Incyte Q3 2026 Earnings Call Transcript
Incyte (NASDAQ:INCY) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Incyte reported third-quarter 2026 total revenue of $1.56 billion, up 14% year-over-year, with net sales at $1.32 billion. Growth was driven by strong performances from Opzelura and the hematology and oncology franchise.
The company is focusing on scaling its core business beyond Jakafi and advancing its late-stage pipeline, which includes several compounds in Phase 3 development. Regulatory milestones included the approval and launch of Opzelura in the EU and ongoing NDA reviews for Monjuvi and povorcitinib.
Incyte raised its full-year sales guidance for Opzelura and its hematology and oncology segments due to strong performance, while maintaining its guidance for Jakafi. The company is confident in its pipeline’s potential to support growth post-2029.
Full Transcript
OPERATOR
Greetings and welcome to the Incyte third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing Star 1 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’s now my pleasure to turn the call over to Alexis Smith, Vice President and Head of Investor Relations. Please go ahead, Alexis.
Alexis Smith (Vice President & Head of Investor Relations)
Thank you. Good morning and welcome to Incyte’s third quarter 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’m joined by Bill, Pablo and Suki who will deliver our prepared remarks. Stephen, 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’ll now hand the call over to Bill.
Bill Meury (Chief Executive Officer)
Thanks Alexis and good morning everyone. As we look at the first nine months of the year, we’ve 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 that 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 3 development including a mutant CALR antibody for MPNs, a protein S modulator for von Willebrand’s disease, a G12D inhibitor for pancreatic cancer, a TGF beta receptor 2 by PD-1 bispecific antibody in colorectal cancer, a CDK2 inhibitor for ovarian cancer, and a JAK inhibitor currently under regulatory review in HS. We have increasing confidence in the biology behind these programs and believe we’ve taken meaningful risks out of them as they’ve advanced.
That does not mean the risk is zero, but increasingly the risk we are managing is execution risk. Running high quality Phase 3 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’ll 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. Second, we achieved important regulatory milestones including the approval and launch of Opzelura for moderate AD in the EU in the third quarter. 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, PD-1 and 989. I’ll 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. Jakafi franchise net sales in the third quarter 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 the third quarter 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. Now to our core business excluding 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, Nick, Timbo, Zioniz and Manjuvi. The growth across brands and geographies strengthens the outlook for the company as we see this business growing to 3 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 U.S. pricing dynamics resulting from the agreement with CMS related to the Opzelura line extension. On a pro forma basis, which adjusts 3Q25 for the favorable impact of the Medicaid line extension settlement, total Opzelura net sales increased 21% over the prior year period. Now I’ll break down the U.S. and international performance.
U.S. net sales in the third quarter were $208 million, up 45% year over year and.
Pablo Cagnoni (President Incyte and Global Head of R&D)
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’re also evaluating a composite endpoint as a key secondary endpoint. The composite endpoint is designed to capture the benefits we have on spleen and symptoms, including improvements in hemoglobin, platelet counts and blasts in peripheral blood.
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 known type 1 mutations to further characterize the potential of 989 across the broader CALR-mutated population.
Looking ahead, we expect to show 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 early 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 20. 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 first quarter of next year. In chronic graft-versus-host disease, we are evaluating axatilimab in earlier-line therapy. This includes a Phase 2 study of axatilimab in combination with ruxolitinib, with results expected at a medical meeting early next year, and a Phase 3 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 Latarsibar. This novel protein S modulator has the potential to be a transformative non-factor replacement treatment for von Willebrand disease. The pivotal Phase 3 study is underway with top-line data expected in early 2029. We also plan to share additional data from the Phase 1 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, a TGF beta receptor 2 by PD-1 bispecific antibody and our CDK2 inhibitor, with expansion efforts planned for next year.
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 1 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 these established regimens.
Objective response rates, confirmed and pending, were 58% for 734 plus gemcitabine and nab-paclitaxel and 81% for 734 plus modified FOLFIRINOX. We also see promising signals of durability with six-month PFS of 80 and 90%, respectively. The data—response, early signs of durability and consistent tolerability across both chemotherapy backbones. Reinforce our confidence in the ongoing Phase 3 DAWN303 study, first-line PDAC, and support moving 734 into early stage of disease with a Phase 3 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 3 DAWN302 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. Beyond these registrational programs, we recently announced clinical collaborations enabling evaluation of 734 with novel combinations. These include pedacentamab, an EGFR bilgr5 bispecific antibody in first-line colorectal cancer; navlimetostat, a PRMT5 inhibitor in PDAC; and SMP1521, a PARP1 inhibitor in solid tumors. These Phase 1 studies will begin next year.
