INCY - NASDAQ

Greetings, and welcome to the Incyte Fourth Quarter 2024 and Full Year Financial and Corporate Update Conference Call and Webcast. At this time all participants are in listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Ben Strain, Associate Vice President of Investor Relations. Please go ahead, Ben.

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 [indiscernible] 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 cashflow 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 vials 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 GVHD. 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 itch 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 PV, 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, reflects 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. I will now turn the call over to Pablo.

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 the 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 this 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 AD 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 PV, 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 AD and vitiligo in the US, initial contribution from the potential launch of Opzelura for pediatric AD 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

Certainly. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Michael Schmidt from Guggenheim Partners. Your line is now live.

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 -- 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.

And I think what -- in terms of setting the bar, when you look at the Phase 2 data and the improvement both on the global assessment of itching, as well as the [WNRS] (ph) endpoint, we think that if we are anywhere in the [indiscernible] Phase 2 trial showed, this is going to be a very important addition to [indiscernible] for patients with prurigo nodularis. The availability of a topical for patients that have perhaps less severe disease than those that may require systemic medicine such as Povorcitinib, we think it's going to be very important. So we want to be somewhere -- and as we all know from the extensive safety track-record of rux cream, it's a very, very well-tolerated medicine. So if we are anywhere near what the Phase 2 results showed, I think we're going to be -- it's going to be very important contribution for patients.

Thank you. Next question is coming from Tazeen Ahmad from Bank of America. Your line is now live.

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 [indiscernible] for the HS data 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, first of all, when you look at the guidance range that we provided the $630 million to $670 million for the year, it represents 24% to 32% year-over-year growth. And as we indicated in our prepared remarks, this is driven by continued demand growth in AD and vitiligo and also reflects the potential launch of Opzelura in pediatric AD in the second-half, a contribution in that -- from that indication and continued increased contribution from Europe. The range that we provided primarily reflects variations in the patient mix as well as in the level of patient activation rate and adherence in vitiligo and the level of contribution from Europe. In terms of the tubes, the level of tubes that especially around the vitiligo is reflected in the level of patient activation rate and adherence. We are seeing an increase in the average number of patients that are sticking with therapy and therefore refill their prescription and also in the average number of prescriptions per patient. But as we have commented in the past, this is an area that is evolving and we expect to continue to evolve as we pursue additional initiatives to help patients -- educate patients and help them appropriately use vitiligo -- Opzelura for vitiligo and that is reflected in the guidance range that we have provided. Finally, the other thing again to keep in mind, as you think about the guidance and how do you distribute it through the course of the year? Q1, as I mentioned in my prepared remarks, always tends to be lower than the previous quarter and the subsequent quarters. We saw that in 2023. We saw it in 2024 when we expect to see the same dynamics in 2025.

And let me take the second part of the question. Look, the first and most important thing is obviously to have a positive study or two positive studies. And that, as you know, means statistical significance for the primary endpoint, which in this case is high score 50 at week-12 in the two hidradenitis suppurativa studies for povo. Now beyond that, I think that when one looks at the Phase 2 results with the Povorcitinib study and you look at the totality of the data and that is effect on high score 50, 75, 90 and 100 as well as the strong effect on pain improvement that the study showed, together with the safety profile when the Phase 2 was very clean. In that study, there were no thrombotic events in the high dose povo arm. There were no patients that discontinued due to adverse events in the povo arm. So I think that the profile that we've seen in Phase 2 and we realize there's always a little bit of contraction in Phase 3, a little bit of a -- the results can change a little bit, but we believe the overall profile that we saw in Phase 2. If we are somewhere in the vicinity of replicating those results in the Phase 3 studies. We think we have a very competitive profile with Povorcitinib in hidradenitis suppurativa.

Thank you. Next question today is coming from David Lebowitz from Citi. Your line is now live.

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.

Thanks for taking the question.

Thank you. Next question is coming from Jessica Fye from JPMorgan. Your line is now live.

Hey guys, good morning. Thanks for taking my questions. A couple on povo in HS. 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 FDA at the right time.

