Incyte Corp (INCY) — Q2 2021 Earnings Call Transcript

Thank you, Kevin. Good morning and welcome to Incyte's second quarter 2021 earnings conference call and webcast. The slides used today are available for download on our website. Joining me on the call today are Hervé, Barry, Steven and Christiana, who will deliver our prepared remarks, and by Dash, who will join us for the Q&A session. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements and are subject to a number of risks and uncertainties that may cause our results to differ materially, including those described in our 10-Q for the year ended March 31, 2021, and from time to time in our other SEC documents. We will now begin the call with Hervé.

Thank you, Christine, and good morning, everyone. On Slide 4, at the beginning of the year we laid out some of our key business objectives for 2021, and we executed on a number of our commercial and clinical goals in the first half while maintaining the momentum we showed throughout 2020. We believe these achievements, including the success of the TRuE-V and TRuE-AD programs in vitiligo and atopic dermatitis, will significantly contribute to our long-term growth and diversification strategy. In the second quarter, our product and royalty revenues grew 17% to reach nearly $700 million. Jakafi net product sales were up 12%, driven by the return of new patient starts to pre-COVID levels. Both Pemazyre and Minjuvi revenues increased quarter-over-quarter, rising 33% and 16%, respectively, as both new product launches continue to gain traction, while royalties grew 30% to $121 million for the quarter, with Jakafi up 24% and Olumiant up 40%. Our performance in the second quarter demonstrated the strength of our business and our new product launches are progressing well. We look forward to the second half as we await two important FDA decisions in September and the potential approval of tafasitamab in Europe following the positive CHMP opinion received in June. While we are disappointed by the PDUFA extension for ruxolitinib cream in atopic dermatitis and for ruxolitinib in steroid-refractory chronic GVHD, we remain confident in the value these medicines can bring to patients based on the robust data from pivotal programs TRuE-AD and REACH3, respectively. We will continue to work with the FDA on retifanlimab, which we recently received a complete response letter for the BLA submission for SCAC. Retifanlimab remains under review with the European Medicines Agency. In addition to the positive data and supply results in vitiligo, we also announced positive Phase 2 data for parsaclisib in patients with autoimmune hemolytic anemia and the achievement of bioequivalence with q.d. ruxolitinib, which is on track for an NDA submission in early 2022. Looking outside of the U.S., we have multiple growth opportunities across several markets. In the first half of the year, Pemazyre was approved in Europe and Japan, and we have seen encouraging updates with ex-U.S. sales reaching $3 million, supporting the importance of Pemazyre as a treatment for patients with cholangiocarcinoma. NICE provided a positive recommendation for Pemazyre in the UK. Turning to tafasitamab in the EU, if approved, Incyte will be commercializing tafasitamab, known by the brand name Minjuvi, bringing the drug to many patients in need. In Europe, 16,000 patients are diagnosed with relapsed or refractory DLBCL each year, of which approximately 14,000 would be eligible for tafasitamab. Our hematology team in Europe, which has already been deployed for Iclusig, will leverage resources to support the launch of tafasitamab on a country-by-country basis. Slide 6 shows the key business objectives we set for the year: firstly, to continue driving growth in our current product portfolio; secondly, to expand and diversify our revenue base through new product and indication launches; and thirdly, to progress our late-stage pipeline as well as our earlier stage programs. With that, I will hand it over to Barry, to cover the individual product performance.

