Incyte Corporation ($INCY)

Good morning, everyone. Thank you for joining us. It's my pleasure to introduce the Insight management team. With me, I have Bill Meury, CEO; and Pablo Cagnoni, President and Global Head of R&D. To start here, Bill, could you give us an overview of where the company stands today, including your core franchises, Jakafi and Absilura? The pipeline priorities and just how you're thinking about big question. But outlook and strategy for the company as we look to the next 3 years?

Sure. I mean big picture, we're transitioning insight from a single cornerstone product to what we believe will be a portfolio of growth drivers. We think about the business across 3 dimensions, as you know, hematology, oncology and immunology. We also break the business down to 3 parts: a core business, a pipeline and then, of course, business development. When we look at our core business today, all the products ex Jakafi, that business will finish this year in the range of about $1.7 billion, up 30-plus percent versus prior year. it's relevant because by the time we hit 2030, the transition, we estimate that core business will be doing about $3 billion to $4 billion. So right now, it's funding the pipeline and it will set a floor. Then we look at the pipeline. Today, we have 8 assets, including VB-039, the STAR deal that have the potential on an unadjusted basis to 2x the company. The -- and they're supported by 14 clinical studies -- 15 clinical studies that will be underway in Phase III. We don't have to be perfect here. The 4 assets that I think have a high PTRS will get approved and contribute meaningfully to the company or 989 our monoclonal antibody targeting MCLR, G12D, vatinib and now VGA 039 for disease. We don't need heroic assumptions, assuming we successfully complete the Phase III programs to get to a multibillion dollar sales level with that group. If you layer that right on top of the core business. Business development will be used just to simply strengthen, extend the core. And what happens is the pipeline becomes the core business, and we expect that the potential to drive top quartile growth from '29, '30 out to '30, '35.

Could you touch on the business development side. So you announced the transaction for Star Therapeutics yesterday. How are you thinking about BD from here? And why Star -- what are you solving for when you look at the overall pipeline? And then what are you adding as you go forward?

I'll start with your last question. What we're for is to 2029. And when we looked at the STAR deal, and I've said this a few times now, it was as close to a textbook example of the type of deal that makes sense or insight and sort of checked all the boxes. First, it's novel. In other words, we're not dealing with incremental innovation. We're not in a situation where we're going to be maximizing marginal differences or we're a late entrant. It has standard of care potential in von Willebrand disease. That's number one. Number two, it's in hematology. That's the central identity of the company. We have differentiated knowledge and capabilities there, and we have all the R&D and commercial infrastructure we need. Number three, it has the potential to really move the needle. -- in terms of our top line, and it could be highly growth and revenue accretive. It's in Phase III. So the timing is right. And we did a deal that was structured, the economics made sense seller and they made sense for us. And so I think it's a good phenotype to the type of thing that we should be doing right now, very complementary to the business, the right risk-reward profile. We use only basically just over 20% of our go-forward balance sheet. So we still have flexibility going forward. And our view here is that we have a tight framework and criteria. If something is in the framework, we can act fast. If something is not, we're very comfortable being patient here, and that's how we're going to view it.

Great. Let's start with the myelofibrosis or the MPN business here. So for Jakafi XR, you launched the drug last month, price at parity with Jakafi acknowledging your expectations that 2026 will primarily be focused here on formulary coverage. What are you seeing in these early days of launch? And what do you want to see over the coming quarters to give you confidence in reaching that upper end of your 10% to 30% guidance range?

Yes, it's a good question. As it relates to formulary coverage, I can provide an update. We're about 30 days in. Optum has added XR to formulary. CVS is enter added to formulary. 14 regional plans have added XR to formulary and 4 Medicaid states. And so as it relates to formulary coverage, we are off to a good start. Conversion or uptake for XR will be measured early and tied to formulary coverage, and we expect really a step change when you get to January 2027 and you're going to want to be converting at 1 point, 1.5 points a month. That would be this working. As it relates to what would get us to the upper end of the range, in which case, we preserve north of $1 billion in Jakafi sales, it starts with coverage and really just moving prescribers and patients to think about XR before IR. We, obviously, a very large professional promotion effort in place. We cover all the major hematologists prescribers in the country. We also have a patient database and we're able to communicate with Jakafi patients so as you know with these launches, it's about execution. So far it's set up. If we're in the middle of our range, that's good. And if we're at the upper end of the range, there's only upside in that.

