Operator: You may be placed into question queue at any time by pressing star one on your telephone keypad. We ask you please ask one question, then return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero on your telephone keypad. It is now my pleasure to turn the call over to Alexis Smith, Vice President, Head of Investor Relations. Please go ahead, Alexis.
Alexis Smith: Thank you. Good morning, and welcome to Incyte's Q3 2026 Earnings Conference Call. Before we begin, I encourage everyone to go to the investors section of our website to find the press release, related financial tables, and slides that follow today's discussion. On today's call, I am joined by Bill, Pablo, and Suky, who will deliver our prepared remarks. Steven, Dave, and Mohamed will also be available for Q&A. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. I will now hand the call over to Bill.
Bill Meury: Thanks, Alexis, and good morning, everyone. As we look at the first nine months of the year, we have made meaningful progress against the strategy we laid out for Incyte. That strategy has two fundamental components: scaling the core business beyond JAKAFI and advancing our late-stage pipeline to drive the next phase of growth. The core business is the foundation. It gives us a scale to navigate the 2029 transition and fund R&D. Layering the pipeline on top of that gives us the opportunity to build a significantly larger company over the next decade. We now have several compounds in phase III development, including a mutant CALR antibody for MPNs, a Protein S modulator for von Willebrand disease, a G12D inhibitor for pancreatic cancer, a TGF-beta by PD-1 bispecific antibody in colorectal cancer, a CDK2 inhibitor for ovarian cancer, and a JAK inhibitor currently under regulatory review in HS.
Bill Meury: We have increasing confidence in the biology behind these programs and believe we have taken meaningful risks out of them as they have advanced. That does not mean the risk is zero, but increasingly, the risk we are managing is execution risk, running high-quality phase III programs, enrolling them on time, and achieving the regulatory milestones in front of us. Those are things we directly control, and that is our focus today. We are fully funding and resourcing these opportunities, leaving nothing to chance, and if we deliver against them, we believe the value creation potential is substantial, and that is how we should ultimately be judged. Now, we will frame the quarter around three themes. First, key business performance. Every product grew year-over-year. JAKAFI had another strong quarter with growth across all indications, and sales from our core business, excluding JAKAFI, increased 37% from prior year.
Bill Meury: Second, we achieved important regulatory milestones, including the approval and launch of OPZELURA for moderate AD in the EU in Q3. In parallel, the NDA reviews for MONJUVI in frontline DLBCL and povorcitinib in moderate to severe HS are well underway. Third, we continue to advance our late-stage pipeline, including trial initiations and expansion efforts for key programs like G12D, TGF-beta by PD-1, and INCA033989. I will now cover the quarter in more detail and then hand it to Pablo to expand on the progress across our pipeline. Total revenue for the quarter was $1.56 billion, representing growth of 14% year-over-year. Total net sales in the quarter were $1.32 billion, up 14% versus the prior year. Growth was broad-based and led by OPZELURA and our hematology and oncology franchise, while JAKAFI remained a significant contributor.
Bill Meury: JAKAFI franchise net sales in Q3 were $827 million, up 4% year-over-year. Underlying demand remains strong, increasing 12% with growth across all indications, led by PV. Net sales growth reflects expected pricing dynamics during the quarter, including the impact of the CMS GENEROUS Model. JAKAFI XR net sales for Q3 were $15 million. XR share of the franchise increased by approximately 100 basis points in September to approximately 3%. This was driven by both new and existing patients. Formulary coverage is expected to exceed 80% by year-end. The combination of increasing uptake here and expanding market access keeps us on track to achieve our full-year-end target of roughly $50 million in XR net sales and supports our goal of retaining 10% to 30% of the JAKAFI business by 2029.
Bill Meury: Now to our core business ex-JAKAFI, which is one of the clearest indicators of transitioning the company. Net sales from our core business, excluding JAKAFI, were $490 million, representing a 30% increase versus prior year, reflecting contributions from key growth brands, namely OPZELURA, NIKTIMVO, ZYNYZ, and MONJUVI. The growth across brands and geographies strengthens the outlook for the company as we see this business growing to $3 billion to $4 billion by 2030. OPZELURA net sales were $255 million in the quarter, an increase of 36% over prior year. Net sales were driven by increased demand across geographies and favorable US pricing dynamics resulting from the agreement with CMS related to the OPZELURA line extension. On a pro forma basis, which adjusts Q3 2025 for the favorable impact of the Medicaid line extension settlement, total OPZELURA net sales increased 21% over the prior year period.
Bill Meury: Now I will break down the US and international performance. US net sales in Q3 were $208 million, up 45% year-over-year and 25% on a pro forma basis. Importantly, prescription demand increased 24% across both atopic dermatitis and vitiligo. New patient starts, an important leading indicator, increased 26%. The strong Q3 results reflect the strategy we outlined at the beginning of the year, which include expanding the sales force, taking a more targeted approach with nurse practitioners and physician assistants, and improving access quality. We are seeing progress across all three of those areas. Internationally, OPZELURA net sales were $47 million in Q3, up 5% year-over-year. Excluding the benefit from a prior year reversal related to a government rebate program, underlying sales increased approximately 20% year-over-year. Now, vitiligo has been the foundation of our international business to date.
Bill Meury: Looking ahead, the approval of OPZELURA for moderate atopic dermatitis in Europe represents the next phase of growth for the franchise. As the first JAK inhibitor approved for moderate AD in Europe, we expect adoption to build over time as reimbursement expands across Germany and additional European markets in mid-2027. Excluding the one-time US CMS impact, we continue to expect the international business to represent approximately 20% of total OPZELURA net sales for the full-year. Finally, our hematology and oncology portfolio delivered net sales of $235 million, an increase of 38% versus the prior year. NIKTIMVO net sales were $67 million, an increase of 47% versus prior year, and approximately 10% sequentially. We expect full-year sales to approach $250 million. ZYNYZ net sales were $58 million, an increase of 157% year-over-year.
