Q4 2019 Earnings Call

Greetings and welcome to the insight fourth quarter and yearend 2019 earnings conference call. At this time all participants are in listen only mode. A question answer session will follow the formal presentation.

Operator: Greetings, and welcome to the Incyte fourth quarter and year-end 2019 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Booth, head of investor relations for Incyte. Please go ahead, sir.

If anyone should require operator assistant store the conference. Please press star zero under a telephone keypad.

As a reminder, this conference is being recorded it is all my pleasure to introduce your host like boots head of Investor Relations website. Please go ahead Sir.

Mike Booth: Thank you, Kevin. Good morning, and welcome to Incyte's fourth quarter and full year 2019 earnings conference call and webcast. The slides used today are available for download in the investor section of Incyte.com. I am joined on the call today by Herve, Barry, Steven, and Christiana, who will deliver our prepared remarks, and by Dash, who will join us for the Q&A session. During the question and answer session, I ask that you limit yourself to one question and, if needed, one follow-up. This will enable as many of you to ask questions as time allows.

Thank you Kevin.

Good morning, and welcome to insight fourth quarter and full year 2019 earnings conference call on West Coast.

Slides used today are available for download on the Investor section of insight Dot com.

I'm joined on the call today by a they battery Stephen and Christiana, who will deliver our prepared remarks and by Dashel will join us for the Q and I said.

During the question and answer session I ask that you limit yourself to one question and if needed one follow up this wasn't able to as many of you to ask questions as time allows.

Before we begin I'd like to remind you that some of the statements made during the call today are forward looking statements, including statements regarding our expectations for 2020 guidance the commercialization of our product and on dependent on plans for the compounds in our pipeline as well as the development plans about collaboration talk [laughter].

Mike Booth: Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements regarding our expectations for 2020 guidance, the commercialization of our products, and our development plans for the compounds in our pipeline, as well as the development plans of our collaboration partners. 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-Q for the quarter ended September 30, 2019, and from time to time in our other SEC documents. It is also important to note that our recently announced collaboration with Morphosis for the global development and commercialization of tafacitumab is subject to clearance by antitrust authorities, and therefore any statements we may We'll now begin the call with a... Thank you, Mike.

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-Q for the quota ended September Thirtyth 2019, and from time to time in our other FCC documents.

It's also important to note that our recently announced collaboration with Mosys for the global development and commercialization of competition that [laughter] is subject to clearance by antitrust authorities and therefore any statements. We may make about the collaboration and system at a conditioned on such statements well now begin the call Whitney.

Thank you Mike I'm good morning, everyone.

Herve: Thank you, Mike, and good morning, everyone. So 2019 was another year marked by strong commercial performance, including surpassing $2 billion in annual revenue for the first time. In addition, we continue to advance our R&D portfolio and make progress towards our strategic goal of diversification and growth. Drink to you!

For 2019 was another your mouth by strike on the shuttered, a four month, including surpassing two BBM and I know of a new forget from Stein.

Additionally, we continue to advance our R&D portfolio and make progress toward our strategic goal of diversification and growth.

Drinks are you.

Herve: We achieved 13 of the 15 key goals we laid out this time last year, including the approval and successful launch of Jaka Fye in steroid refractory acute GVHD. While the results of the Gravitas 301 trial of Itacitinib were disappointing, we announced positive results of the Phase III REACH II trial. We submitted the NDA for pemigotinib based on strong updated data, and we are very pleased to recently report positive top-line Phase III results from ROCKSCREAM in atopic dermatitis.

We actually something of the 15 key goals, we laid out this time last year.

Things you have drawn on success would launch of its like a fight in steroid refractory acute gvhd.

What is always that's a great that's real one try out of the that's it's anybody's appointing we announced but it to resolve those a phase three reach to try and we submitted the India and you get any bids on stronger did it did though I mean I'm very pleased to recent yeah. We bought positive topline phase three results from looks great.

In atopic dermatitis.

In addition to our entire portfolio. We continue to seek extent might have said that could complement that well business, where we can kinda by some of these mfas. This will.

Herve: In addition to our internal portfolio, we continue to seek external assets that could complement our business. Our recent collaboration with Morphosis on Tafasit Amab represents a strong fit with our portfolio, and we expect to be able to capitalize on our commercial expertise in the U.S. and Europe. Turning now to our commercial performance in 2019, we had another year of robust top-line growth. Product and royalty revenues grew 22% year-over-year, with growth coming from all four sources.

We present the strength between that were booked for do you I mean, we expect to be able to capitalize on that were commercial expertise in the U.S. on Europe.

Turning now to I will come I shouldn't that function 2019.

We had another year of robust topline growth well that kind of what are your deal revenues grew 22% Youre, probably go well with growth coming from or fall short season.

Herve: Jacka Fye was up 21%, Jackavy Royalties up 16%, iKluzig up 13%, and Illumion Royalties doubled to $80 million. Slide 5 shows the revenue momentum over the last several years. Product and royalty revenues have more than tripled since 2016. Jaka Fye, with a 4-year CAGR of 29%, remains a significant revenue driver, and non-Jaka Fye revenues have shown over 50% compounded growth over the same period. Two new molecules, both of which were discovered at Incyte, are currently under priority review at the FDA, and these are highlighted on slide 6. Both have breakthrough therapy designation from the FDA. The BDUFA date for Pemigetinib is May 30th, and we expect the FDA decision on Novartis' application for the approval of Capmatinib in around six months.

Second Friday was up 21% Gigavue royalties up 16% iclusig up something but sunk and loading up royalties doubled to 18 me now.

Slide five shows a revenue momentum over the last several years.

Well, that's done away until revenues have more than tripled since 2015.

Second five with a four year CAGR of 29% remains a significant revenue driver.

No. It's like a fight revenues have shown over 50% compounded growth, although the simple you.

Through new muddy Qms, both of which well he's got the inside currently under a priority review at the F.D.A.M.D. is highlighted on slide six well have a breakthrough therapy designation from you.

The bidding for digital pen he gets you need these mid Thirtys sorry, yes.

And we expect that did this season on Novartis application for the <unk> around six months time.

Herve: The Cap Matinee of Economics to Incite, Include royalties in the range of 12 to 14% on global net sales by Novartis and over $500 million in potential revenue. Thetacetamab, from our recently announced collaboration with Morphosis, is the third molecule currently under FDA review. We see CD19 inhibition with NFC-engineered antibody as a unique mechanism of action that is fundamental to the treatment of B-cell malignancy.

The Capmatinib economics to inside.

Include royalties in the range of 12% to 15% on global net sales by Novartis and over 500 million in potential milestone.

[noise] [noise], that's you're talking about from my well recently announced collaboration with Mfas. This is a soap body June currently under idea we issue.

We see cdnineteen any be chandeliers and they see engineered antibody as a unique mechanism of actions that is fundamental to the treatment of b cell malignancies.

Herve: We believe that TAFACITA Map can become a very important part of our oncology portfolio and provides both a near-term opportunity through the potential launch in DLBCL, where the BLA was submitted late last year, and the MA is expected to be submitted mid this year, as well as significant potential upside in the medium to longer term. Tafasitamap fits very well with our current commercial and metallurgy footprint and therefore enables us to capitalize on our significant commercial capabilities in the US and Europe. Turning now to the key development and commercial priorities for 2020. We have the three potential new product approvals this year that I have already mentioned, and we also expect to submit the NDA for ROCKSCREAM in atopic dermatitis before the end of the year.

We believe that deficit them up can become a very important part of our oncology portfolio and provides both the NIPT Delmar booked any piece was a potentially launching deal this year and whether it be area with submitted that late last year.

<unk> and <unk> is expected to be submitted mid this year as well as significant potential upside in the medium to longer term.

That's it feels very where do we start work on commercially methodology footprint and therefore inhibitors to capitalize on my with significant commercial capabilities in U.S. and Europe.

Turning now to the kids development and commercial priorities for 2020.

We have the street potential new product approvals. This show that they have already mentioned and we also expect to submit the India for work stream.

I think that meant they just before the end of the you.

Herve: We also expect to continue the momentum within our LIMBER program, with the initiation of the first pivotal combination development trial, as well as important data from the once-a-day formulation of Rockwell. On the commercial side, we will work to drive continued Jakafi growth in all three indications while also ensuring that we are ready to pursue successful launches of Pemiget enabled and Tapasit Ahmad. I will now pass to Barry for more detail on both the 2019 JAKA 5 performance as well as our commercial preparations for PEMI and TAFA.

