Incyte Corp (INCY) — Q3 2020 Earnings Call Transcript

Thank you, Kevin. Good morning, and welcome to Incyte's third quarter 2020 earnings conference call and webcast. The slides used today are available for download on the Investors section of incyte.com. I'm joined on the call today by Hervé, Barry, Steven, and Christiana, who will deliver our prepared remarks, and by Dash, who will join us for the Q&A session. During the question-and-answer session, I ask that you limit yourself to one question and if needed, one follow-up, as this will enable as many of you to ask questions as time allows. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements regarding our expectations for 2020 guidance, the commercialization of our products and the development plans and expectations for the compounds in our pipeline, as well as the development plans of our collaboration partners. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially. Including those described in our 10-Q for the quarter ended June 30, 2020, and from time to time in our other SEC documents. In addition, I would like to caution everyone that the COVID-19 pandemic is an evolving situation, and we may therefore be unable to assess the full effect of governmental, business and social actions and policies and overall economic conditions on our business. Accordingly, it is important to keep in mind that our statements on this webcast speak as of today. We'll now begin the call with Hervé.

Thank you, Mike, and good morning, everyone. In the third quarter we saw continued strong growth within our commercial business and we progressed our clinical portfolio on both development and regulatory fronts. Commercial performance across the business was strong. Our product and royalty revenue grew 16% to $621 million, driven by Jakafi as well as an increasing contribution from new product launches and from royalties. Jakafi grew 13% year-over-year to reach $488 million with growth seen across all three indications. Jakavi and Olumiant royalties grew 17% and 32%, respectively, totaling nearly $100 million in revenues for the quarter. There is significant momentum in the first weeks of launch of Monjuvi in the U.S., and I am pleased to say that Pemazyre, which was launched at the end of April, has outperformed our initial expectations. The application seeking approval of tafasitamab in relapsed/refractory DLBCL is under review in Europe. An application seeking approval for pemigatinib in cholangiocarcinoma is under review in both Europe and Japan. It has been a busy quarter for baricitinib development updates. Exciting data were recently presented from the ongoing evaluation of baricitinib in patients with severe alopecia areata, and Lilly's development program in this indication includes two Phase 3 trials. If approved, baricitinib may be the first JAK inhibitor to be approved for alopecia areata. In October, baricitinib became the first oral JAK inhibitor indicated for the treatment of moderate-to-severe atopic dermatitis, following its approval by the European Commission. This represents a new potential source of revenue for Incyte. With Lilly, we also announced positive data from the ACTT-2 trial of baricitinib in COVID-19. From our IO portfolio, positive results were presented from our trial evaluating retifanlimab in squamous cell anal carcinoma, and from our dermatology portfolio, we shared positive preliminary efficacy and safety results for our oral JAK1 inhibitor 54707 in hidradenitis suppurativa, HS. HS is a chronic skin condition caused by inflammation and infection of the sweat gland. We also presented full results from the Phase 3 TRuE-AD program of ruxolitinib cream in atopic dermatitis. These results are indicative of why we are so excited by the potential of our dermatology portfolio and why we are establishing a new dermatology franchise for Incyte. Incyte has deep expertise in immunology within our drug team, and we have leveraged our cross-program knowledge of the JAK-STAT pathway to develop innovative medicines to treat autoimmune disorders. We are now developing science-based therapeutics for the medical dermatology community and have multiple first-in-class candidates that we believe can deliver important benefits to patients. Our dedicated dermatology development group continues to execute with precision and speed, as evidenced by the rapid advancement of work streams in recent years, including the successful Phase 3 program in atopic dermatitis and the recent completion of recruitment into the pivotal vitiligo program. We are also building our U.S. commercial organization. The expected acceleration of regulatory timelines through the use of the priority review voucher gives us added momentum here, and I am very pleased to say that we have been able to recruit some exceptional talent as we continue to build our dermatologic team. I will end my introduction by reminding you of the tremendous progress we have made so far in 2020. We have announced multiple positive pipeline developments since the beginning of this year, as shown by the check marks on Slide 6. Looking forward, we have five important updates to come over the next 2 months. We expect to submit the NDA for ruxolitinib cream at the end of the year and to initiate the first Phase 3 trial in the LIMBER program. Important transitional data from 86550, our oral PD-L1 inhibitor is going to be presented at SITC next week, and we are also expecting a busy ASH conference in early December. At ASH, our presentation will include an oral presentation of the REACH3 data for ruxolitinib in chronic GVHD, as well as a series of updates from the parsaclisib CITADEL program in several different non-Hodgkin's lymphomas. We also intend to host an investor call on Monday, the 7th of December, to provide our highlights from the conference. I will now pass the call over to Barry for the commercial overview.