Thank you, Hervé. Good morning, everyone. Before we discuss individual product performance, I wanted to mention how encouraged we are as we see the gradual return of patients to physicians' offices following a year of decreases in patient diagnosis and treatment due to COVID. While pharmaceutical representatives' access to oncology offices is still lagging compared to other therapeutic areas across the industry, we are seeing notable improvement in rep access to in-person meetings with oncologists. We expect these positive trends to continue and are optimistic about a stronger recovery in the second half of the year. On Slide 8, we show that Jakafi sales grew 12% year-over-year to $529 million for the quarter, with total patient demand increasing across all three of our approved indications. New patient starts shown by the magenta line on the chart are now at pre-pandemic levels, signaling that more patients are returning to their doctors and receiving the treatments they need. Regarding Jakafi guidance, we are reaffirming our growth prospects for the year. A slight reduction in the upper end of guidance has been made to account for the increase in gross-to-net due to a greater percentage of Jakafi volume ordered from 340B accounts and a three-month extension in the PDUFA for ruxolitinib in steroid-refractory chronic GVHD. We now expect Jakafi net product sales between $2.125 billion and $2.17 billion for the year, and we anticipate the growth of Jakafi to continue in the second half with a stronger recovery of new patient starts and the potential approval of ruxolitinib for the treatment of steroid-refractory chronic GVHD representing an additional growth opportunity for Jakafi. We look forward to the FDA's decisions next month. Turning to Slide 9, Pemazyre continues to exceed our expectations, with product sales growing 33% quarter-over-quarter to $18 million, including $15 million in U.S. sales, as use in the second line continues to grow and the duration of therapy drives performance. Since our initial launch, 60% of patients on Pemazyre have been second line patients, as reported by their physicians. However, in a recent survey of physicians that prescribed Pemazyre, that percentage is near 80%, indicating a shift towards earlier adoption of this therapy. Testing rates for FGFR2 fusions or rearrangements continue to grow and a recent survey showed that unaided awareness of FGFR2 fusions relative to intrahepatic cholangiocarcinoma increased to 61%, up from 34% noted in the survey prior to the Pemazyre launch. We remain optimistic for the second half as our reps continue to drive awareness for FGFR2 testing and its use in the second line setting. Turning to Monjuvi on Slide 10, Monjuvi sales grew to $18 million in the second quarter, representing a 16% growth over Q1. We continue to see an increasing uptake of Monjuvi in the second line diffuse large B cell lymphoma and are observing positive trends in new patient starts, with momentum continuing as we exited June. As mentioned earlier, it has been a challenge to launch an injectable therapy amidst COVID; however, we are seeing positive trends including the expanded number of accounts purchasing Monjuvi, the increase in new patient share, and a higher percentage of Monjuvi patients in the second line setting. Updated three-year results from L-MIND were recently published, and we believe these data will help bring greater awareness to the potential benefit of Monjuvi in the second line setting. I'd like to now turn the call over to Steven for a clinical update.