We are still expect to continue the momentum we've seen that well Limbo program. We then you see shows the first be but the combination of development trial as well as important data from the once a day formulation that looks pretty to me.

On the go much our side, we will work to drive come to justify growth in all three indications where you while also ensuring ensuring that we are ready to pursue six is fully launched she's a very gets you need.

I see them up.

I wouldn't know pester, Barry from multi fit on both 2019, Jack afraid performance as where does that commercial preparations for me.

Thank you survey and good morning, everyone.

Barry: Thank you, Herve, and good morning, everyone. In the fourth quarter of 2019, Jackify grew 23% year-over-year to $466 million. Patient demand continued to drive the uptake of Jackify, and growth was strong across all three indications. Jackify has grown consistently in total patients treated and net sales for each of the past several years, fueled by growth across all indications. The 2020 Net Product Revenue Guidance we provided for Jackify today reflects a continuation of this growth in patients and in top-line sales to a range of $1.88 to $1.95 billion. Slide 11 also highlights the key priorities for our U.S. team this year. These priorities include continuing the growth of total patients treated for myelofibrosis, increasing the number of patients on therapy for polycythemia vera, where we recently launched a nationwide disease awareness campaign, and continuing the momentum in GVHD, where we have seen strong traction since the launch in the steroid-refractory acute setting.

In the fourth quarter, a 2019, Jacobite grew 23% year over year to $466 million.

In demand continue to drive the uptake objectify and growth was strong across all three indications.

Jack up by has grown consistently in total patients treated and net sales for each of the past several years fueled by growth across all indications.

The 2020 net product revenue guidance, we provided for Jacobite today reflects a continuation of this growth in patients and in topline sales to a range of $1.88 billion to $1.95 billion.

Slide 11 also highlights the key priorities for our U.S. team this year.

These priorities include continuing the growth of total patients treated in myelofibrosis, increasing the number of patients on therapy in polycythemia, Vera where we recently launched a nationwide disease awareness campaign and continuing the momentum in Gvhd, where we have seen strong traction since the law.

Lunch in the steroid refractory acute setting.

Barry: We

Barry: We look forward to the presentation of data from REACH-2 at the Presidential Symposium at the EBMT meeting next month and to the results of REACH-3, a randomized Phase III trial of Jackify versus best available therapy in steroid-refractory chronic GVHD.

We we look forward to the presentation data from reached two in the presidential symposium at the end team meeting next month and to the results of reach three in the second half of this year.

Each three is the randomized phase three trial objectify versus best available therapy, and steroid refractory chronic gvhd.

Barry: In addition, we are also planning for the potential launches of both Tapacitamab and Pemegatinib. We expect to be able to leverage our commercial expertise for both compounds, and we will be ready to launch immediately if approved by the FDA. I'll turn the call over to Steven for our clinical updates.

In addition, we're also planning for the potential launches a bulk deficit of Matt and PEM again, we expect to be able to leverage our commercial expertise for both compounds and we will be ready to launch immediately if approved by the FDA I'll turn the call over to Steven for a clinical updates.

Steven: Thanks, Barry, and good morning, everyone. At the beginning of 2019, we had laid out a list of key R&D goals for the year, and I'm pleased to say that we achieved most of what we set out to do. While the recent results of Gravitas 301 were disappointing, we were able to report multiple successes last year. Some highlights include the positive top-line result reported for the randomized REACH-2 trial of ruxolitinib in steroid-refractory acute graft-versus-host disease, the submission of an NDA for pemigatinib in cholangiocarcinoma, and the initiation of pivotal trials for ruxolitinib cream in both atopic dermatitis and vitilig

Thanks, Barry and good morning, everyone.

At the beginning of 2019, we had laid out a list of key R&D goals for the year and I'm pleased to say that we achieved most of what we set out to do while the recent results of gravitas real one was disappointing we were able to report multiple success as last year.

Some highlights include the positive topline results reported for the randomized reached two trial of Ruxolitinib in steroid refractory acute graft versus host disease.

The submission of an anda for Penny Gartner and Cholangio carcinoma.

And the initiation of pivotal trials for Ruxolitinib cream in both atopic dermatitis and that lager.

We recently announced that the first of two phase three trials evaluating ruxolitinib cream in atopic dermatitis met its primary endpoint and I'll cover this on the next slide.

Steven: We recently announced that the first of two Phase III trials evaluating ruxolitinib cream in atopic dermatitis met its primary endpoint, and I'll cover that on the next slide. We were pleased to announce that our Pivotal Phase III True AD2 study achieved its primary endpoint of proportional patients with IgA treatment success following eight weeks of therapy. This is the first of two identical pivotal trials, and we expect the results of TRU81 later in the first quarter. In terms of study design, TRU82 recruited approximately 600 patients with mild to moderate atopic dermatitis. Inclusion criteria included an age range of 12 to 75 years of age, an IGA score of 2 to 3, and a percentage body surface area affected of 3% to 20%.

We were pleased to announce that our pivotal phase III true 82 study achieved its primary endpoint of proportion of patients with NRG a treatment success file an eight weeks of therapy.

This is the first of two identical pivotal trial and we expect the results of true 81 late in the first quarter.

In terms of study design true 82 recruited approximately 600 patients with mild to moderate atopic dermatitis.

Inclusion criteria included an age range of 12 to 75 years of age and RJ score of two to three and a percentage body surface area affected of 3% to 20%.

Steven: Patients were randomized 2 to 2 to 1. 2.75% Rexcreen BID, 1.5% Raxcreme BID, and vehicle cream respectively, and were on therapy for eight weeks, at which point all eligible patients could either switch to or continue on 0.75% or 1.5% Raxcreme BID for the long-term safety extension period. In the Phase 3 True82 study, and for both those, efficacy data was measured in the primary and secondary, as well as the safety profile, which as a reminder were presented at EADV in 2018 and have since been published in manuscript form in JACI. As required by the FDA for dermatologic studies, long-term safety data are being collected, and we continue to expect to submit the NDA for Roxalipinib cream in Q4 of this calendar year.

Patients were randomized two to two to one 2.75% direct screen be I'd.

1.5% direct screen, VIP, and a vehicle cream, respectively, and one therapy for eight weeks at which point all eligible patients could either switched to continue on 0.75%, 1.5% Rex cream be I'd for the long term safety extension period.

In the phase three true 82 study and for both doses the efficacy data as measured in the primary and secondary endpoints as well as a safety profile a consistent with previous data from our phase two program, which as a reminder were presented at EEI TV in 2018 and have since been published in managed script form in jail.

Hi.

As required by the FDA for Dermatologic studies long term safety data being collected and we continue to expect to submit the NDA for Ruxolitinib cream in Q4 of this calendar year.

Steven: I wanted to take this opportunity to briefly walk through the summary clinical development program for tafacitum. With Morphysis, we intend to pursue development in both relapsed refractory and frontline diffuse large B-cell lymphoma, as well as in relapsed refractory CLL and other non-Hodgkin's lymphoma. For relapsed refractory diffuse large B- The Be-Mind Phase 3 study is also underway. Assessing TAFA versus rituximab, both on top of bendamustab, The futility analysis for BMIND was passed in late 2019, and primary completion is estimated for 2022. TAFA has also been evaluated in Frontline Diffuse Large B-cell Lymphoma. The safety portion of the First Mind Study is expected to be completed later this year, whereupon we expect to start the pivotal portion of the program as it relates to relapsed refractory CLL and other non-Hodgkin's lymphoma.

I wanted to take this opportunity to briefly walk through the summary clinical development program for tap a settlement.

With Morphosys, we intend to pursue development in both relapse refractory and frontline diffuse large b cell lymphoma, as well as in relapsed refractory CLL and other non Hodgkin's lymphoma.

For relapsed refractory diffuse large b cell lymphoma, L. mind was the basis for the BLE submission seeking approval of the combination of 10% map Quest Lenalidomide.

The beam on phase three studies also underway assessing task versus Rituximab, both on top of Ben domestic.

The futility analysis will be mind was cost in late 2019 and primary completion is estimated for 2022.

Cafes also been evaluated in frontline diffuse large b cell lymphoma.

The safety portion of the first months study is expected to be completed later this year, where upon we expect to start the pivotal portion of the program.

As it relates to relapsed refractory CLL and other non Hodgkin lymphomas based on some promising data of tapping combination with appear to be kind of delta inhibitor and the Kosmos trial, we expect to initiate a trial of Tampa plus our own Pithree kinase Delta Delta inhibitor post the close of in 2020.

