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Incyte Corporation (NASDAQ:INCY)

Q1 2014 Earnings Conference Call

May 1, 2014 08:30 AM ET

Executives

Pamela M. Murphy – VP - IR and Corporate Communications

Hervé Hoppenot – President, Chief Executive Officer

James M. Daly – EVP and Chief Commercial Officer

Richard S. Levy – EVP, Chief Drug Development and Medical Officer

David C. Hastings – EVP and Chief Financial Officer

Reid M. Huber – SVP - Discovery Biology

Analysts

Whitney Ijem – JPMorgan Chase & Co.

Matt M. Roden – UBS Securities LLC

Ian Somaiya – Nomura Securities International, Inc.

Brian C. Abrahams – Wells Fargo Securities LLC

Eric T. Schmidt – Cowen & Co. LLC

Thomas Wei – Jefferies & Co.

Michael W. Schmidt – Leerink Partners LLC

Navdeep Singh – Goldman Sachs & Co.

Steve Byrne – Bank of America Merrill Lynch

Josh E. Schimmer – Piper Jaffray & Co

Ying Huang – Barclays Capital, Inc.

Liisa A. Bayko – JMP Securities, LLC

Boris Peaker – Oppenheimer & Co., Inc.

Operator

Greetings ladies and gentlemen and welcome to the Incyte Corporation’s First Quarter 2014 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded.

I’d now like to turn the conference over to your host, Pam Murphy, Vice President, Investor Relations and Communications. Please go ahead.

Pamela M. Murphy

Good morning and welcome to Incyte’s first quarter 2014 conference call. On the call today are Hervé Hoppenot, President and Chief Executive Officer, Jim Daly, Chief Commercial Officer, Dave Hastings, Chief Financial Officer; Rich Levy, Chief Medical Officer and Head of Drug Development; and Reid Huber who heads Discovery Biology.

Hervé will begin with a brief overview of the quarter, Jim will follow with an update on Jakafi, and Rich will highlight progress made in our clinical programs. Dave will then describe our first quarter financial results, after that we will open up the call for Q&A.

Before beginning, we would like to remind you that some of the statements made during the call today are forward-looking statements including statements regarding our expectations for the commercialization of Jakafi and our development plans for Jakafi and other indications and for other compounds in our pipeline and our expectations for net product revenues. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially including those described in our 10-K for the year ended December 31, 2013 and from time to time in our other SEC documents. Hervé?

Hervé Hoppenot

Thank you Pam, and good morning everybody. seethe field of oncology is evolving very rapidly at Incyte with a growing marketed product and the pipeline that includes innovative targeted therapy and first-in class compound in onco inflammation and immuno oncology is very well positioned to be an important player in this [challenge] [ph] in oncology.

We had a very good first quarter commercially and on the development side. The sales of Jakafi - demand size of Jakafi are increasing at a steady rate and we are very confident in the full-year net product revenue guidance of $315 million to $335 million. On the clinical side we’re growing our portfolio; the PV filing is on track; we launched our Phase III program of ruxolitinib in patients with pancreatic cancer and randomized Phase 2 studies of ruxolitinib in patient with colorectal cancer or lung cancer and breast cancer has been initiated.

The IDO program is advancing; the ipilimumab combination Phase I/II data would be presented at ASCO in a few weeks. And we’re on track to begin the trial combining our IDO inhibitor 24360 with Merck’s anti-PD-1 immunotherapy in the second quarter. Our selective JAK1 inhibitor 39110 is expected to begin the first of two Phase 2 trial in non-small cell lung cancer in the second quarter. And we have advanced our PI3-kinase delta inhibitor 40093 in our Phase 1 trial in combination with 39110 in B-lymphoid malignancies.

Novartis continues to progress INC280 our c-MET inhibitor and has initiated a second Phase 2 trial in c-MET positive/EGFR-TKI-resistant non-small cell lung cancer. Our alliance with Lilly could deliver significant value for baricitinib our second JAK1/JAK2 inhibitor and we expect to see internal readout of results from the first of multiple trials in RA Phase 3 program this year, with data presentation to come in 2015. We also plan to initiate a Phase 2 trial of our second JAK1 inhibitor 47986 in rheumatoid arthritis by mid year.

Now let me turn to ASCO; we will have three important clinical data presentations and on Monday night following two of this presentation, we will host an investor event where we will discuss as a presentation of that day, so it’s a recap results as well as the data that [inaudible] the role of JAK inhibition as a mechanism to target systemic and local inflammation. And 24360 and the role we see for IDO inhibition in immuno oncology, so that’s for Monday.

And on Tuesday afternoon following our presentation of the results from RESPONSE the pivotal Phase 3 study in patient with uncontrolled polycythemia vera we will host a second IR event and Dr. Verstovsek will present the RESPONSE data so that will be coming in another few weeks from now, where we will have all of this important data that will be presented. Now Jim will provide more details around our commercial accomplishment with Jakafi.

James M. Daly

Thank you, Hervé and good morning everyone. Our first quarter net product sales of $70 million reflect continued steady growth in underlying demand which was offset by one time seasonal impacts from price and inventory drawdown following inventory builds in the fourth quarter of last year. These impacts were anticipated and we remain confident in our full year guidance of $315 million to $335 million for net product revenue. Year-over-year net sales grew 44% and quarter-over-quarter sales declined 4% with the following components to change relative to the prior quarter.

