Incyte Corporation (NASDAQ:INCY)
UBS Global Life Sciences Conference
September 20, 2012; 01:00 pm ET
Dr. Paul Friedman - President & Chief Executive Officer
Matt Roden - UBS, Biotech Analyst
Good afternoon. We are going to get started with the next presentation, and I’m Matt Roden, Biotech Analyst here at UBS and we are pleased that you can join us at the Global Live Sciences Conference.
Speaking next is Incyte Corporation. Speaking on behalf of Incyte is President and Chief Executive Officer, Dr. Paul Friedman. As a reminder to everyone, the breakout session is to follow in the Broadway Room, one level down immediately to follow. Paul.
Thank you Matt and good afternoon everyone. I think I don’t know how to work this. Here we go.
So before I start, I have to go through the fine print here. Please note that Safe Harbor rules govern our remarks and forward-looking statements and we ask that you review our latest SEC filings, including our most recent 10-Q for the quarter ended June 30, 2012 for a summary of risk factors that may cause actual results to differ materially from any forward-looking statements.
Now, while we are all appropriately focused on the launch of Jakafi, I’m going to spend the next few minutes describing how our JAK inhibitors are providing us with a pipeline in and of themselves. Just to remind you, JAK inhibitors are a class of drugs that block enzymes called Janus Associated Kinase or JAKs for short.
We initiated the JAK program in the mid-2000’s and we identified two oral proprietary JAK 1 and JAK 2 inhibitors to advance into the clinic and they rapidly achieved Proof-of-Concept in myeloproliferative neoplasms, as well as in rheumatoid arthritis.
This allowed us to establish two important strategic collaborations, the first is with Novartis for our lead JAK inhibitors, Jakafi, for all hematology, oncology indications outside the Untied States and we kept the commercial rights to Jakafi in the United States. The second in the global collaboration with Lilly for the JAK inhibitor Incyte 28050. Its now called baricitinib for all chronic inflammatory diseases.
In November of last year the FDA approved Jakafi for use in patients with intermediate or high risk Myelofibrosis. Jakafi is the first and only product approved by the FDA for Myelofibrosis and it’s also the first JAK inhibitor approved for any indication. And last month Novartis received the European Commission Approval of Jakafi; it’s called Jakavi outside the United States. Also with a broad label, treatment of disease related splenomegaly or symptoms in patients with myelofibrosis.
Now we see a great potential for Jakafi in other hematology/oncology settings. Most advanced is the clinical development program in polycythemia vera, another myeloproliferative neoplasm. A global phase restudy conducted under an SPA and collaboration with Novartis is underway and on track to complete in 2013. There are also ongoing trials in Leukemias, Lymphomas and pancreatic cancer.
The six-month results from the phase II (b) trial of baricitinib in patients with rheumatoid arthritis will be presented at ACR in November and we expect Lilly to start the Phase III program in RA this year. Baricitinib is also in Phase II development as a treatment for psoriasis and Lilly has recently initiated a Phase II trial in patients with diabetic nephropathy. I’ll describe that later in the presentation. We also have a broad and growing pipeline, as well as a productive R&D engine and we are in a strong financial position.
We ended the second quarter with $262 million in cash, excluding $9.5 million of restricted cash held in escrow for interest payments through October on our convertible senior notes. Our cash position at the end of the second quarter includes the $40 million milestone we earned from Novartis, based on the CHMPs recommendation for EU approval of Jakavi.
In addition we expect to earn $60 million when Novartis receives pricing and reimbursement approval for a subset of the major European countries. This will most likely occur in the first half of next year.
We are still using the sell-through method for revenue recognition, which means we defer revenue until the specialty pharmacy ships the product to the patient. We anticipate transitioning to the sell-in method later this year, which means we’ll recognize revenue when our product is received by the specialty pharmacy.
For the first half of the year our gross product revenue was $53.1 million. The gross net adjustment for this revenue was approximately $4.1 million, resulting in net product revenue of $49 million.