Why couldn't it be higher than the range you've given?

When you're dealing with an XR conversion, remember, there's new patients and there's current patients. IR makes a great deal of sense for new patients. when you're moving someone off of a drug or to X when they're occurring, that takes a little bit more time. And I think there's a certain amount of inertia in the market that you have to recognize. Now you can solve for that with a lot of activity. And I think that's what we're going to try to do.

Great. And should we expect you to disclose sales or other metrics over the near term?

Yes. We'll provide an update on formulary coverage, prescriptions and you will see the sales. Right now, we have about $10 million to $12 million in sales today. I think by the end of the year, that number could be in the range of about $50 million to $75 million.

Pablo turning over to you on the malar program here. So that program remains the primary focus from a pipeline perspective and revenue replacement strategy. ahead of the upcoming presentations at EHA, Walk us through where the program stands today and your level of confidence in successfully bringing this to the market in both the second-line and first-line settings in MF?

Certainly. So we will have an update at EHA as you pointed out, we'll have an update on the T population up in the MF population and a translational update as well. And when you look at overall with this program is, let's start with ET. We'll present an update to probably around 100 patients at EHA. And I think what consistently we're seeing is very high rates of complete hematologic response regardless -- roughly 70% or so. Patient in type 1 patients, that number is even higher. It's probably around 90%, and it's lower in patients with non-typutation. We've known that now for quite some time. Very importantly, the safety profile of 99 continues to be very clean. A lot of patients -- almost all the patients are still on drug at a very, very low percentage of had to discontinue. In addition, in second line ET, we have alignment now with the FDA, and we're in the process of launching the first pivotal trial for 99. I'm highly confident that in second line, ET, when you look at the historical numbers for post-hydroxurea interventions in the 30% to 40% complete hemologic response and not a lot of them with, the data that we've shown for 989 gives me a lot of confidence that this medicine will have a positive second line ET trial and eventual we'll get it to market. So now the role -- the goal here is execution in second-line AT, getting that off the ground and enroll as fast as possible. On the MS side, you have dating the abstract and we'll update during the meeting. And there's 2 separate important messages there. In this update, it's not a true frontline population that will be updated at ASH at the end of the year. But what you'll see is post-Jakafi, post RUX, patients and a group of patients that were what we call ineligible for Jakafi. So let's start with the first one. We have is we have 35 rates that we reported before. It trended approximately the same percentage points here and there lower. But overall, the data looks consistent with what we've shown in the past. Importantly, the anemia data continues to get better. And when you think about what 99 does, which is basically normalizing the amount of in these patients basically suppressing eliminating the malignant clone and low and the benign the wild-type cells to grow back. That's why the anemia continues to get better. It's getting in the 60% range or so, which we think is pretty impressive in this pretreated patient population. The other thing you're going to see is that in the [indiscernible] rates are very high. And that gives us a lot of data that we'll have later this year and about the possibility to accelerate the development of 99, both in second-line MF and first-line MF as well. And second line MF we're already in the process of starting conversations with FDA in order to build a new framework, a new regulatory framework for this patient, which would be a composite endpoint, which will incorporate some of the things we're talking about, including some aspect of this normalization of hematopoiesis represented by anemia. We'll see how those conversations go. If we need to go with SVR35, I'm confident we can get the trial design with high proves success anyway, based on the data that we already have. And then the next step is as quickly as possible once we have all the data in-house for the first line MF population is to launch the first line MF trial, which we probably will initiate early in 2027. So that's the goal. By this time in 2027, probably earlier, we'll have 3 pivotal trials ongoing with 99, second line ET, second line MF and first-line MF. That's the goal.

If XR could get you to $1 billion at the high end of the range, what does MCLR give you in terms of revenue replacement of Jakafi?