Turning to 890, a TGF-beta receptor 2/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 1 data evaluating 890 in combination with standard-of-care chemotherapy in first-line MSS CRC. 890 in combination with FOLFOX and bevacizumab showed encouraging antitumor activity with an objective response rate of 71%.
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 six-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 3 Nexsera 303 study in first-line metastatic MSS colorectal cancer, which is well underway with top-line data expected in 2029.
We’re also moving 890 to 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. 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 more meaningful treatment option for patients and physicians. As a result, we are deprioritizing development efforts in platinum-resistant ovarian cancer. The open-label Phase 2 Maestro-1 trial remains ongoing.
However, we have made the decision to stop additional site activation and discontinue future enrollment in the randomized Phase 3 Maestro-2 study. This was not an easy decision and we’re grateful to the investigators and patients who participated in this study. Stepping back, in a short period, we have moved from establishing proof of concept to advancing multiple registrational programs in oncology. We have done so by following the data, and we will continue to be deliberate about where we invest with that approach. We believe we’re well positioned to build multiple oncology franchises over time.
Turn 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 [indication] 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. We also expect several important Phase 3 readouts by year-end, including top-line results from ruxolitinib cream in mild to moderate HS and povorcitinib in prurigo nodularis. Together these programs position povorcitinib for potential approval in multiple indications including HS, PN, and vitiligo.
Building on the foundation Opzelura has established in dermatology, 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’re 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 Suki for a financial update on the quarter.
Suki
Thank you, Pablo, and good morning. I’ll 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 $1.25 billion for the upfront. When we exclude the Vega-related IPR&D expense, total operating expenses for the quarter grew 12%. 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 prelaunch activities for povorcitinib. And 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, we are maintaining our full-year guidance for the Jakafi franchise of $3,220,000,000 to $3,270,000,000. 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 $1,100,000,000 to $1,120,000,000, reflecting continued growth in both the US and international markets. For Hematology and Oncology, we are raising full-year guidance to $890 million to $910 million, reflecting the performance across key growth brands. As a result, we are increasing total net sales guidance to $5,210,000,000 to $5,300,000,000. 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 the fourth quarter, we expect total R&D and SG&A expenses to be towards the middle of the full-year range, reflecting investments in our late-stage development pipeline and precommercialization 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’re now conducting a question and answer session. If you’d like to be placed into the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you’d like to remove your question from the queue. As a reminder, we ask you please ask one question and return to the queue. Our first question is coming from Tazina Mudd from Bank of America. Your line is now live.
Tazina Mudd (Analyst at Bank of America)
Hi guys, good morning. Thanks for taking my question. So I just wanted to ask you, what are the key items we should be focusing on for the update for 989 MKLR in the frontline MF study coming up this quarter? Thanks.
Bill Meury (Chief Executive Officer)
Thanks, Taseen. Pablo will take the question.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Good morning, Taseen, and thank you for the question. So at ASH we’re going to present, as promised, an update on the first-line data. Now, 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 on SVR35 and TSS50, as well as the anemia improvement that we’ve come accustomed to see in patients with 999. So to complement that, or to expand on that, at ASH we’re 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. Those are split between single agent and combination with ruxolitinib, about two-thirds/one-third approximately, and importantly we have quite a bit of follow-up in those patients at this point. In fact, one of the things that I think 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 is about four months later than the data in the abstract. So 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’s the truly relevant data. So I think it’s a pretty comprehensive update.
I think it will give a clear idea of the role of 99 potentially for frontline MF. And we look forward to sharing the data with you. Thanks for the question, Suzine.
OPERATOR
Thank you. Our next question today is coming from Edsa Darut from Barclays. Line is now live.
Gustavo (Analyst at Barclays)
Good morning, this is Gustavo. Thanks for taking our question. My question is on the second line, Ms. Digital for 989. How will prior JAK inhibitor treatment be defined? Would the patients need to be resistant, refractory, or intolerant? And is there a minimum duration of treatment or dose for those? Thank you.
Bill Meury (Chief Executive Officer)
Go ahead, Pablo.
Pablo Cagnoni (President Incyte and Global Head of R&D)
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 a language in the protocol where 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 the second-line study at all. Thank you for the question.
OPERATOR
Our next question today is coming from Jessica from J.P. Morgan. Your line is now live.
