Q3 2022 Incyte Corp Earnings Call
Hello, and welcome to the insight third quarter, 2022 financial and corporate update conference call and webcast. At this time all participants are in a listen only mode. If anyone should require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation as a reminder, this.
This conference is being recorded its now my pleasure to turn the call over to Christine Cho head of Investor Relations. Please go ahead.
Thank you Kevin Good morning, and welcome to insights third quarter 2022 earnings conference call and webcast. The slides presented today are available for download on the investors section of our website.
Joining me on the call today are are they <unk>, Barry Steven and Christiana, who will deliver our prepared remarks and dashboard join us for the Q&A.
Before we begin I'd like to remind you that some of the statements made during the call. Today are forward looking statements and are subject to a number of risks and uncertainties that may cause our actual results to differ materially including those described in our reports filed with the SEC. We will now begin the call with her way.
Thank you Christine and good morning, everyone.
Okay.
Things are soft quarter, our product revenues increased 20% year over year to 700 and something million benefiting from strong jackup side there's growth.
That's why there's an increasing contribution from upsell wasn't it.
Jakafi net sales grew 13% to 620 million driven by robust growth in chronic gvhd.
That's why this new patient growth in MF and PV.
So it wasn't that since most of them.
As part of quarter two study maybe on them and we continue to execute on the successful launch in <unk> in.
It's illegal driving increased demand, while also significantly improving formulary exit.
The ex U S launches of Vimizim I mean, Judy.
Which are both sitting noticed strategies contributed to the 19% growth coming from our the only method of general crunchy products.
Turning to slide five.
We have multiple opportunities for significant growth in both oncology and dermatology with a well result that promotes and the potential for multiple new product a new indication of over the next several years.
But we're encouraging franchise.
Recent launches of new indications and new markets provide further growth opportunities for jakafi.
In limbo.
Total data from two programs access to the mab in chronic gvhd it looks perfect as it would be an M. S. I expected next year and.
Two in 2022, and 'twenty to 'twenty three to define the basketball world for this program.
Outside of MTN in Gvhd, we have multiple early and late stage clinical programs.
Including a well or did you have one program, which was the first to show clinical activity as I know all PDL, one and we have a did it did I did see you.
Next week.
In addition to oncology dermatology franchise.
Key near term driver with launches.
Currently underway in atopic Derm I think just on digital.
Dermatology pipeline is expanding with new indications being developed for rux cream as well as policy Geneva in November the mab in areas of high unmet medical need.
Positions us well for significant growth and diversification.
With that I will turn the call over to Barry.
Thank you Ravi and good morning, everyone.
The launch of <unk> continues to be very successful with double digit demand growth in atopic dermatitis and strong uptake in vitiligo net.
Net sales grew 130% quarter over quarter to reach $38 million led by strong patient demand and broader reimbursement coverage for ops of Lora over 62000 units of <unk> were shipped in the quarter, representing a 32%.
Growth of 32% versus Q2.
The positive feedback loop between patients and physicians driven by the efficacy if auto Lora continues to fuel the uptake in atopic dermatitis <unk> in vitiligo has been well received by both physicians and patients and it's adding to adding further to growth in demand.
Absolutely access continues to improve as N D. C blocks are removed and payers continue to add absolutely onto their formularies.
Turning to slide eight and absolutely in a D.
<unk> is now the number one prescribed agent for new 80 patients amongst dermatologists with a new patient share of 17%.
Laura is changing the treatment paradigm, helping to break the cycle of repeated failures on topical corticosteroids and calcium urine inhibitors there.
The number of dermatologists, gaining experience with absolutely continues to increase and 96% of prescribers are reporting satisfaction with Epsilon.
That the QC and rapid itch reduction continues to be a top driver for prescribing.
When it comes to selecting patients for therapy dermatologists consider asset Theyre 80 patients as candidates for Epsilon, we expect the number of patient initiations purpose scriber to continue to increase over time.
Turning now to launch in the <unk>, where we are seeing positive early momentum awareness levels are high with nine out of 10 dermatologists are aware of <unk> as a treatment for vitiligo.
Dermatologist, you, absolutely, which is the first ever approved treatment for re pigmentation as a transformative therapy for patients living with vitiligo.
In a recent survey as shown on the left dermatologist indicated their use of absolute aura in vitiligo with more than triple in the next six months.
They're currently treated vitiligo patients dermatologists consider at nearly 70% could be candidates for treatment with absolutely.
For the one 3 million diagnosed vitiligo patients who are currently not seeking treatment. We are launching several initiatives, including direct to consumer campaigns patient advocacy group engagements and branded patient meetings to raise awareness and encourage those patients to seek treatment now that there is a new approved therapy.
Both <unk> and <unk> are substantial opportunities and we expect obsolete or it could become a meaningful growth driver over the next several years.
On slide 10 payer coverage for <unk> continues to improve with the percentage of covered claims increasing from an average of 39% in the second quarter to 63% in the third quarter and reaching 70% in October with an increasing number of plans, adding absolute onto formularies and.
