Greetings, ladies and gentlemen, and welcome to the Incyte Corporation’s Q3 2012 Earnings Conference Call. A brief question-and-answer session will follow the formal presentation. (Operator instructions.) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Pamela Murphy, Vice President of Investor Relations and Communications. Thank you; you may begin.

Good morning and welcome to Incyte’s Q3 2012 conference call. It’s been a challenging week for many and we appreciate your participation this morning. On the call today are Paul Friedman, Incyte’s President and Chief Executive Officer; Dave Hastings, Executive Vice President and Chief Financial Officer; Rich Levy, Executive Vice President and Chief Drug Development and Medical Officer; and the newest member of the Incyte team, Jim Daly, Executive Vice President and Chief Commercial Officer. Dave will begin with a review of our Q3 financial results and Paul will follow with additional comments regarding the ongoing launch of Jakafi and provide an update on our lead clinical program. Then Jim, who just started here last week, is going to share a few of his key reasons for joining Incyte. We’ll then open up the call for Q&A. Before beginning, we’d like to remind you that some of the statements made during the call today are forward-looking statements including statements regarding our expectations for the launch and commercialization of Jakafi, our product revenue guidance as well as our development plans. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially including those described in our Form 10(q) for the quarter ended June 30th, 2012, and from time to time on our other SEC documents. Dave?

Thanks, Pam, good morning everybody. I’ll start this morning with product revenue, which for the three months ended September 30th, 2012, was $43.7 million. As expected, this quarter we transitioned to the sell-in method from the sell-through method for revenue recognition. This means that we are now recognizing revenue when our product is received by the specialty pharmacy. As a result of this transition, included in net product revenue for the quarter is $9 million of previously deferred revenue from products shipped to our specialty pharmacy customers prior to June 30th, 2012. In our press release this morning, for comparative purposes we’ve provided a table showing Q3 as if we were still using the sell-through method which as you know is based on dispenses to patients. As that table shows, using the sell-through method our Q3 net product revenue would have been $34.5 million compared to $29.7 million in Q2. This 16% sequential growth in Jakafi dispensed to patients in Q3 supports our expectation of a steady and consistent launch. Our net product revenues for the nine months ended September 30, 2012, were $92.7 million and we have tightened our guidance for 2012 to a range of $130 million to $135 million, which represents the upper end of the guidance we provided last quarter. Our gross-to-net adjustment for product revenue recognized for Q3 was approximately $3.4 million or about 7.3%. As a reminder, this percentage will vary from quarter to quarter depending on our (inaudible) but it has been relatively consistent over the past few quarters. Our gross-to-net adjustment includes the following: fees to our specialty pharmacies, rebates to governmental payers, our share of the doughnut hole for Medicare Part B patients, copay assistance to eligible privately-insured patients, and any product returns. Our cost of goods sold was immaterial as our initial finished goods inventory was previously expensed as R&D prior to FDA approval. And in terms of operating expenses, both R&D and SG&A were within our expectations. In terms of cash we ended the quarter in a strong position with $244 million in cash and investments; that excludes $9.5 million in restricted cash held in escrow for interest payments through October, 2012, on our 4.75% convertible senior notes. To conclude, with the Jakafi launch going well and our expectation of future milestone royalty payments from our strategic partners, we are in a strong financial position. So with that, Paul, I’ll turn the call over to you.

Okay, thank you. As Dave said we are seeing steady and consistent growth as evidenced by the 16% sequential increase in underlying demand, and we’re building a strong foundation for long-term growth of Jakafi. We saw a consistent rate of new patients initiating Jakafi during Q2 and Q3, and here it’s important to note that new patients are generated from both new prescribers as well as from existing prescribers who continue to treat an increasing number of patients. And in that regard, approximately 30% of our target customers are now prescribed Jakafi. Overall, this means that we’re growing the base of prescriber experience with Jakafi and increasing the depth of experience which reflects physicians’ desire to identify more patients within their practices who are appropriate for Jakafi treatment. And we continue to be focused on improving persistency for patients who initiate treatment with Jakafi. As we discussed on the Q2 call, the primary reasons for patients either coming off therapy or being placed on a dose hold include thrombocytopenia, anemia, and death. The data suggests we are starting to see improvement in persistency which reflect two ongoing developments. First, we’re seeing a gradual shift to less-advanced patients taking Jakafi; and second, physicians are becoming better informed on how to manage Jakafi dose titration through increased experience and an expanded educational campaign on what to expect when initiating and maintaining use of Jakafi over time. Our goal is to reach every new patient and prescriber to ensure that they can achieve the best possible outcome with Jakafi. One important message is to reinforce proactive dose modifications by physicians consistent with Jakafi’s label since we’ve seen in our pharmacy data that physicians who modify dosing have better persistency rates than those that don’t. Educating physicians on the appropriate use of Jakafi is…