Sylvia (Analyst at J.P. Morgan)
Hi, this is Sylvia on for Jessica. Thank you for taking our question. Can you elaborate on the strength you are seeing in Opzelura and are you able to quantify the gross-to-net you saw this quarter and how that differed from third quarter ’25? Thank you.
Bill Meury (Chief Executive Officer)
Yeah, it’s a good question. I’ll make a few comments and then Pablo—I mean, Mohamed—can expand on them. You know, 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. And if you look at the results this quarter, you focus on two key metrics: underlying prescription demand and new patient starts. And 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. And so that is a moat around the business. And our job right now is really, 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. And 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 (Executive Vice President, Head of U.S Oncology)
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. And on top of that, that 25% was driven by a 24% overall demand growth year over year. So 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. And like Bill mentioned, new patient volume, which is really the best measure of competitiveness, grew 2x market when you think about AD and vitiligo. So 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 (Chief Executive Officer)
Sylvia, just 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. And when we look out ’27 and beyond, think about price as a maintenance strategy. There’s a cost to maintaining coverage, but we don’t 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 Saleem Syed from Mizuho. Your line is now live.
Eric (Analyst at Mizuho)
Hi, this is Eric on for Saleem. Congrats on the quarter and thanks for taking our question. On axatilimab and GVHD, it looks like the first-line axatilimab plus rux readout got pushed out from 4Q26 to 1Q27. Just curious about the puts and takes on that and how you think about overall timeline on that at this point, if that’s different.
Bill Meury (Chief Executive Officer)
Thanks for the question, Eric. Todd will take it.
Eric Todd
So the reason for that is simply to present the comprehensive data set at the most relevant meeting, which is in the first quarter 2027. The data wasn’t ready for submission to the meeting. We don’t 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. So we want to present that at a scientific meeting and the most appropriate one is in the first quarter 2027.
That’s the only reason for shifting the timeline a little bit. Thanks for the question.
Eric (Analyst at Mizuho)
Thank you.
OPERATOR
Our next question today is coming from Brian Abrams from RBC Capital Markets.
Brian Abrams (Analyst at RBC Capital Markets)
Hey there. Good morning. Thanks for taking our question and congrats on the continued progress. Maybe one on 989. I guess I’m curious, what monotherapy or combo activity do you think you would need to see and KOLs would want to see to warrant development of 989 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 (Chief Executive Officer)
Great. Go ahead, Pablo.
Pablo Cagnoni (President Incyte and Global Head of R&D)
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. So 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 989 in untreated, rux-untreated patients with MF is substantial. You all remember the SVR35 and TSS50 data that we showed and 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, 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, with a Type C meeting with the Surrogate Endpoints team, to discuss and 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 989 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 improvement in anemia, reduction in fibrosis, reduction of mutated megakaryocytes in the bone marrow. 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 a decision on the frontline study. Going directly to your question, we do know that Jakafi produces rapid improvement in symptoms and an SVR35 in 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 989 versus 989 alone.
That’s a perfectly legitimate study. Patients and physicians will have two options to treat their MF, either single agent 989 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 (Chief Executive Officer)
Thanks for the question, Brian.
Brian Abrams (Analyst at RBC Capital Markets)
Thank you.
OPERATOR
Next question today is coming from Evan Segerman from BMO Capital Markets. Your line is now live.
Evan Segerman (Analyst at BMO Capital Markets)
Hi guys. Thank you so much for taking my question. Great to see you earlier this week. So just taking a step back, the pipeline progress that Incyte has accomplished over the past year has been impressive. Can you just level set, kind of remind us what you’ve accomplished over the past year and then looking forward, aside from mklr at ASH, what are some things that we should be focused on over the next year so that when we get to the 3Q call we can discuss those as well.
Thank you all.
Bill Meury (Chief Executive Officer)
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 moonshots 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 3. They’re not all equal when you think about them on a sort of risk-adjusted value basis. Povicitinib 989 12D and letarsabar are comparatively higher PTRS projects. TGF beta by PD1, the fifth asset is different, significant potential value but more biology risk. 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’s how we view it. I don’t think the pipeline thesis for Incyte is trading on any one opportunity and I do believe that the pipeline we have right now has the potential to support our target growth rate post 2029. Now is it enough if we execute? I think the answer is yes. But as you know, these are probabilistic opportunities and attrition is a fact of life and our job is to sort of keep this product line moving. We can’t declare victory yet.