The continued removal of MDC blocks, we have started to gradually shut down a full buy down program and transition to a more traditional free drug bridging program, we expect to fully discontinued to fill buy down program around the end of the year. Please note that during this period of transition to the free drug preaching bridging program, we expect variability.
And how I cubie at captures those prescriptions, which may lead to two data not being representative of the actual prescription levels and trends.
Moving onto Jakafi performance on slide 11, Jakafi net sales in the third quarter grew 13% year over year to $620 million driven by growth in new patients across all indications within myelofibrosis, new patient starts grew by 8% and in polycythemia Vera by 9%.
Total Gi gvhd patients grew 20% year over year with the continued successful launch in the chronic setting with strong demand for Jakafi. We are again tightening full year net product revenue guidance from a range of 2006 to $2 4 billion to a new range of $2 three.
Eight to $2 4 billion.
Turning to slide 12, nine Judy net product sales in the U S were $22 million in the third quarter. We continue to see gradual improvement in duration of therapy as usage continues to expand in the second line.
<unk> net sales were $6 million for the quarter with the launch going well in Germany.
And where we have seen several months of consecutive growth.
<unk> worldwide net sales were $23 million with the launch continuing to progress in Europe and Japan. During the quarter. We also received approval of <unk> as the first targeted therapy in the United States for myeloid lymphoid neoplasms with F. G. F R. One rearrangement and extremely rare and.
RSO blood cancer with that I'll turn the call over to Steven.
Thank you Barry and good morning, everyone.
We recently presented positive phase II data of <unk> in Hidradenitis Suppurativa at the 2022 European Academy of Dermatology and Venereology Congress.
Which demonstrated that patients on <unk> at significantly greater decreases in total axis and inflammatory nodule count versus placebo from baseline to week 16.
In addition, Hs clinical response, so his score which is defined as a greater than or equal to 50% reduction in the total apsis, an inflammatory nodule count and no increase in emphasis counter draining fistulas compared to baseline was achieved in a greater percentage of <unk> patients than placebo at week 16.
Alright, and nitrous Super Tivo represents a significant opportunity where there are more than 150000 patients with moderate to severe disease in the United States.
In October our pivotal phase III data of <unk> cream in Vitiligo was published in the New England Journal of Medicine, and these data highlight the positive efficacy and safety profile of <unk> as a treatment for re pigmentation in vitiligo.
The MAA for <unk> in Vitiligo is under review and we expect a regulatory decision in the first half of next year.
Moving to slide 16.
Last month, we announced our agreement to acquire <unk> therapeutics, and they lead acid or remotely mab, a highly potent and selective anti IL 15 receptor beta monoclonal antibody.
IL 15 signaling occurs upstream of the JAK stat pathway and demonstrates a strong scientific rationale for the valuation of IL 15 blockade in vitiligo and other dermatological conditions.
In vitiligo preclinical data suggests that maintenance and relapse is driven by resident memory T cells or T. R. M in the skin <unk>.
IL 15 is critical for the survival of CRM and IL 15 blockade May result in the depletion of resident memory T cells, leading to a longer and more durable re pigmentation effect.
The addition of <unk> to our dermatology portfolio bolsters, our commitment to patients living with vitiligo and potentially offers optionality based on severity of disease as well as different dosing options that may allow for combination therapy.
All of which is complementary to our JAK franchise.
We are planning on entering clinical development with <unk> in 2023.
On slide 17 is an updated table of our extensive clinical development pipeline in dermatology.
With regards to <unk> cream in hand X amount after discussions with the FDA.
Deemed not necessary to run larger phase III clinical trial in chronic <unk> as the indication is covered by the current label.
We have also added two new indications in the development plan for <unk> cream with two phase II trials in preparation for lack in sclerosis. Unlike in place.
Additionally, our <unk> in Vitiligo has been included which is expected to enter clinical development in 2023 as I mentioned earlier.
Turning to slide 18, and <unk> as a reminder, the phase one two study in chronic graft versus host disease. This was an open label study evaluating <unk>, an anti CSF one oriented body in patients six years and older with active chronic graft versus host disease in the third line plus setting.
In this heavily pretreated patient population <unk> monotherapy resulted in our best overall response rate of 68% across both doses of one milligram per kilogram every two weeks and three milligrams per kilogram every four weeks.
53% of patients reported a clinical meaningful improvement in their symptoms via the lease symptom scale.
<unk> was also well tolerated and demonstrated an acceptable safety profile with no viral reactivation in the study.
Looking ahead, we anticipate data from the ongoing mcgarvey tier one pivotal trial in chronic graft versus host disease in mid 2023, and thus a potential BLA filing later in 2023 and.
In addition, the combination of trial of <unk> in steroid naive chronic graft versus host diseases in preparation with an expected initiation in the first quarter of next year.
On the next slide and our progress in Myeloproliferative neoplasms in graft versus host disease in general we continue to advance our limber pipeline and expect to achieve many important milestones in the remaining months of 2022 and into 2023.