Steven: Based on some promising data of TAFA in combination with the PR3 kinase delta inhibitor in the COSMOS trial, we expect to initiate a trial of TAFA plus our own PR3 kinase delta inhibitor past CLISB in 2020. Moving on to our limber project on slide 16, which is our initiative focused on expanding our leadership within the MPNs beyond Ruxelat, later this year, we expect initial bioavailability and bioequivalence data for once a day ruxolitinib, which is an important step towards a potential launch in 2022. We expect to begin proof-of-concept combination trials of ruxolitinib with both our BAT and ELK2 inhibitors during this year, and we also plan to initiate a pivotal trial combining ruxolitinib with paraclysib in myelofibrosis patients with a suboptimal response to ruxolitinib monotherapy based on encouraging proof-of-con With that, I would like to turn the call over to Christiana for the financial update.

Moving on to our lumber project on Slide 16, which is our initiative focused on expanding our leadership within Mpns beyond Ruxolitinib.

Later this year, we expect initial bioavailability and bioequivalence data for once a day ruxolitinib, which is an important step towards the potential launch in 2022.

We expect to begin proof of concept combination trials ruxolitinib, both alphabet and Elk to inhibitors. During this year and we also plan to initiate a pivotal trial, combining ruxolitinib with pasta cluster in Mato fibrosis patients with a sub optimal responds to ruxolitinib monotherapy based on encouraging proof of concept.

Data.

This initiation would mark the first pivotal trial within the lumber program.

With that I would like to turn the call over to Christiana for the financial update.

Christiana: Thank you, Steven, and good morning, everyone. The financial update this morning will include GAAP and non-GAAP numbers. For a full reconciliation of GAAP to non-GAAP, please refer to slides 25 and 26 in the backup section of the deck and to the press release we issued this morning. Our fourth quarter results reflect continued strong revenue growth across all products, with total product and royalty revenues of $579 million, representing an increase of 24% over the fourth quarter of 2018. This is comprised of $466 million in Jakafi and $24 million in Iclusive Net Product Revenues, $65 million in Jacobi royalties from Novartis, and $24 million in Allumiant royalties from Lilly. Our total costs and expenses for the quarter, on a non-gap basis of $434 million, increased by 10% from the prior year quarter.

Thank you Stephen and good morning, everyone. The financial update. This morning will include GAAP and non-GAAP numbers for the full reconciliation of GAAP to non-GAAP. Please refer to slides 20 526 in the backup section of the deck and to the press release, we should this morning.

Our first quarter results reflect continued strong revenue growth across all products with total product and royalty revenues were $579 million, representing an increase of 24% over the fourth quarter of 2018.

This is comprised of $466 million and Jackup high and $24 million Tonight Classic net product revenues $65 million in Jack heavy royalties from Novartis and 204 million directional movement royalties.

Frankly.

Our total cost and expenses for the quarter on the non-GAAP basis of $434 million increased by 10% from the prior year quarter.

Christiana: As you can see, the growth rate in total costs and expenses was well below the growth rate in product and royalty revenue. Ongoing R&D expense for the quarter was $282 million on an on-gap basis, representing a 3% increase from the prior year quarter. This was primarily due to our existing pipeline programs progressing to later stages of development and was partially offset by our election to end additional co-funding of the development of Parasite Nipu with Lily.

As you got to the growth rate in total cost and expenses was well below the growth rate in product and royalty revenues.

Ongoing R&D expense for the quarter was $282 million on a non-GAAP basis, representing 3% increase from the prior year quarter.

This was primarily due to our existing pipeline programs progressing to later stages of development and was partially offset by our election to end additional funding of development, but is it an equal with Lilly.

Christiana: SG&A expense for the quarter was $123 million on a non-gap basis, representing a 27% increase over the prior year quarter. This was primarily due to an increase in the commercialization efforts related to JAKA5. Looking at full-year 2019 results, total products and royalty revenues of $2.08 billion grew 22% while total costs and expenses stayed relatively flat at $1.55 billion on a non-GAAP basis. As a result, non-GAAP operating income increased by 88% from $325 million in 2018 to $610 million in 2019. Looking at the trend from 2015 through 2019, the growth in our product and royalty revenues has exceeded the growth in both our ongoing R&D expenses and SG&A expenses on a non-gap basis, leading to higher operating leverage and reflecting our commitment to the disciplined management of our financial resources.

As DNA expense for the quarter was $123 million on a non-GAAP basis, representing a 27% increase over the prior year quarter.

This was primarily due to an increase to invest commercialization efforts related to Jackup high.

Looking at full year 2019 results total products on royalty revenues of $2.08 billion grew 22% total cost and expenses stays relatively flat at one point $55 billion and the non-GAAP basis.

Actual results non-GAAP operating income increased by 88% from $325 million in 2018, so $610 million in 2019.

Looking at this trend from 2015 through 2019, the growth in our product and royalty revenue has exceeded the growth in both our ongoing R&D expense NSG, an expansion in non-GAAP basis, leading to higher operating leverage and reflecting our commitment to disciplined management of our financial research.

Yes.

Moving on to Twentytwenty I will now discuss the components of our Twentytwenty guidance. Please note that the guidance will provide today does not include the financial impact of our recently announced collaboration was more policies, which crystal gets closed and also excludes the impact of any additional potential future strategic transactions.

Christiana: Moving on to 2020, I will now discuss the key components of our 2020 guidance. Please note that the guidance we provide today does not include the financial impact of our recently announced collaboration with Morphosis, which has not yet closed, and also excludes the impact of any additional potential future strategic transactions. For the full year 2020, on both a gap and on-gap basis, we expect net product revenue for Jackify to be in the range of $1.88 to $1.95 billion, driven by continued growth across all indications. For iCLUSiC, we expect net product revenue to be in the range of $100 to $105 million. As in previous years, we will not be providing guidance for milestone or royalty revenue.

[music].

For the full year Twentytwenty on both GAAP and non-GAAP basis, we expect net product revenue for the Jackup high to be in the range of 1.88 to $1.9 billion to $5 billion driven by continued growth across all indications.

All right classic, we expect net product revenue to be in the range of 800 $205 million.

As in previous years will will not be providing guidance for milestones or royalty revenues.

We expect our gross to net adjustment for twentytwenty to be approximately 16% for Jack OSI with adjustment in the first quarter of the year being higher relative to both the previous quarter and subsequent quarters.

Christiana: We expect our gross to net adjustment for 2020 to be approximately 16% for Jessica Fye, with the adjustment in the first quarter of the year being higher relative to both the previous quarter and subsequent quarter. We expect GAAP R&D expense to be in the range of $1.21 to $1.28 billion, and non-GAAP R&D expense to range from $1.08 to $1.15 billion. The increase compared to 2019 is primarily driven by our existing pipeline programs progressing to later stages of development. We expect GAP-SG&A expense to be in the range of $505 to $535 million and non-GAP-SG&A expense to range from $447 to $477 million. The increase compared to 2019 is primarily driven by efforts to support the expansion of our commercial portfolio and investment in infrastructure to support the continued growth of the business. For both the case of R&D and SG&A, the non-GAAP expense guidance excludes estimated stock-based compensation expenses. I will now turn the call back to Herve for further discussion of the year ahead.

We expect the GAAP R&D expense to be in the range of one falling 21 to one point $28 billion and non-GAAP R&D expense to range from 1.28 to one point $15 billion.

The increase compared to 2019 is primarily driven by our existing pipeline programs progressing later stage of development.

We expect the gap is DNA expense to be the range of $505 million to $535 million and non-GAAP EPS DNA.

Expense to range from $447 million to $477 million.

The increase compared to 2019 is primarily driven by efforts to support the expansion of our commercial portfolio and investment in infrastructure to support the continued growth of the business.

Both in the case, we'll try to Andy Anish DNA, the non-GAAP expense guidance excludes estimated stock based compensation expense.

Ill now turn the call back to elevate for further discussion of the ahead.

Herve: Thank you, Christiana. So 2019 was a strong year in terms of business performance and pipeline progression. And as you can see on slide 23... 2020 is shaping up to be another busy and important year for Incyte. In my opening remarks, I laid out our key priorities for the year, and here we have highlighted the five key regulatory updates that we expect, which are the FDA decision on Pelmigatinib, Tafacitamab, and Capmatinib, the MAA submission of TAFAR, and the NDA submission of ROCS. We also look forward to providing numerous other data announcements as the year progresses. Operator, that concludes our prepared remarks, and please give your instructions and open the call for Q&A.