Thank you, Hervé, and good morning, everyone. In the first nine months of 2020, Jakafi sales rose by 17% compared to the same period in 2019. We continue to experience strong demand for Jakafi across all three indications. This solid performance year-to-date has allowed us to refine our sales guidance for Jakafi to a new range of $1.91 billion to $1.94 billion. On the right side of the slide, you can observe the trend in patient proportions by indication. Myelofibrosis patients still make up the largest segment of Jakafi users. The number of polycythemia vera and GVHD patients on Jakafi is increasing and now represents 33% and 13% of total patients, respectively. Slide 10 offers further insights into new patient growth for Jakafi. The chart on the left indicates that over 90% of total patients are ongoing patients from previous periods, and this group continues to grow each quarter. As previously mentioned, new patient starts fell significantly in Q2 this year due to the impact of COVID-19, which resulted in decreased total patient visits. Following this temporary decline in Q2, there was a partial recovery in new patient starts in Q3. Now, regarding the Monjuvi launch, we are very encouraged by its performance, generating $5 million within the first few weeks of the mid-August launch. Together with our colleagues at MorphoSys, the commercial and medical teams have been working to raise awareness of Monjuvi's benefits, and we have now become the market leaders in terms of voice share. Our field activities, participation in educational events, and inclusion in the NCCN guidelines are all helping to boost Monjuvi's recognition within the Hemonc community. Feedback so far has been very positive, with physicians emphasizing the significance of Monjuvi's depth and duration of response and its favorable safety profile. We have gained strong momentum for Monjuvi in both academic and community settings, with over 200 accounts having placed orders. We have noticed a significant increase in community Hemoncs, which now represents approximately 65% of total prescribers, a trend we expected. Our market access team has also made great progress since the launch, achieving nearly 90% formulary approvals in our top 30 accounts. Switching to Pemazyre, launched in the second quarter, we are pleased with its rapid adoption, generating $8 million in sales in the third quarter. Broad access to FGFR testing has facilitated this swift uptake. We have seen good national adoption of Pemazyre, with over 200 patients treated since its launch. A high refill rate indicates that the right patients are being identified through this testing as they continue their Pemazyre therapy. I will now turn the call over to Steven for our clinical updates.