Underlying demand as measured by bottles dispensed to patients grew by 6% consistent with growth relative to the same period last year. We are encouraged by this performance given that seasonality typically makes first quarter challenging for branded products due to the annual reset of deductibles, increased cost sharing while in the donut hole, and patients pulling forward January prescriptions into December. Net price declined by 4% reflecting a temporary increase in gross to net discounts driven by seasonal increases in Medicare Part D donut hole rebates reflecting a $3 million impasse.

As expected and communicated on the fourth quarter call, the inventory increase that occurred in the fourth quarter was given back in the first quarter. Inventory declined by 6% and we exited the first quarter at the lower end of the normal range of three to three and a half weeks. The dollar value decreased in inventory in the first quarter was approximately $4 million consistent with the inventory build in the fourth quarter.

We believe the increase in underlying demand in the first quarter reflects continued solid execution of our commercial strategy to growth Jakafi in MF. Market research indicates that the expansion of our sales force, which was completed in the fourth quarter along with high impact educational programs have driven expanded depth and breadth of prescribing for Jakafi.

Measures of specific progress were seen and an increased understanding of dosing and recognize that Jakafi works regardless of JAK2 V16F mutation status. The overall reimbursement environment for Jakafi continues to be favorable. The vast majority of payers manage Jakafi consistent with the label, and patients are able to successfully manage most prior authorization that exists.

In the first quarter, we launched enhancements to our Incyte care patient support program. We remain committed to making this program second to none in terms of support levels, eligibility thresholds and either views to benefit both current MF patients and future PV patients. Our Jakafi net sales guidance assumes no meaningful contribution to revenues in 2014 from FDA approved indication in PV. We believe the PV indication will make a substantial contribution to Jakafi sales in 2015.

The addressable patient population for PV is larger than that of MF and lengthy treatment of PV is likely to be longer than MF. Based up on claims data there are at least hundred thousand PV patients diagnosed and treated in the U.S. 60% of them are currently on HU, or previously on HU. But this continued because of side effects, or lack of efficacy. We estimate that approximately 25,000 of these patients or one in four have inadequate response to or intolerant of HU and suffer from uncontrolled PV while on just available therapies.

We have always said that MPNs are just beginning. We have a deep pipeline of novel molecules and innovative programs that represents an exceptional opportunity to make a difference for patients. To discuss this in more detail I’ll turn it over to Rich.

Richard S. Levy

Thanks, Jim. During the first quarter, we took several important steps forward to broaden and strengthen our JAK inhibitor programs. Our development efforts with Jakafi in myeloproliferative neoplasms continue to advance. In early March, response our Phase III registration study for polycythemia vera that is being conducted under an SPA readout and we announced top-line results were positive.

This study which compared ruxolitinib to best available therapy for patients with polycythemia vera who are resistant or intolerant to hydroxyurea, met its primary endpoint for achieving phlebotomy independence and reducing spleen volume by 35 percent or more. The safety profile of ruxolitinib was generally consistent with previous studies.

Given the positive results, we remain on track to submit the sNDA this June. Our second Phase III study in patients with PV a double-blind study called RELIEF is measuring disease related symptoms and data are expected mid-year. Our goal is to submit full results from RELIEF for presentation at ASH in December and to submit sNDA label update on symptomatic benefit shortly after our expected approval of the PV indication.

I will next turn to our development efforts focusing on JAK inhibition in solid tumors. Previously reported that the results from the Phase II double-blind RECAP trial in second line pancreatic cancer showed a hazard ratio for overall survival of 0.47 favoring the ruxolitinib arm in a prospectively defined subgroup of patients.

We will discuss these data and the subgroup in greater detail at ASCO during both the oral presentation as well as in our Monday evening investor event. At that event we will also describe in detail the mechanistic rationale for JAK inhibition and solid tumors as well as the clinical basis for our patient selection methodology.

We are moving forward with randomized survival studies not only in pancreatic cancer, but also in several other solid tumors. Our first and most advanced program is in pancreatic cancer. In March, we randomized and started treatment of the first patient in Janus 1, a double-blind, placebo-controlled Phase III trial in the second line setting evaluating ruxolitinib versus placebo on a background of capecitabine, this is being conducted under a Special Protocol Assessment.

A second nearly identical trial Janus 2 is planned to begin within the next two months. Each trial will enroll approximately 300 patients who meet the criteria for the subgroup defined in the RECAP trial. And the primary endpoints will be overall survival. We’ve also started screening in our double-blind, placebo-controlled Phase II trials in non-small cell lung cancer and breast cancer and have started treatment in the first patients in our colorectal cancer study involved with ruxolitinib.

The breast and lung cancer studies will focus exclusively on the subgroup identified in RECAP. The breast cancer study will compared ruxolitinib plus capecitabine, to capecitabine plus placebo with the 148 patients. The lung cancer study will compare ruxolitinib plus pemetrexed and cisplatin, to pemetrexed/cisplatin plus placebo, in a 156 patients.

The colorectal cancer study will compare ruxolitinib plus regorafenib to regorafenib plus placebo and will also enroll parallel group that does meet the subgroup criteria with the aim of demonstrating the differential benefit of ruxolitinib in the subgroup identified in RECAP.

However the primary endpoint will be based only on the patients in the selected subgroup, this study will enroll 373 patients. We are also planning to evaluate our lead JAK1 inhibitor 39110 and solid tumor starting with two blinded Phase II studies in non-small cell lung cancer, again with overall survival as the primary end point for both studies. The first study is planned to initiate in the second quarter, and the second study is expected to initiate later this year.

I’ll now turn to our IDO1 inhibitor 24360, a mechanism that we think may provide meaning therapeutic approach in the immuno-oncology field. We know that IDO1 inhibitors can provide antitumor fact in relevant preclinical models as monotherapy and we combined with checkpoint inhibitors such as anti-CTLA4, anti-PD-1, or PD-L1 significant synergy has been achieved.