Bill Meury: Uptake in the US and international markets remains strong, and ZYNYZ is the leading first-line treatment option and only FDA-approved first-line treatment in SCAC. MONJUVI net sales were $55 million, up 30% year-over-year, driven by follicular lymphoma uptake in the United States and the launch of MONJUVI in Europe and Japan following approvals in follicular lymphoma during the first half of the year. This performance reinforces our belief that we can build a substantial hematology and oncology business beyond JAKAFI. With that, I will turn the call over to Pablo to review our R&D progress.
Pablo Cagnoni: Thank you, Bill, and good morning, everyone. We are making meaningful progress across our pipeline. Programs that were in early clinical development last year are now in phase III registrational studies. Today, more than 10 pivotal trials are underway across hematology, oncology, and inflammation autoimmunity, including several programs with the potential to be first-in-class medicines. It is important to highlight how we got here. Each decision has been driven by data. We advance programs where the evidence is clear and focus on the treatment settings that can offer the greatest opportunity for patients and physicians. This discipline, built into our discovery and clinical organization, gives us confidence that we can continue to deliver. Today, we will cover the progress we have made year-to-date and during the quarter and highlight what lies ahead.
Pablo Cagnoni: Starting with myeloproliferative neoplasms, or MPNs, our ambition is to develop molecularly targeted treatments for every patient with an MPN by the beginning of the next decade. These efforts are anchored by 989, our mutant CALR monoclonal antibody, and the first mutation-specific therapy in late-stage development for CALR-mutated MPNs. Last year, we presented the first clinical data in patients with CALR-mutated essential thrombocythemia and myelofibrosis, which established a foundation for our development strategy. Our registrational program in second-line ET is underway, with site activation ongoing and the first patient treated during the third quarter. In second-line MF, we have had productive conversations with the FDA, including alignment on the phase III EXCALIBUR-MF2 study. We expect to initiate the study by year-end. The phase III randomized study will evaluate 989 against best available therapy in patients with CALR-mutated myelofibrosis who have previously received a JAK inhibitor.
Pablo Cagnoni: The study will enroll patients with both type 1 and non-type 1 CALR mutations, with mutation-specific dosing informed by our phase I experience. Co-primary endpoints are spleen volume reduction of at least 35%, or SVR35, and total symptom score reduction of at least 50%, or TSS50, at week 36. The week 36 assessment allows additional time to capture the full magnitude and durability of treatment benefit, consistent with the targeted treatment approach that we believe has the potential to address underlying disease biology. These are established endpoints, consistent with those used for current approved therapies in MF. Notably, we are also evaluating a composite endpoint as a key secondary endpoint. The composite endpoint is designed to capture the benefits we have observed beyond spleen and symptoms, including improvements in hemoglobin, platelet counts, and blasts in peripheral blood.
Pablo Cagnoni: This allows us to further characterize the potential benefit of a disease-modifying therapy on key manifestations of MF. The study's power to evaluate efficacy in patients with type 1 mutations will represent more than 70% of the CALR-mutated MF population and have experienced the most robust clinical responses to date. We will also continue to generate data in patients with non-type 1 mutations to further characterize the potential of 989 across the broader CALR-mutated population. Looking ahead, we expect to share the first clinical data for 989 in first-line MF by year-end, both as monotherapy and in combination with ruxolitinib. This data will help define the role of 989 in an earlier treatment setting and inform our development plans in 2027. Additionally, we plan to share preclinical data on our next-generation mutant CALR antibody, which we will be progressing into the clinic in early 2027.
Pablo Cagnoni: Together, these efforts reflect our strategy to build a broader portfolio of mutation-directed therapies with the potential to meaningfully change the treatment paradigm for patients with MPNs. Beyond MPNs, we continue to advance important programs across our hematology pipeline. The FDA's review of tafasitamab in first-line diffuse large B-cell lymphoma, or DLBCL, is ongoing, with approval expected in the Q1 of next year. In chronic graft-versus-host disease, we are evaluating axatilimab in early lines of therapy. This includes a phase II study of axatilimab in combination with ruxolitinib, with results expected at a medical meeting early next year, and a phase III study evaluating axatilimab in combination with steroids, with top-line results anticipated in 2028. We also expanded our hematology pipeline this quarter with the acquisition of Vega Therapeutics and its lead therapy, latarcibart.
Pablo Cagnoni: This novel protein S modulator has the potential to be a transformative non-factor replacement treatment for von Willebrand disease. The pivotal phase III study is underway, with top-line data expected in early 2029. We also plan to share additional data from the phase I open-label extension later this year. Turning to oncology, we have advanced our solid tumor programs from early clinical development to a growing late-stage pipeline. A year ago, we established clinical proof of concept across several novel mechanisms and tumor types. Today, we have pivotal programs underway for our KRAS G12D inhibitor, our TGF-beta receptor 2 by PD-1 bispecific antibody, and our CDK2 inhibitor, with expansion efforts planned for next year.
Pablo Cagnoni: As we reviewed at ESMO earlier this week, our strategy is to advance novel mechanisms in high-incidence cancers where outcomes remain poor, with a particular emphasis on building a leading gastrointestinal franchise anchored by 734 and 890. Starting with 734, our G12D inhibitor, our conviction in this program continues to grow, and we are rapidly expanding its development across tumor types, treatment settings, and novel combinations. At ESMO, we presented phase I data evaluating 734 in combination with standard of care chemotherapy in first-line pancreatic ductal adenocarcinoma, or PDAC, and in combination with cetuximab in heavily pretreated patients with colorectal cancer. In PDAC, 734 showed encouraging activity in combination with both standard of care chemotherapies, with a safety and tolerability profile consistent with this established regimens. Objective response rates confirmed and pending were 58% for 734 plus gemcitabine and nab-paclitaxel, and 81% for 734 plus modified FOLFIRINOX.