Thanks, Barry, and good morning, everyone. I'll start with our ruxolitinib cream program. Initial data from the Phase 3 trials presented earlier this year at RAD showed that ruxolitinib cream resulted in significantly higher Investigator Global Assessment treatment success and Eczema Area Severity Index 75 scores for RUX cream versus vehicle. At EADV in October of this year, pooled analysis of the two Phase 3 trials were presented. These pooled results reinforce the efficacy profile of ruxolitinib cream as it relates to IGA-TS, EASI-75 and the rapid, substantial and sustained reduction in patients with atopic dermatitis. Newly presented data at EADV showed that patients on ruxolitinib cream also experienced significantly better sleep quality, sleep depth, and restoration. These results further highlight the potential for ruxolitinib cream to become an important treatment option for atopic dermatitis patients. We are on track to submit the NDA in atopic dermatitis at the end of this year and intend to use our priority review voucher, which should accelerate the FDA decision. The priority review voucher is expected to shorten the FDA review period by 4 months. Therefore, we could expect an FDA decision in June next year, if all goes according to plan, as opposed to October of 2021. Our Phase 3 program for vitiligo is now fully recruited, and we expect results in the first half of 2021. Given the accelerated timelines for the use of the priority review voucher, there is also the potential for an acceleration of the vitiligo program, because an earlier decision on the atopic dermatitis NDA may allow for consequently earlier submission of the sNDA for vitiligo. Staying within our dermatology development group, we announced positive initial data for 54707, an oral JAK1 inhibitor in patients with moderate-to-severe hidradenitis suppurativa, which is a chronic skin condition where inflammation and infection near sweat glands can result in painful abscesses, sinus tracts, and scarring on the skin. The Phase 2 trial evaluated three doses of 54707 versus placebo, each of which were taken daily for 8 weeks, followed by a 30-day safety follow-up. Preliminary efficacy was seen in a reduction in the number of abscesses and inflammatory nodules termed AN count, with results seen as early as week one, as well as reductions in skin pain. 54707 was well-tolerated with no treatment discontinuations due to treatment emergent adverse events, and we have already initiated a larger 200-patient Phase 2b study. We are excited by the global opportunities for tafasitamab, and Slide 17 reminds you of our broad development program, which covers several non-Hodgkin's lymphomas in both the first line and the relapsed refractory settings. We have multiple pivotal trials in preparation across various indications, including first line diffuse large B-cell lymphoma and in relapsed refractory follicular lymphoma. We also expect to initiate a proof-of-concept trial evaluating tafasitamab in combination with our PI3 kinase delta inhibitor parsaclisib, for which the final protocol is in preparation. Turning to our IO portfolio. At ESMO in September this year, we presented Phase 2 results from PODIUM-202, evaluating retifanlimab in squamous cell anal carcinoma. The disease control rate of 49% and median duration of response of 9.5 months were well received. We are opening a Phase 3 trial for retifanlimab in patients with squamous cell anal carcinoma. Slide 18 also reminds you of the status of the other indications we are pursuing for retifanlimab as well as the important clinical translational data we will be sharing from 86550, our oral PD-L1 inhibitor, which is to be presented at SITC next week. The translational data are from actual clinical specimens taken during the ongoing trial, and we will be able to share with you the data showing, for example, the degree of PD-L1 inhibition and T cell changes illustrative of immune modulation with 86550. We expect to provide more fulsome clinical safety and efficacy data from this ongoing trial during the next year, and we are also initiating a new Phase 2 trial in patients with treatment naïve PD-1 sensitive tumors as we continue to move forward with this important project. I will end my section on our development projects addressing COVID-19. With Lilly, we recently announced positive results for baricitinib in the ACTT-2 trial in hospitalized COVID-19 patients. In combination with remdesivir, baricitinib reduced time to recovery, improved clinical outcomes, and showed a numerical decrease in mortality compared to remdesivir alone. These results were most pronounced in patients receiving oxygen. Based on these data, Lilly has submitted baricitinib to the FDA for potential emergency use authorization and regulatory discussions remain ongoing. For ruxolitinib, we recently completed enrollment of the RUX COVID trial, and we expect topline results from this trial by the end of this year.