Thank you very much, Paul, and good morning everyone. I am really excited to be a part of this Incyte team. As you can imagine, I did my homework before joining, and based upon the learnings I’m convinced that Jakafi represents an extraordinary opportunity to make a meaningful difference for patients with Myelofibrosis. Not only is it first-in-class and the only FDA-approved treatment for a true unmet need, Jakafi simply provides remarkable clinical efficacy for patients. That said, there are always challenges in educating physicians and patients on the optimal initiation and maintenance of most truly novel therapies; and in my past experience with GSK and Amgen in launching such products in oncology and other specialty areas, when the efficacy benefits are strikingly perceptible to patients and physicians most other issues are highly, highly, highly manageable. In my short time at Incyte I have been greatly impressed by the level of talent and energy within the organization and the deep commitment to make a positive impact for patients. I look forward to working with my colleagues to continue to grow Jakafi and to develop and commercialize our future products. Back to Paul.

Thanks, Jim, and welcome to the team. We look forward to your contributions to our continued success. And with that, Operator, let’s open the call for Q&A please.

We will now be conducting a question-and-answer session. (Operator instructions.) Our first question comes from the line of Thomas Wei with Jefferies & Company. Please proceed with your question. Thomas Wei – Jefferies & Co.: Just wanted to see if you could provide a little bit more detail on things like the discontinuation rates of persistency that you’re talking about; and also compliance rates. On a quarter-over-quarter basis, how do those look? Are we starting to see improvements in either discontinuation or compliance?

Hi Thomas, this is Jim. Thanks for your question. Let me give you just a really brief preamble and then we’ll get right to the heart of your question. First, I just wanted to reinforce that we are fully committed to sharing with your our best understanding of what’s going on with the Jakafi launch. From our perspective, dispenses to patients or what we’re referring to as “sell-through,” that is our best and most reliable measure of true underlying demand, and that’s why we highlighted it so prominently in the press release, in the black box there. And that trend underpins our guidance of $130 million to $135 million for this year. Now with respect to secondary drivers of demand, such as persistency or what you refer to as compliance rates, or new patient starts, at this point we really don’t think it’s constructive to get into specific numbers at a very detailed level because we think it could be potentially misleading without providing the appropriate context and caveats to go with these numbers. For instance, as you talk about persistency, there really isn’t a single persistency number; it’s really a curve over time in which you have to follow various cohorts of patients since the month in which they were initiated on therapy. And we’re doing that very diligently, but as you can imagine at the end of six months or nine months, some of those cohorts become increasingly small. It’s also compounded by the fact that we have begun to see an increase in the number of patients who are restarting therapy, which is also a very important consideration in the dynamic. Having said that, we’re more than open to provide you with as much directional, qualitative feedback as we can on issues like persistency and new patient starts. So with respect to the persistency, in direct response to your question, Thomas, over the last two to three months we are seeing an improvement in the one-month persistency in patients. And as Paul indicated in the formal remarks, that’s not unexpected. We’re seeing a shift to a healthier patient population as measured by their baseline thrombocytopenia and/or anemia, and we’re also seeing physicians who are becoming much more facile with the dose titration. I hope that answers your question, Thomas. Thomas Wei – Jefferies & Co.: It does. Maybe just to follow up and then I’ll jump back in the queue: I guess I’m having a little bit of a hard time reconciling… If you had about the same number of new patient starts I would actually be calculating that the sales should have been higher than what you reported given the gross-to-net. And so the kind of missing factors here are the persistence and the compliance, but you’re saying that directionally those numbers improved on a quarter-over-quarter basis?

Let me qualify that a little bit more for you, Thomas. First, we’re very pleased with the rate of new patient adds. As Paul indicated again in the formal remarks, we’ve seen a consistent number of patients added month-on-month in Q3 relative to Q2. So that’s encouraging. Physicians are having very little difficulty identifying new patients who are appropriate for Jakafi treatment. Now, just assuming that persistency is a plug, which you’re going to back in to persistency – that is the single most important lever from our perspective going forward in order to increase overall demand. And we’re focused on that very diligently and we are seeing early indications of improvement, but again, I think it’s too early to try and quantify those trends. Thomas Wei – Jefferies & Co.: Okay, thank you.

Our next question comes from the line of Matthew Roden with UBS. Please proceed with your question. Matthew Roden – UBS: Great, thanks for taking my question. Congrats to Jim and to the company for finding each other – it seems like a good fit. So maybe, Jim, a question for you. We appreciate your take from an outsider’s perspective on the organization, but I’d be curious to understand what you like about the operations that you see and where you see opportunities to do things a little bit differently. How would you put your stamp on the organization?