We look-forward to presenting the results of the ongoing uncontrolled dose-finding portion of our Phase I/II study of 24360, in combination with the approved anti-CTLA4, antibody, ipilimumab in melanoma at ASCO the data from which continue to be encouraging.

In addition, we will soon initiative our first combination study with Merck’s anti-PD-1 immunotherapy, MK-3475. Under the terms of non exclusive clinical collaboration agreement, Incyte and Merck will co-fund the Phase I/II study in patients of previously treated metastatic and non-recurrent non-small cell lung cancer as well as other metastatic cancers.

The Phase I portion should define a recommended regimen for the two combined agents in patients for their range of solid tumors, and the Phase II portion will evaluate efficacy and safety that recommended regimen and a randomize population of non-small cell lung cancer patients where all patients receive MK-3475, combined with either our IDO1 inhibitors 24360 or placebo. Incyte will conduct the study, though the design of the study was done in close collaboration with Merck.

IND has been cleared by the FDA and the trial should begin enrolling patients by mid year. We also have additional opportunities to combine our drugs when preclinical data suggest the combination they have additional clinical benefits. The first such targeted combination that were currently evaluating in a clinical trail is with our JAK1 inhibitor, 39110 and our PI3K-delta inhibitor 40093 in patients with B-lymphoid malignancies. Both are distinct mechanism study different synergy and preclinical study and lymphoma.

And with that, I’ll now turn the call over to Dave.

David C. Hastings

Thanks, Rich. Good morning everybody. Let’s begin with Jakafi for which we recorded $69.7 million first quarter net product revenues. Additionally, we reported $9.8 million in product royalties from Novartis for sales of Jakafi outside the United States. We also recorded as a part of contract revenue in the first quarter, a $7 million milestone from Novartis based on the formal initiation of a Phase II clinical study with c-MET inhibitor INC280 and c-MET positive/EGFR-TKI-resistant non-small cell lung cancer.

Our gross to net adjustment for product revenue recognized was approximately $9.6 million or 12.1% for the first quarter. As I mentioned in our last call, we expected our gross to net adjustment to be higher in the first quarter than the rest of the year primarily because of our share of the donut hole for Medicare Part D patients. We still expect that our full year gross to net adjustment will range from 9% to 10%. Our cost of goods sold for the first quarter was immaterial as we continue to benefit from the fact that our starting finished goods inventory was previously expensed as R&D prior to FDA approval. In terms of operating expenses, both R&D and SG&A were within our expectations.

From a cash perspective, we ended the quarter with $519 million in cash; our multiple and increasing sources of cash flows from net product sales, milestones and royalties and our stable cash position give us the ability to continue to invest in our PV launch activities and fund our expanding high potential pipeline.

So, with that operator, that concludes our formal remarks. And let’s open the call for our Q&A.

Question-and-Answer Session

Operator

Thank you. At this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question today is coming from Cory Kasimov from JPMorgan Chase. Please proceed with your questions.

Whitney Ijem – JPMorgan Chase & Co.

Good morning, this is Whitney on for Cory this morning. Two quick IDO questions for you. First, can you give us any more detail in terms of how many patients will see data on at ASCO or how many cohorts have been enrolled? And then also if you can give us any detail on what data we should be expecting in the abstract to sort of in terms of types of data versus the poster?

Richard S. Levy

Sure. So, I mean you didn't say it but I'm pretty certain that you are talking about the IDO studies. So in the abstract we will have results of the patients who were first started at 300 milligrams and even though that dose was not tolerated we’ll present some data - there is data in the abstract on those patients. Then we went down to 25 milligrams twice a day. There were eight patients in that cohort and that is the data that is in the abstract. At the actual presentation we will also have results of the 15 milligrams BID cohort, which adds about another seven or eight patients. So, altogether there is a number of patients. But there will definitely be some additional data from the higher dose cohort in the presentation that is in the abstract that we expect to come out around two weeks from now.

Whitney Ijem – JPMorgan Chase & Co.

Got it. Thanks for taking the question.

Operator

Thank you. Our next question today is from Matt Roden from UBS. Please proceed with your question.

Matt M. Roden – UBS Securities LLC

Great, good morning and thanks for having me on the call. I would like to ask a commercial question and then a pipeline follow-up if I may. So first on the commercial, Jim, could you maybe amplify your comments on Jakafi demand in terms of new patient starts and persistency rates? And perhaps whether or not there is any perspective on April trends.

James M. Daly

Sure Matt. As we look at the underlying demand trends in the first quarter, they're rock solid. Again 6% dispensed again that’s dispensed to patients very consistent with what we saw same period last year, quite consistent with what we saw quite frankly in the fourth quarter. We are seeing expansion of new prescribers. And quite frankly we are seeing those trends persist through April. So we’ve had a strong April, so we feel that the impacts that we felt in the first quarter were seasonal and the underlying business remains robust.

Matt M. Roden – UBS Securities LLC

Jim, if the gross to net and inventory normalizes here, to what extent should we expect a snapback in reported sales in 2Q and then lastly, can I just gauge your level of confidence in the guidance range?

James M. Daly

Sure, well as you know, patients, particularly when you have a branded product with a significant Medicare part D component, patients do have a tendency to try and pull forward prescriptions from January into December, but that effect only lasts for month and you’d expect to see that bounceback. We are seeing that. Price was kind of a wind in our face in the first quarter. We had gross to net of 8% in the fourth quarter. We jumped to 12% in the first quarter. But as Dave guided 9 to 10 for the year, we expect that to come down so price will certainly be a wind in our back. Plus we took price increase on April 1. So we expect to have - and we think we ended the quarter at the low-end of the normal range of inventory. So we have got all drivers going in the right direction in the second quarter so we think we're going to have a very strong second quarter.

