The operator introduces the Incyte Fourth Quarter Earnings Call and Webcast. Ben Strain, Associate Vice President of Investor Relations, welcomes everyone and reminds them to access the press release and related materials on the company's website. Hervé Hoppenot, along with other members of the company, will discuss the financial results and make forward-looking statements. The company had a strong year with 2023 product and royalty revenues reaching $3.7 billion and achieving $1 billion in quarterly revenue for the first time. Jakafi and Opzelura both saw growth, with Jakafi reaching $2.6 billion in net sales and Opzelura reaching $338 million, driven by new patient and refill acquisitions in both AD and vitiligo. The company expects Opzelura to continue contributing to growth in the next year.

On Slide 7, Incyte's clinical pipeline has the potential to launch 10 transformative therapies by 2030, with several programs already de-risked. The recent acquisition of tafasitamab from MorphoSys will provide short-term benefits, including increased revenue and cost efficiencies, and is expected to have a positive impact on Incyte's revenue and operating income in 2024.

The acquisition of tafasitamab will provide potential for growth in second line follicular lymphoma and marginal zone lymphoma, as well as first line DLBCL. Incyte will fully benefit from these indications if the Phase 3 data are positive. Jakafi net product revenue grew 7% in the fourth quarter and 8% for the full year, with growth seen across all indications. There were some variations in Jakafi dynamics during the fourth quarter, including an increase in patients on free drug and inventory fluctuations. The company expects continued growth for Jakafi and has updated its full year net product revenue guidance. Jakafi maintains its leadership and market share in MF, with no impact from competitors according to market research.

In the fourth quarter, Jakafi demand remained strong and is expected to continue growing due to its effectiveness in treating myelofibrosis, polycythemia vera, and chronic graft-versus-host disease. Opzelura also had a successful fourth quarter, with net product revenues increasing by 78% compared to the previous year. Total 2023 net sales grew by 162%, driven by increased demand and refills from both atopic dermatitis and vitiligo patients. Opzelura has been well-received by physicians and patients, and continues to outperform other dermatology products in terms of monthly prescriptions and quarterly net revenues.

Opzelura's successful launch is due to its strong product profile and ability to address unmet needs in atopic dermatitis and vitiligo. The company has initiatives in place to drive demand in 2024, including improving access and utilization management. In addition, they are focused on increasing patient awareness and education for vitiligo treatment options. The company's R&D efforts are focused on developing innovative treatments for MPNs, graft-versus-host disease, oncology, and inflammatory diseases. They aim to deliver best-in-class and first-in-class medicines to address significant unmet needs.

The company's discovery process focuses on identifying and developing novel targets for diseases, with a particular focus on MPNs, graft-versus-host disease, and oncology. They have made significant advancements in their R&D portfolio, including submitting a BLA for a chronic graft-versus-host disease treatment and initiating studies for various potential therapies. They also have a new program in development for a KRASG12D inhibitor. In dermatology, they have received approval for a vitiligo treatment in Europe and have positive data for other skin conditions.

In 2023, Incyte had a successful year with positive Phase 2 data for povorcitinib in vitiligo and initiation of Phase 3 studies. They also announced positive results in a Phase 2 study for prurigo nodularis and initiated two Phase 2 studies for asthma and chronic spontaneous urticaria. This positions Incyte as the only company with both topical and oral options for a range of indications. 2024 is expected to be another exciting year with multiple clinical and regulatory milestones, including data on their CDK2 inhibitor and tafasitamab in follicular and marginal zone lymphoma. They also submitted a BLA for axatilimab and plan to initiate additional combination studies for chronic graft-versus-host disease.

In the dermatology portfolio, a sNDA for Opzelura for pediatric atopic dermatitis is expected to be submitted, and multiple data readouts are anticipated throughout the year. The call was then passed to Steven, who discussed clinical development pipeline updates, including the presentation of over 40 hematology and oncology abstracts, a plenary presentation at the ASH Annual Meeting, and the submission of a BLA for axatilimab for the treatment of chronic graft-versus-host disease. The BET inhibitor is showing promising results and will be advanced to Phase 3 later this year. Positive Phase 3 data for ruxolitinib cream in pediatric patients was also presented, and the sNDA is expected to be submitted by mid-2024 with potential approval in 2025.