Thank you Christina.

So 2019 was a stranger income of business performance on pipeline progression.

And as you can see on slide 23.

2020 stripping out to be on those.

Busy on important geoffroy inside.

In my opening remarks, I laid out our key priorities for the year and here we have highlighted the five key regulatory updates that we expect which allows the idea. This season them when you get enable deficits and capmatinib.

And is submission effect.

The end use submission of rock screen.

We also look forward to providing numerous was okay that announcement as the year progresses.

Operator that concludes our prepared remarks. Please give you instruction opens a goal for sure.

Operator: Certainly. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. And as a reminder, we ask that you please ask one question, then return to the Our first question today is coming from Brian Abrahams from RBC. Your line is now live.

We'll now be conducting your question answer session. If you like to be placed in the question can you. Please press star Wars under telephone keypad.

Information Tony will indicate your line is in the question Q you may Prostar Q, if you'd like to move your question from the Q for participants using speaker equipment, maybe necessary to pick up or hints that before pressing star one and as a reminder, we ask you. Please ask one question the return to the Q.

Our first question today is coming from Brian Abrams from RBC. Your line is alive.

Hey, guys. Thanks, very much for taking my question.

And congrats on the continued commercial performance and on the 282 results.

Steven: Hey guys, thanks very much for taking my question and congratulations on the continued commercial performance and on the True82 results. On topical rocks, I was wondering if you could talk about your expectations for whether there might ultimately be a boxed warning on the label with respect to class safety. What, if any, impact do you think that might have on dermatologist views and uptake of the agent ultimately? I guess along those lines, any type of work that you have done or expect to do over the course of the program to fully characterize systemic exposure and maybe the relative importance of that as you think about a future label there and adoption. Thanks.

On topical rux I was wondering if you could talk about your expectations for weather.

There might be ultimately a box warning on the label with respect to class safety.

What if any impact that you think that might have on dermatologist views and uptake of the age and ultimately and I guess along those lines any type of work that you have done or expect to do over the course of the program to fully characterize systemic exposure and maybe the relative importance of that as you think about a future label there and adoption. Thanks.

Brian Steven Thank you for your question.

The data that we've already presented both at EEI TV and then published in a paper in JCR shows the safety profile to date for our topical rack Scream, obviously, what you referenced in terms of box warning has to date largely applied to compounds that that give you substantial systemic exposure.

Steven: Brian, Steven, thank you for your question. You know, the data that we've already presented, both at EADV and then published in a paper in JACI, shows the safety profile to date for our topical RAC screen. Obviously, you know, what you reference in terms of a box warning has to date largely applied to compounds that give you substantial systemic exposure, and what we've already published, we have little to no systemic exposure. We have a very clean safety profile. So given all of the above, you know, we don't think that we're going to be in that territory of having a box warning. Obviously, ultimately, it's up to the FDA and not to us. But again, given the little to no systemic exposure seen to date, and the very clean safety profile, we don't expect that. And then we'll update the safety as this year goes along, you know, with more long-term data. But that's currently our expectation.

Asia.

What we've already published we have little to no systemic exposure, we have a very clean safety profile. So given all of the above we don't think that we're going to be in that territory of having a box warning. Obviously ultimately it's up to the FDA and not to us, but again given the little to no systemic exposure seen to date, the very clean safety profile, we don't expect that.

And then we'll update the safety as this year. It goes along with more long term data, but thats our expectation currently.

Thanks, Stephen I'll hop back in the Q.

Thank you. Our next question is coming from Mark from from Cowen and Company. Your line is now live.

Yes, thanks for taking my question.

It is for Irving Christiana Anderson.

Morphosis deal unit, assuming this closes.

I have about three products prudently launching the next year and a half or so.

So I'm just wondering.

Appetite for continued M&A and.

Steven: Thanks Steve, and I'll hop back in the queue.

Should we expect that you might do more larger deals like morphosis deal. It for late stage assets or do you think you have done and that ended the pipeline and we should really be more focused on smaller earlier stage deals going forward.

Herve: Thank you. Our next question is coming from Marc Frahm from Cowen & Company. Your line is now live.

Herve: Thanks for taking my question. This is for Herve and Christiana. With the Morphosis deal, assuming this closes, you'll probably have about three products probably launching in the next year and a half or so. I'm just wondering the appetite for continued M&A, and should we expect that you might do more larger deals like the Morphosis deal for late-stage assets, or do you think you're done with that end of the pipeline and we should really be more focused on smaller, earlier-stage deals going forward?

Hi, Mark. Thank you for the question. So in terms of the BD strategy. It hasn't really changed from what it was before the Morphoses deal. We are continuing to look at the external assets to complement dollar supplement our internal activities and the focus is that.

Similar to what it was before.

Looking at programs that crude that.

Barry: Hi Marc, thank you for the question. So, in terms of the BG strategy, it hasn't really changed from what it was before the Morphosis deal. We are continuing to look at external assets to complement or supplement our internal activities, and the focus is similar to what it was before, looking at programs that could help diversify and continue to grow revenue, programs that allow us to capitalize on our existing capabilities in oncology, HIEM, and NPNs, of course, and more on the bolt-on type of transactions versus larger deals. And when you look from a capacity point of view, we ended the year with $2.1 billion of cash on the balance sheet. The pro forma for the Morphosis transaction is $1.2 billion, so we still have capacity to continue to look for those bolt-on type of transactions.

Hello, diversified and continue to growth revenue.

Programs that allow.

To capitalize on.

Existing capabilities in oncology team MPN to of course.

And.

A more on the bolt on type of.

At transactions versus last year.

Deal and when you look from the capacity point of view.

We ended the year were two point.

1 billion of cash on the balance sheet that pro forma for today Morphosis has actually.

Going to billion. So we still have capacity to continue to look for those bolt on type of transactions.

Great. Thank you.

Thank you. Our next question is coming from Tyler Van Buren from Piper Sir Your line is now lives.

Barry: Great, thank you.

Steven: Thank you. Our next question is coming from Tyler Van Buren on behalf of Piper Sandler. Your line is now live.

Hey, guys. Good morning, Thanks for taking my question with respect to the true EDI results in the press release, there's one line, which appears pretty deliberate.

Steven: Hey guys, good morning. Thanks for taking the time to answer the question. With respect to the true AD results in the press release, there's one line which appears pretty deliberate and was repeated in the press release this morning where you guys state that the overall efficacy and safety profile of Ruxolitinib cream is consistent with previous data. And I know you guys can't speak about the data, but I guess just with respect to that statement, could you say that transcripts are provided by Transcription Outsourcing, LLC.

And was repeated in the press release. This morning, where you guys state that the overall efficacy and safety profile Ruxolitinib cream is consistent with previous data. So and I know you guys can can speak about the data, but I guess just with respect to that statement could you say that it's consistent with the via.

The effect size compared to vehicle as we think about it relative to prior data and then just as a quick follow up just can you talk about the potential conferences that you guys might present data and I'm, assuming that you would wait for the results from true 81 as well.

Steven: Yes, it's Steven. Thanks for your question. So just the back part of your question first; the True81 results will come, you know, sometime this quarter. And obviously, we are awaiting them, and we expect them to be in line with True82. And then again, with the proof of concept data, you know, what we're trying to communicate as much as we can, without actually giving the actual results, because we have to protect future meetings when we want where we want to present the data as soon as possible, is that, directly and quantitatively, the active arms, the 0.75 and 1.5%, were in line with the primary and secondary efficacy endpoints seen in the phase two data. And the vehicle was there as well, which was very encouraging.

Got it yes, it's Steven Thanks for your question. So the just the back part of your question first the true 81 results will come sometime this quarter and obviously we are.

Great well wait in them and we expect them to be in line with 282, and then again with the with a proof of concept data.

We are trying to communicate as much as we can without actually given the actual results because we have to protect future meetings. When we walk where we want to presented data as soon as possible is that directionally and quantitatively the active arms, the 0.75 and 1.5%.

Were in line with the primary and secondary efficacy endpoints seen in the phase two data and the vehicle was as well which is very encouraging. So when we went from 150 patient proof of concept study to a 600 patient phase three into 82, we're seeing this same quantitative results in terms of the primary and.

Steven: So when we went from a 150 patient proof of concept study to a 600 patient phase three study in True82, we are seeing, you know, the same quantitative results in terms of primary and secondary efficacy, as well as safety. And that's as much as we can say to try and protect both the presentation and a future manuscript, which we hope to be able to do soon.