Matt M. Roden – UBS Securities LLC

Sorry, go ahead on the guidance.

James M. Daly

Yes, the implication for the guidance, Matt quite frankly, we are more confident in the guidance we issued on the fourth quarter call now than we were when we issued it. We're feeling really good about where the business is. We've got a lot of momentum, and we have very high level of conviction in the current guidance.

Matt M. Roden – UBS Securities LLC

Okay, and then one follow-up on the pipeline if I may. Rich, I wanted to get your perspective on the SPA on the Jakafi Janus study. So on one hand you could say it’s not terribly groundbreaking to have an SPA for survival trial in cancer. But is the right interpretation of the SPA, is that the regulators thought that the onco information approach is clinically real and significant, and does this represent a sort of a blessing of the subgroup and imply the regulators are buying into the mechanism based on the data?

Richard S. Levy

So clearly there is buy-in to the subgroup. That was not an issue and we have in writing that we don't need to study the other subgroup et cetera, et cetera. With respect to how much FDA believes in the mechanism, I mean there a skeptical group is – in general when they say show me more data. So they have seen the early data and they said we need another trial and you would be better off following the regulations and doing two more trials just to be absolutely safe in case that results in the first of those trials is not quite as robust as what you saw in Phase II. So I mean that's about all I can say. The SPA was a process that we went through. Not because we wanted to get their buy-in that survival could be the primary endpoint, but to make sure that the subgroup was okay and that we didn't need to do any work to develop a companion diagnostic.

Matt M. Roden – UBS Securities LLC

Okay, great. Thanks and congrats on all the pipeline progress.

Richard S. Levy

Thank you.

Operator

Thank you. Our next question today is coming from Ian Somaiya from Nomura. Please proceed with your question.

Ian Somaiya – Nomura Securities International, Inc.

Thanks, and I apologize in advance for the background noise. First question was on the Jakafi pancreatic cancer you made a presentation. Could you just give us some sense of what to expect, what additional [inaudible] the data we get, I know in the press release you shared with us [inaudible] in the survival across the two groups, are we just going to get an expansion of that to nine months plus or is there something more we should expect? And I have one follow-up.

Richard S. Levy

Okay, I can’t go into detail as to what is going to be in the abstract/presentation, I think the main difference that you will see from what’s already out there is the identification of the subgroup. I don't remember the abstract per se to remember what else is in there. But there is more information than was simply in the press release that we issued before. And then the actual presentation will obviously go beyond the abstract and I think importantly the investor event that we will do that evening will include additional presentations that go beyond the actual results of the RECAP study to include background on historical data, on selection of the subgroup and why we are confident of this is not only real here in pancreatic cancer, but other solid tumors as well. As well as more on the scientific background on the whole theory and evidence behind onco inflammation as a therapeutic target with Jakafi [inaudible].

Ian Somaiya – Nomura Securities International, Inc.

Okay. And just one follow-up was on the combination study you are running [inaudible] B-cell lymphoma, PI3K-delta and JAK1. Just intrigued by the combination of that mechanism and I was wondering if there are any subgroups that you have identified or [inaudible] in that trial like you did in the RECAP study.

James M. Daly

So, right now we are still in the dose finding portion of that study. And so we generally in this case as well, try to get through dose finding with a broad population of patients until we get to the drug levels where we are confident that we really want to be focusing on potential subgroups that may be best. In that study, we are not focusing on the same subgroup as in the solid tumors although that is a possibility for later on. And I’d ask Reid if you want to add anything to this.

Reid M. Huber

Yes, I don’t think I’d add in EM is that we have some degree of interest of course in the ABC subtypes just given the background biology of JAK start signaling there, and some of the emerging data with these receptor inhibition, but I think our preclinical data suggests that the combination could have utility outside of the subgroup. And so just to amplify Rich’s statement that’s one of the underlying reasons why enrolling a broader set of patients and surveying activity kind of more broad set early on is important to us. Because I think that’s driven by part of the underlying thinking in the biology.

Ian Somaiya – Nomura Securities International, Inc.

Okay. Can you just give us a sense for what the likely next steps are going to be for that program for that combination?

David C. Hastings

Sure. We’ve already established with monotherapy with 4093 that we’re able to get safely to levels that inhibit the target by over 90% throughout the dosing interval. We then took a step back, when we added in combination with the JAK1 inhibitor and we want to get up to at least that level. Then there are several expansion cohorts in different patient populations which are not really ready to discuss at this time. But Reid also mentioned for example the ABC subtype of DLBCL. It’s something that we are interested in. And that will potentially give us, answers to whether or not we want to move forward to potential Phase II or even registration trials in some of those B-cell malignancies with that combination.

James M. Daly

I would rather just get offline.

David C. Hastings

Greater details until a later time.

Ian Somaiya – Nomura Securities International, Inc.

Okay. Thank you, very much.

Operator

Thank you. Our next question today is coming from Brian Abrahams from Wells Fargo Securities. Please proceed with your questions.

Brian C. Abrahams – Wells Fargo Securities LLC

Hi, thanks for taking my questions and congratulations on all the commercial and pipeline progress. Question on PV to start I never going to see the full data in a couple of weeks, but is there anything I guess qualitative that you can talk about that you learned about Jakafi’s benefits in treating PV from the response study compared to what we already knew from the phase II experience, and you guys seem pretty confident in the potential positioning once this has approved next year. And then I'm curious also if you’re starting to see any uptick in our flavor used or I guess more relaxed restrictions from insurers since the top line, positive topline data is come out and then in a quick pipeline follow up thanks.