The phase one study of <unk> in combination with selling cost of CK 0804 in myelofibrosis is initiated with the first patient dosed in October .
Later this year, we expect to present initial data from the bet and <unk> programs.
Target action date for once daily <unk> is March 23, 2023, and we expect topline results from the phase III study of <unk> and inadequate responders in 2023 as well.
Turning to slide <unk> PD Lone program, we continue to progress the development of our oral PD one program with two compounds 280, and <unk>, which have been prioritized based on observation of tumor shrinkage and to date no evidence of peripheral neuropathy with either compound.
We will be presenting updated data on both compounds at the society for the immunotherapy of cancer annual meeting in Boston next week.
The third quarter was successful for insight across regulatory clinical and business development and we are looking forward to an exciting close to the year I'd like to turn the call over to Christiana for the financial update.
Thank you Stephen and good morning, everyone.
Our third quarter results reflect continued strong revenue growth with total product revenues of $713 million, representing an increase of 20% over the third quarter of 2021.
Total product revenues have comprised of $620 million for Jakafi $55 million for rather a mythology oncology products and $38 million for upsell Laura.
Net product revenue growth was primarily driven by increases in Jackup high in absolute at net revenues and metallurgy oncology net revenues, which include revenues from Iclusig, Panama and many children, who were impacted by unfavorable changes in foreign exchange rates on a constant currency basis other hematology oncology.
Product revenues grew by 32% over the prior year period.
Total royalty revenues for the quarter were $110 million and are comprised of royalties from novartis of $86 million for jakafi and $4 million for that breakdown and royalties from Lilly of $20 million for ILUVIEN.
Jacobina and ILUVIEN Troy at this for the quarter was negatively impacted by FX headwinds, while the alumina and the royalties were also impacted by a decrease in net product sales of ILUVIEN for use as a treatment for COVID-19, and then onetime deduction taken by Lilly related to securing additional intellectual property rights.
Excluding the impact of onetime IEP payments, COVID-19 related sales and currency fluctuations.
Royalties were essentially flat on a constant currency basis compared to the prior year period.
<unk> net product revenues for the quarter was $38 million driven by robust demand and broadening payer access.
I spares at absolute at the formulary.
And the share of covered claims increases were.
We're continuing to see improvement in the gross to net discount rate.
As Barry previously presented as a percentage of Cobra claims is increasing and the average quarterly gross to net discount is decreasing as shown at the bottom of the slide.
The fully loaded gross to net discount rate decreased from 81% in the second quarter of 2022% to 71% in the third quarter of this year.
We expect the gross to net discount rate to continue to decline in the first quarter and reach a fully loaded steady state exit rate of 40% to 50% around here.
Moving onto our operating expenses on a GAAP basis ongoing R&D expenses of $351 million for the third quarter increased 6% from the prior year period, primarily due to continued investment in our late stage development assets.
The growth of SG&A expenses was primarily due to our investments related to the new dermatology commercial organization in the U S and the related activities to support the launch of upsell ore in atopic dermatitis and vitiligo.
Our collaboration loss for the quarter was $2 million, which represents our 50% share of the U S. Net commercialization of loss for him on jewelry.
Moving onto our guidance for 2022 based on the strong performance of Jakafi, we are tightening our guidance to a range of $2 $38 billion to $4 billion.
Given FX headwinds that we experienced year to date and expect to continue to experience in the fourth quarter. We are revising our other hematology oncology revenue guidance to a range of $200 million to $210 million.
Finally, we are reaffirming our R&D guidance, which now includes the $70 million upfront payment to be Larry is anticipated in Q4 as well as its G&A guidance for the year.
Operator that concludes our prepared remarks, please give your instructions and open the call to Q&A.
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 100 telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before.
For pressing star one one moment, please while we poll for questions.
First question today is coming from <unk> Richter from Goldman Sachs. Your line is now live.
Good morning, Thanks for taking my question and congratulations on the quarter and on.
So can you help us think about the trajectory from here just given the moving parts, which the trial did gross to net and the uptake.
Individualize populations, maybe some some color that would be helpful. And then secondly announced yet or.
If you could help us understand the reimbursement dynamics that are playing out around writing a script and how owner may be in and what you're doing to kind of alleviate that burden on the part of the physician.
They are solving this is barry.
So as far as the uptake and the Lego goes we're very happy.
As you see from the prepared remarks.
Our dermatologist are excited about having this new therapy.
First ever therapy to re pigmented skin in patients with vitiligo.
We know that.
As soon as the launch which really we began in August .
<unk> scripts began to accelerate and we know the continued to accelerate as we've told you before it was about 150000 or 200000 patients that are actively being treated for vitiligo now there may be $1 3 million or more patients that have been like over that may choose to come back to their dermatologists now that they have a an active therapy.
That can help them there.
So we're very happy we can't really break out the actual number of.
Percentage of bid.