Yes, it's a good question. We'll take ET and MF, which both can contribute equally. -- to, let's call it, the peak sales potential of this product. In ET, the best way to think about it is 20,000 people with the mutation and ET. Half of them roughly 50% are not fully responding to hydroxyurea, not because it's not a really good cytoreductive agent, but because people can't get to the therapeutic dose due to toxicity. That's 10,000 people. At biologic pricing, call it, $250,000 a year. That's a $2.5 billion TAM. So what percentage of that segment does 989 get? I think it's all of it, it would be a $2.5 billion opportunity. If it gets half of it, we still have $1 billion plus coming from ET. Another way to think about it is 5,000 people in the United States have a mutation and are resistant to hydroxyurea, which is a negative prognostic indicator. You probably get most of those, again, you kind of get to $1 billion, multiple roads there. That's half the product. The other half is MF. I think the most important point of what Pablo said is that we're very encouraged. We can't call it yet. We'll know more at the end of the year at ASH with the frontline performance of $989. When it's used earlier, it does better, especially in the type 1 population. Type 1 patients are 75% of MF. There's 10,000 people with the mutation and MF. That's a $2.5 billion segment. If you're in the front line, you get more of it. If you're in a second line, you get a little bit less. Either way, I think both indications can get 989 into that $2 billion to $3 billion range. And that would be a real success for us.

That's great. Pablo, going back to you here. You have an end of Phase II meeting with the FDA later this summer to discuss the potential for a new composite endpoint. -- for the -- for a pivotal Phase III here in second line MF. Maybe walk us through the strategy here and how critical this is to Phase III success in both the second line and frontline and what the implications for the field and competitors are if the FDA does move forward with this? And does it really set a new bar here?

So the argument here, which I think it's important to understand, there's -- the reason why is we have 35 and TSS50 are there is simply because 15 years ago, 16 years ago, it was clear that Jakafi was very good at shrink in plain and improving symptoms. And so that were put there and everybody has had to use those endpoints in MF since 10. While 989 does frank spleens and improved symptoms and we've shown that data very clearly at EHA and ASH last year, -- it has a completely different mechanism and a different impact on this disease, which we -- the term to summarize that use is it normalizes hematopoesis. But that's basically reflected in a dramatic improvement in anemia that we've seen that, again, we reported at ASH last year. When you take that into account and about the fact that anemia, it's a better correlate the long-term survival of this patient that is you really reach a point that you said, well, it's time to figure it out how to incorporate this knowledge into a novel endpoint. And this is, by the way, data has been generally independently of us. It's been published by a group of experts showing that other factors than SVR35 and TSS50 have better correlates with long-term survival in MF patients. So that's the argument that we put together. Obviously, the data has been published. There is support from the scientific community, both in the U.S. and in Europe about really redefining how these medicines are approved. If we can't get there with FDA, I'm confident, and as we have 35 TSS50 focus trial is still a trial we can win. When you look at the comparable data in second-line MF in patients with no wash out from Jakafi. The SVR35 to momelotinib in that group of patients is 7%. We reported rates around 30% now since ASH last year, and you'll see another update on Saturday. So that's still a trial we can win. We just think it's important to change the regulatory paradigm. But if we have to stick with SVR35 and TSS50, we'll do that and we still think we're going to have a way to run a positive trial.

And just on a related point, we've been monitoring the impact of MCLR on VAT, which has been fairly modest thus far in MF. At which time point should we expect this or expect to see this meaningfully improve? And how critical is it to the drug's long-term success?

Let's remember what VAF tells us and what it doesn't tell us because I think it's very important at its basic baton peripheral blood is basically taking a pool of cells, a highly heterogeneous cell population and measuring the frequency of the variable -- the different -- the wild type and the mutated outline that provision ratio. And the important point there is in MF, the wild-type opposition is smaller. So changing that ratio with a small population takes longer to grow, it's harder. And second, it's going to be a lagging indicator to what's going on in the bone marrow. In addition, VAF measures cells are color mutated positive, but coopting receptor negative, and those cells are not affected by the antibody. They have to die on their own. They're not malignant. They don't lead to the disease, and they have to die on their own. When you put all that together, we think over time, VAF will continue to improve, but it's a much lower indicator of what's going on. While we pay a lot of attention, and we'll update this at EHA is the megacities in the bone marrow, which are the source of the disease. So we measure color-mutated mercaracides and wild-type macaron we're seeing a shift the mutated ones are going down, the well type are going up. Then we look at immature cells in peripheral bots, CD34 positive color mutated cells in peripheral blood and we again see those going down. And the third, we see normal red cell progenitors in the bone marrow going up. All that is telling us the right things are happening. When you look at VAF, the magnitude may be modest, as you pointed out, but almost all the patients are pointing down in that waterfall. So we're seeing that the malignant clone is going away as represented by that. I think over time, VAF should continue to get better. We're not too focused on VAF. I know there's a lot of interest in seeing that I would focus more on what's going on in the bone marrow, and what's going on with the peripheral blood progenitors.