The paragraph discusses the progress and results of several studies for different dermatological conditions. Ruxolitinib cream met its primary endpoint in a Phase 2 study for hidradenitis suppurativa and is currently being evaluated in Phase 3 studies for prurigo nodularis, lichen planus, and lichen sclerosus. Povorcitinib, an oral JAK1 inhibitor, has also shown promising results in a Phase 2 study for prurigo nodularis and is being evaluated in Phase 3 studies for hidradenitis suppurativa and vitiligo. The company also presented data from an open label extension of a Phase 2 study for povorcitinib in HS, showing a decrease in disease severity and maintenance of response through week 52. The company's IL-15 receptor beta antibody is also being evaluated in healthy volunteers.

Incyte's datasets for povorcitinib show its potential as a treatment for HS. Phase 3 studies for HS are ongoing. Incyte's oncology pipeline includes tafasitamab, a small molecule oral PD-L1 program, and a small molecule CDK2 inhibitor. Incyte also announced a Phase 1 study for INCB161734, a KRAS G12D inhibitor with promising preclinical results. The KRAS G12D mutation is found in multiple types of cancer and could be a significant opportunity for Incyte if successful.

The company expects several updates on their pipeline in 2024, including presenting results from Phase 2 studies at a medical conference in the first half of the year. The second half of the year is expected to be catalyst-rich, with potential approvals and Phase 3 results. The company also saw strong financial performance in 2023, with total product revenues of $862 million in the fourth quarter and $3.2 billion for the full year. Total revenues reached $1 billion in the fourth quarter, driven by growth in Jakafi sales despite a negative impact from an increase in free drug and channel inventory levels.

In the fourth quarter, net product revenues for Opzelura increased by 78% year-over-year, reaching $109 million. This was mainly due to increased patient demand. For the full year, Opzelura net product revenues were $338 million, a 162% increase from the previous year. R&D expenses decreased by 11% in the fourth quarter, but increased by 3% for the full year due to pipeline progression. SG&A expenses increased by 8% in the fourth quarter and 16% for the full year, mainly due to increased sales and marketing activities for Opzelura. For 2024, the company expects net product revenues for Jakafi to be between $2.69 billion and $2.75 billion, on track to reach their long-term goal of over $3 billion in net product revenues by 2028.

The company expects net product revenue growth to be driven by demand and partially offset by lower pricing due to imposed caps and growth in 340B volumes. The gross to net adjustment is expected to be higher in the first quarter due to higher deductibles and share of donut hole for Medicare Part D patients. Opzelura net product revenues are expected to be lower in the first quarter due to typical Q1 dynamics. For other hematology/oncology products, the company expects total net product revenues to grow by 47% over 2023. COGS is expected to remain consistent with 2023, while R&D expenses are expected to increase by 7% primarily due to pipeline progression.

The company expects SG&A expenses to increase due to the inclusion of sales and marketing expenses for Monjuvi in the US. The call is now open for Q&A, with the first question regarding the potential stabilization of Jakafi's market share in myelofibrosis and the potential impact of the approval of pelabresib in combination with Jakafi. The company believes myelofibrosis will continue to be the largest portion of their patient share, but the approval of pelabresib could potentially benefit Jakafi.

During a conference call, Andrew Berens from Leerink asked about the development of Jakafi XR and the impact of Novartis' recent bid for MorphoSys. Incyte's CEO, Hervé Hoppenot, explained that their agreement with Novartis allows for co-development of new formulations of ruxolitinib in oncology, including the once-a-day version. Steven Stein, Incyte's Chief Medical Officer, added that they have received clear feedback from the FDA to demonstrate the efficacy of the new formulation, which they estimate will be completed within two years. This development does not affect their plans for fixed-dose combinations with other products.

The speaker discusses the company's BET inhibitor, which has shown promising results in reducing spleen volume and improving symptoms in patients. They mention the standard for approval in first-line treatment and cannot comment on other companies' regulatory progress. The speaker then addresses the potential for their drug povorcitinib in treating multiple indications, including HS and PN, and highlights its efficacy and unique properties compared to other treatments. They also mention the successful enrollment in Phase 3 trials for povorcitinib.

The company is optimistic about their lead indication, which tackles multiple aspects of the disease and has a long half-life and high volume of distribution. They believe it will be a convenient once-daily oral tablet and have strong data for itch relief and skin change resolution. They also have a program for ALK2 with POC data expected by mid-2024, and they will review this data to determine the next steps for development. Additionally, they have a mutant CALR antibody program, but no specific timeline was given for initial Phase 1 data.