Vitiligo versus atopic dermatitis for Ya just at this point just because we're uncertain about the actual number since many of the claims that we can look at I really don't have diagnosis diagnostic codes associated with them. So where are we know that atopic dermatitis. For example, because we have a lot more.
Data with that is growing at least double digit double digits quarter over quarter. We know that <unk> is accelerating a week after week and we assume that's going to continue to occur in terms of reimbursement and the dynamics there.
Of course, we have.
Most patients have to go through a prior approval process those patients that have commercial insurance.
But as we've said is the coverage has continued to get better and better over time, so that the vast majority of commercial patients do have access to therapy as far as problems go.
Prior approval is something.
Something that dermatologists deal with all of the time most of the a D utilization.
The utilization criteria do in fact include one or two.
<unk> therapies that they have to go through but dermatologists are used to doing that now.
There may have been a little period of time, where they were getting used their prior approval process step therapy process, but certainly since July 1st it's really taken off and.
If there were barriers there mostly removed sometimes there is geographic barriers one region of the country maybe.
<unk> may be easy another area of the country, maybe a little bit more difficult, but with our our own people that are out in the field. We try to help as best we can we have an excellent market access team that can help the dermatologist and pharmacist go through the prior approval process. So most patients now and into the future should have.
Little problem accessing <unk> for both.
In vitiligo.
Yeah.
Thank you.
Thank you. Your next question is coming from Helena <unk> from Bank of America. Your line is now live.
Hi, Good morning. Thanks for taking my question just wanted to follow up on gross to net and where are you with the free drug program as of right. Now are you withdrawing that and where do you expect that to be on a go forward basis as you can.
Trying to get closer to your 40% to 50% gross to nets in here and just to clarify youre planning on exiting the year with 40% to 50% gross to net is that correct.
Tenancy in Asbury again, yeah. So our gross to net we do plan on having it get better as we exit the year at the most important factor is we are changing over from what we call a full buy down program, where it was very generous program at the beginning of the year is that.
At the beginning of launch, whereas the very easiest thing to do for patients and for dermatologists. So that they could go to any pharmacy and even when there was really limited coverage because of MDC blocks.
They were able to access the drug because we were.
Paying for the drug for a full buy down now that we have increasing coverage in the vast majority of commercial patients do have access to the drug we're switching over to a more typical bridging program, where patients will be able to win that have commercial insurance and they go through the prior approval process.
And for whatever reason they are in fact denied coverage then they would go they would end up getting through a bridging program a free drug at cost of goods.
For us so that has.
It has a big impact on gross to net but that number will continue to go down over and over as we have said 70% of the claims currently are.
Are going through and being paid and that will increase as we go through the year and towards the end of the year, so that will improve as well so we'll.
We will continue to improve our gross to nets, just through that switching our programs, but also we're continuing to increase coverage for those those payers out there that we still have some.
Some work to do and will increase our will improve our gross to net by working with each of the plans to improve the utilization management criteria. So that we are in the proper tiers, where we should be so that co pays are lower so those things will affect the gross to net and bring it down to that targeted <unk>.
<unk> that we're looking for.
Thank you next question is coming from Jessica Fye from J P. Morgan Your line is now live.
Hey, guys. Good morning, Thanks, so much for taking my questions.
Couple more on obsolete.
You mentioned, you're still working to increase coverage and I know you gave the percentage of covered claims let's say current percent of lives covered today and where do you want that to go and then second how good is your visibility on patient retention and say annual tubes per patient in each of these settings, where does that stand.
Now how do you see that evolving thank you.
Well.
I think we said that as of.
Now 70% of the claims are going through and being paid the coverage really is approaching 84% of plans have.
84% of patients that have commercial insurance have access through the contracts that we have signed.
So that's there as far as pace.
Patient retention is concerned.
Because most of the scripts that come through our new <unk> or new to brand our axis. So in fact, we'll need some more time and data to figure out exactly what the refill.
Rate will ultimately be both for <unk> and the like but we're still projecting for.
The average per year scripts will be two to three tubes will be two to three and the average for vitiligo around at 10 tubes per year for vitiligo patients.
Thank you.
Thank you next question is coming from having secret Min from BMO capital markets. Your line is now live.
Hi, guys. This is Keith on for Ed. Thanks for taking our questions I guess first one.
It looks like looking at the numbers by some measures which could.
Could be seeing ex U S growth.
Later in 2022 and 2023, but we are seeing in this quarter lower royalties just wanted to get a sense of how this and are you seeing this evolve in 2023 given regulatory progress.
And then secondarily, if you could comment on the differences between the two oral PD one inhibitors that are in parallel development and at what point would you decide to focus on one versus the other things.
So in terms of the royalties.
Well as I indicated in the prepared remarks, we have seen.
[noise] FX headwinds, having an impact on our royalties given that Jack IV and although men.
Very much a ex U S a.
Based on next few SaaS sales.
In addition to the FX impact that for upset for Illumina, we so saves associated with COVID-19 treatment going away and as a result.
Royalties.
They are associated to COVID-19.
They say he saw this past.
Last quarter.