Great. There's an expanding competitive landscape that's playing out within MPNs, including J&J and Demormkallar and Lilly and Ajax on the JAK inhibition side, where we've seen more data, I guess, for the EHA abstract and expect to see initial data from the MTR programs over the next 12 months or so. What are you monitoring most closely from a competitive perspective? And how are you thinking about differentiation and positioning relative to these assets?

I'll just make a few comments and let Pablo expand. What we're focused on right now is our programs, obviously. As Pablo said, we have an opportunity by the middle of '27 to have 3 Phase III trials. I think as it relates to the other monoclonal antibody, thoughtful antibody design, no human data. So not a lot to say there. As it relates to the opportunity the type 2 JAK 2, I think that it's an apples-and-oranges comparison. One is a symptomatic therapy optimizing or maximizing spleen volume reduction and symptoms versus potentially disease-modifying therapy. I don't think it's an either/or, I think in a CAR population, if we can replicate in Phase III what we're seeing in Phase I, we have a solid path to build a very important product for us. And as it relates to T cell engagers, more advanced disease, and it could have a role, and we have to focus on ours, not J&J's, that's my view.

Just to complete a couple of points there. Look, our goal, as we stated last year is by the end of this decade is to have a targeted therapy for every single patient in MPN. In order to do that, we need to execute on the current plan. We have the understanding of the space. We know this biology. We have the right team in place. We have these medicines that we've been talking about in the clinic and launching pivotal trials as we speak. And we also have a number of next-generation programs that we're working on. So we're going to continue to innovate in this space. We have the critical mass in place to continue to expand our presence in MPNs and we will. So obviously, you always follow your competitors, you don't underestimate anyone, but our goal and our focus is to execute on the current program.

Just the last 1 to round out the questions on MPNs here. Where does your immune selective 617F program stand? And -- are you seeing encouraging signals with new solid dispersion formulation? And when should we expect a go/no-go decision for this lead asset?

So 058 has been a challenging program. The first thing I would say is we remain absolutely convinced that this mechanism will work. If we hit V617F hard enough, we will get positive clinical readouts in patients with V617F mutated MPNs -- the program has been challenging. We've been generating data. The data right now are not trending in the direction that we would love to see. So we will reassess the program later this year, and then we will make decisions. We have next-generation programs that look much better. molecules that look much better than the lead. We also have the option agreement with Prelude we're following -- we're tracking their progress, and we can execute the option whenever we think it's the right time. So we're unlikely to present meaningful data later this year, but we will continue to update you as the program progresses.

Bill, moving over to ToPovo here. You have framed this opportunity as a $500 million to $1 billion peak sales outlook in HS across both pre- and post-biologic patients. Walk us through the launch strategy and how you plan to target both of these populations and what needs to play out to reach that upper end of the guidance range?

Yes. We do believe, given the data set, which 70% is in a prebiologic population and 30% is in the post biologic patient population that we can capture or garner utilization at sort of both those inflection points. When you look at the data on Povo and compare it to that of a biologic, you see high score 50, 75, 90, 100 pain relief, draining tunnel clearance, flare control, that rivals the 17s. I think it's indisputable. The one thing that a JAK inhibitor does is it relieves pain, I think, perhaps as good or better, and it's definitely faster. There's no FDA-approved oral options. Someone gets put on -- or gets diagnosed with HS. They get an antibiotic or a steroid on one end, and then they have to leap over to an IL-17. And so I think this will be an important treatment option for dermatologists and NPs and PAs. The benefit risk profile in HS, I think, is very attractive. The most important part of what we're going to do at launch is to educate them on the data, of course, and then garner utilization in both those places. And you're talking about 150,000 patients who are diagnosed and treated, I think some estimates are higher. -- with HS that are not taking any advanced systemic therapy. There's only about 50,000 to 60,000, which is growing on the IL-17. HS is unlike IL-13-mediated AD or IL-23 mediated psoriasis. It's a multi-cytokine disease, JAK inhibitors or multi cytokininhibitors. And so I think there's real potential here. The most important thing for us to do is to get trial at launch. And if the drug performs in the real world setting, like it did in the clinical trial setting, I think it's going to be a needle mover.

