Paul A. Friedman – Former President and Chief Executive Officer
Herve Hoppenot – President and Chief Executive Officer
Cory Kasimov – JPMorgan Chase & Co.
Incyte Corporation. (INCY) JPMorgan Healthcare Conference January 13, 2014 11:30 AM ET
Cory Kasimov – JPMorgan Chase & Co.
Good morning everyone. My name is Cory Kasimov, I’m the senior biotech analyst at JPMorgan and it is a truly my pleasure to introduce our next company here today, which is Incyte Corporation.
And here to present for Incyte, is the company’s President and CEO Paul Friedman and he is somewhat sad, it will be Paul’s last presentation the JP Morgan conference given that there is a CEO transition that was just announced this morning.
Following Paul’s presentation there will be a breakout session just across the hall in the Georgian Room.
So, with that, I will turn it over to Paul.
Paul A. Friedman
Thank you, Cory. Good morning. I’m going to tell you today, why our tagline the drive to discover and experience to deliver, which we coined in 2003 still holds true. In that regard, some of you may have seen our press release this morning that Hervé Hoppenot, who also embraces this vision has been named as the new CEO of Incyte.
At the end of my presentation, Hervé is going to join me on the podium to say a few words, is the usual small print I ask that you review our latest SEC filings for a summary of risk factors that may cause actual results to differ materially from any forward-looking statements.
2003 was another eventful productive year for the company. We delivered solid sustained growth in sales of Jakafi or oral JAK1/JAK2 inhibitor approved for use in patients with intermediate or high-risk myelofibrosis.
We ended the year on a strong note and we look forward to sharing 2013 product revenue results and our guidance for 2014 in February. Our product development programs advanced along multiple fronts. We anticipate FDA approval of Jakafi for polycythemia vera by yearend with compelling results and prospectively plan subgroup in our Phase II study of Jakafi and pancreatic cancer to stage a set for the potential use of JAK inhibitors including our wholly owned JAK1 selective compounds in multiple solid tumors.
Emerging data suggest that our novel proprietary IDO1 inhibitor INCB24360 may add value in treating solid tumors particularly when combined with other checkpoint inhibitors.
In information our strong alliance with Lilly is position to capture full potential for our second JAK1/JAK2 inhibitor baricitinib being evaluated in pivotal trials in rheumatoid arthritis as well as in Phase II trials in psoriasis and diabetic nephropathy.
And also based on unambiguously positive data from proof-of-concept trials, we are confident that our fully owned JAK1 inhibitors have the potential to benefit patients with chronic inflammatory conditions.
Through the course of the year, we also restructured and strengthened the balance sheet in a cost efficient way with minimal dilution and finally as a reflection of all the above our shareholders recognized a very meaningful increase in value in 2013.
As reported we ended the third quarter with approximately $291 million in cash and our net product revenues for the first three quarters of 2013 were $162.6 million. In November we announced the completion of a private placement of $750 million of convertible senior notes and importantly because we repurchased a $117 million of our 2015 notes, which had a much lower straight prices than our new notes.
The dilution related to the $229 billion of net proceeds was minimal, an increase of approximately 1 billion shares on a fully diluted basis. With pro forma of cash balance a $520 million as of September 30th will well position to increase the investment in our development pipeline this year.
And indeed, Incyte has a growing robust pipeline, while I will spend most of this presentation describing our oncology programs; we also have a number of compounds including baricitinib that target chronic inflammatory diseases.
At first proof-of-concept studies with our lead JAK1 inhibitor INCB39110 in RA and psoriasis showed that 39110 improved efficacy by multiple measures, as compared to placebo and it was generally well-tolerated importantly without evidence to myelosuppression. Because we committed 39110 to further studies in oncology, we are advancing our second JAK1 inhibitor INCB47986 into inflammation; we plan to initiate a Phase II trial in our array in the first half of this year.
And as we did with the development of ruxolitinib and baricitinib, where we pursued oncologic and chronic inflammatory conditions with distinct molecules we are position to do the same with JAK1 program, which includes several very interesting follow-on compounds that just entered the clinic this year.
Regarding baricitinib, we see major opportunity in RA. While the majority of sales for the three anti-TNF inhibitors Humira, Remicade and Enbrel is in the treatment of patients with RA. They remain significant unmet need there, in a large part because third of the patients don’t respond to these treatments.