And in addition to that there was one time payment associated with.
Securing some additional IP, which was deducted from the low royalties that we get for Oh lumen.
If you take out the old loss impact of FX, our COVID-19 related sales and the one time IP payment then we see it.
Royalties being pretty flat year over year.
Going forward, we don't provide guidance on the royalties, but we would expect that for a little man to continuing now to have that any COVID-19 related royalties and also the FX impact obviously something that everybody has had been experiencing and that disappointed with <unk>.
Continue to see that impact that.
Continuing now in there.
Fourth quarter.
Keith It's Stephen I'll answer your second question on the oral PD Lone franchise, Firstly, just to say, it's an extremely important franchise to us.
First in class, Yeah, and it's a very important program.
The initial compound five FIFO was dropped because of the peripheral neuropathy signal, which we have not seen with either 280 or 31828 series slightly ahead of 318. There are differences structurally in terms of the chemical structure and there are slight differences in terms of the PK, but for.
Now both continued to progress both are enrolling well and we continue to accumulate efficacy and safety data that we want you'll see next week at the <unk> poster presentations on both compounds.
In terms of going forward sometime next year will probably declare registration directed wise, which compound will be taken but what I continue to present time will keep both go in they both look good and we want that optionality given the importance of this program.
Thank you. Your next question today is coming from the corporate World.
Morgan Stanley Your line is now live.
Hi, Good morning, Thanks for taking my question, so going back to the dermatology I wanted to ask a question on.
<unk> capture ratios.
So we recall that in <unk> 'twenty. Two you mentioned that there was an overstatement I just wanted to see if theres any color available about how that's trended in <unk> versus <unk> and then you mentioned that there could be some more irregularity going forward because of the transition from the full buy down program to the bridging program.
And I was wondering if you could comment on Directionally, how you think those thank you.
Irregularities might trend if you think that's going to be an overstatement or understatement and to what degree do you think the capture ratio might might be irregular and then I had a follow up.
Hum.
In Q2, we saw <unk> overstating the level of hotel without a prescription and that kind of thing that we discussed last quarter. However at that time the trend in prescriptions was pretty representative of the actual trend. So if you were to look at the trend lines that were moving in parallel that until we align in parallel with that site.
What we have seen since is that the gap between the level of pack size.
<unk> reported Scripps has been narrowing but the trend line is no longer representative of the actual trend lines. So for example, when you look at the actual data over the last few weeks of the quarter you saw that it was flattening.
While this was not the case as we now transition from the full buy down program to the more traditional free dragged a bridging program.
There is actually a high level of uncertainty as to how <unk> will be capturing the scripts.
And it's unclear whether that would result in an overestimation of scrapes and underestimation. So as a result, we they expect that for a period of time at least through the.
This is the fourth quarter, the actual via data would not.
The representative of actual us both in terms of the level of scripts as well as a trend line.
Okay understood and then I had a follow up on that so.
So you mentioned that a phase III study there was going to start in hidradenitis suppurativa by the end of the year could you just talk a little bit about what the study could look like from a design perspective.
What patient population you think.
You would enroll in this program.
Yeah Vikram, it's Steven Thanks for the question, we just showed that data at Adv recently.
From our phase II proof of concept work and you know there was a very good reaction from people in the field and opinion leaders in the field as to the potential for <unk> to treat patients with unmet need in Hs.
<unk>.
The morbidity from the condition comes from abscess nodules, and Fistulas and there's a large inflammatory components speaking to probably why JAK stat inhibition is important there the regulatory end point that was established from the initial approval of the first dragging the sit in is as I've mentioned in the pre.
Paired remarks.
Something called his score.
A composite endpoint that looks at absences of nodules and then the lack of a further fistula.
Formation.
One point, that's captured at 16 weeks.
We'll go in to this population with two doses.
And you can see from our phase two work.
There was a dose response generally speaking, but it wasn't a great differentiation between the two higher doses tested in the phase II setting and so both will be taken into phase III.
And then otherwise the standard endpoint from of his call point of view.
Current approved therapies don't seem to give patients the benefit they desire and arent used a great deal in Hs, So theres a lot of unmet medical need here.
Thanks.
Thank you. The next question is coming from Mara Goldstein from Mizuho Securities. Your line is that a lot.
Excuse me. Thanks, so much for taking my question I, just wanted to understand a little bit better.
And that takes it right when you say around the end of the year does that include the possibility of that CAGR slipping into the first quarter and then secondarily on the heat you need a super Kiva.
Okay.
A bit about the market and work for us.
And to that space right now.
So.
Tomorrow and it does vary on the gross to net yeah, So we're saying that.
Get to the 40% to 50% by the end of the year for all of the factors that I pointed out before that the transition to the bridging program about the improved coverage about are working with appears to have better utilization.
Management criteria, lowering tier as lorie and a copay.
<unk> mentioned before is that you know you're picking up copays and you're picking up deductibles and deductibles go down as the year goes down so.