Thanks Barry and good morning, everyone. Starting with ruxolitinib cream, the FDA review of the NDA for ruxolitinib cream in atopic dermatitis is ongoing, with a new PDUFA date of September 21. At the Revolutionizing Atopic Dermatitis Conference in June, 52-week data from the TRuE-AD program were presented showing long-term disease control with as-needed use of ruxolitinib cream. The majority of subjects achieved clear or almost clear skin by week eight, and we saw no new safety signals during the long-term safety period, including no adverse events suggestive of a relationship to systemic exposure. We also recently initiated our Phase 3 pediatric program to expand the patient populations who might benefit from ruxolitinib cream. Turning to Slide 14, we previously announced at the beginning of Q2 that the Phase 3 vitiligo program had achieved its primary and key secondary endpoint at week 24. Patients were randomized to receive 1.5% ruxolitinib cream twice daily versus vehicle for 24 weeks, at which point a crossover occurred from vehicle to 1.5% ruxolitinib cream twice daily for an additional 28 weeks. The overall efficacy and safety profile of ruxolitinib cream were consistent with previously reported Phase 2 results. As a reminder, 30% of patients in the Phase 2 study achieved a F-VASI75, and continued improvement was seen through 52 weeks. With these positive outcomes, we are on track for an sNDA and MAA submissions in the second half of 2021, and are optimistic that ruxolitinib cream may offer a meaningful treatment option for patients living with vitiligo. On Slide 15, tafasitamab three-year data from the L-MIND study were presented in June at the 2021 American Society of Clinical Oncology Annual Meeting and subsequently published in Hematologic in July. These data demonstrated significant durable responses and reaffirmed a consistent safety profile with tafasitamab treatment in patients with relapsed or refractory diffuse large B cell lymphoma who are ineligible for transplant. We are particularly encouraged by the tolerability and high overall response rates seen, especially in the second line setting, which emphasizes the importance of starting therapy sooner. Additionally, the study demonstrated that subsequent treatment, including autologous stem cell transplant and CAR-T therapy, is not precluded in patients with disease progression during tafasitamab plus lenalidomide treatment. We await the decision from the European Commission following the positive CHMP opinion received in June. Moving on, the tafasitamab clinical program continues to develop with multiple pivotal and proof-of-concept studies set to start later this year, including frontMIND, which is currently enrolling patients in the first line diffuse large B cell lymphoma. The initiation of coreMIND, a pivotal trial evaluating tafasitamab plus parsaclisib in relapsed or refractory chronic lymphocytic leukemia, is based on positive results from the COSMOS study. Lastly, we expect to initiate MINDway, our dose optimization study in relapsed or refractory diffuse large B cell lymphoma. On Slide 17, the LIMBER program continues to evolve positively. We presented positive once-daily ruxolitinib bioavailability and bioequivalence data at EHA in 2021, which demonstrated bioequivalence for area under the curve. Once-daily ruxolitinib stability testing is ongoing, and we expect to file an NDA in early 2022. Multiple trials are ongoing, including the potential for fixed-dose combinations with parsaclisib plus ruxolitinib, and we anticipate initiating the BET and L2 combination components of the respective trials of ruxolitinib in the second half of this year. Turning to Slide 18, the results from REACH3, which investigated ruxolitinib in steroid-refractory chronic graft versus host disease, were recently published in the New England Journal of Medicine. This data shows that treatment with ruxolitinib significantly improved overall response rate at week 24, as well as a much higher best overall response rate versus the best available therapy. REACH3 also achieved statistically and clinically meaningful improvements in key secondary endpoints, including failure-free survival and symptom response. With a September 22 PDUFA, we are excited about the potential to help bring this therapy to patients living with steroid-refractory chronic graft-versus-host disease, who currently have very limited treatment options. Turning to parsaclisib on Slide 19, we presented Phase 2 data in autoimmune hemolytic anemia at the EHA in 2021, which showed high response rates and normalization of hemoglobin levels during the initial 12-week treatment period. Clinically meaningful improvements in fatigue-related quality of life were observed, and parsaclisib was generally well tolerated. In a disease with no currently approved treatments, we continue our commitment to patients through the development of parsaclisib and the initiation of the Phase 3 trial set to start later this year. In closing, we've had several clinical development successes, announcing positive data across multiple programs and making significant progress within certain key development initiatives during the first half of 2021. We anticipate an eventful second half with multiple potential approvals and additional regulatory submissions. With that, I would like to turn the call over to Christiana for the financial update.

Thank you, Steven, and good morning everyone. Our total product and royalty revenues for the second quarter were $696 million, representing a 17% increase over the second quarter of 2020. Total product royalty revenues for the quarter are comprised of net product revenues of $529 million for Jakafi, $28 million for Iclusig, and $18 million for Pemazyre; royalties from Novartis of $82 million for Jakafi, and $2 million for Tabrecta; and royalties from Lilly of $36 million for Olumiant. The 12% year-over-year growth in Jakafi net product sales reflects higher patient demand across all indications and a continued recovery of new patient starts as the impacts of the COVID-19 pandemic subside. Moving on to our operating expenses on a GAAP basis, ongoing R&D expenses of $339 million for the second quarter increased 20% from the prior year period, primarily due to product supply costs for ruxolitinib cream, the progression of our late-stage pipeline, and our 55% share of the global and U.S. specific development costs for tafasitamab. Excluding the $11 million impact of incremental product supply cost for ruxolitinib cream, ongoing R&D expense for the quarter increased 16% from the prior year. Our SG&A expense for the quarter of $169 million increased 43% from the prior year quarter, primarily due to investments related to the establishment of the new Dermatology Commercial organization in the U.S. and the related activities to support the potential launch of ruxolitinib cream for atopic dermatitis. Our collaboration loss for the quarter was $10 million, representing our 50% share of the U.S. net commercialization loss for Monjuvi. This is comprised of total net product revenues of $18 million and total operating expenses, including COGS and SG&A expenses of $38 million. Finally, our financial position continues to be strong as we ended the quarter with approximately $2.1 billion in cash and marketable securities. As we are at the mid-point of 2021, we are taking the opportunity to update our revenue and expense guidelines. As Barry detailed earlier, for Jakafi, we are tightening the range to $2.125 billion to $2.17 billion. Based on the strong performance of Pemazyre in the first half of 2021, we are increasing the guidance range for other hematology oncology to $155 million to $170 million. Finally, we are lowering SG&A guidance to $725 million to $755 million to reflect lower expenses for ruxolitinib cream as a treatment for atopic dermatitis in the U.S. based on the PDUFA date extension. There are no changes in our guidance for COGS and our R&D. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q&A.