Hi, Matt. First of all, Matt ,thanks very much for the question, and I fully agree with you that it really is a match made in heaven. And I’m thrilled to be here, both for the nature of the business opportunity but also because of the culture that I’ve found in the past couple weeks. In terms of what’s most important to me in terms of adding value to the organization, three things: Jakafi, Jakafi, Jakafi. We really feel a sense of urgency to make sure that this product is made available to the patients who will experience profound benefit. So I’m looking forward to working very closely with the sales and marketing organization, spending a lot of time out in the field with our representatives and with key customers to get a firsthand understanding of the market, a firsthand appreciation for the opportunities as well as the barriers; and making sure that we’re doing everything we can to optimize successful trial so that we get the right dose, the right patient with the right expectation, and thereby earn the right to come back to physicians and ask them to put more patients on the product. Matthew Roden – UBS: Okay, that’s helpful. And then just one follow-up if I may for Paul or Rich, I’m intrigued by the title in the ASH abstracts here on long-term follow up, because when we talk to community oncologists anecdotally what they say is that longer-term follow up on survival is important for expanding utilization into less severe patients. So maybe, guys, just to manage our expectations a little bit, do you think that the data forthcoming are going to be supportive of increased use or not supportive? How should we think about that?

Well, we would probably not have highlighted both COMFORT-I and COMFORT-II in that way if the data was in our opinion not going to be supportive of a survival benefit in both studies. But what would you say, Rich? We’re kind of limited because of the abstracts haven’t come out yet.

I think the abstracts are scheduled to come out on November 5th so it’s a short period of time before the level of clarity from the abstracts themselves and then maybe a little bit more details at the actual presentations. But we really look forward to that data because we totally agree that the more people are convinced that there is a survival advantage the more likely they will not only start less severe patients but the harder they will work to titrate the doses to keep patients on drug. Matthew Roden – UBS: Okay, thanks for your perspective.

Our next question comes from the line of Salveen Richter with Canaccord Genuity. Please proceed with your question. Salveen Richter – Canaccord Genuity: Thanks for taking my questions. Just in terms of the education to restart Jakafi, I’m just wondering if you can remind us the reasons for why patients drop off and then which of the patients who dropped off would be candidates to restart therapy? And then you also mentioned about 30% of your target physicians now prescribe Jakafi – I’m just trying to understand what’s playing out with the other 70% as to why they’re not prescribing yet. Thank you.

Okay, I’ll start and then pass the baton to Jim. The major reasons for a dose hold: either your platelet counts go too low or your red count goes lower than the physician or the patient is comfortable with. You can then have a dose hold which is what we did in the clinical studies until the counts rebound, and then you start again at a lower dose and you work up to an optimal dose. It’s a joint effort between the patient and the physician to titrate to a proper dose. If you work at it, the vast majority of patients can find a tolerable and very effective dose. And as we’ve gone out and provided further education to physicians, there is a greater and greater willingness – as evidenced by the numbers – to restart patients that they have stopped for cytopenia. And we’re anticipating that over time that number will continue to increase. Jim?

Paul, I think from a sales force perspective, our responsibility is to remind physicians that this is not a one-size-fits-all product and that the benefits of titrating patients to the optimal dose are certainly worth the upfront investment of time on the part of physicians and patients. So I think that’s a fairly straightforward exercise and we’re committed to implementing it extremely well. Now, to the second part of your question which is a third of our prescribing audience, of our target audience have prescribed Jakafi – what’s going on with the others? Our market research indicates that the single most common reason for not having prescribed the product is they simply haven’t encountered an appropriate patient yet. So we’re confident that with continued effort we’ll be able to increase their adoption of Jakafi. Intent to prescribe it is extremely high. When we talk to these physicians and ask them about their intent to prescribe going forward, that’s a very encouraging metric for us. Salveen Richter – Canaccord Genuity: Great. If I could just follow up on the patients that discontinued and you’re trying to get to restart, is there a pool of patients that you don’t see capable of restarting, I mean apart from patients that have stopped treatment due to death? Is there any other group?

This is Rich. You know, it’s hard to say in every single case but for the most part why patients have stopped is because they have not necessarily titrated to the right dose. And so I think the key is to educate those physicians as to the data that we now have suggesting, for example, the 10 mg BID dose is a very effective dose that doesn’t cause cytopenias for the vast majority of patients; and to try to get back to those sorts of things. But I mean to speak to every single patient without knowing the details, I can’t be sure. Salveen Richter – Canaccord Genuity: Great, thank you.

Our next question comes from the line of Cory Kasimov with JP Morgan Chase. Please proceed with your question. Cory Kasimov – JP Morgan Chase: Great, good morning to all and thanks for taking the questions. I have two of them for you. I wanted to follow up first on the survival question because we’re also finding that docs are largely unaware of the initial survival data presented at ASH or what was published in Blood which is what’s preventing them from putting their less symptomatic patients on therapy. So do you expect you can ultimately try to get this longer-term follow-up data that’s to be presented at ASH added to the product’s label? And then the second question is another one on persistency, and you mentioned that it’s improving partly because physicians have become better informed on implementing dose titration. Can you just talk a little bit about the educational efforts that are necessary there and how complicated this titration is? Thanks.