Secondary efficacy as well as the safety and that's as much as we can say to try and protect both the presentation and future manuscript, which we hope to be able to do soon.

That's great. Thank you.

Thank you. My next question is coming from Cory Kasimov from Jpmorgan. Your line is now lives.

Hey, good morning, guys. Thanks for taking the question.

Wanted to ask unjustified, just with regard to your 2020 guidance looks like it implies growth of I think is 12% to 16% can you just.

Steven: That's great. Thank you.

Barry: Thank you. Our next question is coming from Corey Kazimoff from J.P. Morgan. Your line is now live.

Qualitatively discuss how much of this is coming from gvhd versus the longer term indications of MF and PV and then also can you just comment on what happened with the Jack Defy reset study you need to use on the in the press release that recruitment was discontinued so curious what happened on that front. Thank you.

Barry: Hey, good morning, guys. Thanks for taking the time to answer the question. I wanted to ask about Jackify, just with regard to your 2020 guidance, which looks like it implies growth of I think is 12 to 16%. Can you just qualitatively discuss how much of this is coming from GVHD versus the longer-term indications of MF and PV? And then also, can you just comment on what happened with the Jackify reset study in ET? It says in the press release that recruitment was discontinued. I am so curious what happened on that front. Thank you.

Hey, Chris Barry I'll, let Steven handle the reset study, but as far as the growth goes we're very encouraged by the approval and launch in acute steroid refractory gvhd for for Jack a five that continues to.

Now add a significant portion to the overall net sales, but myelofibrosis continues to be the largest portion of our net sales wipe PV total percentage of patients.

Steven: Hey, Cory, this is Barry. I'll let Steven handle the reset study, but as far as growth goes, we're very encouraged by the approval and launch in acute steroid refractory GVHD for Jackify. That continues to now add a significant portion to the overall net sales, but myelofibrosis continues to be the largest portion of our net sales. So, MF and PV will continue to drive the growth towards $3 billion, ultimately, but GVHD is now a significant contributor to that. Steven?

Continues to increase at a faster rate than MF, but those two indications MF and PV will drive the indications, obviously, we talked before whether its.

Whether its acute gvhd or chronic gvhd. The total population in the United States in the steroid refractory setting is about 3000 patients and obviously you know that it's a much larger patient population, so MF and PV, we'll continue to drive the growth towards $3 billion ultimately, but.

The HD.

Now a significant contributor to that Steven.

Steven: Corey, in terms of the RESET study, so that's looking at ruxoletinib in central thrombocytemia, the study design was a little bit complicated because of the composite endpoints. So the endpoint that was required in negotiation with the regulatory agencies was to obtain control of blood counts in terms of both the white blood cell count and the platelet count together and not an event endpoint like thrombosis. So what was required in terms of eligibility was patients coming on who had either intolerance to or progressed on hydroxyurea, had a white blood cell count above 11,000 and had no prior exposure to negrolide because the study was randomized against negrolide. And trying that for more than a year, in fact, longer, we were unable to enroll a sufficient number of patients in a timely manner.

Sorry in terms of the recent study so thats looking at Ruxolitinib in essential Thrombocythemia. This study design was a little bit complicated because of the composite endpoint. So the endpoint there was required in in negotiation with regulatory agencies was to obtain control of black.

In terms of both the white blood cell count and the platelet count together and not a an event endpoint like thrombosis.

So what was required in terms of eligibility was patients coming on who had.

Either intolerance will progressed on Hydroxyurea had a white blood cell count above 11000 and had no prior exposure to an agrilife because the study was randomized against a negra allied and try and that for the for more than a year in fact longer which was unable to enroll sufficient number of patients in a timely manner. We.

Steven: We looked at various amendments to try and get around this, but ultimately, because of that composite endpoint, we couldn't do that in terms of either the white count or prior negrolide. So the current thinking is to change it to a publication strategy, finish up the study, and publish it, but it will not be of registration quality in terms of its size.

Looked at various amendments to try and get around us, but ultimately because of that composite endpoint. We couldn't do that in terms of years of what count or prior negra lied. So the current thinking is to change it to publication strategy finish up the study and publish it but we will it will not be of registration quality in term.

As of its size.

Steven: Okay, thank you. I appreciate it.

Okay. Thank you appreciate it.

Thank you. Our next question is coming from improved from Morgan Stanley. Your line is alive.

Herve: Thank you. Our next question is coming from Vikram Purohit from Morgan Stanley. Your line is now live.

Good morning, Thanks for taking my question. So I had a question on your commercialization plans for rux cream.

Herve: Good morning, thanks for taking my question. So, I had a question about your commercialization plans for RUX Cream. So, you previously noted that you're still thinking through your options when it comes to whether you'd like to pursue commercialization independently or to find a partner for Europe, and I just wanted to see if your thinking here has evolved or changed at all based on the first set of phase 3 data you saw based on the recent readout.

As we noted that you're still thinking through your options when it comes to whether you'd like to pursue.

Commercialization independently or to find a partner for Europe and I just wanted to see if you're thinking here has evolved or changed at all based on the first set of phase two data you saw.

On the recent readout.

So when we think the area here. So as a result readout is have you see.

Herve: So the recent readout is obviously... You know, improving our optimism regarding the chance of getting regulatory approval in the U.S., where, as you know, we have... We decided to go by ourselves. Regarding the rest of the world, as I said previously, things have not really changed. I mean, we will be... there's a high probability we'll have a partnership with Asia. And in Europe, we are still in the process of looking at what options we have, either going alone, licensing out completely, or some form of a partnership. And each of the three options is still open to Europe.

[music].

And improving our.

Optimism regarding the.

The chance of getting a regulatory approval in the us, whereas you know we have.

Decided to grow by that will sell.

Regarding the rest of world.

As I said previously things have not really changed I mean, we will be there is a high probability we'd have a partnership regarding Asia.

In Europe, we are dealing the process of looking at what.

Options, we have either going along the licensing completely off some form of partnership on each of the three option is still open will regarding Europe.

Okay.

Herve: Okay, understood, thanks.

Okay understood. Thanks.

Steven: Thank you. Our next question is coming from Evan Segerman from Credit Suisse. Your line is now live.

Thank you. Our next question is coming from Evan Seigerman from Credit Suisse. Your line is now lives.

Steven: Hi all, thank you for taking my question and congratulations on the progress. So I noticed in the press release there were some updates on the LOTUS-adacitinib trial and ulcerative colitis and also paracyclib and Sjogren's disease. Can you help me understand why the UC trial was discontinued and what you saw in the data from the Sjogren's trial not to warrant continuation?

Hi, Thank you for taking my question Congrats on the progress so I noticed in the press release, there was some updates on the Lotus edge system trial in ulcerative colitis, and also Paris, a club and Sjogrens disease can you help me understand why the you see trial as discontinued and what you saw on the data from the Sjogrens trial not to warrant continuation.

Sure Evan it's Steven Thanks for your question in terms of the low dose it to sit in the in inflammatory bowel diseases, particularly ulcerative colitis.

Steven: Sure, Evan and Steven, thanks for your question. In terms of low-dose itacetinib in inflammatory bowel diseases, particularly ulcerative colitis, again, it was around operational dynamics in the competitive space. So we were unable to enroll sufficient numbers of patients to keep progressing the study, as well as given the competitive space with other compounds with similar mechanisms being way ahead, we elected at the end of last year to no longer pursue that program. In terms of Sjogren's, again, a difficult medical condition in terms of measuring endpoints and getting, you know, sufficient spread versus standard of care or even placebo, we're not seeing enough activity to warrant going But because of their mechanisms of action, either in terms of, you know, JAK inhibition or B-cell inhibition with delta inhibitors, they lend themselves to conditions in the inflamed autoimmune setting where those mechanisms are important. So we have the ability to conduct [inaudible]

Again, it was around operational done dynamics in the competitive space. So we were unable to enroll in a sufficient numbers of patients to keep progressing the study as well as given the competitive space with other compounds with similar mechanisms being way ahead, we elected at the end of last year to no longer pursue that program.

Graham.

In terms of Sjogrens again difficult.

Medical condition in terms of measure in endpoints.

And get in a sufficient spread versus versus standard of care or even placebo.

We've not seen enough of the activity to arent going forward into full registration program. It was a proof of concept study and in our opinion, we know we didnt get to the proof of concept. We wanted to pursue registration further there across inflammation in order immunity one of the the beauties of of the program.