Good morning, thank you for taking my questions. Two from me, one is, could you just speak to what’s happening on the regulatory side with regard to JAKs and how that impacts your process here on the Derm franchise? And then secondly, with the $30 million reduction in guidance, how much of that is due to contribution from steroid-refractory GVHD versus impact from the 340B base?

Hi Salveen, it's Steven. I'll answer your first question. So, in terms of the regulatory aspects of the ruxolitinib cream, obviously we cannot and do not speculate on what the FDA will or will not do, but we can tell you, we have tremendous confidence in the profile of the cream given now that we have four completed Phase 3 studies, two in atopic dermatitis, two in vitiligo. Including the long-term follow-up now for both safety and efficacy in these studies that demonstrates no new safety concerns related to what one would expect from any untoward systemic exposure. The efficacy profile in atopic dermatitis that we have presented before in mild-to-moderate AD is outstanding, and the safety profile is consistent with what I just said: low systemic absorption of approximately 4% to 7% of bioavailability compared to an oral tablet. In other words, no untoward effects seen. Given all of that, we remain extremely confident in the profile and look forward to that PDUFA date on September 21. I will hand over the second part.

So Salveen we don’t think of it as being just a tightening. As we get further in the year, we see that the range we had was appropriate. The low end of our range was appropriate and the higher end is tightened to what we're likely to hit. As far as what affects the growth in net versus GVHD, we actually anticipated that our gross to net would be 1% for the year lower than it is now, so where that's taking up a good chunk of the amount that we reduced the top line from the high end of the guidance.

Thank you.

Hey, guys, thanks so much for taking my questions. Two questions for me on Jakafi. Obviously, very encouraging to hear that new patient starts have now returned to pre-pandemic levels. I'm curious if you're seeing any recent changes with the Delta wave currently in the pandemic, in terms of patient diagnosis, visits to physicians, and new starts, as well as your ability for sales reps to engage with physicians and the extent to which that shapes your guidance? And then secondarily, on the once-daily form, I know physicians have this perception of myelosuppression with JAKs being intrinsically linked to spleen response and activity. So I'm wondering how you hope to educate physicians around the potential to have comparable efficacy with a once-daily form that may have less toxicity? And is there any clinical data beyond the bioequivalence that you're hoping to deploy to help support that education and awareness? Thanks.

So Brian this is Barry. I’ll take the first part and hand the other part over to Steven. So obviously the Delta variant is concerning, but as of now we've actually seen new patient starts increasing for Jakafi back to pre-pandemic levels. We know that sites are opening up for rep access and all of our field-based employees have access to clinics, offices, and hospitals. Obviously, we don't know what the future holds, but for right now, we're getting back to where we were back in the beginning of 2020. Steven?

Yes Brian, it’s Steven. So thanks for the question on once-daily ruxolitinib. As you sort of alluded to, albeit indirectly, the once-daily PK profile, while we demonstrated the comparability needed for area under the curve, the Cmax, as you would expect from a once-daily versus a quicker release formulation, is lower. We do think, although this still needs to be proven, that that is one of the aspects that drives the myelosuppression, particularly through potentially JAK2 inhibition, and that there may be less anemia with once-daily. I don't think that it's fully true what you said, and it's more perception than reality that myelosuppression is linked to spleen volume reduction. In fact, as you know, we see SVR 35 a bit of improvements in many patients who don't have any myelosuppression at all. It's something we will have to counter. The route we're taking for once-daily in terms of approval is bioavailability, bioequivalence route. The forms are now in stability testing, and if stability goes well, we'll be filing that early next year. There is no clinical data yet on outcomes in terms of efficacy or safety. That's something we would do after the fact if we wanted to, so very simple BAB route to prove the needed area under curve equivalence and then stability to get the approval. Thanks.