James M. Daly

Brian this is Jim, I will take the second question first which is we’ve seen just a very gradual increase and the percent of use that is non-MF I think we have 12% non-MF in the fourth quarter and that’s gone to 13% in the first quarter, so no meaningful change.

Richard S. Levy

So I have to be careful what I say here because the data is not out yet. There are some differences between the designs of the trials more so then there are differences in the results of the trials. So for example in the Phase 2 trial we look at (indiscernible) by patient not by MRI, where is to get MRI in Phase 3. We had a running period where we got people into a therapeutic range for their hermetic within the Phase 2 trial. And then look for phlebotomy eligibility where as the Phase 2 we just took them where they were. So there are going to be some difference based on the designs of the trials but I don’t think quantitatively or qualitatively they indicate anything different.

Obviously the Phase 3 trial is larger and that gives us an ability to start looking at certain things that we had no potential to look at in Phase 2 including for example even though the rates are low, rates of the thrombosis in the different arms of the trial which you trying to keep them rate down in order to be able to avoid thrombosis but actually doing thrombosis trials is way too long and too larger in the FDA we didn’t need to do that but within this larger study with patient study is longer we can start to get a hint at some of that data as well.

Brian C. Abrahams – Wells Fargo Securities LLC

Thanks Richard, that’s really helpful and just a quick follow up you mentioned I don’t think Lily’s recently mentioned that will see some of the Phase 3 data comparison that rolling up by the end of this year can you possibly clarify which of the studies, which study or studies we might see and is there anything you’re waiting to see from those readouts prior to starting the Phase 2 for 986 in RA? Thanks.

Richard S. Levy

The answer is. I do know which trials are likely to readout this year but I’m not at liberty to get any information on Lily’s programs at this time they really are in control of the message on this one and we just what we said is what we’re allowed to say at this point of time.

Brian C. Abrahams – Wells Fargo Securities LLC

Okay, sure enough in terms of gaining practice for 986 and anything you are looking for in those studies if we start 96.

Richard S. Levy

No, that study is pretty much ready to start we have an investigator’s meeting coming up and then patients will start enrolling protocol has finalized, the IND is clear that’s pretty much ready to go.

Brian C. Abrahams – Wells Fargo Securities LLC

Great, thanks again.

Operator

Thank you. Our next question today is coming from Eric Schmidt with Cowen and Company. Please proceed with your questions.

Eric T. Schmidt – Cowen & Co. LLC

Thanks for taking the question maybe a big picture question for Hervé and it looks like you’re planning quite a show at ASCO with two analyst meetings one focused on JAK’s and solid tumors and IDO. Is there one, two points that you want investors to take home from that Analyst meeting on JAK’s and solid tumors and IDO what would they be.

Hervé Hoppenot

Well the reason we do two meetings is frankly, mostly practical because two of the presentations on Monday and I know many of you in fact may not say on Tuesday so what we wanted to do is to do meeting on Monday evening to discuss IDO and onco inflammation. I think obviously the data itself is going to be a big part of this meeting, but in addition to the data, what we would like to discuss with all of you is also the scientific rationale behind onco inflammation and the fact that there is a mechanism there that is fairly you where very few companies are involved and we are in the lead. And it is our responsibility to clarify for everybody what is the science behind the mechanism of external of the drug like Jakafi in study tumors. For IDO obviously the data that would be for the disclosed for the first time and then we’ll be discussing also the status of the program and how we see combinations being that keep up as the next steps for this product.

Eric T. Schmidt – Cowen & Co. LLC

Thank you, that’s helpful.

Operator

Thank you. Our next question today is coming from Thomas Wei from Jefferies. Please proceed with our question.

Thomas Wei – Jefferies & Co.

Thanks, just a couple on 360. Just to clarify how many were at 300 milligrams?

David C. Hastings

I would it’s probably about somewhere in the range of six, but I just don't have that number in my head.

Thomas Wei – Jefferies & Co.

Fair it’s…

Richard S. Levy

Hervé’s would bring to me the key things that was seven.

Thomas Wei – Jefferies & Co.

Okay, so it might be seven, eight and then seven or eight. So when you total what we may get around 22 or 23 patients presented at ASCO in the actual presentation, is that right?

Richard S. Levy

Yes.

Thomas Wei – Jefferies & Co.

And can you give us a sense because of the disparity of the doses here, when you talk about having a positive view on the efficacy signals, you are talking about a kind of all doses here. This isn’t something that’s being driven by the data 300 milligrams.

Richard S. Levy

Absolutely not, I mean that would be I couldn’t say pass the red base test, so we have a non-tolerated dose that works and tolerated doses was that are not working. So yes, our excitement that we had and communicated in the past was based on the results that we were seeing a 25 milligrams. The b.i.d. that we had before we submitted the abstract that includes the data 25 b.i.d.

Thomas Wei – Jefferies & Co.

And you’ve talked about showing data on response rates and progression free survival and overall survival. Can you say, are we going to see some data on things like that’s response at the ASCO presentation?

Richard S. Levy

So, two things, one I think so, but we haven’t finalized the presentations yet. But I think we're going to probably show a waterfall plot were you show the depth of response on each individual patient within certain groups. And second as I tried to say, we have survival data. I'm not sure what we're going to do with that because in this era, patients who fail this combination may go on to things like PD1 inhibitors, which that was not true and at the time when ipilimumab and monotherapy was being first studied. And so that could be overly misleading to suggest something that we don’t know was related to the drug per se. But time to progression or time to change in regimen as a measure of progression is some thing that we believe is interesting data and will be included in the presentation.