Thank you, Steven, and good morning, everyone. The financial update this morning will include GAAP and non-GAAP numbers. For a full reconciliation of GAAP to non-GAAP, please refer to Slide 27 in the backup section of the deck and to the press release we issued this morning. Moving to our results for the third quarter. Revenue growth continued to be strong with total product and royalty revenues of $621 million, representing an increase of 16% over the third quarter of 2019. This reflects growth across both products commercialized by Incyte and those commercialized by our partners. Total products and royalty revenues for the quarter are comprised of net product revenues of $488 million for Jakafi, $26 million for Iclusig, and $8 million for Pemazyre. Royalties from Novartis of $68 million for Jakavi, $1 million for Tabrecta, and royalties from Lilly of $29 million for Olumiant. Total costs and expenses for the quarter of $559 million on a non-GAAP basis include $120 million related to the purchase of an FDA priority review voucher fully expensed under R&D, which we intend to use to accelerate the FDA review of ruxolitinib cream for the treatment of atopic dermatitis and $21 million of upfront consideration and milestones related to our collaborative agreement. Excluding the impact of these expenses, our total costs and expenses increased 15% over the prior year quarter. Ongoing R&D expenses for the quarter were $268 million on a non-GAAP basis, representing a 7% increase from the prior year quarter. This increase was primarily due to our 65% share of the global and U.S. specific development costs for tafasitamab and the clinical trials of ruxolitinib as a potential therapy for COVID-19 and was partially offset by the timing of other development activities. SG&A expenses for the quarter were $106 million on a non-GAAP basis, representing an 18% increase over the prior year quarter. This increase was primarily due to an increase in commercialization efforts related to Jakafi and Pemazyre, the preparation for the potential commercialization of ruxolitinib cream, and the timing of certain expenses. Collaboration loss for the quarter was $50 million, which represents a 50% share of the U.S. net commercialization loss for Monjuvi. The total U.S. net commercialization loss of $30 million for Monjuvi comprised of total net product revenues of $5 million and total operating expenses, including COGS and SG&A expenses of $35 million. Our financial position continues to be strong as we ended the quarter with $1.7 billion in cash and marketable securities. Moving on to our guidance for 2020, based on the continued strong performance of Jakafi in the first 9 months of the year, we are tightening our Jakafi full year guidance to a range of $1.91 billion to $1.94 billion. This implies net Jakafi revenues of $489 million to $519 million for the fourth quarter of the year. This range reflects some uncertainty associated with a resurgence in COVID-19. We are reiterating our guidance for both R&D and SG&A. As a reminder, the R&D guidance excludes the $805 million upfront consideration related to our collaboration with MorphoSys and the $120 million of expense related to the purchase of the FDA priority review voucher. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q&A.

Great. Good morning, guys. Thanks for taking the question. I guess, I'll start with the obvious. Barry, can you just talk a little bit more about the real-world physician feedback, the field teams getting on Monjuvi since launch? Is there anything that you're particularly surprised or pleased by relative to your prevailing expectations in these admittedly very early days? Thank you.

Sure. Cory, thanks for the question. It's actually been very good. I participated in a number of advisory boards. Lots of our interactions now are virtual, of course. But I think most physicians and hematologists would choose Monjuvi as being the preferred second-line agent for most of their patients with diffuse large B-cell lymphoma. So we're very happy. We think our trends will continue to grow in the right direction. I think it's going as well as it could possibly go. Even with COVID, for example, our sales representatives and medical representatives in the field have actually been able to communicate and get into their accounts and talk about the benefits that Monjuvi provides.

Hi everyone. Thank you for taking my question and congratulations on your continued progress. I have a question for both Christiana and Barry regarding the acquisition of the priority review voucher in atopic dermatitis. Could you share your thoughts on the potential return on investment, considering what an initial launch trajectory might look like and the potential pricing strategy? Thank you.

Hi, this is Christiana. Thank you for the question. So on the priority review voucher, as Steven described, the way it provides us the potential to accelerate the overall timeline to market for RUX cream, both for AD and vitiligo. So for AD, it could shorten the FDA review period by 4 months, from 10 months to 6 months. If the AD review is completed earlier than under the normal 10-month period, it gives us the possibility to subsequently submit the vitiligo for a review earlier than we could otherwise do. So, using the potential opportunity we see with the RUX cream in both AD and vitiligo, the unmet needs that we see in both indications. Getting RUX cream to market earlier than would otherwise be the case under the normal timelines is something that we say very attractive and it easily supports the investment we made in the PRB.

And just to add, I think we're completely ready to go as a new dermatology business unit. We're excited about the potential that RUX cream will offer to a whole range of patients with mild-to-moderate disease. As for pricing and launch trajectory, we think it's going to be very good. Pricing decisions haven't been made yet.