Pablo Cagnoni: We also see promising signals of durability with 6-month landmark PFS of 80% and 90%, respectively. The depth of response, early signs of durability, and consistent tolerability across both chemotherapy backbones reinforce our confidence in the ongoing phase III DAWN-303 study in first-line PDAC and support moving 734 into early stage of disease, with a phase III study in adjuvant PDAC planned to start in 2027. Turning to colorectal cancer, 734 in combination with cetuximab produced a 36% objective response rate in heavily pretreated patients. This is notable because anti-EGFR therapy alone has historically produced response rates below 5% in late-line colorectal cancer, which suggests a synergistic combination. This data informed the design of our phase III DAWN-302 study in previously treated colorectal cancer. We reached alignment with the FDA on the design this quarter and plan to initiate the study in the first half of next year.
Pablo Cagnoni: Beyond these registrational programs, we recently announced clinical collaborations enabling evaluation of 734 with novel combinations. These include petosemtamab, an EGFR by LGR5 bispecific antibody in first-line colorectal cancer, navlimetostat, a PRMT5 inhibitor in PDAC, and SNV1521, a PARP1 inhibitor in solid tumors. These phase I studies will begin next year. Turning to 890, our TGF-beta receptor 2 by PD-1 bispecific antibody. We believe 890 has the potential to serve as an immunotherapy backbone, starting in microsatellite stable colorectal cancer, or MSS CRC, a disease that has historically been resistant to immunotherapy. At ESMO, we presented phase I data evaluating 890 in combination with standard of care chemotherapy in first-line MSS CRC. 890 in combination with FOLFOX and bevacizumab showed encouraging anti-tumor activity with an objective response rate of 71%.
Pablo Cagnoni: Importantly, responses were observed across patient subgroups, including an objective response rate of 83% in patients with liver metastases, a population historically associated with poor outcomes and reduced responsiveness to immunotherapy. We also see early signals of durability with a 6-month landmark progression-free survival of 81%. We look forward to sharing more mature progression-free survival data next year. This data support our ongoing phase III NEXERA-303 study in first-line metastatic MSS colorectal cancer, which is well underway, with top-line data expected in 2029. We are also moving 890 into earlier treatment settings, including a proof-of-concept study in patients with circulating tumor DNA-positive disease following surgery and adjuvant chemotherapy. Finally, turning to 667, our CDK2 inhibitor.
Pablo Cagnoni: Based on the evolving treatment landscape, we are focusing our development on first-line maintenance in cyclin E1 overexpressing ovarian cancer, where we believe the opportunity for 667 is greatest to offer a meaningful treatment option for patients and physicians. As a result, we are deprioritizing development efforts in platinum-resistant ovarian cancer. The open-label phase II MAESTRA-1 trial remains ongoing. However, we have made the decision to stop additional site activation and discontinue future enrollment in the randomized phase III MAESTRA-2 study. This was not an easy decision, and we are grateful to the investigators and patients who participated in this study. Stepping back, in a short period, we have moved from established proof of concept to advancing multiple registrational programs in oncology. We have done so by following the data, and we will continue to deliberate about where we invest.
Pablo Cagnoni: With that approach, we believe we are well-positioned to build multiple oncology franchises over time. Turning to IAI, where we continue to build on our leadership in dermatology across topical and systemic therapies. In July, the European Commission approved OPZELURA for adults with moderate atopic dermatitis, or AD. This approval makes OPZELURA the first steroid-free topical JAK inhibitor available in Europe for this population and expands its EU label into a second indication. Povorcitinib, our oral JAK inhibitor, received a positive CHMP opinion for the treatment of moderate to severe HS in adults who have had an inadequate response to anti-TNF therapy. We anticipate a potential approval in Europe by year-end. In the US, the NDA is under review, with an anticipated approval in the first quarter of 2027.
Pablo Cagnoni: We also expect several important phase III readouts by year-end, including top-line results from ruxolitinib cream in mild to moderate HS and povorcitinib in prurigo nodularis. Together, this program's position povorcitinib for potential approval in multiple indications, including HS, PN, and vitiligo, building on the foundation OPZELURA has established in dermatology. To close, the pipeline we have today looks very different from a year ago. We have moved multiple novel programs into registrational development, and we have done so deliberately, guided at each step by the data. With a more mature and diversified late-stage pipeline, supported by the discovery and clinical engine behind it, we are well-positioned to deliver meaningful innovation for patients and support sustainable top-line growth heading into the 2030s. With that, I will turn it over to Suky for a financial update on the quarter.
Suky Upadhyay: Thank you, Pablo, and good morning. I will begin with comments on our third quarter results and then turn to our updated full-year outlook. As Bill mentioned earlier, we delivered strong net sales, managed expenses well, and executed across all areas of the company. Total revenue for the quarter was $1.56 billion, an increase of 14%. Total net sales were $1.32 billion, reflecting 14% growth versus the prior year, driven by strong product demand. Total GAAP expenses for the quarter were $2.27 billion, an increase of 146% compared to the prior year. This includes a $1.23 billion IPR&D expense related to the closing of the Vega acquisition. Total cash consideration for the transaction was approximately $1.27 billion, including $12.5 billion for the upfront. When we exclude the Vega-related IPR&D expense, total operating expenses for the quarter grew 12%.
Suky Upadhyay: GAAP cost of goods sold was $109 million, representing approximately 8% of total net sales. This is in line with our expectations, and we expect COGS to be approximately 8% for the full-year. Our GAAP R&D expenses were $1.79 billion for the quarter, an increase of 254% versus the prior year, driven by the Vega acquisition and continued investment in our late-stage development assets across hematology and oncology. Excluding the Vega acquisition, GAAP R&D expenses increased 11% for the quarter. Moving to SG&A, GAAP SG&A expenses were $364 million for the quarter, increasing 11% year-over-year, driven by pre-launch activities for povorcitinib. Lastly, we ended the quarter with $3.9 billion in cash and cash equivalents. Now turning to our outlook for the remainder of the year.
