications should we prosecute with the 12D. And I think you alluded to much earlier lines like adjuvant therapy and perhaps other combinations. We're doing a lot of that background work, and you should expect an update on how we expand this program in the second half of the year.

Great. Bill, Pablo, thank you for joining us, for your participation. And hopefully, you enjoyed the rest of the conference.

Thank you very much.

Thank you very much.

Thank you to our listeners as well. We'll be back shortly with our next session.