Hey, Pablo, can I follow-up on one of the responses to? I think it was Tazeen 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. So if you remember, the placebo subtracted high score 50 a week 12 is 28% and at week 16 is 17% in the Phase-2 studies. That's I think what you're referring to. Look, we selected week 12. It's a key -- one of the key difference, I think when you look at the povo data, not just in HS, but also in PN, for example, is how quickly it works. And that is very important for patients with painful or intensely prodigious diseases like HS and PN. So that's the importance of the week 12. My comment was referring roughly to replicating the profile that we saw in Phase 2. I don't want to set a number. We're running the Phase 3 studies to have clarity on what the actual benefit of Povorcitinib is in large Phase 3 studies, Jess. So any -- the number -- the specific percentage that we see is not something we're going to comment on right now, but a profile that is consistent with the Phase 2 is what we expect to see in the Phase 3.

Thank you. Next question today is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Good morning. Thanks for taking my question. Just a follow-up here on povo. 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 then also in your 2025 guidance. Just speak to us about how you model for Part D redesign for Jakafi? Thank you.

Certainly, I think -- look clinical trials, particularly in diseases like HS, where they have a placebo effect, as you know, you're going to see some movement on the efficacy endpoints and the efficacy curve over-time. What we saw in the Phase 2 as both you and the previous caller Jess pointed out was that, from week 12 to week 16, there was a drop in the placebo-subtracted response with the -- in the povo arms. It's probably variability and noise related to clinical trials. We are not concerned about that. The studies are well-powered to demonstrate what we believe is a statistically significant difference between povo and placebo. And we think we'll see not only a statistically significant, but a clinically meaningful impact of povo and the primary endpoint, which is high score 50 at week-12, as well as the key secondary endpoints, which include obviously other levels of clinical benefit and other timepoints 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.

Thank you. Our next question today is coming from James Shin from Deutsche Bank. Your line is now live.

Hey, good morning, guys. I just wanted to follow-up on povo 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 [middle] (ph) conference? And then any update on the X2 program for CSU? Thank you.

So on povo 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 262, I don't have an update at this point. We are still completing the valuation 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.

Thank you. Next question is coming from Vikram Purohit from Morgan Stanley. Your line is now live.

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.

So let me start with mutant CALR. So as you point out, we'll have proof-of-concept data this year for both patients with ET and MF, that will come over the course of the year. What we expect to see and just to -- first of all, let me tell you a little bit about what you're going to see and it's going to be a substantive amount of data. We expect to have data different dose levels with some amount of follow-up in order to have clarity on some of the important measures of success for those programs. Obviously, we discussed over the past few months the importance for this program not only to show an impact on the traditional endpoints in-patients with Myeloproliferative Neoplasms such as blood counts, symptoms, spleen, et-cetera, but also to see some early evidence of the reduction, which we think is an important measure of success. This is not going to be obviously definitive data, but we want to have some evidence that a mutant CALR antibody in patients with ET and MF can show some evidence of early reduction. So that will all be part of the update. 617F, if you recall, started in the clinic later. We started dosing patients with MF in the third quarter of 2024. So it's a little bit behind. We intend to have an update this year and the same points apply basically to that program. We would like to see impact, not only the traditional endpoint, but some early evidence of early reduction in that program as well.

Thank you. Next question today is coming from Marc Frahm from TD Cowen. Your line is now live. Please go ahead.

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 [indiscernible] 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 in 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 a patient has started on the systemic antibiotic 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. Next question is coming from Kelly Shi from Jefferies. Your line is now live.

Thank you for taking my questions. I have two. Firstly, can you share a little bit more color on KRASG12D program. In terms of [POC] (ph) data what kind of like 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 povo, 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.

So let me -- thank you, Kelly. So in terms of KRAS, so the indications here as -- that are been the focus for us are pancreatic cancer and colorectal cancer. And specifically in pancreatic cancer, we're trying to accelerate enrollment because, obviously, it has become a very competitive space. We're fully aware of what our competitors are doing. We believe based on the profile here that we have preclinically, which is highly selective and potent G12D inhibitor that if we accelerate this program, we can still compete in this space. Now, it will come down obviously to the efficacy and safety that we see. But when we look at the data from our competitors, we think that particularly as you move to early lines of therapy in combination with the chemotherapy, there's still space for a highly selective, well-tolerated G12T inhibitor. So we look-forward to discussing data later this year, but that continues to be our view. In terms of what we're going to disclose for the povo HS studies in terms of other endpoints, that's not a decision that we've made at this point. Obviously, we'll have to -- we'll have to communicate the overall results of the study. So as I answered a little bit earlier here, but whether we add a number of other endpoints to other release, we haven't decided.