Over the next 12 to 18 months you will receive updates on many of these programs, at least Phase 1 updates as we’re running the Phase 3 programs, and you’ll receive updates on how we are expanding each program, the initiation of studies, and Pablo talked a great deal about our G Oncology program at ESMO and we’ll provide you and everyone else with visibility into how we are advancing this pipeline so that there’s more clarity on the growth potential of Incyte post ’29 on top of the core business.
Thanks for the question, Evan.
Evan Segerman (Analyst at BMO Capital Markets)
Thank you.
OPERATOR
Our next question today is coming from Andrew Behrens from Leerink Partners. Your line is now live.
Andrew Behrens (Analyst at Leerink Partners)
Well, congrats on all the progress. It was great seeing you guys in Madrid. I don’t know about you but I’m practicing my Spanish as an insurance policy against next week. Maybe a bit of color on the decision to deprioritize priority for the CDK2. We noticed it wasn’t 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 wasn’t enrolling well or something else that you saw?
And then 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’s your sense of the regulatory buy-in for the potential to get a biomarker-driven endpoint eventually in the frontline setting? Thanks.
Bill Meury (Chief Executive Officer)
Thanks, Andy. Pablo, take the question.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thank you Andy, good to see you earlier this week. So it’s the competitive landscape mainly. So look, we like 667. The data, we believe, as you saw and you pointed out, we thought it looks pretty strong, you know, 48% response rate in the late-line population. But the data that has continued to accumulate in platinum-resistant ovarian cancer with ADCs convinces us that, number one, this study will be very challenging to accrue and number two, the commercial prospects in that indication were limited.
Now we continue to believe that there will be a role for an oral option for these patients, particularly molecular targeted population. The maintenance study continues and we do have a large data set in platinum-resistant disease that we’ll discuss with FDA. Now I think the probability of accelerated approval on that basis is very, very small because there’s very clear evidence that A) randomized trials can be run in that disease and B) the efficacy has been superior to what we’ve shown with 667, to be very frank.
So that’s the basis for discontinuing that one study. On MF, a surrogate biomarker input would be ideal. I don’t think we’re there and I don’t think we’re there mainly because I’m not sure what that endpoint would be today. You know, we talked about VAF and VAF is an interesting way to monitor to some extent the progress, but it’s 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 989 or any CALR antibody.
What we do believe, however, is that it’s 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 a treatment response to a drug like 989. And it’s also those factors are better predictors of long-term survival in MF patients than simply using SVR35 and TSS50.
And that’s 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 (Analyst at Goldman Sachs)
Thank you. Good morning. Could you speak to what you’ll 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 989 and competitors, and then also how you would position your bispecific given the similar pathways? Thank you.
Bill Meury (Chief Executive Officer)
Thanks for the question, Salveen. Go ahead, Pablo.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thank you, Salveen. Good to see you earlier this week. So, 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 of CALR antibody is the best-in-class CALR antibody out there. The reason for that is we’ve optimized every property that we thought we had to optimize on 999. This novel medicine is 70 times more potent against non–type 1 mutations and it has a much longer half-life.
You’ll 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. We expect that the dose that’s going to be required is going to fit in a pen. So we really believe that this will address some of the limitations that 99 has. And as the status bar is getting 99 approved for patients with ET and MF, we think that this next gen will be very helpful in the longer run.
Just—I know you didn’t ask about that one, but we’re also going to present data on the next gen V617F inhibitor. We think this drug addresses a lot of limitations that we had with our previous entry in this space. So we look forward to sharing the data with you. As we’ve discussed a couple of times over the past year, I need to see more data to understand exactly where the bispecific will be positioned in patients with MF. 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 more rapid tumor reduction. But if the data with 9A9 continues to look better and better, one could argue that the space for the bispecific could become a little bit more limited.
Bill Meury (Chief Executive Officer)
Thanks for the questions, Al.
Salveen Richter (Analyst at Goldman Sachs)
Thank you.
OPERATOR
Next question today is coming from Jay Olson from Oppenheimer. Your line is now live.
Jay Olson (Analyst at Oppenheimer)
Oh, hey, congrats on all the progress and thanks for taking the question. For 734, what are your plans for combination strategies in PDAC and CRC, especially with the positive news from pentosemtimab? How are you thinking about moving 734 into earlier lines in combination with pentosentamab? Thank you.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thank you, Jay. So the combination that we announced is in fact to study 734 in combination with pitaxantamab and FOLFOX in patients with colorectal cancer. Obviously you need to do a phase one 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 pedacentamab is the best next-generation EGFR inhibitor, and that’s why we put that collaboration in place.