Suky Upadhyay: We are maintaining our full-year guidance for the JAKAFI franchise of $3.22 billion to $3.27 billion. Demand and pricing performed in line with our expectations, and we successfully absorbed the impact of the CMS GENEROUS Model, which on an annualized basis will be roughly 1% of JAKAFI gross sales. We are raising our full-year guidance for OPZELURA, hematology and oncology, and total net sales based on the strong performance delivered through the first nine months of the year. For OPZELURA, we are raising full-year 2026 net sales guidance to $1.1 billion to $1.12 billion, reflecting continued growth in both the US and international markets. For hematology and oncology, we are raising full-year guidance to $338.9 million to $910 million, reflecting the performance across key growth brands.
Suky Upadhyay: As a result, we are increasing total net sales guidance to $5.21 billion to $5.3 billion. We are also maintaining our full-year operating expense guidance. While unchanged, based on our year-to-date R&D investment and expected spend in Q4, we expect total R&D and SG&A expenses to be towards the middle of a full-year range, reflecting investments in our late-stage development pipeline and pre-commercialization efforts. To close, we are pleased with our performance for the quarter and the first nine months of the year, and we remain confident in our outlook. With that, I'll turn the call back over to the operator and open it up for Q&A.
Operator: Thank you. We'll now be conducting a question-and-answer session. If you'd like to be placed into 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. As a reminder, we ask you please ask one question, then return to the queue. Our first question is coming from Tazeen Ahmad from Bank of America. Your line is now live.
Tazeen Ahmad: Hi, guys. Good morning. Thanks for taking my question. I just wanted to ask you, what are the key items we should be focusing on for the update for INCA033989 mutCALR in the frontline MF study coming up this quarter? Thanks.
Bill Meury: Thanks, Tazeen. Pablo will take the question.
Pablo Cagnoni: Good morning, Tazeen, and thank you for the question. At ASH, we are going to present, as promised, an update on the first-line data. Just as an aside, you remember that at EHA, we presented data in patients that were ineligible for JAKAFI, and the data looked quite good, in our opinion, both in SVR35 and TSS50, as well as the anemia improvement that we have become accustomed to seeing in patients treated with INCA033989. To complement that or to expand on that, at ASH, we are going to have about a total of 55 patients in frontline. Of those, about 20 are in that group of ineligible, and the other 40 or so are in true first-line patients that would have been eligible for JAKAFI. There is a split between single agent and combination with ruxolitinib, about two-thirds, one-third, approximately.
Pablo Cagnoni: Importantly, we have quite a bit of follow-up in those patients at this point. In fact, one of the things that I think it is important to highlight is the data in the abstract are much more immature than the data in the presentation. In fact, the data cut in the presentation about four months later than the data in the abstract. I would ask you when the abstracts come out, which is in the relatively near term, that we wait for the data in the presentation because that is the truly relevant data. I think it is a pretty comprehensive update. I think it will give a clear idea of the role of INCA033989 potential frontline MF, and we look forward to sharing the data with you.
Bill Meury: Thanks for the question, Tazeen.
Operator: Thanks. Your next question today is coming from Etzer Darout from Barclays. Your line is now live.
Gustave Diep: Good morning. This is Gustave on for Etzer. Thanks for taking our question. My question is on the second-line MF pivotal for INCA033989. How will prior JAK inhibitor treatment be defined? Would the patients need to be resistant, refractory, or intolerant? Is there a minimum duration of treatment or dose for those? Thank you.
Bill Meury: Go ahead, Pablo.
Pablo Cagnoni: Thank you for the question. I mean, the definition is pretty standard in the fact that patients don't achieve ideal SVR35 or ideal spleen or symptom response to JAKAFI, or usually the reason for intolerance is either thrombocytopenia or anemia in most patients. So, the physicians make that determination. There's no language in the product, but the physicians will make that determination. And there's no minimum duration, I don't believe. I would have to confirm with the product. I don't believe there's any minimum duration of treatment or dose of JAKAFI. The dose of JAKAFI prior to entering a second-line study is not predetermined in a second-line study at all.
Bill Meury: Thank you for the question.
Operator: Our next question today is coming from Jessica Fye from JPMorgan. Your line is now live.
Silvia Luo: Hi, this is Silvia on for Jess Fye. Thank you for taking our question. Can you elaborate on the strength that you are seeing in OPZELURA, and are you able to quantify the gross-to-net you saw this quarter and how that differed from Q3 2025? Thank you.
Bill Meury: Yeah, it's a good question. I'll make a few comments, and then Pablo, I mean, Mohamed can expand on them. At the start of the year, we made a very deliberate strategic decision to expand the sales force, increase promotion to NPs and PAs, and to improve access quality, which required an investment. If you look at the results this quarter, you focus on two key metrics: underlying prescription demand and new patient starts. It's been strong now for several months. I think it's an important indicator of the strength of the business, not just to finish the year, but in 2027. OPZELURA has a very large prescriber base of 20,000 physicians. We have extensive formulary coverage, and we have probably north of a quarter of a million people receiving OPZELURA today. That is a moat around the business.
Bill Meury: Our job right now is really simple: keep the pressure on, keep our foot on the gas pedal, and this business could represent over a third of our core business ex-JAKAFI when we hit the transition in 2029. Mohamed and his team has done an excellent job managing this product for the past several quarters. Mohamed, do you want to add anything?
Mohamed Issa: Yeah, maybe just to quantify a few of the points that you mentioned, Bill. Thank you. Just to reiterate, in the US, we grew net sales 25% on a pro forma basis, which basically accounts for the GTN benefit that you would have seen from the line extension settlement that we declared. On top of that 25% was driven by a 24% overall demand growth year-over-year. The majority of the pro forma growth was driven by demand, and actually, there was a little bit of a price downside on that when you look at it on a pro forma basis. The growth of the business is really, really healthy, and a lot of the growth, as you can see, is coming from the brand's underlying health of the business, which is demand.
Mohamed Issa: Like Bill mentioned, new patient volume, which is really the best measure of competitiveness, grew 2x market when you think about AD and vitiligo. Not only are we growing, but we're growing and we're outpacing the market, which is a really good indicator of not only the health of the business, but our competitiveness overall.