Hi, everyone. Thanks for taking the question. This is Andrea on for Salveen. Maybe another question on the new product launches. Could you speak to what you're seeing with Pemazyre and any initial thoughts on what the drivers of momentum have been that have surpassed your expectations?

Sure, Andrea. Thanks. The drivers of momentum are simply that this is the first targeted therapy available for patients with FGFR2 fusions or rearrangements. These patients had nothing after second-line therapy. Testing has been easier than we expected with next-gen sequencing, identifying the right kinds of patients and getting the drug to them at the right time. Patients are not only accessing the drug, but they're staying on the drug, at least for the time being. Obviously, it's very early. But yes, we're quite pleased with the number of patients we have and the amount of patients that are coming back for refills.

Hi, all. Thank you so much for taking my question and really congrats on the continued progress. So it's really clear that dermatology is the focus for you now. Can you provide some color on why you opted to invest in building your dermatology franchise? I know there have been questions about whether or not you’re going to do an in-house or partner out. How large is this kind of commercial force expected to be? Then I have one follow-up there.

Maybe I'll take that. Hervé here. As you know, we have been following the product. The product led us into dermatology. If you remember, we had studies in our alopecia areata. In fact, that was the first study we did. Then we had the studies in atopic derm and vitiligo. I think what changed our view from finding a partner and getting royalties for this is when we realized the profile of the product in atopic dermatitis is in fact very much superior to what you have available today. The number of patients is potentially very large. Over the past 2 years, we saw the benefits we are providing in vitiligo is very unique. Vitiligo is not just a cosmetic issue; it's a life issue, and we can reverse it for some patients. It's a disease that is hurting them. So when we quantified what it meant, we saw this opportunity in the U.S. as being very meaningful for our goal of growth and diversification. That's where we said we could potentially do it ourselves. We have a team and we are putting in place. I think I described this as 200 people, more or less something of that size. It's in good shape to be built now over the next 6 months with priority voucher. I think it's an opportunity for Incyte to have literally a new franchise. It's not changing our attention or taking our attention from cancer and immunology; it’s literally a separate team. So there will be two legs now that will be basically driving the growth of Incyte starting in 2021. One will be the IAI immunology, dermatology, and the other one will be cancer. Frankly, there is no real change in our investments or energy that we put behind our cancer hematology portfolio. It's just an addition to what we had before. For the rest of the world, we are still in a situation where we think we will have partnership for Asia and a large part of the world for the cream. In Europe, we are looking at what makes the most sense.

Yes, it's Steven. So as you saw, it's another JAK inhibitor we have in our portfolio. It's relatively JAK1 selective. We are developing it currently in hidradenitis suppurativa. We believe based on research we've done that there remains an unmet need there because the available drugs aren't as effective as patients want them to be. We're very encouraged by early data, which I showed you in terms of abscess reduction and skin pain relief. So it's an important entity to study with a compound that is clean for that indication. Beyond that, what we do with the compound still needs to be determined.

Yes, there are additional indications for RUX cream we are also looking at. The way we see it is that there is a developing portfolio that is evolving. If you look at eczema and vitiligo, we have two very large opportunities just in front of us, where we will have the first-in-class treatment, and in the case of vitiligo, it would be the first medicine to be approved for this patient population. So there are two very important short-term growth drivers. Additionally, there are other products or indications that will be coming subsequently.

Hi, good morning. Thanks for taking my question. Just wanted to get some color on what data points we could expect from the CITADEL program at ASH?

Hi, Tazeen. It's Steven. I think you're asking for a little bit of color granularity on the CITADEL program at ASH. At a high level, the program continues to advance in terms of maturity of data. We have data being presented there in terms of an oral presentation in marginal zone lymphoma, and then further presentations in terms of mantle cell and follicular lymphoma. The mantle is broken down into different presentations with prior BTK inhibitor and then the lack of prior BTK. In totality, the data continues in our view to be extremely encouraging. The response rates have been maintained over time in the independently reviewed response rates, and the duration of responses held up and the progression-free survival as well. We are encouraged by the totality of the dataset, and this is exactly what we wanted. We wanted to have those response rates, and now with further follow-up, to be able to show that they're both durable and provide appreciable median progression-free survival. We are on track to submit an NDA in the U.S., hopefully in the second half of 2021. This program is for delta in lymphomas. Beyond that, delta has other indications we are pursuing. Also, in myelofibrosis, we start our Phase 3 there as part of the LIMBER program. Additionally, in autoimmunity and inflammation, we’re also studying it in autoimmune hemolytic anemia. It's a very comprehensive program for a very active compound in our view.