Pablo Cagnoni, CEO of Acceleron Pharma, discussed the progress of the ALK2 inhibitor program and the mutant CALR antibody program during a recent conference call. For the ALK2 inhibitor program, the team is focused on establishing efficacy in a larger number of patients with newly diagnosed MF in combination with ruxolitinib. They are also working to increase the dose and duration of therapy. Data is expected to be released this year, and the next steps for the program will be clarified. For the mutant CALR antibody program, dose escalation has recently started and the study is accruing well. The initial goals are to establish safety, pharmacokinetics, and initial evidence of efficacy. Data may be presented this year or in 2025. Another question was asked about Opzelura, but the response was not included in this paragraph.

The speaker responds to a question about the launch trajectory and future growth of AD and vitiligo treatments. They mention the unmatched profile of their therapy and the interest of payers in delaying or avoiding biologic treatments. They also mention their goal to maximize the value and net sales of their product, and any potential discounts would be made with the intention of improving access and increasing volume. The next question asks for clarification on this topic.

The speaker asks for an update on the sales and potential guidance for Opzelura, and whether the company will break out sales for vitiligo and atopic dermatitis. The speaker also asks for a quantification of the growth opportunities for tafasitamab in follicular and marginal zone lymphoma. The company responds that currently, 60% of Opzelura sales are for atopic dermatitis and 40% for vitiligo, but this may change. They also mention the potential for positive data in new indications for tafasitamab, but cannot give a calibration until Phase 3 data is available. They estimate there are 29,000 patients in first-line diffuse large B-cell lymphoma and 13,000 in second-line plus follicular lymphoma in the US.

In response to a question about the negative impact of Medicare Part D patients receiving free product on fourth quarter revenues, Barry Flannelly explains that this was due to changes in the availability of financial assistance from charitable foundations. He also discusses the potential impact of Medicare changes in 2024 and 2025, which will reduce out-of-pocket costs for cancer patients and likely result in more patients being able to afford the drug. This is seen as a positive development and may lead to more patients staying on the drug instead of abandoning it due to high costs.

The company expects patients who abandoned drug therapy due to high costs to return now that Medicare Part D has reduced prices. They anticipate that the proportion of free Jakafi patients will remain consistent with historical levels. The recent decrease in volume is attributed to normal year-end seasonality, but they expect a reacceleration in the second and third quarters. Opzelura has launched in Germany and Austria and the company is currently discussing pricing for vitiligo in Europe.

The price for Opzelura is €750 per 100-gram tube. The company has received reimbursement in France through a program called Accès Direct, and will start recognizing revenue when the price is approved. They are also working on getting reimbursement in other European countries. The company initially focused on vitiligo for reimbursement reasons, but is also conducting studies for atopic dermatitis. The payer mix does not differ between the two indications. The company does not have a specific estimate for the number of tubes used per patient for a full year.

The company has previously stated that for AD, the average number of tubes used is around two, but this is expected to increase as patients use the drug over larger areas of their body. For vitiligo, it is too early to determine the average number of tubes used. The company anticipates higher refills for vitiligo compared to AD. Regarding payer dynamics, the company cannot quantify the level of script abandonment for Jakafi, but it is at least 10%. They have seen some formulary wins for Opzelura, but they will only give price concessions if they see enough volume benefit to end up with a net sales benefit.

The company is unsure of the number of patients who could benefit from their product, Jakafi, due to high out-of-pocket costs. They hope to see improvement in this area in the next few years. They also discuss their recent acquisition of tafa and mention rumors of a potential bid for MorphoSys. Another question is asked about the development of Jakafi XR and the CEO explains that it is a complex process that will take two years to complete.

The company believes that the impact on their bottom line will be minimal in the short term but positive in the long term, regardless of the outcome of their new indication. They have a full pipeline of projects in the field of myelofibrosis and do not currently prioritize acquisitions. The delay in XR formulation is due to missing on Cmin in the submission, but they are confident in their new formulation and expect to have it completed by the end of the year.

The speaker, Barry Flannelly, answers a question about patient retention for Opzelura, a drug for vitiligo and atopic dermatitis. He explains that while patients with eczema may only use the drug during flares, vitiligo patients can use it for up to two years. He also mentions the potential for patients to continue using the drug as needed for future flares. The second question is about the entry of competitors into the market for MF (not defined), and whether this could lead to market expansion.

The speaker discusses the importance of patient education and adherence in the treatment of vitiligo and mentions their market leadership in the myelofibrosis space. They also mention the potential for expansion in the market with the approval of other drugs. The safety profile of their CDK2 inhibitor is also mentioned, with no reported ocular toxicity or cytopenia.

The speaker thanks the audience for their participation in the call and mentions that they will continue to share data and future plans for their CDK2 inhibitor program. The operator then concludes the call and thanks everyone for their participation. The IR team will be available for the rest of the day.

This summary was generated with AI and may contain some inaccuracies.