Additionally, there are patients who refused treatment biologics because of how they are administered. In our market research says, that the ideal RA product would be administered orally once a day, have efficacy at least equivalent to the anti-TNF inhibitors and not the dose limited by off-target toxicities. And this could be demonstrated during the Phase III program by having head-to-head data for comparison, and in addition, it would show inhibition a progression or structural damage.
The internal readout results from the first of multiple trials in the baricitinib RA Phase III program is expected this year with data presentation to come in 2015. And other of the trials is in fact fully powered to offer comparisons to Humira. So we believe baricitinib should be well positioned to deliver only ideal product profile for RA patients, and we are confident that baricitinib has the opportunity to capture significant portion of the RA market. And as an indication of our conviction, we opted to co-fund the Phase III program in RA with Lilly making Incyte eligible for tiered royalties upto the high 20s.
So now moving to oncology. Incyte is well positioned to build a strong, diversified long-term franchise. Our efforts will be focused on five discrete opportunities myeloproliferative neoplasms, cancer inflammation, immuno-oncology, targeted combinations as well as our discovery engines. For MPNs we expect continued steady growth with Jakafi at MF with consistent new patient starts as well as continued improvements and persistency.
We expect increased physician awareness of the value of treating early with Jakafi and shown in scientific presentations, publications and independency in the activities. Jakafi’s benefits include not only durable improvement in splenomegaly and symptoms, but the potential for disease modifying effects including improved survival has shown in our controlled Phase III trials, and the impact on bone marrow fibrosis.
And in this regard, the FDA has accepted our submission of an sNDA to include certain survival data in the label for Jakafi, and we expect its response later this year the PDUFA date is mid-August.
We always expected competition in the MF market, which will ultimately benefit patients in which we fully expect will come. But for at least the next three years, we’d likely to remain the only approved product for myelofibrosis. And that time a market exclusivity is potentially even longer in a polycythemia vera.
Confident of the remaining substantial opportunity in MF, we have recently expanded our sales force. We intend to maintain the momentum we have in the MF market and build on it with the anticipated launch in PV.
The addressable patient population for PV is larger than that of MF. Additionally the length of treatment in PV is likely to be longer than in MF. There at least a 100,000 PV patients in the U.S. and 60% who can take hydria HU or have previously taken AND discontinued from side effects or lack of efficacy.
We estimate that approximately 25,000 patients are intolerant or refractory to HU. And there are additional patients, who are not well controlled with phlebotomy, who refuse HU out of safety concerns.
These uncontrolled PV patients are similar to MF patients in that they often have enlarged spleens and experience debilitating symptoms. Yeah they differ in that they have the elevated red blood cell mass. So a primary treatment goal for PV patients to reduce and maintain hematocrit levels below 45% was achieved in essentially all patients. In the Jakafi Phase II study as were the expected reductions in spleen size and improvement in symptoms.
The top-line data from response, our FDA approved registration study for PV should be available in the March-April timeframe. We expect to submit the sNDA for the treatment of PV patients resistant to or intolerant of HU in June, given the FDA’s granting of fast track status and thus assuming a six month review we would potentially have approval by yearend and hopefully in time for ASH.
Also results from the fully enrolled symptom improvement study relieve should be available around the time of launch at which point we intend to submit a label update on symptomatic benefit.
A second key area of focus is cancer inflammation. This is a subject of significant scientific in medical interest in the oncology field and one which Incyte by virtue of its leadership position in the JAK inhibitor space is well positioned to address.
The cancer inflammation is a dis-regulated adaptive process driven by the tumor and the body’s response to that tumor. Resulting in both pro-inflammatory cytokine production and signaling within the local tumor microenvironment, as well as systemically. This process contributes to many of the hallmark features of cancer including those relating both of the tumor such as proliferation, resistance to cell death, and anti-tumor immune evasion as well as to the whole body’s metabolism, such as cachexia, muscle loss, and poor performance status. And this process has been associated with resistance of therapy and reduced overall survival.
The inflammatory features of cancer and their sequelae are common occurrences across many tumor types, ranging from say 30% to greater than 75% depending on a particular tumor type.
