Incyte Corporation (INCY) Q3 2020 Earnings Report, Transcript and Summary

Hello, and welcome to the Incyte Corp. Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Mike Booth, Head of Investor Relations at Incyte. Please go ahead, sir.

Thank you, Kevin. Good morning, and welcome to Incyte's third quarter 2020 earnings conference call and webcast. The slides used today are available for download on the Investors section of incyte.com. I'm joined on the call today by Hervé, Barry, Steven and Christiana, who will deliver our prepared remarks, and by Dash, who will join us for the Q&A session. During the question-and-answer session, I ask that you limit yourself to one question and if needed, one follow-up, as this will enable as many of you to ask questions as time allows. Before we begin, I'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 2020 guidance, the commercialization of our products and the development plans and expectations for the compounds in our pipeline, as well as the development plans of our collaboration partners. 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 10-Q for the quarter ended June 30, 2020, and from time to time in our other SEC documents. In addition, I would like to caution everyone that the COVID-19 pandemic is an evolving situation, and we may therefore be unable to assess the full effect of governmental, business and social actions and policies and overall economic conditions on our business. Accordingly, it is important to keep in mind that our statements on this webcast speak as of today. We'll now begin the call with Hervé. Hervé Hoppenot: Thank you, Mike, and good morning, everyone. In the third quarter we saw continued strong growth within our commercial business and we progressed our clinical portfolio on both development and regulatory fronts. Commercial performance across the business was strong. Our product and royalty revenue grew 16% to $621 million, driven by Jakafi as well as an increasing contribution from new product launches and from royalties. Jakafi grew 13% year-over-year to reach $488 million with growth seen across all three indications. Jakavi and Olumiant royalties grew 17% and 32%, respectively, totaling nearly $100 million in revenues for the quarter. There is significant momentum in the first weeks of launch of Monjuvi in the U.S., and I am pleased to say that Pemazyre, which was launched at the end of April, has outperformed our initial expectations. The application seeking approval of tafasitamab in relapsed/refractory DLBCL is under review in Europe. An application seeking approval for pemigatinib in cholangiocarcinoma are under review in both Europe and Japan. It has been a busy quarter for baricitinib development updates. Exciting data were recently presented from the ongoing evaluation of baricitinib in patients with severe alopecia areata, and Lily's development program in this indication includes two Phase 3 trial. If approved, baricitinib may be the first JAK inhibitor to be approved for alopecia areata. And in October, baricitinib became the first oral JAK inhibitor indicated for the treatment of moderate-to-severe atopic dermatitis, following its approval by the European Commission. This represents a new potential source of revenue for Incyte. And with Lilly, we also announced positive data from the ACTT-2 trial of baricitinib in COVID-19. From our IO portfolio, positive results were presented from our trial evaluated retifanlimab in squamous cell anal carcinoma and from our dermatology portfolio, we share positive preliminary efficacy and safety results for our oral JAK1 inhibitor of 54707 in hidradenitis suppurativa, HS. HS is a chronic skin condition caused by inflammation and infection of the sweat gland. We also presented full results from the Phase 3 TRuE-AD program of ruxolitinib cream in atopic dermatitis. These results are indicative of why we are so excited by the potential of our dermatology portfolio and why we are establishing a new dermatology franchise for Incyte. Incyte has deep expertise in immunology within our drug team, and we have leveraged our cross program knowledge of the JAK-STAT pathway to develop innovative medicines to treat autoimmune disorder. We are now developing science based therapeutics for the medical dermatology community and have multiple first-in-class candidates that we believe can deliver important benefits to patients. Our dedicated dermatology development group continues to execute with precision and speed, as evidenced by the rapid advancement of work stream in recent years, including the successful Phase 3 program in atopic dermatitis and the recent completion of recruitment into the pivotal vitiligo program. We are also building our U.S. commercial organization. The expected acceleration of regulatory timelines through the use of the priority review voucher gives us added momentum here, and I am very pleased to say that we have been able to recruit some exceptional talent as we continue to build our dermatologic team. I will end my introduction by reminding you of the tremendous progress we have made so far in 2020. We have announced multiple positive pipeline developments since the beginning of this year, as shown by the check marks on Slide 6. And looking forward, we have five important update to come over the next 2 months. We expect to submit the NDA for ruxolitinib cream at the end of year and to initiate the first Phase 3 trial in the LIMBER program. Important transitional data from 86550, our oral PD-L1 inhibitor is going to be presented at SITC next week and we are also expecting a busy ASH conference in early December. At ASH, our presentation will include an oral presentation of the REACH3 data ruxolitinib in chronic GVHD, as well as a series of updates from the parsaclisib CITADEL program in several different non-Hodgkin's lymphomas. And we also intend to host an investor call on Monday, the 7th of December, to provide our highlights from the conference. I will now pass the call over to Barry for the commercial overview.