Thank you. Next question is coming from Brian Abrams from RBC Capital Markets. Your line is now live.

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 a better treatment options when they progress. Obviously, in addition to the BET inhibitor, we're developing the mutant CALR antibody in the V617F inhibitor. But in the relatively near-term, we think that the BET inhibitor can provide a very good treatment options for patients with MF 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.

Thank you. Next question today is coming from Jay Olson from Oppenheimer. Your line is now live.

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.

So maybe on the commercialization, I mean the timeline is basically we are now waiting for the end-of-the stability study to submit to FDA by the end of this year. So that will -- it's a response to a CRL. So it's a slightly different timeline than we should be commercializing in 2026, which if you look at the window it gives us versus the 2029, the first generic of twice a day is around two years and a half. And obviously, the goal of that during that period is to have as many patients as possible being treated with once a day as a single-agent as Jakafi is used today in most indications, in most patients. Now related to the first-line study and the BET combination, obviously, the whole program depends on what Pablo was just speaking about, which is the profile of the first-line combination. And also if you think about it of how the rest of our portfolio in MPN is evolving with the CALR and the 679. So none of that has been firmly decided yet, but that's probably going to be happening over the next year or so on how we can put it in combination with our BET inhibitor [indiscernible]

Thank you. Next question is coming from Eric Schmidt from Cantor Fitzgerald. Your line is now live.

Great. Thanks. Two questions here. This is [indiscernible] on for Eric. The first one on povo in HS. You shared about the high score 50, 12 and 16 week. I guess in terms of high score 75 as well, could you share any ranges of what you think would be meaningful and competitive data there in the evolving landscape? And then the second question is on the tafasitamab first-line in DLBCL study. What do you see as meaningful data there over the [indiscernible] arm? Thanks.

Okay. So on the first one on povo 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 subtract at week 16 for povo, 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 [indiscernible] data, which showed a modest impact on PFS is still has led to a substantial adoption of that in frontline patients. So I think it's a very clear indication where modest improvements could lead to a potentially wide adoption because you're talking about potentially curative therapy.

Thank you. Next question today is coming from Matt Phipps from William Blair. Your line is now live.

Yes, thanks. Two for me. One, can you maybe just remind us on the learnings from the robust trial that were incorporated into front line, 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.

So in terms of the mutant CALR antibody, we haven't really decided -- we haven’t initiated a combination with Jakafi. The specific details of what we're going to disclose. We haven't really decided, but it's possible that we'll disclose some Jakafi combination data. It's an important part of the development plan. And as we've discussed previously, we don't necessarily commit to a combination development for the mutant CALR antibody, but it's possible that because of the really rapid and strong impact of Jakafi on patient symptoms, particular, as you know, as well as other endpoints, a short induction with Jakafi combined with mutant CALR and then the long-term maintenance therapy with mutant CALR antibody could be a treatment paradigm. But none of that has been decided. We'll discuss the development plan, the future development plan for the mutant CALR antibody when we disclose -- when we disclose the data. What we have disclosed into the Type 1, Type 2 is that these are -- these two types of mutations are very different in the structure -- in the gene. And what we've discussed previously was that, the affinity for the antibody for Type 1, Type 2 is pretty different. In terms of what we expect to see in the clinic, we'll discuss that when we have the data results, but it's possible that we have a different level of activity in patients with different types of mutations.

Thank you. Next question is coming from Andrew Berens from Leerink Partners. Your line is now live.

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.

So in terms of XR, so look, you cannot replicate the Cmax with a once-a-day formulation compared with the twice a day formulation. The FDA understands that and that was not the purpose of the study. So that -- what you have to -- what you have to meet is obviously the AUC at steady-state and Cmin at steady-state. As we disclosed in the slide deck, both of those endpoints were met. The only gating factor is the stability studies. As I mentioned in my prepared remarks, we have discussed the results of the study with FDA and we have an agreement with them on the stability studies necessary for the resubmission for the response to the CRL, and we expect that, that will be done before the end-of-the year.

Thank you. Next question is coming from Andy Chen from Wolfe Research. Your line is now live.

