Incyte Corp (INCY) — Q4 2024 Earnings Call Transcript

Thank you, Kevin. Good morning and welcome to Incyte's fourth quarter and full-year 2024 earnings conference call. Before we begin, I encourage everyone to go to the Investors section of our website to find the press release, related financial tables and slides that follow today's discussion. On today's call, I'm joined by Herve, Pablo, Christiana, who will deliver the prepared remarks. Matteo and Steven will also be available for Q&A. I would like to point out that we'll be making forward-looking statements which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in SEC filings for additional detail. I will now hand the call over to Herve.

Thank you, Ben, and good morning, everyone. So we delivered another strong year with 2024 total revenues growing 15% versus 2023 to reach $4.2 billion, continuing the steady growth we have delivered since 2020. In addition to the consistent performance of Jakafi in 2024, we saw strong growth from our non-Jakafi revenue, primarily driven by Opzelura, highlighting our continuing revenue diversification. Moving to Slide 6. 2024, Jakafi net sales were $2.8 billion, growing 8% versus the prior year, with growth coming from all indications. Opzelura saw strong continued momentum in 2024, growing 50% to $508 million, driven by both new patients and refills in atopic dermatitis and vitiligo in the US, and expanding reimbursement outside the US. We expect Opzelura to continue to be a key contributor to growth in the next year. Our cash flow remains strong, which allowed us to complete the $2 billion share repurchase during 2024, while maintaining a strong balance sheet. We ended 2024 with $2.2 billion in cash and no debt. We are in a very strong financial position with growing revenues and a robust pipeline that will deliver a number of very exciting readouts in 2025. Last month, we and our partners Syndax announced that the FDA approved Niktimvo in 9 milligram and 22 milligram vial sizes, paving the way for the commercial launch. This medicine is now available in the US and the commercial launch is underway. Niktimvo is the first anti-CSF-1R antibody approved to target inflammation and fibrosis associated with chronic graft-versus-host disease. And we are excited to bring this new therapy to the approximately 6,000 patients who are currently treated after second-line therapy in the U.S. In addition to the launch of Niktimvo, the sNDA for ruxolitinib cream in pediatric atopic dermatitis was filed with the FDA, and we are on track for potential approval in the second half of 2025. With 2 million to 3 million pediatric patients in the US suffering from atopic dermatitis, we see significant opportunity for ruxolitinib cream with its compelling efficacy in controlling itching to address an important need for this patient population. We submitted pivotal study results to the FDA for both tafasitamab in follicular lymphoma and ratifamlimab in squamous cell anal carcinoma and anticipate approvals for both in the second half of 2025. These product launches are expected to begin contributing to revenue in the near term with the potential to collectively generate $1 billion in incremental revenues by 2029, further diversifying our revenue. We anticipate all four products to be available in 2025, and we will be leveraging our existing commercial infrastructure established for Jakafi, Opzelura, Monjuvi, and Pemazyre to support the launches of these new products or indications. Moving to Slide 9, an update of the fourth quarter and full year 2024 commercial performance for Jakafi. In the fourth quarter, Jakafi net product revenue grew 11% year-over-year to $773 million and grew 8% for the full year to $2.8 billion. Total patients increased 10% in Q4 when compared to the same quarter in 2023. Importantly, growth is being seen across all indications, but with particular strengths in polycythemia vera, with this indication now accounting for 35% of the patients on Jakafi. We expect continued growth of Jakafi in 2025 and expect the full year net product revenue for 2025 to be in the range of $2.925 to $2.975 billion. Turning to Slide 10, and looking at Jakafi total paid demand by indication during 2022, 2023, and 2024. As you can see, unit growth remains robust. Myelofibrosis showed growth again this quarter, while the most significant growth was seen in polycythemia vera. We expect PV to become the largest contributor for Jakafi over time, supported by the data from the MAJIC PV study which underscores the benefit of early intervention with Jakafi and its impact on thrombosis-free survival. Moving to Opzelura on Slide 11. Opzelura net product revenue in the fourth quarter was $162 million, up 48% when compared to the same quarter last year. And this was comprised of $138 million in the US, driven by growth in AD and vitiligo, new patients and refills, and $24 million ex-US, driven by growth in Germany and France. Total 2024 full year net revenue grew 50% versus 2023 to reach $508 million. In the US, the annual prescription trends for 2022, 2023 and 2024, as shown on the right of Slide 11, reflect continued year-over-year growth of Opzelura from both atopic dermatitis and vitiligo. We anticipate continued growth of Opzelura in 2025 and expect the full year net product revenue to be in the range of $630 million to $670 million. On Slide 12, so 2025 will be a year of defining catalysts that will provide an inflection point for Incyte. As you can see highlighted on Slide 12, every program has meaningful milestones expected in 2025. This includes four potential launches, collectively providing important near-term revenue potential, where the launch of Niktimvo is already underway, as I just highlighted. Additionally, we plan to initiate at least three Phase 3 studies, including our BET inhibitor, rux cream in mild to moderate HS, and our CDK2 inhibitor in ovarian cancer. We expect 2025 will be a data-rich year with four pivotal data readouts including ruxolitinib XR, which Pablo will highlight shortly. More importantly, we expect seven early-stage programs to generate informative data, which we believe have the potential to transform the company. Before I hand the call over to Pablo, I would like to provide a leadership update for our commercial organization. After a remarkable decade of dedicated service to Incyte, Barry Flannelly has decided to retire from his role as Executive Vice President, Head of U.S. Oncology. We are pleased to announce that Mohamed Issa assumed Barry's role in January, and Mohamed has successfully led U.S. Commercial teams in oncology, immunology, and neuroscience, most recently at J&J.