OPERATOR
Thank you. Next question is from Ash Varma from UBS. Your line is now live.
Patos (Analyst at UBS)
Hi, this is Patos on for Ash. Thank you for taking our question. So I have one on the G12D program. Can you talk about your enrollment strategy for phase three in fourth-line PDAC? It seems like some of the other competitors are flagging the need to enroll from ex-U.S. sites given increased new agents use in the frontline. So what percent of patients do you intend to enroll from U.S. versus ex-U.S.? And do you have agreement with the FDA on the enrollment mix?
Thank you.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thanks, Ash. Just an important question and we looked at it in a couple different ways. First of all, in terms of enrollment itself, it’s going extremely well. So we have no concerns at this point. You know, we’re not going to yet provide an exact timing for completion of enrollment, but based on our initial projections, it’s on track, if not a little bit ahead of schedule. So that’s going very well. No concerns there. Now, the question—it’s important to answer. What happens if a lot of dioxan racib gets used in patients that progress and whether that treatment effect of dioxan racib post-progression is different in the two arms of the study. We’ve done extensive statistical modeling. We’re going to track that in the study and we can potentially shift to countries where dioxon Rasib is not approved if we see that that’s happening in a lot of patients. I would say at this point we already have more than enough patients enrolled in the U.S. to be sufficient for an FDA submission.
So I have no concerns about not having enough U.S. patients. What we will monitor though is post-progression Daraxin Rasiv use to make sure that that doesn’t impact the post-progression of PFS2 in a way in one arm more than the other. And if there is a need for intervention, we will shift to countries where dioxin Rasiv is not approved.
OPERATOR
Thank you. Next question today is coming from Gavin Clarkardner from Evercore ISI who is now live.
Gavin Clarkardner (Analyst at Evercore ISI)
Hey guys, I wanted to ask on the second-line MS MKALR 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? And just to clarify on the primary endpoint, so that’s 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?
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thank you, Gavin. No, there’s 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 to 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. So the SVR35 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% SVR35 and about 40–45% TSS50, is in patients with no washout that obviously are expected to do worse.
So that’s important to remember. So we feel very confident that all the approved therapies in second line are substantially inferior to what we’ve seen with 999 so far. The only comment I’m 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 CALR mutations. We will collect the data in non–type 1 patients. Obviously we’ll have it available, but the primary analysis of the study is in type 1 disease.
Bill Meury (Chief Executive Officer)
Thanks, Gavin.
OPERATOR
Thank you. Next question today is coming from John Newman from Canaccord Genuity. Your line is now live.
John Newman (Analyst at Canaccord Genuity)
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 PanRAS 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, but maybe not quite as many yet as G12D. Thanks.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Great question. On the PanRAS, we don’t rule out doing a combination with the PanRAS. We continue to scan the landscape to see if there’s an option that is suitable for us. So 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. So 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 (Analyst at Guggenheim Securities)
Hey, thanks for taking my questions. I just had another follow-up on 989. So thinking about the possible registration strategy in frontline MS patients, will the focus there also primarily be on type 1 patients with a 36-month endpoint, or would that include a broader opportunity? And how would you position the next gen CALR antibody relative to 989 in a company?
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thank you, Michael. On the first part we’ll see what the data takes us. Right now we continue to develop 999 to try to address the needs of all patients with CALR mutations. We made a decision second line as we just discussed, and frontline the data will guide that decision. So let’s talk after ASH and then we can—once we both have the data in front of us—we can see what that looks like. Now remember, remember a potential pattern for sign as discussed a few minutes ago is a three-armed study with Jakafi in combination with 989. In that case that calculation might change a little bit. So 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. 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, 999 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 2 dose much faster and our goal is to start pivotal trials with next gen in 2028.
Bill Meury (Chief Executive Officer)
Thanks Michael. Michael, thank you.
OPERATOR
Next question is coming from Mr. Kapoor from H.C. Wainwright. Your line is now live.
Amitan (Analyst at H.C. Wainwright)
Hi, this is Amitan from Mitchell. Thank you for taking a question. I guess looking at 734 and Dawn 302, what supports 734 and cetuximab combo replacing second-line chemo, and will Dawn 302 second-line cohort be large enough to establish benefit independently of third line or—thank you.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Let me see if I understand the question. So you’re asking about the design of the 302—of the colorectal trial?