Yes, it's Steven Thank you for the interest in the condition and its the same thing we are hearing off we presented the data. So it's estimated that if you look at moderate to severe Hs in United States. There are about 150000 patients in terms of prevalence of the condition and now again with a lot of unmet need that's not.
<unk> currently addressed by the current approved therapy. So this study will be focused on those moderate severe as you know and then we'll include a control arm plus two doses as I mentioned earlier.
That's in preparation with locked to begin towards the end of this year or perhaps early next year and then we've already demonstrated.
Probably because of the excitement in the area and the unmet needs of these studies enroll really really well.
So that's the population we go in after and that's the current prevalence figure that we want to address with this particular study. Thanks.
Yes.
Thank you next question is coming from Brian Abraham from RBC capital markets. Your line is now live.
Hey, this is a lean in on for Brian . Thanks for taking our question I wanted to go back to upsell. Laura. So earlier, you had mentioned that there were some challenges with scripts being abandoned and formularies.
Pharmacies not coding properly I guess can you talk about how these have been resolved and if there's any challenges there that may continue to occur due to the free drug wind down program I.
I guess do you have a sense of what percentage of patients that are actually on the free drug then go and start using the paid product and what you might need to do to get those claims higher and then I guess sort of just related to that.
Gross to net aspect I mean, do you have any visibility into the 2023 contracting you know given that inflation is fairly high do you think you'll have to give back a lot of any potential price increases you might take.
Into gross to net.
Sure well I'll try to answer your air.
Last question first the 2023 contracts the contracts that are anybody that the payers are working on now for 2024. It is 2023 there is no changes.
That will occur as far as.
I didn't think I mentioned anything about abandoned.
Prescriptions at pharmacies at all and not quoting correctly no. The only thing we said was that as we were changing over from mostly free drug to now mostly paid drug.
Dermatologist and pharmacies had to go through a prior approval process that before they were essentially just go ahead getting free drug because theres a LTC blocks in place.
So now moving forward.
In fact, we should have less and less problems with prior approvals are used to any step therapies that the utilization management criteria has and obviously like I said before we have you know our market access people that try to help.
Help any any dermatology offices or pharmacies that are still having problems.
Problems with that but we think we're through those challenges there is always going to be prior approvals for drugs like these so.
That's part of our system that we're currently dealing with so I think we've said before that our you know most of the claims that are going through now are being paid and that's only going to get better as we move into the future.
Got it thanks.
Thank you next question is coming from Jay Olson from Oppenheimer. Your line is now live.
Oh, Hey, Corona likelihood.
Hey, thanks for taking the questions.
Maybe one question on let's say the next four H ads.
Can you just maybe you can talk about the unmet needs with certainly a lot that you can maybe potentially a gist that's with a publix.
Publix isn't it.
Also all the all remodeling that you recently acquired.
To provide some colors on how he can complement to our legal syntax, especially.
It's also being studied for vitiligo.
Any other potential indications of our planning or thinking about.
With Alibaba that thank you.
Yes, Steven Thanks for the question again on Hs.
So just to be somewhat repetitive these patients have a lot of morbidity.
Particularly in skin falls like Europe , the armed with the XL are in other parts of the body in terms of absences and nodules that drain and caused a lot of them are morbidity to these patients. It looks like the currently approved TNF inhibitor doesn't fully address that unmet need and again you know that speak.
Two the interest in new mechanism of action, yeah that that looked like from our phase II proof of concept, maybe addressed very well from from in terms of <unk> JAK inhibition. So that's the reason we're excited about the data. That's the reason we want to go fast into a phase III.
There is.
Very good and in MA.
The slide in the prepared remarks response in terms of <unk> and nodule formation, and we will be testing as I said earlier two doses there.
It's about.
As you know somewhere around 0.1% of the U S population, but we estimate approximately 100 and excuse me upwards of 150000 patients in yours prevalence wise and maybe you know about 50000 currently get treated but if you have a therapy that addresses that need then that'll be a really important thing to do.
<unk>.
In terms of <unk> and its IL 15.
<unk> receptor beta monoclonal antibody.
As I said.
This addresses resident memory T cells in the skin, which I felt to.
Cause the melanocytes not to produce the pigment and then to keep the disease.
Present, so by addressing this and there is a very good preclinical model you can potentially result in quote unquote cure or at least prolonged responses in terms of re pigmentation. So we view this completely complementary just to go over the entirety of our of our Vitiligo studies, our first indication with <unk>.
<unk> is in patients with a 10% or below body surface area involvement and requires.
Long term treatment to get the effects that improve over time. If you look at the data you look at the 24 week data that goes up by another 20% absolute points. When you get to 50 weeks and then with all of a certain of our fertilizer program is looking at patients with more severe.
With larger more body surface area involvement, so 8% or above.
Again, we have data there that's really encouraging and we will be presenting at a early next year at a major meeting and then make go forward decisions for Puma sitting up there in terms of an oral therapy with the different therapeutic ratio and then just to round. It out now with the anti IL 15 receptor beta antibody we get.