Thank you, Herve, and good morning. As we highlighted a year ago, and we summarize on this slide, we remain on track to deliver more than 10 high-impact launches by 2030 from programs across the portfolio. On Slide 15, I would like to quickly highlight some of the key accomplishments during 2024, and I will then cover some of the milestones expected in 2025. We had a number of important regulatory achievements in 2024, including the approval of Niktimvo for third line plus chronic graft-versus-host disease and three submissions to the FDA with expected approvals later this year, including Opzelura in pediatric atopic dermatitis, retifanlimab in SCAC, and tafasitamab in relapsed/refractory follicular lymphoma. We disclosed data from our CDK2 inhibitor and BET inhibitor programs and provided pivotal study plans for both, which we anticipate initiating this year. We continued to evolve at R&D focus with intent of increasing the rigor of our decision making, accelerating the progression of our pipeline, and optimizing our resource allocation. Through the fourth quarter of 2024, we presented data at the American Society of Hematology Annual Meeting, or ASH, from both our BET inhibitor program and Phase 3 results for tafasitamab in patients with relapsed/refractory follicular lymphoma. The Phase 3 results of tafasitamab in follicular lymphoma were presented at a late breaking session and showed that the study met its primary endpoint by demonstrating a statistically significant and clinically meaningful improvement in progression-free survival. This was, to our knowledge, the first study to validate the combination of an anti-CD19 with an anti-CD20 monoclonal antibodies in patients with follicular lymphoma. Tafasitamab was generally well tolerated and safety was consistent with its known safety profile. This data has been submitted to the FDA and approval is expected in the second half of 2025. For our BET inhibitor, we shared additional data from the ongoing dose escalation study as both monotherapy and in combination with ruxolitinib. This result showed reductions in spleen volume as well as improvement in both symptoms and hemoglobin. As highlighted on this slide, we plan to advance this program into Phase 3 development as a monotherapy in the post-JAK population, and we look forward to providing additional details later this year. Moving to Slide 18, we are continuing to execute a broad development plan for Povorcitinib, our oral small molecule highly selective JAK-1 inhibitor. Povorcitinib is currently being evaluated in Phase 3 studies in hidradenitis suppurativa, vitiligo, and prurigo nodularis, and in randomized Phase 2 proof-of-concept studies in chronic spontaneous urticaria and asthma with data for both expected in 2025. Povorcitinib has already shown encouraging efficacy and safety in a randomized Phase 2 study in patients with moderate to severe hidradenitis suppurativa, a highly painful inflammatory condition. As highlighted on this right side of Slide 19, Povorcitinib showed significant responses by week 12, including improvements in high score 50, 90, and 100. Additionally, Povorcitinib demonstrated a rapid and significant reduction in pain, offering the potential to transform the current standard of care for this disease. The two Phase 3 studies, STOP-HS1 and STOP-HS2 are fully enrolled, and we expect to have Phase 3 data in the first half of this year. Turning to the mutant CALR antibody program on Slide 20. The publication detailing our mutant CALR monoclonal antibody was recently featured on the cover of Blood, highlighting the importance of this innovative medicine. This antibody was developed entirely by Incyte, and unlike Jakafi, the mutant CALR antibody has the potential to eliminate the mutant clone and normalize hematopoiesis in patients with CALR mutated essential thrombocythemia or myelofibrosis, potentially leading to a functional cure. We look forward to sharing data from the ongoing proof-of-concept studies in both ET and MF later this year. Turn to Slide 21 and ruxolitinib XR. We're pleased to announce that a bioequivalence study of ruxolitinib 55 milligrams extended release demonstrated the once-a-day formulation to be bioequivalent to twice-a-day ruxolitinib. Bioequivalence was achieved for both AUC and Cmin, and the geometric means ratios falling within the 80% to 125% bioequivalence reference range. We have reviewed this data with the FDA and with their agreement, plan to submit for approval by the end of the year once stability studies are completed. As mentioned, 2025 will be an important year for Incyte, with over 18 key milestones, including four new product launches, four pivotal trial readouts, at least three Phase 3 study initiations, and seven proof-of-concept study results. As you can see on Slide 22, we have already achieved two of these milestones that we first highlighted just last month with the launch of Niktimvo and bioequivalence data for ruxolitinib extended release. We look forward to sharing additional updates on these milestones over the course of 2025. And with that, I would like to turn the call over to Christiana for the financial update.