Thanks, Steven and thanks Barry.

Hey, thanks for taking my questions. One for Steven just on the LIMBER program on the combinations, I mean, the monotherapy seemed to have been running for a while. I mean, is the dose escalation just being much more extensive than maybe thought or is it really just enrollment perhaps from COVID that's keeping that from being able to advance into the combinations? And then for Barry, the increase in 340B, I think we've been seeing that increase over time, yet historically, but I guess it's accelerated in the first half. Do you think that's maybe a mix issue from COVID, or is that something we should expect to be a more permanent change as well?

Hey, Marc it’s Steven. In terms of LIMBER, it's an incredibly important program to us for all the obvious reasons, both for the company in shareholder value, commercial value, and for patient value. The formulation work on once daily has gone very well with the outcome we desire, as we just spoke about in terms of bioequivalence and stability now, and that file should go ahead in early 2022 if stability is fine. In terms of the combination, which is what your direct question, just a reminder there, the three we have internally is the parsaclisib combination program. That program is now open and enrolling patients, and we’re comfortable with where that program is, despite some COVID impact. For the earlier programs, we think through hepcidin inhibition, there may be amelioration of anemia, providing an efficacy upside as well. We are comfortable with where our programs are.

As far as the 340B use goes, well we have a limited controlled distribution process for Jakafi and for Pemazyre for that matter. So our volume of 340B orders is about 11% now, and the industry is about 15%. We think we do a pretty good job of making sure that 340B orders don't get out of control. But we've seen 340B orders rising, and they slowed down this year, but they picked up again for several reasons. More disproportionate share hospitals are coming onto the 340B program, and we expect this trend to continue. So we’ve built that into our forecast going forward.

Okay, thank you.

Hey guys, thanks for taking my question. I just want to talk a little bit about maybe the opportunity for atopic dermatitis. I mean there are 5.5 million people. But when you think about the initial opportunity to uptake and switching from other treatments, or are there more specific populations? Just if you can help us kind of think about what that initial pool might look like for modeling. Thank you.

I'll try to answer that Alethia. We think the opportunity is quite large, to help patients who have eczema and atopic dermatitis. The 5.5 million is obviously those patients who are drug-treated in the U.S. It's estimated that 30 million people have atopic dermatitis from kids to adults. We believe that going from steroids up to biologics, there's a huge unmet need for patients with mild to moderate atopic dermatitis, and ruxolitinib cream is just the right treatment for those patients.

Good morning. Thanks for taking my question. So, two from my side. First on Monjuvi; understanding it is still relatively early days, but I was wondering if you could comment on the duration of use you've been observing in patients that have been prescribed Monjuvi? And secondly, going back to the QD rux program and LIMBER, if you do receive approval for the NDA submission plan for next year, how would you envision the commercial rollout here? Would you expect this to be an option for new patient starts, or would you expect to conduct a more aggressive switching campaign for patients also currently on a BID regimen? Any color there would be helpful.

So Vikram, on Monjuvi itself. As expected, when you launch a new drug in oncology, in particular, you end up getting patients who perhaps had multiple prior lines of therapy. So the initial duration of therapy was shorter, but as we move into true second line patients more and more every day, we know that the duration of therapy will likely be much longer. As for the second part of your question, maybe Steven will address that.

Yes, Vikram, it’s Steven. For once-daily ruxolitinib, it’s bioavailability, bioequivalence route initially to approval, so we won't have a ton of clinical data. However, we expect that with the lower Cmax profile, there may be less anemia. The once-daily form may provide convenience for patients who want to use it instead of twice-daily, and it may be particularly applicable to those who are more likely to experience cytopenias. The ability to do fixed-dose combinations with once-daily will also be an important aspect. There are multiple ways to provide fixed dosages, which we believe will add to patient value and improve commercialization.

And perhaps something on this TRuE-V as well. The treatment of myelofibrosis is evolving, with several combinations being developed, including three by us. It's significant to realize that in the combination regimen with oncology products, having both once-a-day is the best way to ensure there are no mistakes, and it is also a safety aspect. If approved by the end of 2022, we will transition both existing patients moving to combination where appropriate and new patients being studied on the once-a-day regimen.