This is Rich. So I think part of the reason that the message may not have gotten through as well as we would have ideally hoped in the past around survival is that there were naysayers out there who were saying “Well, you only have an advantage over placebo in COMFORT-I but you don’t have an advantage over the vast available therapy in terms of survival in COMFORT-II.” And so with people speaking against this at the same time that people were speaking for it, I think the message got diluted. I think that there’s a reasonable chance that if the COMFORT-II data were to show a survival difference that there would be much more of a consensus among thought leaders that this really is true, and that will then get down to the level of the community physician who is treating the majority of these patients. With respect to adding this to labeling, I think that’s still going to be very difficult given that the studies really weren’t planned. We didn’t think that we had the opportunity within these relatively small, short-term studies during the control period to be able to demonstrate this. And so at some point we will provide the data to FDA in a package and let them evaluate it, but I think the chances that this would actually lead to a true labeling claim at this point are small. And I will point out that there’s histories of drugs that have done very well based on the type of data that gets out into the literature on survival without actually getting the claim. Was there a second part to your question that I missed? Cory Kasimov – JP Morgan Chase: Just on the persistency, the education around the dose titration.

The titration… Our labeling does indicate that titration is an appropriate approach but doesn’t get into a great deal of specifics other than titrating for thrombocytopenia. And so we think it’s also important for those who are more concerned about dropping hemoglobin levels to know what they can do in the shorter term to get those hemoglobin levels up without the necessity for holding dose or transfusing. So we have data out there in the scientific community; we continue to talk about that at scientific exchanges and in response to requests for information, but the sales force can actually go out and talk quite a bit about the need for titration which is on-label information. Cory Kasimov – JP Morgan Chase: Thank you.

Our next question comes from the line of Rachel McMinn with Bank of America Merrill Lynch. Please proceed with your question. Rachel McMinn – Bank of America Merrill Lynch: Yeah, thanks very much. I wanted to go back to the discontinuation question but ask it a little bit differently. It sounds like there’s two basic discontinuations, right, where you have patients who are very ill and drop off because they’re so sick and they’re dying; but then you have this other cohort of patients who are discontinuing because physicians just don’t know how to titrate properly. And just qualitatively, if you can give us a sense of is that kind of half and half or is it predominantly one versus the other? And then I also wanted to ask Jim, since you’re here and you had it sounds like some chance to really dig in here, what do you think needs to be done differently? If you can kind of speak to getting these patients more urgently on drug, what other programs or messaging needs to be done to be more effective in the sales force? Thanks.

Okay, so I’ll start and then Jim can answer the second part of the question or elaborate on the first part as well. Early on, as we’ve said on multiple occasions the patient mix was much more heavily weighted toward patients with platelet counts less than 100,000. They also were early on being dosed with 15 mgs and 20 mgs twice a day, which was too high a dose for people with less than 100,000 platelets. So there are two things that have happened with respect to the overall population. One is the week-over-week mix of patients with platelet counts below 100,000 versus those above 100,000 now has significantly fewer patients who are coming in below 100,000. But beyond that, the message that we’ve taken out into the field from our presentations at ASCO and EHA as to how to dose people who come on Jakafi with an initial platelet count of less than 100,000 is getting out, because we’re finding in discussions with physicians who start such patients that they are now beginning the patients almost always – certainly in a majority of cases – at 5mgs BID and working their way up to 10 mgs. So you have a change in the percentage of the really fragile patients in the mix every week, and for those fragile patients, they are being dosed more appropriately with a lower starting dose. So in both instances what you would predict and what we are beginning to see are improvements in persistency. Jim?

Rachel, to your question about the adjustments we would make going forward, let me first say that I have been extremely impressed by the professionalism and the sophistication of the launch plan for Jakafi as well as the execution. I think the team has done a first-class job in preparing this product for launch and executing extremely well in the first nearly year after launch. As I look at the biographies of our sales force, we’ve been very fortunate to recruit the brightest and the best people with deep, deep oncology experience. So beyond that, I think it’s premature to say what are the changes that we would be looking at making other than the fact that I have never seen a launch where you haven’t had three months, six months after launch to go back and make some adjustments in terms of your key launch assumptions. There is always a gap between theory and reality. You go back, you make the adjustments, you fine tune the plan and you go forward, and I think we’re in the process of doing that right now. Rachel McMinn – Bank of America Merrill Lynch: Great. And then just one quick follow up for Paul or Rich: on your JAK1 program, I’m just curious if you have any more comments in regards to inflammation versus Myelofibrosis. I would expect something with very limited JAK2 selectivity to not work in MF but clearly you feel differently because you’re running a study there, so what are appropriate expectations in that setting? Thanks.