Thank you Pablo, and good morning, everyone. Our fourth quarter 2024 results reflect a strong commercial execution and continued growth with total revenues of $1.2 billion, up 16% versus the same period last year. Total product revenues of $1 billion in Q4 were driven by strong demand growth for Jakafi and Opzelura and increased revenue contribution from Monjuvi as a result of the acquisition of full rights to tafasitamab in 2024. Total royalty revenues were $159 million, up 6% compared to Q4 2023 driven by increased demand for Jakafi. Turning to Jakafi on Slide 26. Jakafi net product revenue was driven by strong patient demand growth across all indications. In the fourth quarter of 2024, net product revenue increased 11% year-over-year, driven by a 9% increase in total demand and a 14% increase in paid demand. For the full year 2024 net product revenue increased 8% versus 2023, driven by a 7% increase in total demand and a 9% increase in paid demand. Recall that in Q3 and Q4 2023, we saw a significant increase in the number of Medicare Part D patients receiving free product. As we anticipated, these patients returned to paid demand in 2024. As a result, year-over-year, paid demand growth exceeded total demand growth in both the fourth quarter and full year 2024. Turning now to Opzelura on Slide 27, total net product revenue for the fourth quarter was $162 million, representing a 48% increase year-over-year, driven by growth in new patient starts and refills across both atopic dermatitis and vitiligo in the US, as well as continued contribution from the commercialization of Opzelura for vitiligo in Europe. In the fourth quarter, ex-US Opzelura net product revenue was $24 million. For the full year, net product revenue was $508 million, representing a 50% increase year-over-year, and ex-US net product revenue was $61 million. Moving on to Slide 28 and our operating expenses, total GAAP R&D expenses for the fourth quarter were $466 million, an increase of 5% compared to the same period in 2023, due to continued investment in our late-stage development assets and timing of certain expenses. For the full year 2024, ongoing R&D expenses, excluding the Escient acquisition upfront consideration and other one-time expenses increased 14% year-over-year as a result of increased investment in our late stage programs. As we wrap up the clinical developments of certain of these programs, as well as the development activities of discontinued programs, we anticipate the reduction in investment in those programs to partially offset the increased investment in other programs, which would allow us to control future R&D expense growth. Moving to SG&A, total GAAP SG&A expenses were $327 million for the fourth quarter, representing an 11% year-over-year increase, primarily as a result of Incyte now recording Monjuvi-related sales and marketing expenses in the US following the acquisition of global rights to the program in 2024, as well as the timing of consumer marketing activities and certain other expenses. For the full year 2024, total GAAP SG&A expenses increased 7% year-over-year as a result of us now recording Monjuvi-related sales and marketing expenses, and investment in the launch of Opzelura in Europe and the preparation for new product launches in the US. Finally, total ongoing R&D and SG&A expense for the full year increased 10% versus a 15% increase in total revenues, leading to an increase in operating leverage and margins. Moving on to 2025, I will now discuss the key components of our guidance on a GAAP basis. For Jakafi, we expect net product revenue to be in the range of $2.925 to $2.975 billion, well on track to achieve our long-term guidance of over $3 billion by 2028. We expect net product revenue growth to be driven exclusively by continued demand growth, primarily in polycythemia vera, and be partially offset by lower net pricing as a result of IRA-imposed price increase caps and continued growth in 340B volumes. As in previous years, we expect the growth to net adjustment to be higher in the first quarter of the year relative to the previous quarter and subsequent quarters due to higher deductibles that are primarily impacting Q1. For Opzelura, we expect total net product revenue to be in the range of $630 million to $670 million, driven by continued demand growth in atopic dermatitis and vitiligo in the US, initial contribution from the potential launch of Opzelura for pediatric atopic dermatitis expected in the second half of the year, and increased contribution from Opzelura for vitiligo in Europe. In the first quarter of the year, we expect to see again the effects of typical Q1 dynamics on net sales due to planned deductibles resetting at the beginning of the year and the impact of holidays, medical conferences, and other events on dermatology product sales. As a result, Q1 Opzelura net product revenue is expected to be below the previous quarter, consistent with what we saw in 2024. For other oncology products, we expect total net product revenues to be in the range of $415 million to $455 million. These include contributions from both the current approved indications for Iclusig, Miktimvo, Monjuvi/Minjuv, Pemazyre, and Zynyz, as well as the launches of Monjuvi in follicular lymphoma and Zynyz in squamous cell anal carcinoma anticipated in the second half of 2025. Turning to operating expenses on a GAAP basis, we expect COGS to range from 8.5% to 9% of net product revenues. The increase in the COGS rate is driven by certain manufacturing related expenses and the impact of our profit share agreement with Syndax for Niktimvo in the US, as Syndax's portion of the profit share will be reflected in COGS. R&D expenses are expected to be in the range of $1.93 billion to $1.96 billion, primarily driven by the progression of our pipeline. We expect SG&A expenses for the year to be in the range of $1.28 billion to $1.31 billion. Operator, that concludes our preparing remarks. Please give your instructions and open the call for Q&A.