Literature reports, as well as our own internal research efforts have indicated that JAK/STAT signaling may be a fundamental importance to cancer inflammation. With emerging data from ruxolitinib and pancreatic cancer, which I will describe next, and with a portfolio of JAK1 selective inhibitors, Incyte is in a leading position to explore the therapeutic impact of targeting cancer inflammation across multiple solid tumor types.
Top-line results from RECAP, which studied ruxolitinib plus capecitabine versus capecitabine and second-line pancreatic cancer, showed a hazard ratio for overall survival of 0.47, favoring the ruxolitinib arm in a prospectively defined subgroup of the patients. Preselected based on the characteristics rooted in the biology I just described and therefore most likely to benefit by JAK pathway inhibition. The subgroup of interest in RECAP represented approximately half of the randomized population.
So based on these data and the abundance of the subgroup and many other solid tumors, we strongly believe that JAK inhibition represents a new treatment approach for pancreatic cancer and other solid tumors. Published reports and our own preclinical data also suggest that selective JAK1 inhibition may be similarly effective to a JAK1, JAK2 inhibitor in these indications. This provides its own spectrum of opportunities particularly in patients in whom more myelosuppressive chemotherapy is wanted and in whom can current ruxolitinib therapy may be less well tolerated. And with that in mind, we are advancing both ruxolitinib and our JAK1 inhibitor 39110 in a number of clinical trials in solid tumors.
The FDA has granted orphan status for ruxolitinib for the treatment of pancreatic cancer. We have also reached agreement on a Special Protocol Assessment SPA, SPA for a registration trial in the second line setting. Very importantly the FDA agreed that we could limit the study to the subgroup, which showed the greatest benefit in the Phase II RECAP study and that there was no need to develop companion diagnostic. This one study may be sufficient to support approval if the results are sufficiently robust, in order to minimize that risk, we are going to conduct a second nearly identical of Phase III study.
Enrolment into these double-blind placebo controlled study should begin in the first half of this year. Each is expected to enroll about 300 patients, who failed or who were intolerant to first-line therapy and who are part of the subgroup that showed benefit in the RECAP trial. Patients will receive either ruxolitinib or placebo combined with capecitabine and the primary endpoint is overall survival.
Additionally, we planned three placebo-controlled Phase II trials to evaluate ruxolitinib in non-small cell lung cancer, colon cancer and breast cancer, starting in the first half of this year. Each study will focus on the subgroup identified in RECAP, will combine ruxolitinib with therapies with low to moderate myelosuppressive effects and will have overall survival as a primary endpoint.
We are also advancing the JAK1 selective inhibitor 39110 in solid tumor trials, selective JAK1 inhibition may provide a similar benefit to patients with solid tumors has does dual JAK1/JAK2 inhibition yet with less myelosuppression given its JAK2-sparing profile. And to evaluate this, we will conduct two placebo-controlled Phase II studies of 39110 in distinct chemotherapeutic regimens in patients with non-small cell lung cancer, focusing again on the RECAP identified subgroup.
Now, another area of emphasis for Incyte is in the immuno-oncology field, specifically opportunities with our first-in-class oral indoleamine dioxygenase or IDO1 inhibitor INCB24360.
So, IDO1 is an enzyme, whose increased levels in multiple tumor types are associated with decreased survival. It coverts tryptophan to kynurenine, which is subsequently modified into a series of downstream metabolites. This firstly reduces the local availability of tryptophan, which is particularly important for the proliferation and activation of immune cells and secondly increases the local concentration of kynurenine and its metabolites which are toxic to the immune cells.
High IDO activity also leads to a preponderance of regulatory T cells in the tumor and that further suppresses the activation of the immune system. So IDO1 inhibition shifts the immune system from an immunosuppressive state to an activated state, allowing a body to mount a more effective anti-tumor immune response.
And I will use this mechanistic overview of the key steps involved in generating an anti-tumor immune response to underscore the key features of IDO inhibition. It may be bringing coals to Newcastle for many of you. So the anti-tumor immunity begins with tumor antigens being processed and on antigen-presenting cells called dendritic cells and you can see that they then present those peptide antigens to naive T cell. And you continue in a process which yields activated T cells effector cells, which have the capacity then to promote anti-tumor response by directly killing tumor cells.
If tumors employ several mechanisms to dampen this process in a way the immune system, one of them is the CTLA-4 receptor, which provides a negative signal to the T-cell when it interacts with the antigen presenting cell which shown on the upper right, preventing the generation of effector T cells.