Their entirety, and we expect that we'll have activity on its own based on the preclinical models and Thats, how we will start testing. It initially, but you can imagine a world going forward, where these therapies will complement one another and be used interchangeably, depending on the disease and how it evolves.
And we really want to address the unmet need yeah. We are excited about our fertilizer franchise and what it can do for patients who require an <unk> III pigmentation.
Oh, sorry, your last question other indications I think it's pretty early.
But the mechanism may be important in areas.
<unk> systemic sclerosis, sarcoid et cetera, but it's very early in that journey. So we'll just see how this program goes going forward. Thank you.
Thank you so much.
Thank you next question is coming from Michael Schmidt from Guggenheim Securities. Your line is now live.
Our next question is coming from Matt Phipps from William Blair. Your line is now live.
Got it thanks for taking my questions. Congrats on the progress I was wondering if you could help set the stage a little bit for the limber updates coming soon maybe an idea of how many patients you'll have with the L. Two or bet plus jakafi combinations.
And later this year or do you think that's enough data to make a determination on how youre moving either or both of those programs forward.
Yeah, Hi, it's Steven.
The limber program in terms of combinations is again key to how we want to address unmet.
The unmet need in patients with moderate proliferative neoplasms, we're looking very much forward to the ash meeting and it will be really important meeting for us.
In terms of each of the programs help to us a little more advanced than the best program. We've already showed data from a translational point of view that we get the hip sodden inhibition. We want the on kinetics are favorable in terms of the way they move in and we expect to follow with hemoglobin increases.
Icon, you'll have to wait for the actual presentation at a meeting at the end of the year to show the entirety of the data, but we expect to show in a reasonable number of patients with monotherapy and some in combination with alpha to beta as I say, there's a little bit behind that given the abstract cutoff for the particular meeting.
And the poster presentation there'll be a little less data quantitatively with pet at that meeting in mostly in the monotherapy setting and not yet a combination data to show given the cutoffs in terms of decisions.
In 2023 on way to go with these programs once we have established safe doses and schedules. We will look at the particular populations that need to be addressed of interest with elk to obviously patients potentially with anemia, given its mechanism of action, but it could be beyond because it.
Will result in the ability to maintain rux dose intensity and with back we'll see also given the competitive space where that is on way to go in terms of first line in suboptimal populations, but those decisions to answer your questions will be in 2023.
Thanks.
Thank you. Our next question today is coming from Michael Schmidt from Guggenheim. Your line is now live.
Hey, this is kelsey on for Michael apologies for getting disconnected there, but thank you for taking our question I guess, how do you kind of anticipate the EMS market landscape evolving in the coming years with the recent approval of bond, Joe and potential approval of mobile onto next year and are you seeing a change in patient starts.
Particularly those with low platelets given Joe is now available in the U S. Thanks, so much.
Sure.
<unk> in myelofibrosis as you know.
<unk> has been approved now for about 11 years in myelofibrosis to other JAK inhibitors, <unk> and <unk> have been approved.
<unk> from BMS as you probably know really has been a flat to declining mostly used in the second line setting if used at all as far as <unk> concerned at least is that data that we look at.
Don't really see much vanja usage.
But it must be being used in the second line setting and that's the way that.
It seems to be positioned for those patients that have low platelets.
Over time, I mean, obviously.
There could be some combination data.
In the future with other products for moment lot Nib, we'll have to wait and see what the label says but.
<unk> of the survival advantage that jakafi has because of the unprecedented symptom improvement that jakafi has with low Gi toxicity.
We think it'll be the standard of care for a long time, we do not see any changes in.
Or noticeable changes at all in.
And the duration of therapy for patients we are as I said before that we continue to grow new patients in MF. After all of this time, so we grew 8%.
In terms of new patient growth for myelofibrosis, and we continue to position.
Jakafi as first line and we believe it should be started as soon as possible before patients have a possibility of progressing and getting worse. So we're confident in our position, we'll have to wait and see with mobile lightened up label says, but we think that.
Jakafi was still be the standard of care because of its efficacy and safety profile.
Thank you. The next question is coming from EBA prove a tariff from Cowen. Your line is now live.
Oh, Thank you and thanks for taking our questions.
Can you give an update on the progress made towards establishing utilization management criteria in vitiligo.
Approximately what percentage of plans now.
Please.
Well.
Because most of the contracts where that we establish for a D carried over to two vitiligo now some of the vitiligo utilization criteria. That's in place there was little LIBOR criteria for maybe.
<unk> of the planned throughout the United States before.
<unk> was approved for vitiligo and has only increased over time some of them some of the utilization criteria.
We've seen have.
Absolutely as first line some have one step some have two steps now we will continue to work with each and every one of those plans every single day to optimize the utilization criteria to actually reflect the clinical data because in fact there.
No reason to use.
Any step therapy for vitiligo.
Or are these patients that have been like Ob cost of the clinical data because it's the only drug approved first and only drug approved for that condition.
No.
So in a way.