Good morning. Thanks for taking our question. This is Paul on for Michael. We have two on the pipeline. First, on Opzelura. Can you set some expectations for the upcoming Phase 3 in prurigo nodularis? What's the clinical bar here given there's no topical therapies available? And then secondly, just on the CDK2 program, are there any plans to provide another clinical update on the Phase 1 ovarian cancer study perhaps with longer follow-up at the expansion dose levels? And what are the gating factors to formalizing a pivotal study dose selection? Thank you.

Good morning. Thank you for the questions. Let me take the second one real quick. For the CDK2 program, as we discussed earlier this year, we plan to initiate pivotal trials this year. And as we discussed, that will be in platinum-resistant ovarian cancer. We've taken a dual approach there with a single-arm study for what we hope will be accelerated approval in the US, as well as a randomized trial that we will provide more details over the course of the year. So that program is advancing rapidly and we will provide an update later this year as you asked.

And the second part of the question in terms of rux cream in prurigo nodularis, as you know, the Phase 3 data are coming in this half.

I believe that regarding the standards we are aiming for, the Phase 2 data shows significant improvement in both the global assessment of itching and the WNRS endpoint. If we achieve results similar to those from the Phase 2 trial, this will represent a crucial enhancement in treatment options for patients with prurigo nodularis. The introduction of a topical treatment for patients with milder forms of the disease, compared to those requiring systemic treatments like Povorcitinib, will be very beneficial. Additionally, given the strong safety history of rux cream, which is known for its good tolerability, we anticipate that if our results align with those of Phase 2, we will make a significant impact for patients.

Hi guys, good morning. Thanks for taking my questions. As it relates to Opzelura, can you give us a sense of how you got to guidance for this calendar year? Specifically, how are you thinking about the number of tubes that are going to be used for the two approved indications? And then maybe one question on the data for the HS that’s due in the first half of this year. What would you consider to be not only statistically significant, but also clinically meaningful data? Thanks.

Hi Tazeen, it's Christiana. Regarding the Opzelura guidance, we provided a range of $630 million to $670 million for the year, indicating 24% to 32% growth compared to last year. This projection is driven by ongoing demand in atopic dermatitis and vitiligo, as well as the potential launch of Opzelura for pediatric atopic dermatitis in the second half of the year, which will contribute to this growth alongside increased sales in Europe. Our range takes into account variations in patient demographics, activation rates, and adherence levels in vitiligo, along with contributions from Europe. The number of tubes, particularly for vitiligo, is tied to patient activation and adherence rates. We are observing a rise in the average number of patients remaining on therapy, leading to more prescription refills and an increase in the average prescriptions per patient. However, we acknowledge that this area is still developing, and we plan to implement additional initiatives to educate patients on proper usage of Opzelura for vitiligo, which is reflected in our guidance range. Lastly, keep in mind that when distributing guidance throughout the year, Q1 tends to be lower than the preceding and following quarters. We observed this trend in 2023 and expect similar dynamics in 2024 and 2025.

Let me address the second part of the question. The key factor is to achieve positive results in one or two studies, which means achieving statistical significance for the primary endpoint. In this instance, that is high score 50 at week 12 in the two studies for Povorcitinib related to hidradenitis suppurativa. Furthermore, when we examine the Phase 2 results from the Povorcitinib study and analyze the overall data, including its impact on high score 50, 75, 90, and 100, along with notable improvements in pain, the study demonstrates a strong safety profile, as there were no thrombotic events in the high-dose Povorcitinib group and no patients discontinued due to adverse events in the Povorcitinib arm. While we recognize that Phase 3 results can vary slightly, we are confident in the overall profile observed in Phase 2. If we can replicate those results in the Phase 3 studies, we believe Povorcitinib will have a very competitive profile for treating hidradenitis suppurativa.

Thank you very much for taking my question. Given the IRA out-of-pocket has moved to its go-forward levels at $2,000 per year, can you run us through what the process is that a patient must go through to actually ensure that the cap is put in place? What steps do they need to take and how long do you think it might be until the benefit of that starts showing up in sales?