Thomas Wei – Jefferies & Co.

And then just lastly that the Merck, Lambro combination study, given the huge range of doses that you have looked at historically where doesn’t in the 300 milligrams maybe being a very specific toxicity issue with it be. Is the plan to stick to the 2550 end of the range with Lambro or to start there and to go all the way up to the original proposed 300 mg? Or how should we think about that and how many doses might this early Phase 1 part actually end up exploring?

Richard S. Levy

Yes, so I think we went to 600 and 900 originally with monotherapy and that was way higher than we needed to be. And I agree with you that we believe that the combination toxicity data is largely – is the combination issue and most likely not a PD-1 or PD-L1 combination issue. But we have to generate the data to do that. So we are going to start relatively low. And work our way up. But I don't think that anyone has to be that there is a need to take the amount of time it would take to get all the way up to 300 mg dose again, because when we look at this, we said in the range of 25 to 50 mg BID gives about all the efficacy that you see in the preclinical model.

So, we would like to have some buffer there above that's that every patient remains in that therapeutic range. And so I don't think it's the case that we are going to have to go gradually from 25 BID as an example of the starting point all the way up to 300. But, the protocol probably allows us to continue to go, but I think that we probably won't go past a few doses.

Thomas Wei – Jefferies & Co.

Thanks, that’s very helpful.

Operator

Thank you. Our next question today is coming from Michael Schmidt from Leerink. Please proceed with your question.

Michael W. Schmidt – Leerink Partners LLC

Hey, good morning. Thanks for taking my questions. I have one bigger picture question on the IDO inhibitor, so would be we don’t call it’s your landscape evolving rapidly and becoming fairly competitive and some of the indications, what is your overall philosophy in driving development for 20, 40, 60 forward in certain indications versus others. And then I had a follow-up.

James M. Daly

So, we’re looking at a broad range of options. With respect to the PD-1 or PD-L1 targets. We think those are very good drugs and but in many of the indications there is evidence of efficacy but not for example as strong as they are in melanoma. And so, what we're really looking for primarily is indications in which we know that the mechanism is active but for which there is a significant room for improvement that could be demonstrated in moderately sized registration trials. We also continue to look at opportunities for other combinations outside of PD-1, PD-L1 potentially with things like ipilimumab potentially with things like vaccines and potentially with some of the other novel targets that are coming forward in immuno oncology.

Michael W. Schmidt – Leerink Partners LLC

Got it. And with regards to PV and the Novartis collaboration, have you disclosed what level or what types of milestone payments are tied to the PV approval launch?

James M. Daly

Yeah, they are very typical milestones you see in these types of collaborations. Obviously a key events such as approval and pricing reimbursement in their territory would be the most obvious.

Michael W. Schmidt – Leerink Partners LLC

Okay, great. And then the last one on Lilly. Are you aware of development plans for baricitinib, outside RA on parts of Lilly?

James M. Daly

So, what has been publicly announced is that they're doing Phase II trials and psoriasis and diabetic nephropathy and they have not said anything beyond those two indications.

Michael W. Schmidt – Leerink Partners LLC

Okay, great. Thanks for taking my questions.

Operator

Thank you. Our next question today is coming from Navdeep Singh from Goldman Sachs. Please proceed with your question.

Navdeep Singh – Goldman Sachs & Co.

Hi, good morning guys, and thanks for taking my questions. Just few questions, so maybe I’ll start off with a question on Jakafi given the recent increase in – cost of our drugs including oncology drug is that, obviously from pricing power, do you believe you have the Jakafi in the U.S. I thought that you took another 5% increase at the end of Q1. And then I have a follow-up question on IDOl inhibitor. Thanks.

David C. Hastings

It was 4.75, and I think most of the peers are focused on the larger use areas where you have a small indication with the survival benefit with data suggesting supportive of the survival benefit. We’ve had minimal pushback from payers regarding the value proposition for Jakafi.

Navdeep Singh – Goldman Sachs & Co.

Okay, great. And then question on IDO1 inhibitor, so are you guys considering it all that are computing IDO1 inhibitor maybe a little to enter into an exclusive deal with Merck or any other form if you report a pretty compiling data from your study evaluating IDO1 inhibitor plus the Merck PD-1 antibody, and is there anything that you can prevent Merck from taking such a path?

Hervé Hoppenot

I would say that important thing that can prevent anybody from taking such a path, the reality of the field of IDO is that we are well ahead of the competition and that’s what we intend to continue, where we intend to continue to be. So we don’t see that as a circumstantial issue.

Navdeep Singh – Goldman Sachs

Okay. Thanks a lot, Hervé.

Operator

Thank you. Our next question today is coming from Steve Byrne from Bank of America Merrill Lynch. Please proceed with your question.

Steve Byrne – Bank of America Merrill Lynch

So based on your understanding of the biology the JAK signaling pathways, do you hypothesize that there is a role for the JAK2 inhibition in the solid tumors or do think it’s more neutral in its effects and/or could the subgroup potentially remove a detrimental effect?

Reid M. Huber

Yes. So I think – this is Reid. The question asked to the relevance of JAK2 in the inventory activity to the date that we’re kind of present at ASCO around RECAP. I think it’s still an open question, but we have some perspective that really are driving are more balanced approach in the development program or it involves bringing – when possible. And also taking JAK1 and I feel there are no compounds forward.