So first of all, 39110, a JAK inhibitor with a different profile than ruxolitinib – we’re putting it into studies for which we already have data from our JAK1/JAK2 programs to be able to compare how that profile differs in diseases that we understand, and in where we can get data in a relatively short period of time. And those results will then determine whether or not we proceed further with those studies or go into different types of indications. And beyond that, in the absence of data I don’t really have further comments. Rachel McMinn – Bank of America Merrill Lynch: Okay, thanks very much.

Our next question comes from the line of Eric Schmidt with Cowen and Company. Please proceed with your question. Eric Schmidt – Cowen & Company: Thanks for taking my questions. Just first I’d like to confirm or hope to confirm that you’ve all weathered Hurricane Sandy well enough down there and there haven’t been any supply chain disruptions of any sort?

No Eric, we’re fine. Thanks for asking. Eric Schmidt – Cowen & Company: Great. Maybe a follow-up to Jim’s statement: he mentioned that he’s fully committed to sharing with us all aspects of Jakafi’s launch that you can. Does that mean that he has a different view towards unblocking the third party prescription data?

Eric, most likely not. I mean we’re being 100% transparent in terms of dispenses to patients and we think that really is the key metric going forward. Eric Schmidt – Cowen & Company: Okay, and then maybe a follow up for Paul. It’s a little unclear to me on what impact you think this FDA label change might have that you sought in terms of low platelet count patients. I now you filed for getting the new dosing data on the label, but it also sounded to me like you think you might have everything you need already. So I guess the question would be one, what timing should we look forward to in terms of an FDA labeling update; and two, is this critical or as you’ve kind of insinuated, do you pretty much have what you need to make headway with these low platelet count patients today?

Well, I think that’s good insight into what I was saying because we’ve made a lot of inroads into educating appropriately. I’ll let Rich answer about the label. I think it’s always better to ultimately have something in the label but in the meantime we’ve made great strides in getting these patients on the right dose.

Yeah, so I’ll just reiterate that I think it is better to have it in the label. It creates more opportunities to reach physicians who don’t take part in educational exercises, don’t ask additional questions, that sort of thing. In terms of the timing, we submitted it in August and we’re still waiting for a definitive [TOFA]. FDA has indicated in the past that they would continue to work with us to do this as soon as reasonably possible. Eric Schmidt – Cowen & Company: Thank you.

Our next question comes from the line of Brian Abrahams with Wells Fargo Securities. Please proceed with your question. Brian Abrahams – Wells Fargo Securities: Hi, thanks very much for taking my question, and Jim, welcome to the team. I want to shift gears to Baricitinib. With the Phase III’s now getting going [and then posting into] clinical trials, I was wondering if you can give a little bit more detail about the designs overall ,the powering of the studies, really what you’re aiming to do maybe similarly versus differently from other RA programs? Might there be more studies that we should be looking for and if you can give us maybe any sense of the timelines there? Thanks.

So I really can’t get into specifics until the analysts meeting, the joint analysts meeting that will take place at ACR. I think those invitations have gone out; I can’t remember the exact day but it’s the evening of the actual presentation of the Phase II study. Just in general terms I would say that the studies will cover a range of patients, from those that are [Team F] for biologic experienced to [DMR] to methotrexate experienced to naïve patients with the attempt to get a broad label in RA. I’d also say that as we said before that certainly the program was tweaked based on the findings at the advisory committee for tofacitinib, particularly around their findings around structure to make sure that we had adequately powered studies there. And I think the nuances are key and hopefully we’ll have more information around that and an opportunity to ask more detailed questions around this. And Pam just showed me that that date is November 13th. Brian Abrahams – Wells Fargo Securities: Great, and then maybe just a quick follow-up. Can you speak to the role of JAK inhibitors in diabetic nephropathy, what you see as the market opportunity there and maybe if there are any differences in the economics within the partnership for that indication? Thanks.

Sure. Paul, should I take that? So first of all, it’s quite clear that there is inflammation in the kidney and that there is elevated JAK levels in the kidney in diabetic nephropathy, and so a drug that can treat this potentially can have real beneficial effects in terms of maintaining renal function in patients with diabetic nephropathy. And if that actually works then that is a massive opportunity that makes things like RA pale in comparison according to the information that we’ve been given from Lilly, which I can’t get into any more detail than that. In terms of the economics, the deals are the same regardless of what we do which is we get to see Phase II data before we have to make a buy-in decision. They’re doing this trial now which I believe is posted on www.clinicaltrials.gov, and we will see results from that study before we decide whether we’re going to pay 30% of the going forward costs for that study. And so that’s one of the reasons we did the deal with Lilly, is because we get to pick and choose where we put our money based on actual proof of concept results. Brian Abrahams – Wells Fargo Securities: Thanks very much.

Our next question comes from the line of David Friedman with Morgan Stanley. Please proceed with your question. David Friedman – Morgan Stanley: Hi, thanks for taking the questions; just two quick ones. Number one is in terms of the patient adds this quarter, can you give some sense of the breakdown of what were truly new to drug patients versus patients who had dropped off previously and restarted? And then the second question is if you can just describe maybe what the difference is between what the FDA’s threshold is for recognizing data and what you think the clinical community has a threshold for; if you think that these survival data could potentially have a clinical impact but not necessarily meet the threshold of either quality or whatever for the FDA to put it on a label?