Understood, thank you.

Great, thanks. Good morning, guys. I appreciate you taking my questions. Two from me around RUX cream. First, are you having to conduct and/or share any new safety analyses for the product for the FDA ahead of the new PDUFA in September? And then secondly, can you just speak to the anticipated timing of TRuE-AD3 evaluating RUX cream in children and how you see this market opportunity for a topical relative to adults? Thank you.

Cory, hi it's Steven. We don’t comment specifically on communications with the FDA. However, we did note with our initial delay earlier that there was an information request that we responded to, which may have contributed to the delay. From our perspective, the demand for the treatment in under 12 and older populations is significant, and should generate robust recruitment for both trials.

Hey, guys, thanks for taking my questions. I have two; first on Pemazyre that has been launching ahead of expectations in cholangiocarcinoma, but we noticed that two additional studies are set to start in lung cancer and GBM. Could you just comment on the opportunity in addition to cholangiocarcinoma for Pemazyre and their path to market perhaps in other indications? And the second question on Monjuvi; I guess, based on the experience so far, how should we think about the potential launch trajectory in Europe, especially since you would presumably be launching into an environment that's less impacted by COVID at that time?

Michael, hi, it’s Steven. Thanks for the question on Pemazyre. What we saw in an ongoing tumor agnostic program is that we started to see signals within that program in glioblastoma multiforme with a particular molecular driver, and in non-small cell lung cancer as well. We chose to pursue these as standalone entities based on the biomarker. The prevalence rates in FGFR2 fusions or rearrangements are often in the single digits, but even the potential opportunity in lung cancer may be greater. I can’t provide more detail until we have a regulatory agreement on the path for these programs, but it’s promising. Regarding the European trajectory for Monjuvi, launching a new product occurs sequentially in Europe, starting with Germany. We believe we are well prepared for an efficient rollout, as our team has existing methodologies for launch from our experience with Iclusig. The recent NICE recommendation should also accelerate availability in the UK. While the COVID situation varies by country, we believe that circumstances will allow for a successful launch trajectory.

I think the data from the three-year period as well as our emphasis on the clinical benefits provides an optimistic backdrop for the approval processes within the various countries, and we have the infrastructure in place to conduct successful launches. We expect strong demand.

Right, thank you.

Thank you for taking the question. So, just I apologize if I missed this because I missed the beginning part of the call. But are you able to share with us the distribution of new patient starts with Jakafi according to indication? And similarly for Monjuvi, can you update us on the status of just also that distribution of those patients who are being treated in the second line versus later lines of therapy? And I was also hoping that you could provide an update on itacitinib in the second line myelofibrosis trial, the anticipated timing of data, and what the strategy is for that drug at this point.

So Mara, I can tell you that new patient starts for Jakafi for GVHD, MF, and PV are all back to pre-pandemic levels. GVHD growth is particularly strong, followed by PV and then MF. For Monjuvi, our market research indicates that we are now the number one used drug for diffuse large B cell lymphoma patients in the second line setting. Therefore, that's where our growth is coming from.

Regarding itacitinib, this is a different JAK inhibitor, and we are still in early stages of our program. The planned standalone study will be carried out in an appropriate patient population, but I wouldn't anticipate data for at least a year.

Okay, thank you. If I could also just sneak in one more question, and it's on the SG&A spending and the delay in RUX cream, how much of that increase in SG&A spending was associated with the anticipated launch of RUX cream?

So the adjustment made to the SG&A guidance is $10 million on the low end to around $20 million high. This is primarily driven by the expansion of the three-month extension in the PDUFA for RUX cream. Certain activities related to direct-to-consumer marketing that we intended to execute this year will be pushed to 2022.

Okay, thank you. I appreciate it.

Thank you for taking the questions. Can you please comment on your current thinking around the European strategy for topical RUX? And then on the timeline for the vitiligo submission, does the submission for topical RUX in atopic dermatitis have any impact on the regulatory filing in vitiligo?