Bill Meury: Yeah, Silvia, just to add one thing to what Mohamed just said. When you think about price for Opzelura, 2026 was a year of investment to improve the quality of formulary coverage. When we look out 2027 and beyond, think about price as a maintenance strategy. There is a cost to maintaining coverage, but we do not expect significant headwinds as it relates to average selling price for Opzelura. Thanks for the question.
Operator: Thank you. Next question today is coming from Salim Syed from Mizuho. Your line is now live.
Erik Lavington: Hi, this is Erik on for Saleem. Congrats on the quarter, and thanks for taking our question. One on axatilimab in GVHD. It looks like the first line AXA plus RUX readout got pushed out from Q4 2026 to Q1 2027. Just curious about the puts and takes on that and how you are thinking about the overall timeline on that at this point, if that is different. Thanks.
Bill Meury: Thanks for the question, Erik. Pablo will take it.
Pablo Cagnoni: The reason for that is simply to present a comprehensive data set at the most relevant meeting, which is in the first quarter of 2027. The data was not ready for submission to an earlier meeting. We do not want to just show the primary endpoint. We want to show you durability of the response. We want to show you subsequent therapy, a comprehensive review of the safety profile. We want to present that at a meeting and a scientific meeting, and the most appropriate one is in the first quarter of 2027. That is the only reason for shifting the timeline a little bit.
Bill Meury: Thanks for the question.
Operator: Thank you. Our next question today is coming from Brian Abrahams from RBC Capital Markets. Your line is now live.
Brian Abrahams: Hey there. Good morning. Thanks for taking our question, and congrats on the continued progress. Maybe one on INCA033989. I guess I am curious what monotherapy or combo activity do you think you would need to see and KOLs would want to see to warrant development of INCA033989 as a frontline alternative or add-on for treatment-naive CALR-mutated patients, just given the known benefits of JAKAFI, but also the known AEs? Thanks.
Bill Meury: Great. Go ahead, Pablo.
Pablo Cagnoni: So thank you for the question. Let me give you a little bit of a more comprehensive answer here, because I think it's important. I know it's in everybody's mind. We need two pieces of data to finalize the design of a frontline study in MF. First of all, let's go back to a comment I made a few minutes ago. We know from the EHA data in ineligible patients that the efficacy of INCA033989 in untreated, RUX-untreated patients with MF is substantial. You all remember the SVR35 and TSS50 data that we showed, and the really striking effect on anemia improvement. So what we need now is a more comprehensive data set with longer follow-up, which we will have at ASH, including single agent and combination with JAKAFI, as you pointed out.
Pablo Cagnoni: We need to see that data in order to decide the final decision on the design of the frontline study. The other event that needs to happen is we will have a meeting with the FDA, a Type C meeting with the surrogate endpoints team to discuss, continue the conversation that we've had on the use of a composite endpoint to try to shift away from SVR35 or TSS50, because we believe disease-modifying therapies like INCA033989 need to be looked at differently. We need to address the fact that this medicine basically shifts hematopoiesis back to normal, and that is represented by improvements in anemia, reduction in fibrosis, reduction of mutated megakaryocytes in the bone marrow, etc. That needs to be addressed. So once we complete those conversations with the FDA and once we have the full data set, we will make the decision on the frontline study.
Pablo Cagnoni: Going directly to your question, we do know that JAKAFI produces rapid improvement in symptoms and an SVR35 in CALR-mutated patients in frontline of approximately 20% to 22%. We think there's a lot of room for improvement there. Whether we need a combination arm in the study or not, we'll decide based on the points that I just made. We do think there might be a role, in which case we'll launch a three-arm study, which would be RUX versus RUX plus INCA033989 versus INCA033989 alone. That's a perfect legitimate study. Patients and physicians will have two options to treat their MF, either single agent INCA033989 or combination with RUX, and all that will be decided in the next few months, and we'll update you early in 2027.
Bill Meury: Thanks for the question, Brian.
Operator: Thank you. Next question today is coming from Evan Seigerman from BMO Capital Markets. Your line is now live.
Evan Seigerman: Hi, guys. Thank you so much for taking my question. Great to see you earlier this week. Just taking a step back, the pipeline progress that Incyte has accomplished over the past year has been impressive. Can you just level set, remind us what you've accomplished over the past year? Looking forward, aside from CALR at ASH, what are some things that we should be focused on over the next year so that when we get to the Q3 call, we can discuss those as well? Thank you all.
Bill Meury: Yeah, thanks for the question, Evan. I agree with you. I think the shape and maturity of the pipeline has changed over the past 12 months. I also believe it has the right balance of risk and reward. In other words, pipeline is not consumed on one hand by moon shots and on the other hand by safe low return bets. We sort of have a combination of products that can deliver what I would describe as outsized returns potentially, with products that can deliver incremental but reliable growth over time. More specifically, we have six assets right now in phase III. They are not all equal when you think about them on a sort of risk-adjusted value basis. Povorcitinib, INCA033989, G12D, and latarcibart are comparatively higher PTRS projects. TGF-beta by PD-1, the fifth asset, is different. Significant potential value, but more biology risk.
Bill Meury: So in our strat plan, it has the widest range of possible outcomes, whereas the other three or four anchor franchises for us. CDK2, the last one, I would describe as an incremental opportunity. That is how we view it. I do not think the pipeline thesis for Incyte is trading on any one opportunity. I do believe that the pipeline we have right now has the potential to support our target growth rate post-2029. Is it enough? If we execute, I think the answer is yes. As you know, these are probabilistic opportunities, and attrition is a fact of life. Our job is to sort of keep this product line moving. We cannot declare victory yet.
Bill Meury: Over the next 12 to 18 months, you will receive updates on many of these programs, at least phase I updates, as we are running the phase III programs. You will receive updates on how we are expanding each program, the initiation of studies. Pablo talked a great deal about our GI oncology program at ESMO. We will provide you and everyone else with visibility into how we are advancing this pipeline so that there is more clarity on the growth potential of Incyte post-2029 on top of the core business. Thanks for the question, Evan.