An additional mechanism involves the PD-1 receptor and its ligand PDL-1, which served as breaks at the effector cell, effector T cell tumor interface, shown down in the lower right. And monoclonal antibodies antagonizing these proteins enable an anti-tumor response as evidenced by their exciting therapeutic activity in the clinic.
As shown here are two important aspects of IDO1 biology. IDO1 activity within dendritic cells themselves is upstream of these cell surface checkpoint mechanisms that I just showed you. And inhibition of the enzyme has the potential to produce more robust antigen presentation and T-cell activation.
Additionally, inhibition of IDO activity is shown down below schematically in the tumor tissue itself has the ability to augment effector T-cell function.
So by virtue of actions distinct from those of the other checkpoint inhibitors such as anti-CTLA-4 or anti-PD-1, IDO1 inhibition may synergize in combination with downstream checkpoint blockade, to unleash a more efficacious anti-tumor immune response.
These hypotheses are supported by preclinical data suggesting that IDO1 inhibitors can provide any tumor effects both as monotherapy and in combination with these other checkpoint inhibitors where significant synergies have been exhibited.
So our clinical program for IDO1 inhibition is well underway. Beyond a Phase II study of 24360, as monotherapy in ovarian cancer, we have an ongoing Phase I/II study of the compound in combination with the anti-CTLA-4 a monoclonal antibody ipilimumab in melanoma, where we are seeing early evidence for the potential clinical activity of the combination that we look forward to presenting these data at ASCO, later this year. We are also working to establish strategic collaborations to explore the benefits of 24360 with other checkpoint inhibitors including anti-PD-1 or anti-PDL-1 antibodies in other tumor types.
The diversity of our portfolio gives us a compelling opportunity to identify and develop novel-targeted combination regimens in tumors for which there is an unmet clinical need. In the first such targeted combination being evaluated is with our JAK1 inhibitor and our PI3K-delta inhibitor.
In-house pre-clinical studies have demonstrated that the JAK1 and PI3K-delta pathways play interrelated functions in maintaining the growth and survival of B-lymphoid itself. And concurrent inhibition of the two pathways exhibit synergy in preclinical studies.
Our PI3K-delta inhibitor 40093 is already in the first part of a Phase I dose escalation trial and patients with B-lymphoid malignancies, and this month we are initiating a safety and efficacy study of it in combination with our JAK1 inhibitor 39110 in this same patient group and we will continue to leverage the diversity of our portfolio by exploring other novel-cross portfolio combinations.
So, I think it’s obvious we have a robust development stage pipeline, but another reason I’m confident about Incyte’s future is because the team that’s discovered and developed those molecules continues to be exceptionally productive.
Our discovery group has new programs that are not only designed to expand our pipeline with respect to target class, biology and indication space, but as with the PI3K-delta inhibitor these programs were also advanced because they have the potential to yield novel within pipeline proprietary combination regimens with preclinical evidence of mechanistic synergy. And the details around these new programs and their strategic important to our pipeline will be described as they reach clinical development likely later this year.
So in closing, when you look at the number of compounds at our current pipeline and the number of potential indications we are pursuing, and beyond that you then see how even richer that pipeline should become this year, you can see why Incyte is well positioned for continued success.
I want to say, it’s been an honor to work with the team at Incyte; a talented, resourceful group, intensely focused on making a difference in the lives of patients.
I’m confident that Hervé Hoppenot shares the team’s passion and commitment to the discovery and development of important new medicines and believe that Incyte will continue to thrive under his leadership.
So now let me introduce to you Incyte’s new President and Chief Executive Officer, Hervé Hoppenot.
Just let me say a word to Paul on this company that Jeff created. I think it’s a truly unique company; it is certainly a reason, why I am even so excited of joining Incyte. It’s a company I have been working with for the past few years through our partnership on Jakafi. And I must say, I have been very impressed on the fact that you have a team in discovery, achieving development and now achieving the commercial side that are top notch in the oncology business in general.
So, it certainly a very, very impressive organization. You can see now the pipeline, and the work we have in front of us and I can tell you how excited I’m of joining this top-notch organization, working on such a pipeline. And again congratulations for building an organization of that magnitude.
Cory Kasimov – JPMorgan Chase & Co.
[No Q&A session for this event]
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