Incyte Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Welcome and Thanks: Bill Meury thanked Herve Hoppenot for his 10 years of leadership at Incyte. Meury shared his initial impressions of the company as a high-quality growth business with potential for new product flow, attractive markets, and strong capabilities.
• Strategic Priorities: Focus areas include taking care of the core products, accelerating product development (especially for mid- to late-stage pipeline assets like 989 and povorcitinib), optimizing capital allocation (with core business, late-stage pipeline, and business development as prioritized uses of capital), and careful business development to find derisked opportunities.
• Second Quarter Results: Strong financial performance with revenue growth driven by Jakafi, Opzelura, and Niktimvo. R&D progress was noted, including Phase I data on 989 and MF, expected Opzelura pediatric approval in September, and povorcitinib trials on track.
• R&D Updates: 989 Phase I data in essential thrombocytemia (ET) showed promising normalization of platelet counts and a strong safety profile. Ruxolitinib cream Phase III TRuE-AD4 met co-primary endpoints, indicating efficacy in moderate atopic dermatitis. Povorcitinib is advancing in 3 indications, and 2025 has over 18 key milestones including product launches and trial readouts.

Segment Performance

• Jakafi: Net product revenue for the second quarter was $764 million, representing an 8% year-over-year growth. Full year revenue guidance has been raised to a new range of $3 billion to $3.05 billion. Demand for Jakafi continued to grow across all indications, with channel inventory levels ending the quarter in a normal range.
• Opzelura: Total net product revenue for the second quarter was $164 million, a 35% year-over-year increase. U.S. net product revenue was $132 million, up 19% year-over-year, driven by increased patient demand and refills in atopic dermatitis and vitiligo. Ex U.S. net product revenues were $32 million, driven by continued uptake in France, Germany, Italy, Spain, and Canada.
• Niktimvo: Net product revenues in the second quarter were $36 million, driven by high patient need and strong commercial execution. The product has achieved roughly 82% account penetration with rapid and broad uptake in BMT centers across the U.S., with over 4,000 infusions administered to an estimated 700 patients.
• Other hematology/oncology products: Net product revenues for the second quarter were $131 million, a 66% year-over-year increase. This is primarily driven by the commercial launch of Niktimvo and increased contribution from Zynyz. Full year revenue guidance for other oncology products has been raised to a new range of $500 million to $520 million.

Guidance

• Jakafi: Full year revenue guidance has been raised to a new range of $3 billion to $3.05 billion due to strong demand across all indications.
• Other oncology products: Full year revenue guidance for other oncology products has been raised to a new range of $500 million to $520 million, driven by the Niktimvo launch, higher demand for Zynyz, and earlier-than-anticipated approval for Monjuvi in FL.
• COGS: The revised guidance range for COGS is now 8% to 9% of net product revenues, due to a contract dispute settlement with Novartis.
• R&D: Full year guidance for R&D expenses has been increased by $35 million to a new range of $1.965 billion to $1.995 billion, driven by ongoing investment in late-stage development assets and new development collaborations.

Risks

• R&D Uncertainties: Early-stage projects in the pipeline inherently involve uncertainties, and converting science to regulatory approvals and business results is challenging.
• Business Development Risks: Few positive asymmetrical opportunities exist, and there is a risk of mistakenly misallocating capital in business development efforts.
• Execution Risks: Need to carefully manage details during product launches, as new product launches (like Niktimvo) are unpredictable and can have choppy quarter-to-quarter performance, requiring close attention to new patient starts and utilization.

Question and Answer

Q: Thoughts on the relative importance of oncology, hematology, and immunology therapeutic areas in the strategic plan?

A: MPNs is the most important therapeutic area currently due to an asymmetrical advantage and opportunity to transform treatment. I&I has potential, and oncology programs need the right product, market, and defense to be prioritized.

Q: Read-through from the mCALR data in ET and expectations for MF?

A: Mechanistically, 989 would work similarly in MF as in ET. Safety and efficacy in ET data increase confidence. MF data release shifted to later in the year to include combination data with ruxolitinib, expecting improvement in MF endpoints like spleen size reduction and symptom improvement.

Q: Inventory impact for Niktimvo in the second quarter?

A: Inventory accounted for less than 5% of Q2 sales and is stabilizing in the expected range, with demand driving the performance.

Q: Granularity on G12D and bispecific data at ESMO and key metrics for success?

A: Expect substantial proof-of-concept data at ESMO, with key metrics including efficacy and safety to determine next steps for advancing the programs.

Q: Balance of capital allocation between pipeline investment, external opportunities, and near-term commercial performance?

A: Evaluate internally and externally based on facts, focusing on current strengths but considering strategic external opportunities that make sense financially, operationally, and strategically.

Q: Jakafi growth in PV and patient population uptake?

A: PV is the least penetrated indication for Jakafi, driving strong double-digit growth. The patient population includes those on earlier-line therapy experiencing symptoms, with benefits like thrombosis-free survival.

Q: 989 MF patient population and follow-up details?

A: The population is representative of typical MF patients, not overly restrictive in eligibility. Follow-up is variable but substantial due to long enrollment in the dose escalation study.

Q: Impact of the Inflation Reduction Act (IRA) on Jakafi in the second quarter?

A: IRA had no impact on Q2 performance, with demand driving growth as seen in the quarter.

Q: Potential areas for R&D portfolio optimization?

A: Focus on novel biology and applying novel platforms through collaborations, such as with Genesis and BioTheryx, to increase R&D productivity.

Q: Update on 989 ET data alongside MF data later this year?

A: Yes, updated ET data will be provided alongside MF data later in the year, with plans to start pivotal trials in ET early in 2026.