Operator: Thank you. Our next question today is coming from Andrew Berens from Leerink Partners. Your line is now live.
Andrew Berens: Well, congrats on all the progress. It was great seeing you guys in Madrid. I do not know about you, but I am practicing my Spanish as an insurance policy against next week. Maybe a bit of color on the decision to deprioritize PROC for the CDK2. We noticed it was not a focus at your event on Monday, but we thought it really looked pretty good relative to some of the other oral programs in the same setting. Was it the trial was not enrolling well or something else that you saw? If I could just sneak in a little more on the MF program and the endpoints. I know you did give some color, but what is your sense of the regulatory buy-in for the potential to get a biomarker-driven endpoint eventually in the frontline setting? Thanks.
Bill Meury: Thanks, Andy. Pablo, take the question.
Pablo Cagnoni: Thank you, Andy. Good to see you earlier this week. We like INCB123667, the data in combination with Bev, as you saw and you pointed out, we thought looks pretty strong. 48% response rate in the late-line population. But the data that has continued to accumulate in platinum-resistant ovarian cancer with ADCs convinces that, number one, the study would be very challenging to accrue, and number two, the commercial prospects in that indication were limited. We continue to believe that there will be a role for an oral option for these patients, particularly in molecular targeted population. The maintenance study continues, and we do have a large data set in platinum-resistant disease that we will discuss with FDA.
Pablo Cagnoni: I think the probability of accelerated approval on that basis is very, very small because there is very clear evidence that, A, randomized trials can be run in that disease, and B, the efficacy has been superior to what we have shown with INCB123667, to be very frank. That is the basis for discontinuing that one study. On MF, look, a surrogate biomarker endpoint would be ideal. I do not think we are there, and I do not think we are there mainly because I am not sure what that endpoint would be today. We talked about VAF, and VAF is an interesting way to monitor, to some extent, the progress, but it is far from an ideal endpoint because, as you know, VAF in peripheral blood measures a lot of cells that are not relevant to the treatment effect of INCA033989 or any CALR antibody.
Pablo Cagnoni: What we do believe, however, is that it is time in MF to consider alternative endpoints to SVR35 and TSS50, and that is incorporating different measures of normal hematopoiesis, hemoglobin platelets, as well as blasts in peripheral blood, as well as spleen volume, quite honestly. That is a better way to characterize the treatment response to a drug like INCA033989, and those factors are better predictors of long-term survival in MF patients than simply using SVR35 and TSS50. That is why we want to continue that conversation with FDA.
Operator: Thank you. Our next question is coming from Salveen Richter from Goldman Sachs. Your line is now live.
Salveen Richter: Thank you. Good morning. Could you speak to what you will share with regard to preclinical data for your next-generation antibody at ASH, and how we should think about the profile of this asset versus INCA033989 and competitors, and then also how you would position your bispecific given the similar pathway? Thank you.
Bill Meury: Thanks for the question, Salveen. Go ahead, Pablo.
Pablo Cagnoni: Thank you, Salveen. Good to see you early this week. Let me make two points that I think are really important. Based on the preclinical data that has been disclosed by our competitors and the preclinical data that we have on hand, I think our next-generation CALR antibody is the best-in-class CALR antibody out there. The reason for that is we have optimized every property that we thought we had to optimize on INCA033989. This novel medicine is 70 times more potent against non-type 1 mutations, and it has a much longer half-life. You will see the details at ASH, but it will allow at least for monthly subq injection, maybe even less frequent, depending on what we see in patients. It will be subq, obviously, from day one.
Pablo Cagnoni: We expect that the dose that is going to be required is going to fit in a pen, so we really believe that this will address some of the limitations that INCA033989 has. As excited as we are at getting INCA033989 approved for patients with ET and MF, we think that this next gen will be very helpful in the longer run. I know you did not ask about that one, but we are also going to present data on the next gen V617F inhibitor. We think this drug addresses a lot of the limitations that we had with our previous entry in this space, so we look forward to sharing that data with you. Regarding the bispecific, as we have discussed a couple times over the past year, I need to see more data to understand exactly where the bispecific will be positioned in patients with MF.
Pablo Cagnoni: Efficacy and safety will determine what kind of a role this medicine potentially can play in this disease. I think possibly in patients with more accelerated MF that need a more rapid tumor reduction. If the data with INCA033989 continues to look better and better, one could argue that the space for the bispecific could become a little bit more limited.
Bill Meury: Thanks for the question, Sal.
Operator: Thank you. Next question today is coming from Jay Olson from Oppenheimer. Your line is now live.
Jay Olson: Oh, hey. Congrats on all the progress, and thanks for taking the question. For INCB161734, what are your plans for combination strategies in PDAC and CRC, especially with the positive news from petosemtamab? How are you thinking about moving INCB161734 into earlier lines in combination with petosemtamab? Thank you.
Pablo Cagnoni: Thank you, Jay. The combination that we announced is, in fact, to study INCB161734 in combination with petosemtamab and FOLFOX in patients with colorectal cancer. Obviously, you need to do a phase I study first, but the idea is to move to frontline therapy as quickly as possible. We reviewed the landscape of novel EGFR inhibitors. We decided, and I think the data that was released yesterday confirms that that was the right choice. We believe that petosemtamab is the best next-generation EGFR inhibitor, and that's why we put that collaboration in place.
Operator: Thank you. Our next question is coming from Ash Verma from UBS. Your line is now live.
Paritosh Gangaramani: Hi, this is Prakash on for Ash. Thank you for taking our question. I have one on the G12D program. Can you talk about your enrollment strategy for phase III in fourth line PDAC? It seems like some of the other competitors are flagging the need to enroll from ex-US sites, given increased new agents use in the front line. What percent of patients do you intend to enroll from US versus ex-US, and do you have agreement with the FDA on the enrollment mix? Thank you.