Our net product deferred revenue at the end of the first half of the year was $9 million. Our net product revenue guidance for this year is $120 million to $135 million. The low end of this guidance represents an amount we are confident we can achieve and the high end is what we are shooting for.
So now as I update you on Jakafi, for those of you who are interested in learning more about the product, we recently updated the website for both physicians and patients. Just visit www.jakafi.com.
There’s another website that may interest you called www.myelofibrosisawareness.org. This site is hosted by cancer care on behalf of the MPN coalition and can see here that today marks the first national Myelofibrosis awareness day, which is being led by the MPN coalition with support from us. The theme for the day is Empower and its designed to encourage MF patients become more knowledgeable about their disease.
So now let me update you on the Jakafi launch. Our current market research on hematologists/oncologists indicates a high awareness of Jakafi. However it also suggests that knowledge of myelofibrosis in Jakafi is still fairly limited among our community hem/oncs. This isn’t surprising as many community physicians have only a few MF patients and Jakafi is the first approved product in this therapeutic area. So building awareness and educating physicians and patients about MF and about Jakafi are integral parts of our marketing and sales efforts.
We expect our efforts to result in steady and gradual increases in physician interests and use, increased appreciation and understanding among physicians of how best to dose Jakafi in their MF patients, a greater appreciation among both physicians and patients at MF as a progressive life-threatening disease that worsens over time if left untreated and increased use of jakafi for appropriate MF patients with any degree of splenomegaly or symptoms.
These educational efforts take time, which is why we’ve always said that the launch will be steady and gradual and that peak share in MF is likely to occur about three years from launch, around the same time we expect to have the PV indication.
We received a broad label for Jakafi, for use in intermediate or high-risk MF patients. Although we did not study patients with platelets under 100,000, the label does not exclude them. Early on in the launch, many of our initial patients were quite advanced with platelet counts below 100,000 and some of these patients with a life expectancy of less than six months.
As you’d expect, patients with less than six months life expectancy would impact our initial discontinuation rates and because we didn’t study patients with low platelets, we haven’t had specific dosing guidelines for this group. Some of these patients received too high an initial dose and likely discontinued or had treatment withheld.
We now have interim data from a low platelet study that suggested dosing strategy that works well in these patients. We’ve submitted data to the FDA and as this submission is viewed as a supplemental NDA, the agency has six months to respond. In the meantime and when requested by physicians, we are using the data from the study to provide dosing information for these low platelet patients.
In this particular study we start patients with baseline platelet counts between 50,000 and 100,000 at a dose of 5 mg twice daily and allow for dose modifications based on adequate platelet counts.
As presented at ASCO, at the time of this analysis most patients had optimized the dose of Jakafi to 10 mg BID or higher and the efficacy analysis performed were based on the week 24 when most patients were receiving the 10 mg BID dose. All the three patients experienced improvements, decreases in the Total Symptom Score, TSS, and all but one experienced reduction in spleen volume.
Using a responder analysis, 40% of patients in this ongoing study experienced at least a 50% improvement in the TSS, which compares favorably to the 46% seen in the much larger COMFORT 1 pivotal trial, where patients had higher platelet counts and often received higher doses. 35% of patients in this ongoing study experienced at least a 35% decrease in spleen volume compared to 42% in the COMFORT 1 study.
When we look at the subset of patients not receiving transfusions, an important observation emerges. Not only for this more advanced group of patients, but potentially for all MF patients, specifically in the course of this study we saw no changes in mean hemoglobin levels in the patients.
In addition to the low platelet study we are also evaluating 10 mg BID doses in patients starting with platelet counts above 100,000. An impetus for conducting this alternative dosing strategy is the fact that after dose adjustments by their physicians, a good portion of the patients in COMFORT 1 and 2 ended up on a 10 mg BID dose. That would suggest these patients experienced spleen reductions and symptom improvements that were quite comparable to what was seen with higher doses.