Thank you, Hervé and good morning, everyone. In the first 9 months of 2020, Jakafi sales increased 17% versus the same period in 2019. And we continue to see good demand for Jakafi across all three indications. The continued strong performance in the year-to-date has enabled us to tighten our sales guidance for Jakafi to a new range of $1.91 billion to $1.94 billion. On the right hand side of the slide, you can see the evolution of the proportion of patients by indication. Myelofibrosis patients still represent the largest portion of patients on Jakafi. The numbers of polycythemia VERA and GVHD patients on Jakafi are increasing and now comprise 33% and 13% of total patients, respectively. Slide 10 provides additional color around new patient growth for Jakafi. The chart on the left shows that over 90% of total patients are ongoing patients from prior periods, and this pool of ongoing patients continues to grow quarter-over-quarter. As we have previously disclosed, new patient starts were down significantly in Q2 this year as we felt the effects of COVID-19 due to total patient visits being down. Following this transient decline in Q2, there was a partial rebound in new patient starts in Q3. Turning now to the Monjuvi launch progress. We are very pleased with the performance of Monjuvi generating $5 million in the first few weeks since launch in mid-August. With our colleagues at MorphoSys, the commercial and medical teams have been driving increased awareness of the benefits of Monjuvi and we are now the market leaders in terms of share of voice. Field activity, participation in educational presentations and inclusion in the NCCN guidelines are all contributing to the increasing awareness of Monjuvi within the Hemonc community. Feedback thus far has been very positive, with physicians highlighting the importance of Monjuvi's depth and duration of response and its favorable safety profile. We have built strong momentum for Monjuvi within both the academic and community settings with greater than 200 accounts having now ordered. We are seeing a sizable uptick by Hemoncs in the community, which now accounts for approximately 65% of total prescribers, a trend that we anticipated. Our market access team have also made significant strides since launch, achieving nearly 90% formulary approvals in our top 30 accounts. Turning to Pemazyre, which we launched in the second quarter. We have been very pleased with the rapid adoption of this new medicine -- this novel medicine with 8 million in sales generated in the third quarter. Broad access to FGFR testing has contributed to this rapid patient adoption. And we have seen good uptake of Pemazyre nationally with over 200 patients treated since launch. A high refill rate also suggests that the appropriate patients are being identified via this testing as they continue on Pemazyre therapy. I'll now turn the call over to Steven Stephen for our clinical updates.