Pablo Cagnoni: Thanks, Ash. It is an important question, and we looked at it in a couple different ways. First of all, in terms of enrollment itself, it is going extremely well. We have no concerns at this point. We are not going to yet provide an exact timing for completion of enrollment, but based on our initial projections, it is on track, if not a little bit ahead of schedule. That is going very well. No concerns there. Now, the question, it is important to answer what happens if a lot of daraxonrasib gets used in patients that progress, and whether that treatment effect of daraxonrasib post-progression is different in the two arms of the study.
Pablo Cagnoni: We have done extensive statistical modeling. We are going to track that in the study, and we can potentially shift to countries where daraxonrasib is not approved if we see that that is happening in a lot of patients. I would say at this point, we already have more than enough patients enrolled in the US to be sufficient for an FDA submission. I have no concerns about not having enough US patients. What we will monitor, though, is post-progression daraxonrasib use to make sure that that does not impact the post-progression of PFS2 in a way in one arm more than the other. If there is a need for intervention, we will shift to countries where daraxonrasib is not approved.
Operator: Thank you. Our next question today is coming from Gavin Clark-Gartner from Evercore ISI. Your line is now live.
Gavin Clark-Gartner: Hey, guys. I just wanted to ask on the second line MF mutCALR study, are there any limitations on the percent of patients that can receive a JAK inhibitor in the best available therapy arm, and what are your expectations for what that number will be? Just to clarify on the primary endpoint, that is type 1 only. When you do hierarchical testing, do you go look in the ITT population, or do you specifically then look in the non-type 1 population? Thank you.
Pablo Cagnoni: Thank you, Gavin. There is no limitation in the percentage of patients that can receive a JAK inhibitor. As you know, if you look at the data, one has to be careful looking at studies that allow versus did not allow washout after prior line, first line therapy, the prior line therapy prior to entering a second line study. The ASCO 35 is as low as 8% in patients depending on whether they did or did not have washout. Our data that we presented at ASH, which is close to 40% in G835 and about 40%, 45% TSS50, is in patients with no washout. That obviously are expected to do worse. So that is important to remember. We feel very confident that all the approved therapies in second line are substantially inferior to what we have seen with 989 so far.
Pablo Cagnoni: The only comment I am going to make about the statistical testing is that the primary endpoint is in type 1 patients. We thought that was the right way to run this study to ensure success and to get this medicine approved for these patients, which are about two-thirds, if not a little bit higher, of the patients with KRAS mutations. We will collect the data in non-type 1 patients. Obviously, we will have it available, but the primary analysis of the study is in type 1 disease.
Bill Meury: Thanks, Gavin.
Operator: Thank you. Next question today is coming from John Newman from Canaccord Genuity. Your line is now live.
John Newman: Thanks for taking my question, and congrats on all the progress. You previously stated that, at least at this point in time, you probably won't pursue combinations with your G12D and a pan-RAS inhibitor. I'm just wondering, outside of the work that you're doing with your G12D, have you considered at all licensing G12V, as in VICTOR? It seems like an area where there are a few competitors with maybe not quite as many yet as G12D. Thanks.
Pablo Cagnoni: Great question. On the pan-RAS, we don't rule out doing a combination with the pan-RAS. We continue to scan the landscape to see if there's an option that is suitable for us. We're not ruling it out. Let me be very clear. We've done preclinical work, and we think there's value in the combination. In terms of G12V, we are interested in expanding our KRAS franchise. Also, we would not rule out, at some point, addressing patients with G12V mutations.
Operator: Thank you. Next question today is coming from Michael Schmidt from Guggenheim Securities. Your line is now live.
Michael Schmidt: Hey, thanks for taking my questions. I just had another follow-up on INCA033989. Thinking about the possible registration strategy in frontline MF patients, will the focus there also primarily be on type 1 patients with a 36-month endpoint, or would that include a broader opportunity? How will you position the next-gen CALR antibody relative to INCA033989 in that context? Thanks.
Pablo Cagnoni: Thank you, Michael. On the first part, we will see where the data takes us. Right now, we continue to develop INCA033989 to try to address the needs of all patients with CALR mutations. We made a decision in second line, as we just discussed. In frontline, the data will guide that decision. Let's talk after ASH, and then once we both have the data in front of us, we can see what that looks like. Remember, a potential path in first line, as I discussed a few minutes ago, is a three-arm study with JAKAFI in combination with INCA033989. In that case, that calculation might change a little bit. Let's keep that in mind as we review the data at ASH. On the next-gen, right now, the positioning is get into agreement as fast as possible, get into pivotal trials as fast as possible.
Pablo Cagnoni: We think that if we reach an agreement with FDA on the starting dose, our current understanding of this target will allow us to have a very short dose escalation period. If you remember, INCA033989, we had to start at 50 to 70 milligrams, and we had to escalate all the way to 2,500. That took a long time. It is not going to be the case with the next-generation program. We think we can get to the recommended phase II dose much faster, and our goal is to start pivotal trials with next-gen in 2028.
Bill Meury: Thanks, Michael.
Operator: Thank you. Next question is coming from Mr. Kapoor from H.C. Wainwright. Your line is now live.
[Analyst] (H.C. Wainwright): Hi, this is Amit on for Mitchell. Thank you for taking our question. I guess looking at INCB161734 and DAWN-302, what is the push for INCB161734 and cetuximab combo replacing second-line chemo? Will DAWN-302 second-line cohort be large enough to establish benefit independently of third-line results? Thank you.
Pablo Cagnoni: Let me see if I understand the question. You are asking about the design of the 302, the colorectal trial?
[Analyst] (H.C. Wainwright): Yeah, I was just wondering if you will be able to distinguish the benefit in second-line versus third-line patients.