As we have this pipeline of targeted therapy agents immuno oncology agents all of which were primarily in the beginning to develop for either hematology oncology indications, but because of their mechanism of action either in terms of JAK inhibition or b cell inhibition with delta inhibitors their data.

Lend themselves to conditions in the inflammatory autoimmune setting where those mechanisms are important so we have the ability to conduct.

Multiple proof of concept studies very efficiently and then make decisions to go forward or not and in those two instances it didn't meet.

Our own internal expectations to pursue registration programs.

Steven: Alright, thank you for the call.

Alright, thank you for the color.

Herve: Thank you. Our next question is coming from Jay Olson from Oppenheimer. Your line is now live.

Thanks for the next question is coming from Jay Olson from Oppenheimer. Your line is our wise.

Oh, Hey, thanks for taking the question and congratulations on the financial performance in 2019, you delivered impressive non-GAAP operating margin growth last year and since you're now investing in multiple new product launches over the next year or two.

Christiana: Oh, hey, thanks for taking the question and congratulations on the financial performance in 2019. You delivered impressive non-gap operating margin growth last year. And since you're now investing in multiple new product launches over the next year or two, do you expect to continue growing operating margins at the same rate? And where do you see them going longer term?

We expect to continue growing operating margins at the same rate and where do you see them going longer term and then maybe if I could just to ask a follow up question on QD, Jack If I do you expect any clinical benefits versus be I'd, Jack if I and if so would those benefits appear in the label. Thanks.

Christiana: And then maybe if I could just ask a follow-up question on QD, Jackify. Do you expect any clinical benefits versus BID, Jackify? And if so, would those benefits appear in the label?

Steven: Thanks.

Hi, Jay Hagler Kennedy, let me take the parked on the margin.

Christiana: Hi Jay, Christiana. Let me take the part on the margins. As you can see, both in the case of 2019 and with the guidance that we provided for 2020, we are looking to continue to invest in supporting our portfolio, both on the R&D and commercial side.

As you can see both in the case of 2019 and with the guidance that we provide data.

It for Twentytwenty, we are looking to continue to to invest.

In supporting.

Our portfolio, both some of that Indian commercial side, but the growth.

The expansion front.

Steven: Jay, in terms of your question for the one-stay formulation, the work with that is progressing very well. The intent is to follow a 505B route in terms of first obtaining sufficient bioavailability in terms of PK for the different strengths, and then moving on to prove that individual different one-stay strengths meet the bioequivalence in terms of the ratios on the FDA guidance for each of the strengths you're matching it up with. So there's no, in the beginning, it's not built around clinical differentiation, if you will. It's built around a BA, BE route to obtain approval in that 2022 timeframe.

Slower than that.

The top line.

Which is what we had indicated in the past unless you can see we are in line with with weather we had said.

We will continue to invest in our activities in a in the company on the R&D from thus we have discussed in the past, where we'll be looking to invest based on the quality of the program.

Data supports Morgan program simple development and later stages of development will all have continued to do that but.

In the trends that we see continuing to have growth on the expense side being below that of the topline.

Hi, Jane terms your question for the Wednesday formulation. So the work with that is progressing very well. The intent is to follow Airfiber five be route in terms of first obtaining in a sufficient bioavailability in terms of PK of the different strengths and then moving.

On to prove those individual different Wednesday strain and meet the bio equivalence in terms of the ratios on the FDA guidance feature. This strength you mentioned it up with so there is no in the beginning.

Not not built around clinical differentiation, if you will lets built around.

Herve: We do know from a publication in 2011 with a single one-stay strength, a 25 milligram XR strength, not surprisingly, the PK profile was flatter. So there was less of a C-max, which we think is related to the anemia seen in myelofibrosis, and there may ultimately be less anemia with these products. That'll need to be proven down the pike once we've finished the one-stay formulation work, once you've taken it through the BA, BE route and gotten approved. Then we could potentially do clinically differentiating work to see if there is a flatter profile with all the strengths and ultimately less anemia, and then make that claim and get it on the label. So it's a very stepwise approach.

BA be route to obtain approval in that 2022 timeframe.

We do know from a publication in 2011 with a single once daily strength at 25 milligram XR strength not surprisingly the PK profile was flat. So there was less of a C. Max which we think is related to the in EMEA as seen in myelofibrosis and they may be.

Ultimately less anemia with heat with these products that will need to be proven down the pike once weve.

Finished the Wednesday formulation work once you've taken a through the VA maybe be roots and got an approved then we could potentially do clinically differentiating work to see if there is a flatter profile with all the strengths and ultimately less anemia, and then make that payment yet it in a label. So it's a very stepwise approach.

Great. Thank you.

Herve: If I may add on the QD strategy, the strategy around the QD, that there is obviously this.

If I may add ons acuity strategy is a strategy around security that there is obviously this.

Herve: A practical aspect of QD, there is this potential clinical benefit, maybe on anemia we just discussed, and there is the ability to combine with other mechanisms that have a once a day regimen. So this project by itself has a lot of potential positive consequences on the management of the life cycle of JAKA5.

Practical aspect of QD, there is potential clinical benefit maybe on EMEA, we just discussed and the is the ability to combine with as our mechanism that have a once a day regimens. So this project by itself has a lot of potential positive consequences on the management of the lives.

Correct.

Herve: That was super helpful. Thank you.

Thats Super helpful. Thank you.

Barry: Thank you. Our next question is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Thank you next question is coming from Salveen Richter from Goldman Sachs. Your line is now lives.

Barry: Great

Barry: Great, thanks for taking our questions. This is Andrea from Salveen. The first one, as you look to the upcoming launch for Pemigatinib and cholangiocarcinoma, can you talk a little bit more about how you've approached building out a solid tumor sales force and the efforts that might be needed for patient or physician education to improve disease awareness as well as the need for diagnostic screening? And then I have a follow-up.

Thanks for taking your questions. This andrey on for Salveen. The first one as you look to the upcoming launch for Pentagon Nandan Cholangio carcinoma can you talk a little bit more about how you've approached building out a solid tumor salesforce any efforts that might be needed for patient physician education to improve the disease awareness as well as the need for diagnostic screening.

And then a follow up.

Barry: Sure, Andrea, this is Barry. First, we're actually launching in cholangiocarcinoma in this patient population that has FGFR2 fusions or rearrangements. We're already educating, and providing healthcare professionals

Sure Andrea is very.

First we are actually launching.

In cleanse your carcinoma in this patient population that has at Jeff our two fusions or re arrangements were already educating providing.

Healthcare professionals.

Barry: Getting them ready to, in fact, always test cholangiocarcinoma patients.

Getting them ready to in fact always test cholangio carcinoma patients for various mutations alterations and so forth. So those educational efforts are ongoing now in terms of fts that we put in the field. We do have a few more fts and field, but the way that works in the United States we have.

Barry: for various mutations alterations and so forth so those educational efforts are ongoing now in terms of FTEs that we put in the field we do have a few more FTEs in the field but you know the way it works in the United States we have Now, 147 representatives across the United States, and they call on community oncologists and academic centers across the nation, even though there's people who are specific to heme and solid tumor, most of the community oncologist offices throughout the United States treat both, and certainly, geographically, we hit all of the centers.

Now.

100 and.

47, representatives across the United States and they call on community oncologist and academic centers across the nation, even though there's people who are specific to him and solid tumor most of the community oncologist offices throughout the United States treat both in certainly geographically we hit all of the centers. So we will.

Barry: and Colangio Carcinoma and of course the need for NGS testing or diagnostic testing to remind all of these health care professionals that are treating these patients but in fact you know we have oncology clinical nurse educators who are providing educational services we have medical science liaisons that are all trained so each of the teams have already been trained and we have ongoing training for the sales force so we think we're in solid shape and we're going to continue to educate all health care professionals about the need for diagnostic testing to best help these patients.

Have a dedicated team that's specifically trained on solid tumors and particularly.

The GAAP NIM and Cholangio carcinoma and of course the need for.

Ngs testing or diagnostic testing.

To remind all of these.

These said healthcare professionals that are treating these patients but in fact, we have.

College, the clinical nurse educators, who are providing educational services, we have medical science liaison set are all trained so each of the teams have already been trained and we have ongoing training for the Salesforce. So we think we're in solid shape and we're going to continue to educate all healthcare professionals about the need for.

Our diagnostic testing to best help these patients.