Hi David, this is Jim. David, I don’t want to get into a quantitative description of the components of total patients in the past quarter. I think it’s fair to say that the bulk of the patients in the past quarter were repeat patients. We had a fairly significant proportion that were new and the smallest proportion would have been restarted patients.

So in terms of survival data in the package insert, I mean the traditional approach is you design a study or studies for survival. You define exactly when you’re going to look at the data and [spend your] alpha, so to speak; so if you do more than one analysis you have to describe in advance “how I’m going to spend…” Let’s say you start out with a target, a P value of .05 – if you look more than one time you have to distribute that. In this case we did not envision that within a six-month trial for COMFORT-I or within a one-year trial for COMFORT-II, with allowance for crossovers – even within those studies for patients that were doing poorly – that we really had any chance of showing survival. And so in terms of alpha spend, so to speak, we haven’t left alpha to continue to spend for these new analyses and I think it’s for that reason that there’s a low likelihood that FDA would say “Okay, you’ve demonstrated a survival benefit.” But if you consider the hurdles that we were up against here – designing studies that were too small ,we thought were too small for survival; allowing for crossover, which will tend to make things equal, not different over time; and also the fact that within COMFORT-II there were patients who were lost to follow-up and we were never able to find out if they were alive or dead early on because the protocol didn’t allow those patients to be followed, and the clear majority of those patients were patients who were on [back], who we could never say die sooner – all of those were hurdles. And despite that, we’re seeing the data that we haven’t actually shown you yet updated, but as you can obviously surmise positive data despite that. And I think as we get all of those things across to the community, including that it’s better than the best available therapy, I think that it will have a significant impact but perhaps not as great as if it were in the label and we could actively promote it. And that’s just it’s better than where we were, that’s for sure. David Friedman – Morgan Stanley: Okay, thanks. And just to be clear on the first question answered, you said the majority are new to drug or the majority are restarts?

If you take a look at our total base of patients in Q3 the majority are repeat patients. There is a significant component that are new and finally there’s a smaller component which is patients which are restarting the therapy. David Friedman – Morgan Stanley: Okay, thank you.

Our next question comes from the line of Ian Somaiya with Piper Jaffray. Please proceed with your question. Ian Somaiya – Piper Jaffray: Thanks, I had a couple of them. First, just starting off with the severely ill patients which you’ve previously identified as a source of increased rate of dropouts this year versus potentially next year, can you just share with us where we are in the process of potentially seeing these patients, whether they’re still on therapy or if a vast majority of them are close to coming off therapy? And then I had a few follow-ons.

Sure. Certainly some of them are on therapy and we’re hoping that now that they’ve been titrated to appropriate doses that they’ll be able to stay on for extended periods of time. So it’s kind of a spectrum that again, where I can’t give you a specific number. Jim, do you want to add anything to that?

No, I agree with that. Ian Somaiya – Piper Jaffray: Okay. And then second on the Baricitinib Phase III program in RA, just to get into the comments you made related to the [TOFA] panel, should we assume the size of the Phase III trial is comparative to tofacitinib or is it larger?

I think what I was implying is that the structure study is now powered based on their very slow rate of progression in the control group, and so that study may be larger. But I’m not commenting on the overall size of the program including all the other studies. I think you’ll get a much better sense of that when Lilly talks about it, and we’ll be there on November 13th. Ian Somaiya – Piper Jaffray: Okay. And just the last question was just on the survival data. Is there any sense of urgency, either at Incyte or Novartis, to run a study to confirm the overall survival benefit prospectively on the study and try to get that on the label?

It would be extraordinarily hard to do that these days. You know, I think with the data out there that there is almost certainly a survival benefit. To randomize patients and not let them cross over would be perhaps unethical; my view is that it would be, but also impractical. So it’s kind of a double-edged sword, but we’re happy to see that even within studies that would have a very difficult time demonstrating this that it really would be in my mind unethical to randomize patients to have to stay on therapy other than ruxolitinib. Ian Somaiya – Piper Jaffray: That’s a challenge I should think that’s true for you as well as your competitors.

Absolutely. Ian Somaiya – Piper Jaffray: Okay, thank you.

Our next question comes from the line of Josh Schimmer with Lazard Capital Markets. Please proceed with your question. Joshua Schimmer – Lazard Capital Markets: Hey, thanks for taking the question. I guess coming back to diabetic nephropathy, it might be a large commercial opportunity but I’m wondering why this indication would be prioritized given that the development path to maybe even prospects for success seem rather cloudy at least in comparison to other Phase II inflammatory indications you could have chosen to advance further or faster.