So the cap for the out-of-pocket this year is reduced to $2,000 a year. Patients do have an option to have this spread through the course of the year in equal payments. There is a process that they would have to go through. We expect that it would take some time for them to figure out that process. So we may not see the immediate benefit right away, although we expect to see a continued benefit from the lower out-of-pocket as we saw in 2024.

Hey guys, good morning. Thanks for taking my questions. A couple on Povorcitinib in hidradenitis suppurativa. So I think north of 60% of the patients in your Phase 3 trials are biologic naive. Are you going to seek a label that includes biologic naive patients or do you expect it will be labeled for post-biologic patients? And then within the trials, are you powered for both the biologic naive and experienced subgroups? And is there anything you can say about the powering assumptions there?

Yes, Jess. So as you point out, we haven't disclosed a specific percentage, but roughly directionally that's correct in terms of biologics naive and biologically exposed patients. Prior exposure to biologics, there's a stratification criteria in the Phase 3 trials. We expect to analyze the data based on prior exposure to biologics. I'm not going to comment on the full powering. Obviously, the studies are powered on the basis of assumptions around the primary endpoint and the key secondary endpoints for the study. So we'll discuss the results in more detail. And obviously, in terms of labeling discussions, we'll see what the data looks like and we'll discuss with the FDA at the right time.

Hey, Pablo, can I follow up on one of the responses to? I think it was Tazeen's question. When you said, if you show something that's close to what you showed in Phase 2, that would be super competitive, because I think the Phase 2 deltas on high score 50 differed a little bit if you look at the 16 week versus the 12 week time point. And I think in Phase 3, it's a 12 week. So when you say close to Phase 2, do you mean close to the 12 week cut of Phase 2 or close to the 16 week?

Yes, you're correct. The placebo-subtracted high score 50 at week 12 is 28% and at week 16 is 17% in the Phase 2 studies. That's what you're referring to. We selected week 12 because it's one of the significant differences, particularly when considering the Povorcitinib data, not just in hidradenitis suppurativa but also in prurigo nodularis, for instance, because of how quickly it works. This is very important for patients dealing with painful or severe diseases like HS and PN. That's the significance of the week 12 data. My comment was roughly about replicating the profile observed in Phase 2. I don't want to specify a number. We're conducting the Phase 3 studies to clarify the actual benefits of Povorcitinib in larger populations. Any specific percentage at this point is something we're not going to comment on, but we do expect the profile to be consistent with what we saw in Phase 2 during Phase 3.

Good morning. Thanks for taking my question. Just a follow-up here on Povorcitinib. With regard to the Phase 2 data and we saw this drop from week 12 to week 16. Could you just speak about the read-through to this trial and the risks that may play out there? And also in your 2025 guidance, just speak to us about how you model for Part D redesign for Jakafi? Thank you.

Certainly, clinical trials, especially in diseases like HS that have a placebo effect, will show some fluctuations in the efficacy endpoints and the efficacy curve over time. As noted from week 12 to week 16 in the Phase 2 data, we observed a decline in the placebo-subtracted response in the Povorcitinib groups. This is likely due to variability and noise typically seen in clinical trials, and we are not worried about it. The studies are adequately powered to reveal what we anticipate will be a statistically significant difference between Povorcitinib and placebo. We believe we will achieve not just a statistically significant impact, but also a clinically meaningful effect of Povorcitinib on the primary endpoint, which is the high score 50 at week 12. Additionally, we will address the key secondary endpoints, which include various levels of clinical benefit and different time points in this study.

Thank you. Regarding your second question, Salveen, on the impact of the Medicare Part D redesign on gross-to-net for Jakafi. We do expect to see some savings in Medicare Part D since our contribution to the donut hole will now be replaced by 1% participation to the catastrophic coverage given that we have the small biotech exception. However, these savings would be offset by continued increase that we see in 340B.

Hey, good morning, guys. I just wanted to follow up on Povorcitinib STOP-HS1 and STOP-HS2 Phase 3 trials. How will you disclose this data? Will we get a press release with high score top-line followed by full data at a high conference? And then any update on the X2 program for chronic spontaneous urticaria? Thank you.

So on Povorcitinib for HS, our plan is, once we have the data, is to disclose in a press release and almost certainly we have a call to discuss the results with the investment community. On the X2 program, I don't have an update at this point. We are still completing the evaluation of the events that we described late last year in the preclinical findings in the toxicology and we'll provide an update later this year.

Hi, good morning. Thanks for taking our questions. We had just one on the proof-of-concept datasets expected for mutant CALR and then also for JAK2V617Fi for later this year. Could you just help us kind of frame what we can expect to learn and what you're setting as the bar for success for these datasets and what the hurdle is going to be for moving these programs forward? Thank you.