In this alternative dosing study, we are looking to see if the 10 mg BID dose has the potential to avoid worsening anemia, to reduce the risk of thrombocytopenia, while providing similar efficacy to the higher doses and we hope to present the results of this at a scientific meeting next year.
Beyond the low platelet results there are additional new data now available. An article in The New England Journal of Medicine on COMFORT 1 published this past February suggested the survival advantage for patients treated with Jakafi. These data are now further supported by a recent article shown here in Blood, authored by Srdan Verstovsek at all.
In the article the authors described an analysis of 107 MF patients from our Phase I/II study. They state that in this group of patients followed for a median of 32 months, there appear to be a survival advantage with Jakafi compared – patients on Jakafi treatment when compared to historical controls, who had similar patient entry criteria.
Another analysis included in this publication, compared the survival curves of patients in the study by risk category and importantly that this analysis was independent of any comparison to a historical control group.
As you can see here, treated patients categorized as having high risk MF, have a similar profile to patients with Intermediate-2 Risk disease. By shifting the survival curve of that of high risk patients, for whom the published data show a median survival of about two years to that of Intermediate-2 Risk patients, for whom published data as shown here demonstrate a median survival of about four years, it would appear the treatment with Jakafi could provide a very substantial improvement in survival.
As the median survival of the Intermediate-2 Risk group is in the 44 to 48 month range, logger follow-up and this 32 month analysis has to be done for us to determine what effect treatment with Jakafi has on survival in Intermediate-2 Risk patients.
We recognize there are clearly limitations to these types of comparisons, but when you take them together with the results of the randomized controlled COMFORT 1 trail, evidence is certainly accumulating that additional benefit and additional benefit of Jakafi may well be a prolonged survival.
The Phase III trial in polycythemia vera is called RESPONSE. It’s a global pivotal trail conducted under an SPA. We are doing it with NOVARTIS. The dual primary end point requires achieving both a 35% reduction in spleen volume and remaining three of the need for phlebotomy for six months. We are on track to complete enrolment this year, of paying 48-week data on all patients before the end of next year. We expect to file the SNVA shortly thereafter and obtain approval in the second half of 2014.
We’ve also started a second study, a very important study to support labeling on symptom relief in PV. The response study is an open label study against the best available therapy, so a symptom analysis that could be in a label can’t be done without a blinded study. So this called call RELIEF is such a study; patients receiving hydroxyurea with persistence symptoms get randomized to continue on HU or receive Jakafi in a blinded fashion. It’s a 16-week study and therefore we will have this important information to include in the SNVA.
With respect to what you’d expect from this study, in December of 2010 we presented PV results from our ongoing initial Phase II trail and to summarize in patients with advanced PV, resistant to or intolerant of hydroxyurea, we showed phlebotomy independence and improvement in blood counts, as well as reductions in spleen size lasting up to 27 months.
You can see here that virtually all the patients became phlebotomy independent and remained so for many months of treatment. Spleen size reduction were also quite impressive, and when you look at symptom improvement, the improvement from base line is quite dramatic. Jakafi was very well tolerated in this group. We’ve submitted an abstract for the upcoming ASH meeting, which if accepted would provide additional longer-term data.
I’ll call your attention, especially to the pruritus symptom. While MF patients have aquagenic pruritus, the percentage of people with PV who have it and the severity of it is much more in p.vera patients and the drug is really very effective, very quickly in reliving this really debilitating and depressing side effects that so many of these patients have.
Another interesting study with Jakafi is being conducted in patients with pancreatic cancer. There are a couple of reasons why we think this makes sense. Patients with pancreatic cancer have a higher prevalence of cachexia and there’s a strong association between cancer cachexia and high circulating levels of pro-inflammatory cytokines.
We saw marked improvement in cachexia and decreases in cytokine levels in our MF patients. Additional direct or indirect activation of the JAK-STAT pathway has been observed in pancreatic cancer and in addition of the JAK pathway in pancreatic cancer, cell culture model shows interference with cell growth and mortality and in vivo models have been shown, and in vivo models Jakafi has been shown to slow tumor growth and prolong survival.