The data that will describe particularly at the investor event at ASCO will go into some detail as to which side of kinds are believe to play the most important driving roll in both local and information of the material microenvironment as well as systemically with any manifest and some of the metabolic inhibitor we’ve seen in advanced malignancy.

The majority of that data I think it’s fair to say and support an important role for JAK1 single link and therefore likely an important role JAK1 inhibition and the benefits that we see in pancreatic cancer and that underlies the rationale and other tumor types. JAK2 can play a role in some cell types (indiscernible) cells and things like that, it maybe the importance of JAK2 activity is more histology dependent these are all things that we’re going to have to explore with the development program and really underlie our view that where we can take ruxolitinib forward and regimens that are not overly myelosuppressive will do that and in histologies and regimens were we otherwise couldn’t take ruxolitinib and that's a good place to explore JAK1 and are thinking about all of these things above over time.

Steve Byrne – Bank of America Merrill Lynch

And just a follow up for you Jim, you mentioned the price increase from March it was roughly half the prior price increase. Do you anticipate shortening the interval between price increases, as this is changing your pricing strategy?

James M. Daly

Steve, at a general policy we don’t comment on forward pricing actions but if you look at oral oncolytics there is a growing practice to move toward twice a year pricing actions.

Steve Byrne – Bank of America Merrill Lynch

Okay, thank you.

Operator

Thank you. Our next question today is coming from Josh Schimmer from Piper Jaffray. Please proceed with your question.

Josh E. Schimmer – Piper Jaffray & Co

Thanks for taking the questions. First on the IDO inhibitor program, do plan to pursue additional studies in combination with ipilimumab and what is the rationale for expecting synergy with PD1 antibodies in order to what we seen with…

James M. Daly

So we’re exploring all options we clearly are focused on the PD1’s including the study with Merck if there is an opportunity with ipilimumab that is not already potentially taken by a PD1 we would certainly be interested in exploring that so we’ve not closed the door on anything and I’ll turn the second question over to Reid.

Reid M. Huber

Yes, so Josh, this is not been published work conducted in collaboration with Tom Gajewski University of Chicago and is also been a study published using the IDO1 knock out mouse. But describe some of the pharmacology with combined inhibitation or loss of IDO1 and PD-1, PD-L1 blockade. And I think to summarize it briefly these are mechanistically distinct intervention points they target different aspects of the negative regulation of anti-tumor immune response and taking off IDO1 is a break and ipilimumab activity is reflected of two distinct therapeutic approaches that can give you synergy and very similarly being IDO1 and antagonizing PD1 gives you a very similar pharmacologic effect overall so I think basically these are multiple independent points on a cascade and your ability to achieve synergy is very clear pre-clinically when you take up multiple breaks.

Josh E. Schimmer – Piper Jaffray & Co

Great, and then Jakafi and other solid tumor indication among breast and colorectal what percent of those patients shared (indiscernible) future segment pancreatic cancer. And I wasn’t clear would those patients enrolled in those Phase 3 trials those upper patients or is that is the broad patient population?

James M. Daly

So we’ll get into that more detail when we actually do our Investor meeting when we actually disclose the subgroup. But I mean I will say that probably the breast cancer patients which is probably the largest of the indication has a lower percentage on that would meet the subgroup. But we should have no trouble finding them because there are so many of these breast cancer patients. And what was your second part of the question.

Josh E. Schimmer – Piper Jaffray & Co

When the trials will specifically only include those subgroup patients or whether enrolled.

James M. Daly

Right so as I try to get across in my prepared remarks, the lung cancer and breast cancer studies are only in the subgroup. The colon cancer includes two groups. Those that meet this definition and those do not but the primary endpoint in the colon cancer study is based on those patients that are in that subgroup. We felt that it was important to demonstrate that this subgroup was not only predictive in pancreatic cancer but in at least one other tumor type. And we choose to do that, within colon cancer because this study which is on top of survivor or Regorafenib the very advanced patient population, positive trial there has some potential to be a registration trial. And so we wanted to make sure that we were kicking the box of showing that this predictor that we saw confirmed in pancreatic cancer was also confirmed in one of the tumor types. We don't feel that it, we show that in both pancreatic and colon that we would need to show in other types. And that’s kind of the reason why that study is bigger.

Josh E. Schimmer – Piper Jaffray & Co

Got it. Thanks very much.

Operator

Thank you. Our next question today is coming from Ying Huang from Barclays. Please proceed with your question.

Ying Huang – Barclays Capital, Inc.

Murphy, thanks for taking my questions. I had one for IDO first so obviously the investors have been focusing clearly on the response rate you reported at ASCO. I want to - probably your thoughts on the relationship between response rate, and then eventually will see hopefully a PFS and OS benefit, in this combination IDO inhibitor and (indiscernible) inhibitor here. And then secondly, what is the difference in product code for the JANUS1 and JANUS2 trial for the Phase III pancreatic cancer trial. And then does the SPA you reached with FDA stipulate the you have to meet survival end points for both? Thanks.

Richard S. Levy

Okay. You may have to remind me of all of the questions again. So let me start backwards. So the SPA does not say that we need to have two positive trials the FDA is around the design of the first trial and that the communications with the FDA or the results of that one trial are robust, that that may be sufficient. But we were advised to do a second trial in case the results of this trial are not as strong as in the Phase II trial.

In terms of response rates progression free survival, survival, et cetera. So it’s clear that there are long lived patients who are not responders to immunotherapies. But I think it is a good thing to start with the real responses, including as you have seen with the PD1 some pretty deep responses in terms of the percent change in tumor volume. The second thing is that we will present data on the duration of response in some of these patients and compared to historical data with ipilimumab.