Let me begin by discussing mutant CALR. As you mentioned, we will have proof-of-concept data this year for patients with essential thrombocythemia and myelofibrosis, which will be released throughout the year. We anticipate a substantial amount of data, including results at different dose levels with sufficient follow-up to clarify some key success measures for these programs. As we have talked about over the past few months, it's critical for this program to demonstrate an impact not only on traditional endpoints in patients with myeloproliferative neoplasms, such as blood counts, symptoms, and spleen size, but also to provide early evidence of reduction, which we consider an important success metric. While the data won't be definitive, we aim to show that a mutant CALR antibody can lead to early reductions in patients with essential thrombocythemia and myelofibrosis. This will all be included in our update. Regarding JAK2V617F, which commenced clinical trials later, we began dosing patients with myelofibrosis in the third quarter of 2024. This program is slightly behind schedule, but we plan to provide an update this year, and the same objectives apply. We hope to see impacts not only on traditional endpoints but also early evidence of reduction in this program as well.

Hi, thanks for taking my questions. Maybe to start one nuanced question on STOP-HS. Just Pablo, you mentioned earlier, often these trials do have a little bit of a decline in treatment effect from Phase 2 to Phase 3. In HS specifically, we've seen kind of changes in antibiotic use and how that's treated within SAP, maybe drive some of that effect. Can you remind us just how antibiotic use is being treated? What’s treated in Phase 2? And how that may or may not differ in the Phase 3 trial? And then for Christiana, on the Opzelura guidance, can you maybe break down some of the assumptions there on US versus ex-US growth, just given the kind of label changes that are happening, but also increasing reimbursement outside the US.

So let me take the first part of the question. So first of all, the use of antibiotics in the Phase 3 studies is treated the same way as it was in the Phase 2. So let me just remind you what that is. Patients are not allowed to be on systemic antibiotics at study entry. Over the course of the study, if patients have started on systemic antibiotics for a flare, that's treated as a non-responder. Now if a patient has started systemic antibiotics for a completely unrelated reason, that is now treated as a non-responder and that's consistent with the Phase 2.

In terms of the Opzelura guidance, the guidance that we have provided is global and it does reflect increased contribution from Europe. In 2024, the contribution was primarily driven by Germany and France. And in 2025, we expect continued contribution from those two countries, but also now increased contribution from Italy and Spain. We are not going to be breaking down the guidance between the two regions.

Thank you for taking my questions. I have two. Firstly, can you share a little bit more color on the KRASG12D program. In terms of proof-of-concept data what kind of sample size and also tumor indications could we expect? And also based on the preclinical data achieved so far, do you think it hints any potential differentiation from other competitive G12D programs? And for Povorcitinib, just quickly want to confirm, for the high score of 75, 90 and 100, do you plan to show at a 12 week follow-up only, are actually both 12 and 16 weeks follow-up? Thank you.

Thank you, Kelly. Regarding KRAS, our main focuses are pancreatic cancer and colorectal cancer. Specifically for pancreatic cancer, we aim to speed up enrollment due to the increasing competition in this area. We are fully aware of our competitors' activities. Given our preclinical profile, which features a highly selective and potent G12D inhibitor, we believe that by accelerating this program, we can still remain competitive. Ultimately, the efficacy and safety of our product will be crucial. However, when we analyze our competitors' data, we see that there is still opportunity for a highly selective, well-tolerated G12D inhibitor, especially in early lines of therapy combined with chemotherapy. We look forward to sharing more data later this year, and that remains our perspective. Concerning the disclosures for the Povorcitinib HS studies, we have not yet made a decision on additional endpoints. We will need to communicate the overall results of the study, but we have not decided whether to include other endpoints in future releases.

Hey, good morning. Thanks for taking my question. Maybe on the BET inhibitor, can you talk about the role you foresee for that in a post-Jakafi monotherapy setting? And then what's your latest thinking on the frontline development path? What are you looking for out-of-the treatment naive combo data to move forward? And are we still looking for results from that this year? Thanks.

Certainly. So on the second-line, look, I think that today, as we know, eventually as good as Jakafi is for patients with myelofibrosis, eventually all patients progress and they need better treatment options when they progress. Obviously, in addition to the BET inhibitor, we're developing the mutant CALR antibody and the V617F inhibitor. But in the relatively near-term, we think that the BET inhibitor can provide a very good treatment option for patients with myelofibrosis that progress up to Jakafi. That's why we are accelerating that second-line program as much as we can. And we disclosed the basic design at ASH and you'll hear more of an update later this year. In terms of first-line indication for the BET inhibitor, what we need are more data. We need more clarity on the safety profile and the impact on endpoints that has a combination with Jakafi in previously untreated patients. We showed an update at ASH, which we think is very encouraging in terms of the ability to combine our BET inhibitor with Jakafi and the impact on spleen symptoms and importantly, the impact that we saw in hemoglobin in the presentation that we gave at ASH. So we're still encouraged by the data. I think we need additional data to make that decision and to have another conversation with FDA on a potential first study.