We'll continue to see the utilization criteria only get better because the drug is so good and it should be used in the first line setting when patients come in and want to be treated.
Further vitiligo.
Thank you for that.
Quick follow up when do you expect to start running DTC ads right.
Joe.
Well, we're already doing DTC for vitiligo and a variety of locations of course through social media things like Facebook Instagram and so forth.
In terms of.
Internet search optimization. So if you go looking for a bit of Lego Youll find absolutely to go looking for ups, Laura you'll find that the Lego is there. We also have patient webinars and we work with patient advocacy groups. So the DCC is going on if what you mean by TV commercials.
As you know we are running TV advertisements, both linear and nonlinear so connected TV and non connected TV for atopic dermatitis now so the vitiligo.
Commercials for again for connected and non connected TV will start either in December or January we will have to figure that out yet just for whats. The best placement that is the best timing for these ads to have the most impact.
Thank you as a reminder, that started one to be placed in the question queue.
Next question is coming from Andrew Berens from <unk> Securities. Your line is now live.
Hi, Thanks, guys.
And sorry, if I missed this have been jumping from column call, but I was wondering if you could give some color obviously inventory levels I don't want to do a back of the you have to look calculation. It appears that that may have gone up about $3 million based on the numbers you've given and then also just wondering if you guys are still confident in the one five.
Dollar guidance.
Perhaps to Lora.
In the U S alone.
Thanks.
So as far as inventory levels go.
Andrew.
I'm not.
Really sure what you mean.
Assume you mean for Epsilon I, certainly don't see it in our inventory levels have maintained about two weeks' period of time, it's actually even a little lower than we really thought it was going to be when we first got into this.
This endeavor and as far as the guidance goes and we're confident that with the almost 30 million patients in the United States that Haven have atopic dermatitis in the $5 5 million that are actively being treated now that $1 5 billion guidance is certainly within our a range of possibilities.
Okay. Thank you.
Thank you next question is coming from gathering Clark Gardner from Evercore. Your line, there's not a lot.
Hey, Thanks for taking the question I just wanted to confirm something I heard earlier did you mentioned that patients are using two to three tubes per year for obsolete any topic.
[noise] World setting.
So.
So Gavin what I said was that on average over time, we will see we believe that two to three tubes.
Per year per patient with atopic dermatitis is what it'll work out to be.
Okay got it.
Whats driving the difference from the three to four tubes as we've been guiding towards previously.
Well quite frankly, well.
We'll find out as we move forward into the coming years, because it takes time for.
Refills to be clear and plus as I was sort of alluding to before sometimes you can't tell the difference between a new to brand prescription, meaning that's the first time that patient got the drug in a new prescription that might be for a patient that already had it but it came from either a different prescriber went through different pharmacy. So sometimes those are.
To match up so over time, we'll see.
See whether it's two to three years three to four but also the drug is great and it works really well.
So I think that if there is any difference its because that.
Patients come in they get the drug it clears it clears their skin up cleared their edge up but we will see over time, what the real usage is going to be and like I said, we really have to sort out which is truly a new patient in which is a patient is just getting a new script that may have.
<unk> gotten a different script three four months ago.
Thank you next question is coming from <unk> of Air cargo from Jewish Your line is now live.
Thank you so much for taking my questions.
A question on Vitiligo now that you've launched and do you have an early idea Paul has been received and the awareness amongst doctors and maybe even patients. When do you think youll be able to provide how big of an opportunity. This could be you know in line with the $1 5 billion dollar opportunity you talked about the U S.
And then.
3 billion in cash.
As you said landscape.
As with all of the different combinations that are currently under investigation.
<unk>.
Any changes in your thinking.
Capital allocation and I know you did the valores acquisitions recently, but the size of that.
Deal. Thank you.
Okay.
Hi, Gary.
In terms of vitiligo.
As Barry indicated we're very pleased with.
It was the launch and the initial progress, but we are very early in the launch and this is a very different market.
<unk> is not an established market you have only a small percent of the.
Patients that had been diagnosed with vitiligo currently seeking treatment. It's at around 10% and you have a very big part of the patient population that is inactive. So we want to wait to see a few quarter sofa uptake. So we'll get a better understanding of not only of the currently active patients.
Seeking treatment and how.
How how quickly do they come in today.
Happy, but also how quickly the negative population gets activated and the uptake there before we provide any type of guidance around vitiligo.
In terms of your second question on BD.
There is no change in our thinking in terms of a type of transactions and the objective that we have with a P. D. We are looking to bring in assets that fit well with our current areas of expertise and can leverage our capabilities kind of lever.
Our infrastructure and cannot that to our revenues and diversification.
In the second half of the decade, the Larry E fits very nicely with that objective.
Earlier stage and smaller deals but.
We continue to actively look for either a I would say Wolfgang.
Wolfgang South East is the nature of Oh.
Acquisitions that we are primarily focusing on.
Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.
Thank you all for participating in the call today and for your questions. The IR team will be available for the rest of the day for follow ups. Thank you and goodbye.
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.