Hi, guys. Good morning. Thanks for taking my questions. I had one on Monjuvi. With the application now being under review also by European regulators, I was just wondering if you had any prior interactions with the EMA and what your confidence level is in potential accelerated approval in Europe? There's been a few rejections recently of oncology products based on a single-arm study.

Hey, Michael. It's Steven. We've always prefaced European regulatory discussions noting that single-arm studies have been more difficult. As you just alluded to with some recent examples in areas where they've declined approvals in certain entities. For tafasitamab, as Hervé and Barry have indicated, there's obviously a very strong dataset with a very high complete response rate and median duration of response that continues to improve. The update showed that the median for the combined with CRS was 34 months. Therefore, we have to convince European regulators that there's a discernible treatment effect that's appreciable, and that we want them to approve it, given that. We're in that process now, and all I can tell you is it's going well. It’s marching through the different day, 120 questions that we need to have, and we'll see how it goes with them. It's hard to give you any further color other than that.

Perfect. Thank you. Just on first-line, the planned first-line DLBCL regulatory study. Looking at the abstract from First-MIND, it looks like both of the combinations look very safe. Is there anything else that you're looking for in the first-line study before completing your plans for the Phase 3?

Thank you for pointing that out. As you've noted, the abstract is live now for the safety component of First-MIND, which looks at Tafa plus R-CHOP or Tafa len plus R-CHOP. Our interpretation is the same as yours. The safety for both is comparable. We've already publicly announced that we intend to proceed with the Tafa len R-CHOP combination in the first-line study. We're just working at the final details with regulators on size and those sorts of things, endpoints, etc., but we'll be ready to go soon. This is a very important study, not only for us but to the community in terms of first-line diffuse B-cell lymphoma to try and improve cure rates from R-CHOP.

Oh, hi. Thanks for taking the questions. I appreciate the comments on the Pemazyre launch. It seems like it's outperforming your expectations. I was wondering, I know you only promoted for cholangiocarcinoma, but are you seeing any spontaneous use in bladder cancer or other tumor types?

That I’m not aware of, Jay. We really haven't dug into it all that much. It seems that just about every patient that I'm aware of that comes in is for cholangiocarcinoma. Occasionally, we'll get a request for an individual patient for an individual IND for some tumor type or another, but it's very rare.

Yes. Just a follow-up on that question. The announcement to discontinue the studies in bladder cancer. Can you provide some insights into the studies that you're looking at?

Mara, hi. Your question was breaking up a little bit, but I think you just wanted some view on our strategy in bladder cancer with our FGFR inhibitor. If you step back and look at how bladder cancer, particularly metastatic bladder cancers evolve in the new datasets with checkpoint inhibitors with EV from Seattle Genetics. Clearly, there's a change now in the treatment paradigms and treatment posts in line therapy in bladder cancer. What we want to do is literally do that. We feel that, in conjunction with advisers, our current first-line study does become irrelevant given how care standards are changing. And we have stopped recruitment there. We're re-looking at the bladder program in totality, understanding the biology, particularly given EV's effect in bladder cancer. We want to ascertain whether FGFR3 on its own is a separate driver in that setting and how it will play with our FGFR inhibitors. We're busy doing preclinical work to understand the biology right now. This doesn’t change our strategy for Pemigatinib’s agnostic program that is recruiting very well, nor in myeloproliferative neoplasm 8p11. We feel bladder is evolving enough that we need to step back and understand the biology there.