Hey, congrats on the quarter and thanks for taking the question. For ruxolitinib XR, I'll also congrats on achieving bioequivalence. Can you just talk about your plans to commercialize rux XR and also the timeline for a fixed-dose combination with your BET inhibitor? Thank you.

We are currently waiting for the completion of the stability study to submit to the FDA by the end of this year, which is a response to a complete response letter. This makes our timeline different from the initial expectation of commercialization in 2026; instead, we are looking at a window that extends to 2029 for the first generic of the twice-a-day regimen, approximately two and a half years from now. Our goal during this period is to treat as many patients as possible with the once-a-day formulation, similar to how Jakafi is utilized by most patients in various indications today. Regarding the first-line study and the BET combination, the overall program relies on the characteristics of the first-line combination, as well as the development of our portfolio in myeloproliferative neoplasms, particularly with CALR and V617F. However, those decisions have not yet been finalized, and we expect to have more clarity on how to integrate it with our BET inhibitor within the next year.

Great. Thanks. I have two questions. The first is about Povorcitinib in HS. You mentioned high scores at 50, 12, and 16 weeks. Could you provide any ranges for high score 75 that you believe would be meaningful and competitive given the changing landscape? My second question is regarding the tafasitamab first-line study in DLBCL. What do you consider as meaningful data compared to the control arm? Thanks.

Okay. So on the first one on Povorcitinib in HS, I'm going to have to give a similar answer to what I've given earlier, which is obviously, you want to see statistical significance for the primary endpoint. The key secondary endpoints obviously are not similarly powered, but they are important endpoints to show a clear difference with placebo. I don't think it's productive to really set a bar for what we have to clear. If you look at the data from the Phase 2 study with the 20% at week 12 and 13% placebo subtracted at week 16 for Povorcitinib, I think those are really strong results in the context of prior data releases in patients with HS. So if we are in the vicinity of those results, I think that's going to be a very important contribution. In terms of top line first-line, the first-line DLBCL study. As you know, this is a curative setting. So even a small impact on the primary input of the study, I think could be really, really important. And if you look at recent benchmarks such as the data that showed a modest impact on PFS has still led to substantial adoption in frontline patients. So I think it's a very clear indication where modest improvements could lead to potentially wide adoption because you're talking about potentially curative therapy.

Yes, thanks. Two for me. One, can you maybe just remind us on the learnings from the robust trial that were incorporated into frontline, where you think you can succeed when that trial failed? And then for the mutant CALR program, is that just going to be monotherapy this year or could we also get some Jakafi combo? And can you remind us preclinically if you saw any differential activity between Type 1 versus Type 2 mutations in CALR? Thank you.

In relation to the mutant CALR antibody, we have not yet made a decision on initiating a combination with Jakafi. We are still determining whether we will reveal any data regarding a Jakafi combination, as it is an important aspect of our development plan. While we do not commit to developing a combination for the mutant CALR antibody, we acknowledge that because of Jakafi's rapid and significant impact on patient symptoms and other outcomes, a potential treatment approach could involve a short induction with Jakafi followed by long-term maintenance therapy with the mutant CALR antibody. However, no decisions have been made at this time. We will provide further details on the future development plan for the mutant CALR antibody when we disclose the relevant data. We have indicated that Type 1 and Type 2 mutations differ substantially in their genetic structure and that the antibody's affinity for these two types is also quite distinct. As for what we anticipate observing in the clinic, we will share that information once we have the data results, but it is possible that we will see varying levels of activity in patients with different mutation types.

Thanks. Congrats on a big quarter in 2024. A couple more on Jakafi XR. I don't think you commented on the Cmax. Wondering how that looked as you increase the dose to boost the Cmin? And is there anything else that's dating approval other than the stability studies?

In terms of XR, you cannot achieve the same Cmax with a once-a-day formulation as you can with a twice-a-day formulation. The FDA is aware of this, and that was not the aim of the study. What needs to be met are the AUC at steady-state and Cmin at steady-state. As we indicated in the slide deck, both of those endpoints were achieved. The only factor holding us back is the stability studies. As I mentioned earlier, we have reviewed the study results with the FDA, and we have an agreement on the necessary stability studies for the resubmission in response to the CRL. We expect to complete this before the end of the year.

Hey, thank you for taking the question. So on Povorcitinib HS again, can you talk about specific protocol differences between your trial and other trials, especially from IL-17 antibodies? What have you learned from other trials? And what might you be doing differently to amplify your efficacy here? And then also in your base-case scenario, are you expecting only the high-dose to be approved or both doses? Thank you.