And from a payer perspective, is there any hindrance to really kind of dominating that prebiologic?

Yes. I think usually what you worry about in this situation is prior authorizations and steps through, for example, a biosimilar MIRA. But it's really difficult to mandate that type of medical exception if the label does it. And it is important that we have a label that covers both the pre- and post-biologic setting. If it was to happen and there were drug utilization management measures put in place, they wouldn't be widespread. They wouldn't be universal. And I think more and more cross subsidization and bundling agreements are less and less effective given the push for transparency. And even on the PBM side, they want to manage their budgets on a line item by line item basis. I believe there's a price point in the end that we can charge that makes sense for the PBMs and the plans and make sense for insight, and we'll manage that during the long.

And speak to your confidence here for expansions into vitiligo and asthma and PN as you look to growing this product further?

Very high confidence in vitiligo. We have the data. I think the key there, whether it's AbbVie Pfizer or insight is you have to medicalize vitiligo. It has to be perceived understood as a chronic immune disorder, not aesthetic or a cosmetic problem, and that does take some time. But it's prevalence is very, very high. We know, given our experience with Opselora, what it's going to take to commercialize povacitinib for vitiligo. And that could be $0.25 billion that you're adding on. There is a bull case there where it's bigger just based on the prevalence numbers. But I think you have to be clear eyed about where that category is in terms of diagnose and treatment. PN is an itch disease. We'll have those data at the end of the year. There's 1 thing JAK inhibitors do well, and that's relieved and they do it fast. And so I think that is of equal significance to Povo as vitiligo it. I mean I think those 2 indications could be $0.5 billion, maybe a little bit more. As it relates to asthma way for the day at the end of the year, it's not in our model.

Maybe just a final question here. You continue to sound very confident regarding the profile of your G12D KRAS program in PDAC post the data that we've seen, not just from you, but also from competitors in this space. what drives this level of confidence? And how do you see the drug existing within the landscape with other therapies?

So it's an amazing time in pancreatic cancer research. I mean the data, the data from Rev Med was pretty extraordinary. Now when it comes to specifically have G12D mutations, we think we have what looks in our hands, whether you want to call it, best-in-class as good as anybody else in class, we'll -- we can debate that when we show the data. What we've been doing over the past few months is, number one, we've been executing on putting in place a frontline Phase III trial of our G12D in combination with chemotherapy, both types of chemotherapy for FERINOXanGEmNaV and preventated pancreatic cancer. The trial is getting off the ground is already enrolled in patients and it's going quite well. In parallel with that, we generated data 2 cohorts or cohort of 50 patients, give or take, half with Genmab, half with Folfidox. We'll present that data at ESMO, assuming it gets accepted, and we'll have a fair amount of follow-up in order to give you an idea, not just the responses, but they do our ability. We're very happy the way that data are evolving. Hopefully, you will agree when we show it later this year. What we've also done is combine our G12D with Erbitux, which is something that Dara exon can't do because of the rash. So we thought that angle in colorectal cancer was very important. And we've also combined with chemotherapy plus herbitax. All that data as part of a potential expansion into colorectal cancer will be presented later this year as well. So -- we're really excited how the program is trending. We really like the way the data are evolving, and you should expect just continued evolution in first-line pancreatic, but also an expansion of the program to other indications.

Great. Maybe just 1 last question. Anything else I did not ask about that you want to highlight as you look forward here?

I think on Nick Tembo, which has become a nice incremental growth driver for the company, we'll have data at the end of the year, looking at time in combination with Jakafi, which would result in a steroid-free regimen for patients with GVHD. And I think that is an important outcome to watch.

Great. And absolute seems to be on track?

So Yes, absolutely. It looks good. The AD launch in Europe, I think, will be important to keeping that product on a solid growth trajectory. And also, we have so we have a study with Opsilora in HS that will report out in the fourth quarter. And there's no FDA-approved topical treatment. It would be for mild to moderate disease. Our Phase II study, the HiSCR 50 rate in HS was 79%. Now vehicle is high too. the Phase III study, we're using an HiSCR 75 endpoint. To have Opsilora as a topical for mild to moderate and they have povo for moderate to severe creates a franchise and a sequencing strategy that could be very valuable.

Great. Well, with that, thank you so much. Appreciate the time.