So I think that response and time to progression, and again survival data is just biased in our favor and that's why no one should think that we don’t think a survival is good, It's just that if someone has progressed and they go to another therapy that did not exist before, it's just hard to compare, we don’t want to take credit where it may not be real yet. So I would look at this as an early study for which you have where you are limited in terms of some of the things that you have like what is the long-term survival in and patients. But from what we have, I think it’s remains supportive that we are looking at something that is encouraging, something that is clearly better than ipilimumab monotherapy and will obviously reserve further comments and how this may compare to PD-1 in melanoma until you see the data

Ying Huang – Barclays Capital, Inc.

And can you remind us where it is a new product or different between Janus 1 and Janus 2 trial?

Richard S. Levy

I’m sorry. So the differences are number one that we are looking at symptoms of pancreatic cancer in Janus 2, but not in Janus 1, but that still only an exploratory end point there to try to fully evaluate potential patient for the outcome that could be supplemental labeling statement at a later time. The second thing is the Janus 1 is a little bit larger than Janus 2 not by a lot simply because the only real role for Janus 2 will be a Janus 1 is not sufficiently robust that we need the second positive trial, so it’s a little bit smaller otherwise the designs are pretty much identical.

Ying Huang – Barclays Capital, Inc.

Thank you.

Operator

Thank you. Our next question today is coming from Liisa Bayko from JMP Securities. Please proceed with your questions.

Liisa A. Bayko – JMP Securities, LLC

Hi, thanks for taking my question, just a follow-up some what you were saying earlier I know the colorectal study for Jakafi is large and therefore could be eligible for registration can you will be comment on that for the long? What would be necessary if that result we got here could those be included in the label eventually?

Richard S. Levy

So, first I don’t want to set expectations that the colorectal cancer study is a registration study and this is an expectation that we get approved that study is positive, we’re saying results of that are sufficiently robust and considering that there are no options for those patients possibility. With the respect to the breast and non-small cell there is no possibility in my mind and those studies would actually be the registration studies, but whether if we then went on to a subsequent study, the results of those earlier Phase II studies could also be included in the eventual label that remains a possibility.

Liisa A. Bayko – JMP Securities, LLC

Okay, great and then just a quick question. I noticed you sort of modify the language around PV a little bit use to be sort of retrofit and tolerant and you are talking a little bit more now, but qualifying that uncontrolled does there any sort of meaningful difference behind that?

Richard S. Levy

No Liisa we’re going through a translation process right now I think which the team translated Phase II to Phase III now we have translate Phase III to a label and then as a commercial team we will translate that to messages then we will ultimately translate that into treated patients. So the normal criteria is evolving as we go through those translation processes.

Liisa A. Bayko – JMP Securities, LLC

Okay, great. And then can you maybe talk a little bit about market readiness I know that was slight issue for Jakafi and MF what do you doing in PV now just sort of lay the foundation that’s my last question? Thank you.

Richard S. Levy

Liisa I want get into explicit details, but I want to assure you that we’re doing everything that should be done that can be down in order to climb the market in a complaint manner. So that we have a higher compression launch for PV, so it will be a launch executed in a highly professional manner, and our goal is to make sure that the patients who need this product get it as quickly as possible and we are confident, we are going to do that.

Liisa A. Bayko – JMP Securities, LLC

Great, thanks a lot.

Operator

Thank you. Our next question is coming from Boris Peaker from Oppenheimer. Please proceed with your question.

Boris Peaker – Oppenheimer & Co., Inc.

Yes, good morning, thank you for taking my questions. My first question is on Jakafi, you mentioned that the colorectal study is going to be the second study to somewhat validate the biomarker. I am just curious is that colorectal study does not support the biomarker I mean how would that impact some of the other studies where you’re ready selecting only biomarker positive patients.

James M. Daly

So, I mean I think that, really is going to be indication by indication. And the data that we saw in pancreatic cancer is pretty convincing that this is real. But it was based on hypothesis that goes back in the literature from many years with tens of thousands of patients supporting that this is an important factor. Anyone study is not necessarily going to negotiate that the totality of that data. And so I certainly don't think it would have any impact on the approval in pancreatic cancer. And if we saw good results for example, in both of the patients that were in this group and those were not in the group. In colon cancer, my preference would be the same, the good in both groups and maybe there's another reason why that drug works in colon cancer. Anything can happen within individual study and that's why you have to do the study is to really know.

Boris Peaker – Oppenheimer & Co., Inc.

Correct. And my second question is on IDO. I’m just curious are you in active discussion for additional potential combinations for your IDO compound and it’s so all these partnerships specifically maybe waiting for the ASCO data would have been prior to pulling the trigger on some other IDO combo.

James M. Daly

Yes, we already have two discussions with other manufactures. So we have PD-1s, PD-L1s and there are not gated to any other particular data release.

Boris Peaker – Oppenheimer & Co., Inc.

Okay, great. Thank you for taking my questions.

Operator

Thank you, we have reached end of our question-and-answer session I would like to turn the call back over to management team for further any closing comments.

Hervé Hoppenot

Okay, thank you. Thank you for attending this call. Obviously, as you see, I mean we have had a very strong Q1 on the development side and on the commercial side. So I think it can be looked at as a very good step for the organization and the next big one would be at ASCO. So I hope to see you all at our ASCO Investor meeting. Thank you.

Operator

Thank you. That does conclude today's teleconference. You may disconnect you lines at this time. And have a wonderful day. We thank you for your participation today.

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