It is challenging to delve into specific differences between studies since we don't have all the details of every protocol available. We believe that the design of our Phase 3 studies aligns with how our competitors are researching patients with hidradenitis suppurativa. We structured our Phase 3 study to include a slightly higher percentage of patients in earlier disease stages rather than later stages. This was a critical consideration to minimize the placebo effect, which is more significant in patients with advanced disease. We aimed to replicate as much as possible from our Phase 2 study, including carefully selecting sites and conducting training sessions to ensure that the patient assessments by investigators matched those from Phase 2. The primary endpoint we chose was based on Phase 2 data, which was vital for evaluating how quickly we could deliver benefits to patients, particularly with the week 12 improvement that emerged as our best endpoint in the Phase 2 study. Regarding the dosing, we will engage with the FDA once we have the data. If both doses yield positive results, it could potentially lead to a broader label with different dosage ranges, but we will address that in discussions with the FDA once the data is available.

Hi, thank you for taking our question. This is Eric substituting for Salim. I'm looking to model Jakafi's performance through 2025 and would like to understand how to approach the growth compared to 2024. Specifically, will it be more concentrated in the first half or the second half of the year? Thank you.

So the guidance range that we provided implies a year-over-year growth of 5% to 7%. In terms of how to model it through the year, remember that Q1 always is the lowest quarter and lower than the prior quarter. And this is because of the reset of the deductibles at the beginning of the year, which on the commercial side, you would expect to continue to see this year. And even on the Medicare Part D, unless patients are yet to spread it through the course of the year, it will continue to have more of an impact in the first quarter of the year. So, expect Q1 to be the lowest quarter and lower relative to Q4 of 2024.

Hi guys. Thank you so much for taking my questions. Two for me. Just walk me through some of the initial assumptions for the pediatric Opzelura launch. What does this initial uptake curve look like and how much is factored into your guidance? And second, kind of a hypothetical here, would you ever consider a head-to-head trial with adalimumab in HS versus Povorcitinib, given that you want to establish yourself as a systemic standard-of-care in this market? I'm just thinking as this is a biosimilar market, you're coming in as a branded that could help you kind of get a leg-up here? Thank you.

Yes, Matteo here. I'll take the AD launch. We're very excited about the opportunity that we have there to help these patients between two and 11 years old, also because the very vast majority of them are still uncontrolled and pretty much on steroidal therapies. Obviously, in the second half of the year, we will see the initial uptake from the indication contributed to our net sales. But overall in terms of sizing at peak, we think that the opportunity will represent anywhere around 10% and 15% of the total atopic dermatitis Opzelura business.

Let me address the second question. We have not previously considered conducting a head-to-head study with adalimumab. There are a couple of important points to consider. First, we should wait for the results from the ongoing HS studies. Once we have the data, we will make decisions regarding future development. The issue with the data previously reported on Humira, as discussed among physicians, is that while the reported response rate was high, it has not been replicated since the original study, and the rate of drug failure with Humira is relatively quick. Patients with HS appear to progress rapidly. This is one of the reasons why HS has become such a significant market and indication for several companies, as there is considerable dissatisfaction with the real-world results associated with Humira. Therefore, at this time, we have not decided to conduct a head-to-head study in the future development of HS, and we will discuss it once we have the data.

Great. Thanks for taking my question. Just one. So on Povorcitinib in HS, I wanted to understand your view on the potential upcoming readouts from competitors. How would that impact your value proposition for Povorcitinib in this market? Thanks.

So a risk of being repetitive. So if we look at the Phase 2 data that we've reported in a number of places, both week 12, week 16 and the totality of the data across all the endpoints, high score 50, 75, 90, and 100 and pain response, we think we have a very competitive profile with Povorcitinib. Assuming everybody has a certain level of correction from Phase 2 to Phase 3, we believe that when you put together all the efficacy data together with the safety profile we saw in the Phase 2, that we have a very competitive profile with biologics and certainly with competitors in the market.

Thank you for taking my question. Regarding Jakafi, it appears that polycythemia vera is mainly driving growth. Could you discuss the patient population experiencing uptake and your growth expectations? Is this primarily from new patient additions or the duration of therapy as well? Additionally, aside from ruxolitinib XR and the V617F inhibitor, do you have any further life cycle management plans for your presence in polycythemia vera, which seems to be expanding? Thank you.

Yes, I can speak. Polycythemia vera is currently the fastest-growing indication, driven by earlier treatment. Our data indicates that early treatment can significantly reduce the incidence of thrombosis, which helps patients enjoy a longer thrombosis-free survival. We have been sharing results from the MAGIC study with physicians over the past year, and this has contributed to the adoption we are witnessing in PV, alongside the recent change in the Medicare copay for Medicare patients, which is also supporting growth in PV. As mentioned in our prepared remarks, we believe that PV will become the largest of the three indications over time, buoyed by an influx of new patients and the treatment duration we are observing in this area. In terms of our overall portfolio, the V617F mutation accounts for 80% to 90% of PV cases in the US, making it a crucial factor for our next generation of products at Incyte.

Thank you all for participating in the call today and for your questions. The IR team will be available for the rest of the day for any follow-up. Thank you and goodbye.