Incyte Corporation (INCY) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Q2 Performance: Incyte reported a 9% year-over-year growth in total revenue, exceeding $1 billion. Net product revenue grew by 10%, driven by Jakafi and Opzelura.
• Strategic Acquisitions and Focus: The acquisition of Escient Pharmaceutical added two first-in-class medicines to Incyte's portfolio. A $2 billion share repurchase was completed, underscoring confidence in their clinical pipeline and commercial business.
• Pipeline Transformation and Advancements: Significant progress in transforming the clinical pipeline with the addition of potentially transformative clinical programs and the deprioritization of some immune oncology programs.
• Jakafi and Opzelura Demand Growth: Jakafi net product revenues were $706 million, up 3% year-over-year with a 9% increase in paid demand. Opzelura net product revenue was $122 million, up 52% compared to the same quarter last year.
• European Market Penetration for Opzelura: Opzelura is now reimbursed in Germany, France, Italy, and Spain, with net sales during the second quarter mostly driven by Germany and France.

Pessimistic Highlights

• Pipeline Restructuring: Incyte discontinued several programs, including oral PD-L1, LAG-3 monoclonal antibody, TIM-3 monoclonal antibody, and LAG-3xPD-1 bispecific program, based on data review and evolving treatment landscape.

Company Outlook

• Raised Jakafi Revenue Guidance: Based on strong demand, Incyte raised the bottom end of its full-year 2024 Jakafi net revenue guidance to a new range of $2.71 billion to $2.75 billion.
• Anticipated High-Impact Launches: Incyte expects to deliver more than 10 high-impact launches by 2030, focusing on areas with limited treatment options.
• R&D Investment and Portfolio Prioritization: Incyte is focusing on programs with the highest potential impact, maintaining a reasonable R&D spend with improving ratios.

Q & A Highlights

• Q: Can you drill more into the key determinants of the pipeline restructuring? (Kripa Devarakonda, Truist Securities)

  A: The restructuring was driven by data review and the progression of promising data from the earlier-stage pipeline. The retifanlimab data did not impact the decision. (Pablo Cagnoni)

• Q: What are your go-forward expectations for Jakafi share in myelofibrosis, specifically in new patients in the frontline setting? (Paul Jeng, Guggenheim Partners)

  A: Growth in MF patients is continuing, with new patients in the quarter for MF up more than 2%. Jakafi's growth is mainly driven by PV and GVHD, with minimal impact from competitors. (Barry Flannelly)

• Q: As we look towards ESMO and the CDK2, what should we be looking for? (Brian Abrahams, RBC Capital Markets)

  A: The focus will be on ovarian cancer, showing a data set that captures the dose escalation and supports further development, along with a development plan for this molecule in patients with ovarian cancer. (Pablo Cagnoni)

• Q: For the ALK2 inhibitor data expected in the second half of the year, what are your expectations? (Vikram Purohit, Morgan Stanley)

  A: The study is enrolling well, and we're on track to report results from the pivotal study next year with a potential approval as early as 2026. (Steven Stein)

• Q: Could you comment on the demand for PV and how much impact IRA had to this point in the numbers? (David Lebowitz, Citi)

  A: The growth in PV is driven by the efficacy of Jakafi in the disease. The IRA and the elimination of catastrophic coverage help all patients, making all oncology drugs more affordable. (Barry Flannelly)

• Q: On R&D spend and the portfolio prioritization, what is your solution to what a proper investment is in R&D at this stage? (Eric Schmidt, Cantor Fitzgerald)

  A: The approach to R&D spending is project-specific, focusing on high potential programs and stopping programs where Incyte is not in a good competitive position or the data is not confirming expectations. (Herve Hoppenot)

• Q: For the LAG-3 assets, was it lack of differentiation from an existing asset that led to discontinuation? (James Shin, Deutsche Bank)

  A: The main determinant for discontinuing the LAG-3 programs was the competitive landscape, being far behind competitors. (Pablo Cagnoni)

• Q: Looking ahead to the proof-of-concept data for the MRGPRX4 antagonist, should we think about the data shared by Mirum in PBC as a potential benchmark? (Jessica Fye, JPMorgan Chase)

  A: The benchmark for Mirum is a reasonable place to start, with a focus on the great safety profile seen so far for both MRGPRX2 and MRGPRX4 antagonists. (Pablo Cagnoni)

• Q: Are there recent publications showing synergistic efficacy from combining JAK inhibitors with PD-1 antibodies? (Jay Olson, Oppenheimer & Company)

  A: There's interest in the potential for JAK inhibition to modulate the T cell environment positively and enhance checkpoint inhibition, but no current R&D sponsored plans there. (Steven Stein)

• Q: With the recently completed large share repurchase, how much capacity do you have left for further business development? (Evan Seigerman, BMO Capital Markets)

  A: Incyte has a strong balance sheet with $1.5 billion in cash and no debt, retaining financial flexibility for more business development if chosen. (Christiana Stamoulis)

• Q: For Opzelura, could you quantify the impact of the preferred formulary placements achieved for 2024? (Marc Frahm, TD Cowen)

  A: The preferred position gained in CVS was a key contributor to growth, improving accessibility and execution of support programs for commercial eligible patients. (Matteo Trotta)

• Q: What are your latest thoughts on developing tafasitamab in autoimmune diseases? (Reni Benjamin, Citizens JMP)

  A: Incyte is conducting a full evaluation on the opportunity for tafasitamab in autoimmune diseases, considering the competitive landscape and remaining opportunities. (Pablo Cagnoni)

• Q: On the back of the portfolio prioritization and the Escient acquisition, do you feel comfortable that you can offset Jakafi LOEs and grow beyond as well? (Salveen Richter, Goldman Sachs)

  A: Incyte's portfolio, with 10 launches in the next few years and 12 NCEs in development, provides a growth profile that goes beyond the Jakafi patent expiration. (Herve Hoppenot)