Yes, I don’t think it is to the exclusion of those other indications. There’s obviously particular interest that Lilly had in diabetes and we’ve kind of, I think Rich outlined briefly the rationale; I think the Lilly people could get into it in significantly more depth if you wanted to pursue it with them, Josh. It does not preclude studying what you’re referring to as the more obvious inflammatory diseases. Joshua Schimmer – Lazard Capital Markets: Any thoughts to when we might see those other Phase II indications advance or be advanced?

I think you’d have to talk to Lilly about that. Joshua Schimmer – Lazard Capital Markets: Got it, okay. Thank you.

Our next question comes from the line of [David Krempler] with Morningstar. Please proceed with your question. [David Krempler] – Morningstar : Hey guys, thanks for taking the question. Can you give an update on the payer environment? I think last quarter you said you had pretty broad coverage but two-thirds of patients were requiring prior approval and it was causing a slight slowdown in the uptake rates?

Hi, this is Jim. Actually the reimbursement situation is remarkably positive for this product. Right now we really don’t see reimbursement as being rate limiting to putting new patients on the product. If you want to break it down by payer we have 50% Medicare, 30% commercial and 10% will be kind of your VA, etc. So we have a very favorable reimbursement environment right now with Jakafi. [David Krempler] – Morningstar : Great, thanks.

Our next question comes from the line of Ying Huang with Barclays. Please proceed with your question. Ying Huang – Barclays : Morning, thanks for taking my questions. I have one question on, can you give us a little bit more color on the breakdown between patients with high risk versus intermediate risk who are on therapy of Jakafi? And then I have a financial question as well. Obviously Lilly has already started to enroll the patients in October for Baricitinib. Can you guys give us an estimated cost for the Phase III and your share? I mean I think you have to shoulder 30% - how should we think about R&D costs in the next two, three years? Thank you.

I’ll deal with the R&D question. Yeah, we can’t get into specifics about what the investments will be over the next two or three years with Lilly. What I can say is that they’ve been thoroughly consistent in terms of the budgeting process, what those numbers look like when we first even negotiated the deal. We would expect R&D to go higher next year primarily driven by that investment. You’ll see that increase in ’13 and ’14 and then start to reduce in ’15.

If I can just add to that, I think that the money that we’re spending as our 30% in [RA] with Lilly is money very well spent. The drug looks really, really good. We’re very excited about this and we can afford to do it.

With respect to your first question, we have a nice mix of intermediate II and higher-risk patients. I don’t have the breakdown in front of me here but the majority of the patients who have been put on Jakafi would be categorized as either intermediate II or high risk but we are seeing a proportion of patients in the intermediate I category which I think is encouraging.

Before we close off I do want to clarify my answer to the previous question, and the question was “How does your payer environment look and what’s your reimbursement mix?” So let me clarify that. 50% of our patients are commercial, and right now commercial payers are somewhat reluctant to create barriers for an orphan indication like Myelofibrosis. 30% of our patients are Medicare, and the issue there, because most of our patients there are on Part D is the doughnut hole; and we’ve been very successful in helping patients navigate through the doughnut hole. And then finally the remaining patients are a mix of VA, military, etc. So I hope that clarifies the earlier response.

Our next question comes from the line of Boris Peaker with Oppenheimer. Please proceed with your question. Boris Peaker – Oppenheimer : Hi, I have one quick clarification. The numbers you just mentioned on Medicare versus commercial, could you clarify – is it 50% Medicare or 30% Medicare?

It’s 30% Medicare. Boris Peaker – Oppenheimer : 30%, okay great. And the other question is a general question: we talked about a number of data pieces that are going to be coming out that may help Jakafi in the market. Could you comment on how long do you think it takes to communicate the details, let’s say from the [ACRF starts] to the physicians; and then what your expectation is for that data in terms of time to be incorporated into actual prescribing behavior?

Well, I can speak to the question in respect to oncology and hematology. We’ll have the ASH meeting in December and there are typically ASH reviews that follow immediately thereafter, and this community is very quick to pick up on new data. Boris Peaker – Oppenheimer : So can you give a quantitative time period, let’s say after the ASH abstracts are available and your sales guys could start marketing the information? Is it one quarter that you anticipate to see some impact; is it six months, a year? Just some kind of a quantitative ballpark.

I would be careful about false precision, but generally if you take a look at an ASCO meeting or an ASH meeting you will start to see a change of prescribing within one or two quarters after the meeting. Again, it takes time. It takes time for physicians, particularly when you’re dealing with a condition like Myelofibrosis. What’s very limiting is the next time the physician happens to see an MF patient. Boris Peaker – Oppenheimer : Got it. And my last question is, in terms of support groups there are at least two major support groups for Myelofibrosis. Are you working or how are you working with these support groups and how do you see that helping in identifying new patients as well as maintaining current patients on drug?