Barry: Thanks Barry. Maybe just another one for you then on the morphosis' potential launch. Just what additional add-on to the infrastructure is needed there, and where do you see points of synergies or components that can be leveraged from your existing network?

Hi, Thanks, Barry maybe just another one for you then on the.

Morphosis is potential launch.

What additional add to the infrastructure is needed there and where do you see points of synergies or components that can be leveraged from your existing network.

Barry: Well, Andrea, as you know, until we close, we can't really plan together with our future partners at Morphosis. So we've been thinking about this a lot, and independently, we've been planning about what we actually need, but the ability to guide. Now, on the other hand, we certainly have a great deal of experience in heme malignancies, certainly here in Wilmington, Delaware, and throughout the United States. So we're very confident that we know the lymphoma space very well. We just have to take time, wait a couple of more weeks to actually get together and sit down with our partners on Morphosis about the real details that we can do.

Well Andrea as you know until we close we can't really.

Plan together with our future partners at Morphosis.

So we've been thinking about there's a lot in independently, we didnt planning about what we actually need it but the ability to guide now on the other hand, we certainly have a great deal experience in heme malignancies, certainly here in Wilmington, Delaware and throughout the United States. So we're very confident.

That we know the space the lymphoma space very well, we just have to take time wait a couple of more weeks to actually get together and sit down with our with our partners morphosis about the real details that we have we can do.

Barry: Got it. Thank you so much.

Got it thank you so much.

Steven: Thank you. Our next question is coming from Alethea Young from Cantor Fitzgerald. Your line is now live.

Thank you. My next question is coming from a young from Cantor Fitzgerald Your line.

Steven: Hey guys, thanks for taking my questions and congrats on all the progress. One, can you just talk a little bit about the status of the Citadel program and when we could expect data there? And then, you know, basically kind of your thoughts and your increased conviction, and I saw some data obviously from Paracyclov and Ruxelet, but just maybe talk a little bit about your increased conviction in that combo and then also the other kinds of combos in the Limber program as well. Thank you.

Hey, guys. Thanks for taking my questions and congrats on all the progress one can you just talk a little bit about just as the they'll program and.

When we could expect data there and then basically kind of your thoughts and your increase conviction and I saw some data obviously from Paris.

And I am Ruxolitinib, but just maybe talk a little bit about your increase conviction that combo and then also the other panda combo November program as well. Thank you.

At least if it's Steven thanks for the question. So the Citadel program has three components in terms of B cell malignancies, There's a follicular lymphoma study.

Steven: Aletheus, it's Steven. Thanks for the question. So the Citadel program, you know, has three components in terms of B-cell malignancies. There's a follicular lymphoma study, 203 Citadel, a marginal zone lymphoma study, 204, and then a mantle cell lymphoma study, 205. Essentially, we've completed recruitment across all those studies. There may be just a few patients left on one to be done, and now we're in the follow-up phase. You know, as we've presented this data multiple times, because they're open-label, single-arm studies, we're very encouraged by the high activity of past occlusive across these B-cell malignancies, and now it's really just a wait for the duration of response data.

203, Citadel, a marginal zone lymphoma study to zero for and then a mantle cell lymphoma study twos Arafat essentially weve completed recruitment across all those studies there maybe just a few patients left on one to be done and now we in the fall up phase you know as Weve presented this data.

Multiple times because they open label single arm studies. They were very encouraged by the high activity of post the close of across these b cell malignancies, and now it's really a wait for the duration of response data and then they all could be potentially.

Steven: And then they could all potentially be potentially accelerated approval routes in the United States, you know, given the design of the study. And we may then have to go on and do confirmatory studies as well. So we'll get the bulk of all of that data with the long follow-up through this calendar year and then look at potential submissions across the board. But we're very encouraged by that program and what we've done with it. In terms of the myelofibrosis combinations, as we announced in our prepared remarks, the most advanced is the RAX plus PR3 delta combination. You know, we've also presented that data a number of times.

Accelerated approval roots in the United States given the designs of the study and we May after then going into confirmatory studies as well. So we'll get the bulk of all of that data with the long follow up through this calendar year, and then look at fifth potential submissions across the board, but we're very encouraged.

For that program and what we've done with it in terms of the model fibrosis combinations as we announced in our prepared remarks. The most advanced is the racks plus Pithreek Delta combination.

We also presented data and number of times, we now have the updated data set looking at experiments. We did in terms of weekly reverse daily dosing and we most encouraged by the daily dosing arm of the proof of concept study and Thats why we will be going forward. This year in a pivotal registration route with that.

Steven: We now have the updated data set, looking at the experiments we did in terms of weekly versus daily dosing, and we're most encouraged by the daily dosing arm of the proof-of-concept study. And that's why we'll be going forward this year with that combination. We still have to work out the details with regulatory agencies, but the likely population, as we said in our prepared remarks, is patients who have been on RAX for approximately three months but don't have a sufficient response and are then randomized to RAX plus PR3 delta versus RAX alone in some sort of registration fashion with sufficient numbers. And given the effect we've seen from the addition of delta in that population to date, where we saw further...

Combination, we still have to work out the details with regulatory agencies, but the likely population as we said in our prepared remarks.

Patients who have been on racks, probably for approximately three months, but don't have a sufficient response, and then randomized to Rex plus Pithreek Delta Srecs alone in some sort of registration fashion with sufficient numbers and given the effect. We've seen from the addition of delta in that population.

To date, where we saw in a further.

Steven: In terms of the rest of the lumbar program, it's also a big year, as we announced at J.P. Morgan, you know, we're beginning and we've resurrected our BET program, based on the external environment and what's happening with BET inhibitors in myofibrosis. So we're going to try our own BET inhibitor this year. We'll do the monotherapy safety work and go as quickly as we can to combination with RUX there. And then we have our L2 program as well, which is targeted at alleviating the anemia through a hepcidin mechanism in combination with RUX, and that'll also go to combination this year. And then we'll get further proof of concept data for RUX plus PIM inhibition. So, you know, obviously an extremely important development program to us given the importance of RUX and myeloproliferative neoplasms in general.

[music].

Spleen volume response, particularly with the daily on as well as symptom respond and obviously, we're encouraged by going forward to pivotal program. There in terms of the rest of the lumber program. It's also figure as we announced that JP Morgan we begin in and we have resurrected outfit program based on the external environment and what's happening with betting.

It is in Mato fibrosis, so where we go with our own bet inhibitor. This year, we'll do the monotherapy safety work and go as quickly as we can to combination with Rex there and then ill two program as well, which is targeted around alleviating the anemia through a hip side and mechanism in combination with racks and that will also go to combat.

Nation. This year and then we will get further proof of concept data Forex plus perm inhibition.

Obviously, an extremely important development program to ask given the importance of racks and monitor proliferative neoplasms in general and an active year in terms of.

Yes, initiating a pivotal study getting further proof of concept study and starting to new mechanisms.

Steven: Thank you.

Thank you.

Steven: Thank you. As a reminder, ladies and gentlemen, that's Star 1 to be placed into question Q. Our next question is coming from Mara Goldstein from Mizzou. Your line is now live.

Thank you as a reminder, ladies and gentlemen that star one to be please and the question Hugh.

Our next question is coming from Mara Goldstein from Mizuho. Your line is alive.

Steven: Great, thank you very much for taking the question. Just to circle back on the previous question and RUCS plus parts-explicit in myelofibrosis, can you characterize what that proof of concept was and also what is considered an insufficient response to RUCS in the clinical trial but also in clinical practice today?

Thank you very much for taking my question just to circle back on on the previous question.

Rocks plus parts explicit.

In myelofibrosis can you characterize.

What that proof of concept.

And.

And also what is completed and insufficient response to rock.

Steven: And Mara, thanks for your question. It's a good question, you know, because as you look across not only us but everybody else doing studies in this arena, you have to be very careful of doing cross-study comparisons and make sure that you're actually doing apple to apple comparisons, particularly in terms of how people define the population they study in terms of, you know, the amount of prior rux exposure, what constituted either refractory or disease that's regress And the reason I mentioned the latter is just to be clear, and if you discontinue rux and then allow patients to rebound, if you will, in terms of their spleen and symptoms, just reintroducing rux again, you'll see quite a substantial effect. And we've documented that before and published that.

In the clinical trial, but also on clinical practice today.

And Mark Thanks for your question. It's a good question you know because as you look across.

Not only us, but everybody else doing studies in this arena you have to be very careful of doing cross study comparisons and make sure that you actually do an apple to Apple comparisons, particularly in terms of how people define the population. They study in in terms of the amount of prior racks exposure what what.