Hey, thank you for taking the question. So on povo 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.

So -- and it is difficult to get into specific differences between studies because we don't have all the details of every protocol that's out there. We think that the design of the Phase 3 studies is consistent with the way our competitors are studying patients with hidradenitis suppurativa. We designed a Phase 3 to have a slightly higher percentage of patients with [indiscernible] as opposed to [indiscernible]. That was an important point that we wanted to emphasize in order to reduce the placebo effect since it's harder in patients with more advanced disease. And that was an important point that we wanted to emphasize. I think that the couple of things that we did, as well as we were carefully selecting sites. We run a series of trainings with the sites, which was consistent what we did in the Phase 2 to make sure that the way these patients are assessed by the investigators is consistent what we did in Phase 2. So we try to replicate in Phase 3 as much as we did in Phase 2. And obviously, as I mentioned earlier, the primary endpoint we selected based on the Phase 2 data, I think that was an important lesson in order to really see how quickly we can provide benefit to patients with a week 12 improvement, which also was the best endpoint for us in our Phase 2 study. In terms of the dose, when we have the data we'll discuss with FDA, obviously. Yes, it's possible that if both doses are positive, we will lead to a broader label with different range of doses, but we'll discuss that when we have the data with FDA.

Thank you. Next question is coming from Salim Sayed from Mizuho. Your line is now live,

Hi, thanks for taking our question. This is Eric on for Salim. So just looking at modeling Jakafi through 2025, just wondering how we should think about the change -- the growth versus 2024 and how we should think about that through the year? It's more loaded in first-half, second-half, anything like that? 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.

Thank you. Next question is coming from Evan Seigerman from BMO Capital Markets. Your line is now live.

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 adalimumab head-to-head trial in HS versus povo, 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 getting 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 take the second one. We have not discussed in the past whether to conduct a head-to-head study with adalimumab. There's a couple of points there. First of all, we -- let's wait to see the data for the HS one that -- for the two HS studies that are coming. Once we have the data in-hand, we'll make decisions about future development. The challenge with the data that has been reported in the past with Humira and when you discuss this between physicians is that, while the response rate that has been reported was high and which has not been replicated since the original study, the drug failure on Humira is relatively fast. Patients seem to progress, patients with HS seem to progress relatively quickly. So we -- this is one of the reasons why HS has become such an important market, such an important indications for a number of companies, because there's a fair amount of dissatisfaction with the data, with the results in the real-world with Humira. So at this point, we haven't made a decision to do head-to-head study future development in HS. We'll discuss it after we have the data.

Thank you. Next question is coming from [Ash Ferma] (ph) from UBS. Your line is now live.

Great. Thanks for taking my question. Just one. So on povo in HS, I wanted to understand like what is your view of the potential upcoming readouts from competitors? You have [indiscernible] how would that impact your value proposition for povo 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 povo. 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 [indiscernible].

Thank you. Next question is coming from Kripa Devarakonda Truist Securities. Your line is now live. Q - Srikripa Devarakonda Hey guys, thank you so much for taking my question. On Jakafi, it seems like PV is primarily driving growth. Can you talk about the patient population where you're getting uptake and what are the -- what the expectations are in terms of growth? Is it primarily through new patient adds or duration on therapy as well? And beyond rux XR and the V617F inhibitor, any additional life cycle management plans for your footprint in PV, which seems to be growing? Thank you.

Yes, I can speak. I mean the -- as you see, I mean PV is [indiscernible] indication is the one that is growing the fastest and it is driven by earlier treatment and that's based on the data we have shown that by treating early, you can basically reduce the incidence of trombosis. So basically help patients have a longer trombosis-free survival. And that's a -- that was the MAGIC study that we have been sharing with physicians over the past year and it has been driving this adoption that we are seeing in PV as well as the change in the Medicare co-pay for the Medicare patients, which is also helping in PV. So we, as we said in the prepared remarks, we think PV will become the largest of the three indications over-time, driven by this new patient -- this new earlier patient flow and the duration of treatment we are observing in PV. Regarding the overall portfolio, obviously, V617F mutation is the cause of 90% -- 80% to 90% of PV cases in the US so that will be the key driver of the next-generation of products for Incyte.

So thank you. We've reached end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments. Thank you.

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.