Pablo Cagnoni: Yeah, it is a good question. In general, I expect, let me put it this way, I expect that the study will enroll predominantly third-line patients, because the control arm will allow LONSURF, which was the winning arm of the SUNLIGHT study, as well as regorafenib or fruquintinib. When you put those options in the control arm, you are more likely to end up with a third-line shifted population. Whether the data at the end are sufficient for a broad label, time will tell. It depends on the population we enroll, depending on the results of the study. Based on the control arms, that is what we expect. I wanted to use this question to address one point also, which I think is very important about the DAWN-302 study, just to make sure we are all clear on what the expectations are of the control arm.
Pablo Cagnoni: The SUNLIGHT study had a PFS of about 5.6 months, and that was cited by several as the benchmark. Importantly, in the SUNLIGHT study, Bev-exposed patients had a PFS of 4.5 months, which is substantially lower. DAWN-302 will be in Bev-exposed patients. So we expect the control arm overall will underperform the overall SUNLIGHT study. The other point that is important is we run a real-world analysis with Tempus showing that the SUNLIGHT study population and patients with KRAS mutations do worse on LONSURF Bev than patients that are wild type. Based on that, we think that reassured us that the probability of success of DAWN-302 is quite high considering the expectations for the control arm.
Bill Meury: Thanks for the question.
Operator: Thank you. Our next question today is coming from Derek Archila from Wells Fargo. Your line is now live.
Jacob Goell: Morning, and thanks for taking our question. This is Jacob on for Derek. Can you just provide us some of your thoughts on label scenarios for Povo and HS, and what analogs would you point to there for the launch?
Bill Meury: I think there are two basic label scenarios. We studied both a pre and post-biologic population, and so that would be clearly the preferred label scenario. The other is just simply a post-biologic population, and there are JAK inhibitors, for example, in AD that have an indication, different dataset, different indication, post-biologic. I think that they are both workable paths. I think the biggest opportunity for povorcitinib is it can be used at both inflection points. A moderate to severe patient diagnosed with HS who has been only receiving antibiotics and steroids, which are imperfect solutions, that is a large pool of patients. And then after a biologic for patients who have active disease, are not achieving consistent pain relief, or a loss of response, which has been well-documented, especially with TNF-alpha.
Bill Meury: We are in discussions right now with the FDA, and as part of planning for this launch, we plan for both plausible outcomes. We have not seen the label. We expect that the data will support a broad label, but I am laying out the range of possibilities. And I will let Mohamed comment on how to think about analogs.
Mohamed Issa: Yeah, I think, Bill, really not much to add. I mean, the analogs that we have seen so far will really dictate based on the data. And we believe we have a broad label that supports a broad indication, and different analogs, I think, in the marketplace today suggest the same, based on the datasets that were submitted in their pivotal program. So, we will wait and see, but like Bill said, I think the most important point is that both scenarios are very workable, and we are very optimistic about the opportunity.
Bill Meury: Thanks for the question.
Operator: Thank you. Next question is coming from Eric Schmidt from Cantor Fitzgerald. Your line is now live.
Imogen Mansfield: Great. Hi, good morning, everyone. This is Imogen on for Erik. There is a trial in ClinicalTrials.gov for an antibody in MPNs, INCA036978, that started enrolling earlier this year as monotherapy and in combo with standard disease director therapy. Could you just tell us a little bit about the program, and is it targeting CALR or something else? One question on Povo. In the mild to moderate HS population, we have heard very encouraging feedback from KOLs here if this ends up being a positive set of phase III studies. Where do you think that peak sales could get to for OPZELURA? Sorry, not the Povo, but OPZELURA in HS.
Bill Meury: Great. I will turn over the first part of your question, Imogen, to Pablo.
Pablo Cagnoni: Thank you for the question. At this point, we are not going to disclose the target. All I would say is that that antibody is a mutation-agnostic antibody for patients with MPN, so it can potentially target CALR as well as V617F, as well as MPL mutations. We will disclose the actual target at the right time, Imogen. I am sure you understand.
Bill Meury: Yeah. Imogen, I think your question was about OPZELURA and HS, and I think the backdrop here is really important. There is no FDA-approved oral anti-inflammatory, and there is no FDA-approved topical. The study we did was in mild to moderate HS, and so there is some overlap with Povo, but not a lot. Our math is there is a couple hundred thousand patients, roughly, maybe 300,000 in that mild to moderate segment.
Bill Meury: If you picked up 10% to 15% of that or more, it could be a 5% to 10% lift on OPZELURA. We have to wait for the data in Q4, but it could produce $50 million, $100 million in incremental sales, I think is not a heroic assumption. We will wait and see what the data looks like, and it will be a part of the growth story. It is not necessarily built into our models right now. We are just waiting for the data. Thanks for the question.
Operator: Thank you. Our final question today is coming from Tara Bancroft from TD Cowen. Your line is now live.
Tara Bancroft: Hi, good morning. Thanks for taking my question. I was hoping maybe you could tell us the timeline to the clinic for 954, the V617F, and what we should focus on in the preclinical data that is most indicative of potentially improved clinical profile versus 058. Thanks so much.
Pablo Cagnoni: Certainly. The entry in the clinic for next-gen V617F 954 will be early 2027. We never disclose the exact date, but it is going to be in the early part of 2027. The main things that we wanted to address here, compared with our previous entry, was improving the selectivity, and important in this case to always remind ourselves that what matters is selectivity between wild-type and V617F mutated cells. This is not a JAK1, JAK2 selectivity question. It is wild-type versus mutated cells. We have run extensive preclinical studies that you will see at ASH, and we think the selectivity of this molecule is substantially better than our previous V617F inhibitor. So we feel much better about that.
Pablo Cagnoni: The second is we worked the formulation ahead of time. If you remember, we had to do a lot of work on the formulation of I4. Now the formulation that we are going to enter the clinic, we feel much better about. So, both the formulation side and the selectivity of the molecule, and the margin in preclinical tox studies are much better than 054, so we are really excited about moving this program forward.
Bill Meury: Thanks for the question, Tara.
Operator: Thank you. We have reached the end of our question-and-answer session. Ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.