Hi. Good morning. Thanks for taking my questions. Nice to see the rebound in new patient starts with Jakafi after the slowdown due to COVID. Where do you see that going forward? Could you just comment on your progress with Jakafi in chronic GVHD?

Sure, George. I'll take that. New patient starts have actually especially within the last two weeks even come back to almost pre-COVID levels. So we're happy with that. If you recall, in the first quarter, our new patient starts were extremely pleasing. Until COVID hit, we looked like we were going to have a very good year. We hope to get back to that number of new patients on each of the indications. Of course, we're looking forward to the approval in steroid-refractory chronic GVHD sometime next year. We really think that this is going to be a great benefit for patients. We know that the prevalent population in chronic GVHD is fairly high compared to the acute steroid-refractory GVHD patients. We really believe that there's an opportunity for more growth there with the longer duration of therapy when you're treated for chronic GVHD. We're looking for that approval.

Thanks, Barry. It's Steven. Just to add a little bit, you saw the abstracts go live yesterday and the REACH3 is an oral presentation at ASH. Again a second study, large study randomized study in GVHD, that's positive. It's a significant achievement for the drug and really important for patients. If you look at the totality of the data in the abstract, it's superior efficacy versus best available therapy with a higher response rate, longer failure-free survival, and better symptom improvement. What's not in the abstract, but will be presented at the actual median is also a best overall response at any time, just to provide comparative data to other agents. It's an important oral presentation at ASH. As Barry said, our intent is to get the submission in as soon as possible, given that.

Hi. Thanks for taking my question. For your JAK1 inhibitors 54707, what do you think you need to show in hidradenitis in the Phase 2b to have a compelling profile there versus standard of care?

Yes, Kenneth. It's Steven again. Thank you. Hidradenitis is a disease that has a lot of morbidity for patients due to abscess formation in different skin folds on the body. TNF inhibitors are licensed and used, but not as effective as patients want them to be. The idea is to try to give the biology of a relative JAK1 agent further improvements in abscess formation, sinus tract, etc. This data set uses what's called an AN count, which we believe is the best way to measure patient benefits here. Other endpoints are used in other studies, specifically for TNF, the HISCR, which is a greater than 50% reduction in AN count, without any increase in new lesions. It's a combination thereof in terms of the lesion improvement plus ways of measuring clinical benefit and morbidity on patients. Development will be very stepwise. We now go into Phase 2b with a 200-patient study and we are likely to need a Phase 3 program to get it across the finish line. We've been told repeatedly by people in the area that there remains this unmet need, and that's what we're addressing in the Phase 2b that we have, enough efficacy to get there in terms of AN count reduction.

Thank you very much. This is Gang Li for Andrew. I have a quick question regarding Jakafi and its potential for more severe atopic dermatitis patients. Do you see it being used more in combination with other systemic treatments, or as a standalone therapy? Thank you.

Thanks, Gang Li. If you look at our studies 281 and 282, you'll notice a significant number of patients with moderate disease. We see a potential opportunity there across trials. We truly believe it will be the best drug available for patients transitioning from steroids to biologics. We are confident there is a clear opportunity. In the future, if it’s used in conjunction with biologics like Dupixent, we’ll have to see how it plays out. Dupixent is currently often paired with topical steroids because local control is necessary for certain areas of skin disease. While that may happen later, it's not our current indication. We haven't examined patients with severe disease, but we think a diverse range of patients will definitely benefit from RUX cream.

Yes, good morning. Thanks for taking the question. Maybe one for Steven, I guess, how should we just be thinking about the go-forward dosing strategy for parsaclisib in some of these B-cell malignancies subtypes? I know that ASH abstracts kind of highlight a little bit of a response rate delta between the weekly and daily dosing, which I think also appears to be tumor type and maybe line of therapy dependent. Should we expect that you're going to be pursuing a different dosing strategy in some of these different subtypes, or would you expect to have one that covers the whole gamut of B-cell malignancies?