Amitan (Analyst at H.C. Wainwright)
Yeah, I was just wondering if they will be able to distinguish the benefit in second line versus third line patients.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Yeah, it’s 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 + bev, which was the winning arm of the SUNLIGHT study, as well as regorafenib, fruquintinib. And when you put those options in the control arm, you’re more likely to end up with a third-line shifted population. So whether the data at the end are sufficient for a broad label, time will tell, depends on the population enrolled, depending on the results of the study.
So based on the control arms, that’s what we expect. Now I wanted to use this question to address one point which I think is very important about the Dawn 302 study, just to make sure we’re all clear on what the expectations are for the control arm. The SUNLIGHT study had a PFS about 5.6 months, and that was cited by several as best benchmark. Importantly, in the SUNLIGHT study, bev-exposed patients had a PFS of 4.5 months, which is substantially lower. And 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’s important is we ran 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. So 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 (Chief Executive Officer)
Thanks for the question.
OPERATOR
Thank you. Our next question today is coming from Derek Cartello from Wells Fargo. Your line is now live.
Jacob (Analyst at Wells Fargo Securities)
Morning, and thanks for taking our question. This is Jacob on for Derek.
Bill Meury (Chief Executive Officer)
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 data set, different indication—post-biologic. I think that they’re 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’s a large pool of patients. And then after a biologic for patients who have active disease, aren’t achieving consistent pain relief, or a loss of response, which has been well documented, especially with TNF-alpha. We’re in discussions right now with the FDA, and as part of planning for this launch, we plan for both plausible outcomes. We’ve not seen the label. We expect that the data will support a broad label. But I’m laying out the range of possibilities, and I’ll let Mohammad comment on how to think about analogs.
Mohamed Issa (Executive Vice President, Head of U.S Oncology)
Yeah, I think Bill, really not much to add. I mean, the analogs that we’ve seen so far will really dictate, you know, 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 data sets that were submitted in their pivotal program. So we’ll wait and see. But like Bill said, I think the most important point is that both scenarios are very workable and we’re very optimistic about that opportunity.
OPERATOR
Thanks for the question. Thank you. Next question is coming from Eric Schmidt from Cantor Fitzgerald. Your line is now live.
Imogen
Great. Hi, good morning, everyone. This is Imogen in for Eric. There’s a trial in ClinicalTrials.gov for an antibody in MPNs, IMCA 036978, that started enrolling earlier this year as monotherapy and in combo with standard disease-directed therapy. Could you just tell us a little bit about that program, and is it targeting CALR or something else? And then one question on povorcitinib in the mild to moderate HS population—we’ve heard very encouraging feedback from KOLs here. If this ends up being a positive set of phase 3 studies, where do you think that peak sales could get to for Opzelura? Sorry, not for povorcitinib, for Opzelura in HS.
Bill Meury (Chief Executive Officer)
Great. I’ll turn over the first part of your question, Imogen, to Pablo.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Thank you for the question. At this point, we’re 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 617F as well as MPL mutations. And we’ll disclose the actual target at the right time. Imogen, I’m sure you’ll understand.
Bill Meury (Chief Executive Officer)
Yeah, and Imogen, I think your question was about Opzelura and HS. And I think the backdrop here is really important. There’s no FDA-approved oral anti-inflammatory and there’s no FDA-approved topical. Now, the study we did was in mild to moderate HS and so there’s some overlap with povorcitinib, but not a lot. Our math is there’s a couple hundred thousand patients, roughly maybe 300,000, in that mild to moderate segment. And 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 the fourth quarter, but it could produce $50 to $100 million in incremental sales. I think is not a heroic assumption. We’ll wait and see what the data looks like and it’ll be a part of the growth story. It’s not necessarily built into our models. Right now we’re 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 (Analyst at TD Cowen)
Hi, good morning. Thanks for taking my question. So I was hoping maybe you could tell us the timeline to the clinic for 954, the V617, and what we should focus on in the preclinical data that’s most indicative of potentially improved clinical profile versus 958. Thanks so much.
Pablo Cagnoni (President Incyte and Global Head of R&D)
Certainly. So the enter in the clinic for next-gen V617F 954 will be early 2027. We never disclosed the exact date, but it’s 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’s wild type versus mutated cells. And we’ve run extensive preclinical studies that you will see at ASH, and we think the selectivity of this molecule is substantially better—better than our previous V617F inhibitor. So we feel much better about that.
The second is we worked the formulation ahead of time. If you remember, we had to do a lot of work in the formulation of Hi4. Now the formulation that we’re 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 O5.4. So we’re really excited about moving this program forward. Thanks for the question, Tara.
OPERATOR
Thank you. We’ve reached the end of our question and answer session. And, 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.
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