Constitution, either refractory ore disease, that's progressing and how much was allowed and then was racks actually discontinued verse wasn't continued and the reason I mentioned the lab is just to be clear is that if you. If you discontinue rocks and then allow patients to a rebound if you will in terms of the spleen and symptoms.

Just reintroducing racks again, you will see quite a substantial effect and we've we've documented that before and published that seems to be very very careful of the populations you looking at our proof of concept work from a definition point of view with regardless Pithreek Delta was defined as patients who had been on at least six months of Rex.

Steven: So you have to be very, very careful of the populations you're looking at. Our proof of concept work from a definition point of view with rux plus PR3 delta was defined as patients who'd been on at least six months of ruxalidenib for at least two months of stable dosing. And then we're showing insufficient response in terms of spleen or symptoms and then allowed to come on to the combination without discontinuing rux. With that, we showed a further detriment in terms of spleen volume reduction that was better with daily dosing rather than weekly dosing. If you ask about the exact quantitative excursion in terms of spleen volume response, that's a good question. You know, in the frontline setting, obviously, given our own approval in the setting, we have now established the endpoint of spleen volume reduction of 35% or greater done through a measurement like MRI, for example, which is not subjective but is the probable endpoint that regulators will use going forward, as well as validated symptom scores.

No for at least two months of stable dosing and then we're showing insufficient response.

In terms of spleen or symptoms and then allowed to come onto the combination without discontinue interacts with that we showed a further detriment in terms of spleen volume rate reduction that was better with daily dose in rather than weekly dosing.

You asking the exact quantitative excursion in terms of spleen volume response, that's a good question in the in the frontline setting obviously, given our own approval in this setting we have now established the endpoint of spleen volume reduction of 35% to a great done through.

Measurement Lucky MRI for example, which is not subject to as the probable endpoint that regulators will will use going going forward as well as validated symptom scores in the latter line settings. You know one could argue that that may be too high of bar to get too and maybe 20% or more impact.

Steven: In the latter setting, you know, one could argue that that may be too high a bar to get to, and maybe, you know, 20% or more improvement in spleen volume reduction with concurrent symptom improvement may get you across the finish line or other endpoints like transfusion independence. But that's sort of where the field is right now. I think Spleen Volume Response as a Primary Endpoint with Symptoms as a Secondary Endpoint, and we've established with our own label what that bar is for the comfort studies, and that's what people will have to use going forward. In other settings, there may be somewhat more creative endpoints that you could do as long as you prove to regulators and patients that you're actually getting clinical benefit. Okay, thank you.

Movement in spleen volume reduction with concurrent symptom improvement may get you across the finish line or other endpoints like black transfusion independence, but that's sort of with the field is right now I think for the moment.

First on studies will still require.

Spleen volume risk response, as a primary endpoint with symptoms of secondary endpoint and we've established with our own label what that bar is with the comfort studies and Thats what people have to use going forward in the in the other settings. They may be somewhat more creative endpoints you could do as long as you prove to regulators in patients that you're actually getting.

Clinical benefit.

Steven: Okay, thank you very much.

Thank you very much.

Steven: Thank you. My next question is coming from Christopher Mirai from Nomura Internet. Your line is now live.

Okay.

Thank you. My next question is coming from cruiser from arise from Nomura Instinet. Your line is now live.

Steven: Hey, good morning, and thanks for taking the question. I'm wondering if you could elaborate a little bit on the vehicle performance in True AD that you saw. Just, you know, being cognizant that UCRISA Phase 3 saw some variability in that vehicle performance. How do you feel, I guess, given that type of variability, about the chances of success of True AD 1? And maybe if you could just remind us of some of your driving assumptions around that? Thank you.

Hey, good morning, Thanks for taking the question I'm wondering if you could elaborate a little bit on.

Nicole outperformance in true.

That you saw.

You know being cognizant that that you Chris a phase three.

Some some variability in March.

Vehicle performance, how how do you feel I guess.

Variability about chances for success at 281.

Maybe.

Just remind us at some of your powering assumptions around.

Thank you.

Steven: Chris, it's Steven. So, you know, if you look at the atopic dermatitis arena in general, there are some vehicles that, on their own, without a quote-unquote active ingredient, will have a response rate because of the emollient effect of different vehicles that will then result in improvement in the underlying condition. Our vehicle is cream-based, just like our actual active product, and you saw in the proof-of-concept 150 patient study, our vehicle response rate was, you know, 10% or less percentage points. Just to give you, by way of comparison, a number, but not to make a direct comparison, you know, Eucrisa in their registration studies had to use an ointment-based vehicle because of the constitution of their active product, and their ointment-based vehicle response rate was north of 20%.

Yes, Chris it's Steven So if you look at the at the atopic dermatitis.

Arena in general.

There are some vehicles that on their own without quote unquote active ingredient, we'll have a response rate because of the ammonia into effect of different vehicles that will then result in an improvement in the underlying condition. Our vehicle is clean base, just like our actual active product and.

You saw in the proof of concept 150 patient study.

Vehicle response rate was 10% or less percentage points just to give you by way of comparison, a number but not to make a direct comparison you Chris in their registration studies had to use in ointment based vehicle because of their constitution of their active product and their ointment basically.

Local response rate was north of 20%. So we don't expect and Thats why we know earlier when we spoke we set our results are consistent with our proof of concept data to date Directionally and quantitatively. We expect the same vehicle cream response rate in our true 81, and 282 studies that we saw an approval.

Steven: So we don't expect, and that's why, you know, earlier when we spoke, we said our results are consistent with our proof-of-concept data to date directionally and quantitatively. We expect the same vehicle cream response rate in our TRU81 and TRU82 studies that we saw in our proof-of-concept work, and that's, you know, that's where we stand right now. Obviously, we want to share this with you as soon as we can at an appropriate meeting.

Concept work.

And that.

That's where we stand right now obviously, we want to share. This with you as soon as we can in an appropriate meeting.

Steven: Thank you. I appreciate that. And just one last one on OXO guidance. How much GBHD acute or chronic is in those numbers? Thanks.

Thank you I appreciate that and just one last fall on so guidance, how much gvhd acute or chronic is sort of.

Steven: I'm sorry, could you repeat the question? I didn't hear the question.

In those numbers thanks.

Im sorry could you repeat the question I Didnt hear the question.

Steven: In terms of your guidance for the year, how much of that, if any, accounts for use in GVHD? Thank you.

Oh that just on that in terms of Iraq guidance for the year, how much of that if any.

Yes accounts for use in gvhd. Thank you.

Barry: Well, you know, we were hoping for a particular number of patients. I think I said before that there are, you know, 3,000 patients total with steroid refractory GVHD. Acute GVHD affects about 1,500 patients. We think we were approaching about 1,000 patients. It's hard to actually measure GVHD because, you know, the drug is oftentimes given in a hospital and we don't get as much detail as you do when you get a prescription outside. So GVHD is an important part of the guidance for this year, but overwhelmingly, it's the continued growth in myelofibrosis, which is really going very well, and the continued growth for patients with polycythemia ver But Jackify in acute steroid-refractory GVHD is becoming one of the most used, if not the most used drug other than steroids in the treatment of these patients.

Well, we were hoping for a particular number of patients I think I said before that there is.

3000 patients totaled sorry, refractory gvhd acute gvhd is about 1500 patients.

We think we are approaching about 1000 patients it's hard to actually for gvhd because.

Drug oftentimes is given in the hospital and we don't get as much detail as you do when you get a prescription on the outside so gvhd is an important part of the guidance where for this year, but.

Overwhelmingly is the continued growth in myelofibrosis, which is really going very well and the continued growth in for patients with probably citing nuvera again, which is continuing to grow going very well, but.

Jack if I in acute steroid refractory gvhd is becoming one of the most use if not the most used drug others and steroids in treatment of these patients.

Operator: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to you for any further or closing comments.

Thank you.

Thank you we reached one of our question and answer session I wanted to turn the floor back over for any further closing comment.

Thank you and thank you all for you'll find today on for your questions. So we look forward to seeing you at upcoming investor on mitigate confidences Baton, though we thank you again.

Herve: Thank you and thank you all for your time today and for your questions. We look forward to seeing you at upcoming investor and medical conferences. But for now, we thank you again for your participation on the call today. Thank you and goodbye.

But the submission.

Thank you and goodbye.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines. This time and have a wonderful day, we thank you for your participation today.

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.