It's a good question. Thank you for it because we spent a little bit of time trying to work out the optimal dose and schedule to get the therapeutic ratio we want between efficacy and safety. For the class, it had a bit of a rocky run over the years, starting off with less ideal trials, and particularly people were concerned about longer-term toxicity and things like colitis. We knew from the outset the drug is incredibly active, so we wanted to work that out. We start off at a high dose, 20 milligrams daily for the first eight weeks, which aims to maximize efficacy. The vast majority, if not all of the responses happen during that period. After that, we look at weekly versus daily maintenance. It turns out that, for us, it is best to switch to the daily dosing and not the weekly maintenance afterwards. In the totality of the data, you maintain efficacy while reducing toxicity. Going forward, you can expect 20 milligrams induction for 8 weeks followed by the daily schedule thereafter.

Good morning. This is Rob Andrew on for Matt Phipps here. So maybe just on the early-stage programs with the BET and ALK2 inhibitors. Just getting started up here and maybe what are the expectations with those programs, given the monotherapy dosing? Are we clearly looking for a safety profile acceptable for Jakafi combinations, or what are the expectations there? Thank you.

It's Steven. Thank you for your questions. I'll separate them out because BET has a slightly different history. If you look at BET, BRD is a compound we had in the clinic a few years ago, primarily targeting solid tumors and working on a different hypothesis around MYC inhibition. We were at higher doses back then, and we saw on-target toxicity in terms of thrombocytopenia and some worrying toxicity. We had put ourselves on a clinical hold at that time for that compound. What happened over the ensuing year with BET was seeing data from constellation and CPI come forward. We knew the biology was relevant in myelofibrosis, and we believe there’s something to that data set. We revitalized our own program there, working with the FDA to find a safe starting dose to avert toxicities. We restarted the program. We have to demonstrate monotherapy safety in now with the BET, and we expect that to be the case, given the dosing we are using and then quickly go to combination with ruxolitinib. So that's the story behind BET. For ALK2, this is an exciting program for us. We think the anemia seen in myeloproliferative neoplasms, particularly myelofibrosis, is mediated through hepcidin. We're looking to ameliorate that anemia, plus potentially the JAK-induced anemia, to maintain dosing and increase efficacy. We're also studying it in a rare disease, FOP, which involves premature bone formation in soft tissues, leading to a lot of morbidity and sometimes early death. It's a rare entity, but another commitment we're pursuing. We will have an FOP program with the ALK2 agent.

Thank you for taking my question. I have one about dermatology. Given the relatively high vehicle responses of 10% to 20%, what would be your sales pitch to a dermatologist, especially when we hypothetically compare RUX cream to other standards of care, not necessarily the vehicle? Thank you.

Aydin, this is Barry. First, our response from the 281 studies and 282 studies are very good, and the difference between the active drug and the vehicle is significant. As compared to other therapies overall, you're suppressing the entire immune system when taking an oral drug, which doesn’t seem to be the best. We have a topical JAK inhibitor that you can apply right on the area that’s most effective. We believe that's an advantage for us. So, our sales pitch is actually based on many positive interactions with dermatologists who feel very strongly that RUX cream is a breakthrough for patients suffering from atopic dermatitis.

Good morning. Thanks for taking my question. I had a follow-up question on real-world use for Monjuvi. To the best of your knowledge, has there been much or any off-label use of Monjuvi in combination with another agent like bendamustine, or has it so far primarily been in line with the labeled use in combination with lenalidomide?

Yes, Vikram, it depends on how you define off-label. We have certainly been used in various scenarios for relapsed refractory cases for a second line and beyond. We are planning to study the drug in combination with bendamustine in the future and will conduct multiple studies to explore different combinations, including with parsaclisib. We are enthusiastic about this, and most hematologist oncologists are thrilled about the high complete response rate and the long duration of response we are seeing.

Thank you all for participating in the call today and for your questions. Of course, Christiana and I will be available for the rest of the day, and we look forward to engaging with many of you in the coming weeks at investor meetings, and at medical conferences. For now, though, thank you again and goodbye.