We initiated a Phase II study in 120 patients with pancreatic cancer last year. It’s a blinded study comparing patients treated with capecitabine plus placebo versus patients treated with capecitabine plus Jakafi. Overall survival is the primary end point. Secondary end points include body weight and nutritional markers to a response rate quality of live and pain and full results of this study are expected in the second half of next year.
Moving into inflammation, I mentioned earlier our second JAK 1, JAK 2 inhibitor, baricitinib is partnered with Lilly. They have worldwide rights to the compound for all chronic inflammatory diseases. The three-month results of the Phase II (b) trail in RA will present at ULR in June. The six-month results will be presented at ACR in November. The abstracts came out a couple of days ago; I’ll describe them on the next slide. We expect the Phase III program will start later this year.
We see the recent FDA advisory committee meeting dealing with Pfizer's tofacitinib as a good outcome for the JAK inhibitor class and may allow Lilly to position our inhibitor as best-in-class. Lilly is also evaluating baricitinib in a Phase II (b) trial in patients with moderate to severs psoriasis. Results from these studies could be available next year.
In addition, Lilly recently announced a Phase II trail in patients with diabetic nephropathy. Data suggest that ongoing real inflammation plays a key roll in diabetic nephropathy and in that regard biopsies from the kidneys of early and late stage diabetic kidney disease patients suggest that over activation of JAK-STAT pathway leads to increased levels of pro-inflammatory cytokines. Therefore inhabiting the cytokine pathways dependant on JAK 1 and JAK 2 may lead to positive clinical outcomes in diabetic nephropathy.
In this dose ranging placebo controlled phase II trail that’s expected to include 250 patients, the primary end point is the change from baseline and the urinary albumin in to creatinine ration at 24 weeks. Results are expected in early 2014.
To hear the abstracts, the ACR abstracts, insight Lilly will have two oral presentations and one post oral presentation. The first oral presentation will show 24 week efficacy and safety data from the Phase II (b) study. The data demonstrate the significant improvements and the size and symptoms of RA versus placebo seen at 12 weeks, were maintained or improved for an additional 12 weeks of blinded treatment with 2, 4 and 8 milligrams, once a day. In addition, safety signals observed over 12 and 24 weeks were consistent with previously conducted studies of baricitinib.
The second oral presentation will cover magnetic resonance imaging, a sub-study done and definings in this sub-group in patients with active erosive RA suggest dose dependence suppression of synovitis, osteitis and total inflammation by baricitinib 12 ended 24 weeks.
So also a poster about the 12 and 24-week patient reported outcomes from the trial and as shown in the abstract, RA patients who received baricitinib reported clinically meaningful improvement as early as two weeks into the study and these improvements were maintained or continued to improve through the 24 weeks of observation. We and Lilly also plan to host an investor event, which will also be webcast to summarize the data presented at ACR.
So the final slide; at the beginning of the presentation I said that our JAK inhibitors were providing us with a pipeline in and of themselves and I think that’s true and I focused my remarks on the successful development of our JAK programs.
Further activities with Jakafi involve other ongoing investigator sponsored trials, ISTs and a number of other hematologic indications, including acute lymphocytic leukemia, both pediatric and adult; and a number of lymphomas which have a high incidence of JAK activating mutations, just as MF and PV do.
Looking beyond the JAK inhibitors, our pipeline has other interesting programs. Our earlier stage oncology programs for CMET, which is licensed to Novartis and for an inhibitor of indoleamine dioxygenase for immune enhancement are ongoing. We also have several new proprietary clinical programs in oncology and inflammation and we have yet to describe in a number of pre-clinical compounds that are likely to enter clinical development in 2013.
And that concludes my formal remarks. I think the breakout room is Broadway? That’s Broadway. Thank you all very much.
[No Q&A session for this event].
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