We’re working very intensely with the patient advocacy groups. There’s no better catalyst for a patient request than an MF patient hearing about a positive response in another patient. As a matter of fact, recent market research we’ve conducted have indicated almost 40% of patient trials are as a result of a patient request for the product, so clearly these patients are talking to each other and sharing the experience. And we’re trying to support that as much as possible. Boris Peaker – Oppenheimer : Thank you for taking my questions.

Our next question comes from the line of David Friedman with Morgan Stanley. Pleas proceed with your question. David Friedman – Morgan Stanley: Thanks, it’s been answered. Thank you.

Our next question comes from the line of Lisa Bayko with JMP Securities. Please proceed with your question. Lisa Bayko – JMP Securities: Hi, good morning. A question for Jim: as you look at the profile of Baricitinib and Tofacitinib, can you talk about maybe the key attributes of Baricitinib that you think are really going to stand out and how from a marketing perspective you’d really use those to differentiate the two products? Thanks.

Thank you for the question. I’m going to pass it over to my colleague Rich, but what I can say very early is there is an X factor for oral. If you look at the RA market, there’s at least 10% to 20% of patients who refuse therapy with the [TNF] because it is injectable, so clearly there’s an X factor for oral. And then depending on the clinical studies, the label and the price, I think that will determine the point of entry of JAKs into the market.

Lisa, I think also Lilly may comment on this in a couple weeks, but I think the things that are clear already are once a day versus twice a day and reduced number of drug interactions, because this drug doesn’t have… [The factor they’re delivering] doesn’t have the same enzyme inhibitions and interactions that tofacitinib does. I think the potential which needs to be proven in large Phase III trials is that it may have a better safety profile in terms of infections because it’s not a JAK3 inhibitor; and some of our data suggests that we may have actually a more profound response in Phase II than they did, but it’s really unfair to say that we know that’s going to hold up based on trials that were one, not comparative and were only a few hundred patients. But I think we have enough there that there will be a substantial market for Baricitinib, and the potential that it could actually be the number one JAK inhibitor for RA and potentially others if some of those potentials for the data come true despite a launch a few years later. Lisa Bayko – JMP Securities: Okay, that’s helpful. And then just maybe a follow-up to the broader oral market. As you see the orals come to the market and you look at tofacitinib, do you think this will move up to kind of front line? I mean it makes sense that you’d use oral ahead of [TNF] but obviously there’s more experience.

So front line is largely methotrexate but the question, and I think it’s likely to stay that way in part because of payer preferences to start with something cheap; and also the fact that physicians are comfortable with the toxicities of methotrexate, although there’s certainly people who can’t take it and there’ll be some use in first line. I think the key is using this before anti TNF’s or other biologics. My expectation is that Pfizer will blaze that path to a certain extent for the class, and so they may start off being used primarily, after at least the first if not more than one TNF. But as the safety of the class becomes more clear and as people become more convinced of the efficacy by using it themselves, the fact that it is an oral drug and some of the other advantages that it has that we kind of talked about, I think the real goal is to be able to say this would be after failure of DMRs or methotrexate for the most part; but would still then be used and will have clinical data that it can be used after failures of TNFs. Lisa Bayko – JMP Securities: Thank you.

Our last question comes from the line of Ian Somaiya with Piper Jaffray. Please proceed with your question. Ian Somaiya – Piper Jaffray: So just a question on Baricitinib versus your follow-on JAK inhibitor: can you just give us a sense of how different you need the follow-on JAK to be for you to pursue development in RA and psoriasis?

I’ll start and Rich can add to that. I don’t think we can give you parameters at this point until we gather some data on this JAK inhibitor with a different profile.

But if you look at things like the anti-TNF market, and there are a number of anti-TNFs. Certainly the first one is no longer… Maybe it still is – I’m not sure which sells more, [Numera or Embrel].

I’m totally biased in this answer but it is Embrel.

But still you wouldn’t sneeze at the market that a drug like Numera has, and I think those differences in the anti-TNFs are not enormous in my mind. So I personally don’t think you need huge differences to do really well in this area, but as I said in answer to Lisa’s question I think there is the potential for substantial differentiation and a clear expectation of enough differentiation. Ian Somaiya – Piper Jaffray: Just two parameters to the question: one is obviously I think we all appreciate the magnitude of the opportunity but also we’re mindful of just the costs associated with bringing another RA drug to the market; and whether, to put it in your words, if you can afford to run or support a Baricitinib program as well as pursue development independently in RA. Is it an either/or decision from a financial perspective or do you think you can comfortably pursue both?

Well, I think we have optionality and we’re at the point now where the earlier stage program, we certainly have the capital to continue to progress that; and then as the data becomes more apparent we can make strategic decisions at that point. Ian Somaiya – Piper Jaffray: Okay, thank you very much.

There are no further questions at this time. I’d like to hand the floor back over to management for closing comments.

Okay, thanks very much. We appreciate all of you dialing in and the questions, and we’ll look forward to talking to you again in February on our Q4 call. And with that good morning.

Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.