INCYTE CORP Q3 FY2024 earnings call

• Commercial performance: Strong growth in Jakafi and Opzelura; FDA approved Niktimvo for chronic graft-versus-host disease; sNDA for ruxolitinib cream in pediatric atopic dermatitis filed. - Pipeline progress: Ruxolitinib cream pediatric AD NDA filed with potential approval in 2025; povorcitinib Phase 3 studies in hidradenitis suppurativa, vitiligo, prurigo nodularis; CDK2 inhibitor data from ESMO; retifanlimab Phase 3 SCAC results showed clinically meaningful reduction in progression or death risk. - Financials: Total revenues $1.14 billion in Q3, up 24% YOY; GAAP R&D expenses $573 million in Q3; SG&A expenses $309 million in Q3, up 15% YOY.

In Q3 2024, total revenues increased 24% YOY to $1.1 billion, with net product revenues growing 23%. Jakafi net product revenue was $731 million in Q3, up 16% YOY, and full year 2024 Jakafi net revenue guidance is raised to $2.74 billion to $2.77 billion. Opzelura total net product revenues in Q3 were $139 million, up 52% YOY, with growth in U.S. from atopic dermatitis and vitiligo and launch in Europe. Niktimvo, tafasitamab, and retifanlimab are expected to collectively generate $800 million or more in incremental revenues by 2029.

• Raised full year 2024 Jakafi net revenue guidance to $2.74 billion to $2.77 billion. - Updated other hematology/oncology products guidance to $310 million to $320 million. - GAAP R&D guidance updated to $2.54 billion to $2.59 billion including a $100 million milestone payment to MacroGenics.

Potential risks include uncertainties in clinical trial outcomes, regulatory approval timelines, competitive landscape challenges, and safety profile concerns for various products.

Q: Congrats on a great third quarter. I had one on povorcitinib. Just looking ahead to the upcoming Phase 3 data in hidradenitis early next year. So beyond top line success, do you have any thoughts on where you think -- where you want efficacy to shake out in order to be competitive with Humira and other market biologics? Is there a particular placebo-adjusted effect size that you're looking for to hit with povorcitinib?

A: Michael, it's Steven. Just taking your question. And thank you for the question on HS. Our feeling is if we replicate the Phase 2 data, which was incredibly strong, and as Pablo said in his prepared remarks, that includes HiSCR 100 of up to 29%, then we'll have an extremely favorable efficacy profile that will really benefit patients with HS. You couple that with the other symptomatology, particularly the pain from the lesions, and we were able to get in that Phase II data set to demonstrate pain relief, and that will add to what we think will be a differentiated profile that will really benefit patients. Obviously, it's hard to predict how Phase 3 will read out. The other thing Pablo alluded to in his prepared remarks is extremely good enrollment on both studies, which is probably a testament to the Phase II data driving investigators wanting to put patients on the study.

Q: I had a few on the pipeline. I believe earlier this morning, Novartis announced the longer follow-up time is needed to determine the regulatory path forward for their BET inhibitor. Curious how that impacts at all your thinking or development strategy for your BET? And then can you help us think about the potential development plans for povorcitinib and 262 in CSU? And just kind of where you see both molecules best fitting in the treatment paradigm?

A: Yes. Jess, this is Pablo. Let me take the first one. So our BET inhibitor, as we presented over the past year, and we will provide an update later this year, we're very happy with the data that we've seen so far. We've seen spleen reduction to volume reduction. We've seen a pretty impressive improvement in symptoms, obviously, with the caveat that this is not randomized blinded data, but very important effect on symptoms. We believe that the ability of our BET inhibitor to be dosed continuously as opposed to the way pelabresib has to be dosed with a break of a week every 2 weeks could potentially make it an important difference in our ability to control symptoms. So our plan remains the same. As I said in my prepared remarks, we'll provide an update on the data before the end of the year and we intend to advance into a Phase 3 study, and we will provide details on those designs when we provide an update on the data. So that plan remains the same. On povo 262 for CSU, both are in different stages in a way. Povo, as you know, is in a randomized Phase 2 study for proof of concept. We believe there's a potential for povo in this indication because of the very strong anti-inflammatory effect that it has. So we look forward to sharing data and future plans after that. 262 is in a randomized Phase 2 study with 2 dose levels at 50 and 150 compared with placebo. And we also initiated a study or a lower dose of 25 milligrams compared with placebo. And the idea here is to explore a full range of doses for 262 to potentially once we have the results, assuming positive results to be ready for pivotal studies. In terms of how both fit, I think the difference here is probably a sequence on how these medicines could potentially be used in patients with SCAC. As you know, first line of therapy antihistamines, about 50% to 60% of the patients do not respond into antihistamine or progress on antihistamine. This is a multiyear disease. And so patients need a sequence of treatment to be used to see which one controls best the symptoms for that particular individual. The mechanism is different. Povorcitinib has a broad inflammatory effect. 262 is exquisitely designed to block MRGPRX2 in mast cells in the skin. So we believe that, that selectivity will lead to an excellent safety profile. So once we have data for both programs, we'll share a little bit more on how we think those can potentially be sequenced in the treatment paradigm.