Jay, it’s Steven. On your second question, it shouldn't affect the filing. We plan to submit for vitiligo as soon as possible post our PDUFA on September 21. The regulatory processes are separate, and there shouldn't be any conflict. In terms of our European strategy for topical RUX, we are planning to submit for vitiligo indication first, in the second half of this year. This approach will assist with pricing, which is why we are executing it in that order.

It's important to note that we will analyze the market's requirements and the data needed for approval in atopic dermatitis after securing vitiligo. As we gather insights from ongoing market reviews, we will tailor our approach to ensure that we establish appropriate reimbursement and access frameworks.

Hi, thanks. Four questions from me on the commercial infrastructure you're building for the topical RUX franchise? Can you just remind us how many sales reps you're planning to hire for both indications? And can we get an update on where you are in that process currently? Just to clarify Mara’s question, was any of the lowered SG&A guidance that you announced today related to a delay and headcount reduction or hiring? And then, as a follow up, what percentage of atopic derm patients are treated in the community versus centers of excellence? And what percentage of atopic derm scripts are actually written by primary care physicians? Thanks.

So Andrew, our field force is fully in place. We have 120 sales representatives in the U.S., ready to go through training and getting acquainted with their accounts. SG&A adjustments do not affect our headcount as we are already prepared for the anticipated launch in September. As for writing scripts, dermatologists overwhelmingly prescribe first scripts for drugs like RUX cream, typically in community settings rather than academic medical centers. Majority of patients go to their local dermatologists, whereas primary care physicians may write for mild steroids but very little for RUX cream at this point.

Okay and how often do patients see their dermatologists once they're diagnosed?

Well, it varies. Patients with troublesome eczema will go back to their primary care physician or dermatologist every month or quarter, depending on how many flares they have, or how controlled their symptoms are.

Hey, guys, thank you so much for taking my question. Just following up on the pediatric trial in the atopic derm that you recently initiated. Our KOL checks have indicated that there could be a slightly greater hesitancy amongst parents, especially for the under 12 age group to use something like RUX cream, even if it doesn’t get a black box label, especially the orals do. Is there anything in your market research that gives you confidence that this opportunity is worth pursuing in this population, especially in the context of other competition in the pediatric population? Thank you.

Kripa, hi, it’s Steven. To enable the pediatric program, we had numerous discussions with the regulatory agency to ensure safety and to mitigate harm. We have ample experience with oral RUX, which has been on the market since 2011, used in various patient populations. Overall, we are comfortable with the profile of RUX for pediatric use and its potential benefits outweighing risks. Barry may further elaborate on market insights.

Well, we believe RUX cream could be a very good treatment for kids aged two to twelve who have eczema or atopic dermatitis but cannot be controlled by other treatments. Our research indicates that many parents would prefer this option over existing treatments, which have limitations related to safety and efficacy.

Specifically, as you noted, parents are often concerned about safety, but given the profile we have for RUX and the challenges faced with existing therapies, we believe this will help build acceptance for RUX cream in the pediatric demographic.

Hey, Kripa it’s Steven again. We were disappointed in the ODAC outcome with a 13 to 4 vote, especially given that we have conducted, to our knowledge, the largest study ever in squamous cell anal carcinoma. However, we are confident in the data and will work with the agency to address the concerns in the complete response letter, which will lead to a possible resubmission. The ongoing first-line study is proceeding well and unimpeded by COVID. We’re comfortable with the status of that trial.

Okay, great. Thank you so much.

Yes, good morning. Thanks for squeezing me in. Just a couple of quick questions on QD RUX. So can you speak to any significant or potential differences that might exist between the current version of QD RUX and the prior sustained release version published a few years back?

Steven hi, it’s Steven answering your question. It's good you bring up that older publication, which was the single strength 25 milligrams slow release. That formulation is indeed one of the strengths we have now, but we have done more comprehensive work on bioavailability and bioequivalence, which we will aim to file after stability testing. In terms of fixed-dose combinations, we can create multiple combinations without losing flexibility in titration or dosing.

Thank you all for your time today and for your questions. The IR team will be available throughout the day for any follow-up questions you may have. We look forward to talking to you at investor conferences in the coming weeks. Have a good day.