Thanks, Barry, and good morning, everyone. I'll start with our ruxolitinib cream program. Initial data from the Phase 3 trials presented earlier this year at RAD showed that ruxolitinib cream resulted in significantly higher investigated global assessment treatment success and Eczema Area Severity Index 75 scores for RUX cream versus vehicle. And EADV in October of this year, pooled analysis of the two Phase 3 trials were presented. These pooled results reinforce the efficacy profile of ruxolitinib cream as it relates to IGA-TS, EASI-75 and the rapid, substantial and sustained introduction in patients with atopic dermatitis. Newly presented data at EADV showed that patients on ruxolitinib cream also experienced significantly better sleep quality, sleep depth and restoration. These results further highlight the potential for ruxolitinib cream to become an important treatment option for atopic dermatitis patients. We are on track to submit the NDA in atopic dermatitis at the end of this year and intend to use our priority review voucher, which should accelerate the FDA decision. The priority review voucher is expected to shorten the FDA review period by 4 months. Therefore, we could expect an FDA decision in June next year if all goes according to plan as opposed to October of 2021. Our Phase 3 program for vitiligo is now fully recruited and we expect results in the first half of 2021. Given the accelerated timelines for the use of the priority review voucher, there is also the potential of an acceleration of the vitiligo program, because an earlier decision on the atopic dermatitis NDA may allow for consequently earlier submission of the sNDA for vitiligo. Staying within our dermatology development group, we announced positive initial data for 54707, an oral JAK1 inhibitor in patients with moderate-to-severe hidradenitis suppurativa, which is a chronic skin condition where inflammation and infection near sweat glands can result in painful abscesses, sinus tracts and scarring on the skin. The Phase 2 trial evaluated three doses of 54707 versus placebo, each of which were taken daily for 8 weeks, followed by a 30-day safety follow up. Preliminary efficacy was seen in a reduction in the number of abscess and inflammatory nodules termed AN count, which with results seen as early as week one as well as reductions in skin pain. 54707 well-tolerated with no treatment discontinuations due to treatment emergent adverse events and we have already initiated a larger 200 patient Phase 2b study. We are excited by the global opportunities for tafasitamab, and Slide 17 remind you of our broad development program, which covers several non-Hodgkin's lymphoma in both the first line and the relapsed refractory settings. We have multiple pivotal trials and preparation across various indications, including first line diffuse large B-cell lymphoma and in relapsed refractory follicular lymphoma. We also expect to initiate a proof-of-concept trial evaluating tafasitamab in combination with our PI3 kinase delta inhibitor parsaclisib, which the final protocol is in preparation. Turning to our IO portfolio. At ESMO in September this year, we presented Phase 2 results from PODIUM-202, evaluating retifanlimab in squamous cell anal carcinoma. The disease control rate of 49% and median duration of response of 9.5 months were well received. We are opening a Phase 3 trial for retifanlimab in patients with squamous cell anal carcinoma. Slide 18 also remind you of the status of the other indications we are pursuing for retifanlimab as well as the important clinical translational data we will be sharing from 86550, our oral PD-L1 inhibitor, which is to be presented at SITC next week. The translational data are from actual clinical specimens taken during the ongoing trial, and we will be able to share with you the data showing, for example, the degree of PD-L1 inhibition and T cell changes illustrative of immune modulation with 86550. We expect to provide more fulsome clinical safety and efficacy data from this ongoing trial during the next year, and we are also initiating a new Phase 2 trial in patients with treatment naïve PD-1 sensitive tumors as we continue to move forward with this important project. I will end my section on our development projects addressing COVID-19. With Lily, we recently announced positive results for baricitinib in ACTT-2 trial in hospitalized COVID-19 patients. In combination with remdesivir, baricitinib reduced time to recovery, improved clinical outcomes and showed a numerical decrease in mortality compared to remdesivir alone. These results were most pronounced in patients receiving oxygen. Based on these data, Lily has submitted baricitinib to the FDA for potential emergency use authorization and regulatory discussions remain ongoing. For ruxolitinib, we recently completed enrollment of the RUX COVID trial, and we expect topline results from this trial by the end of this year. With that, I would like to turn the call over to Christiana for the financial update.

Thank you, Steven, and good morning, everyone. The financial update this morning will include GAAP and non-GAAP numbers. For a full reconciliation of GAAP to non-GAAP, please refer to Slide 27 in the back up section of the deck and to the press release we issued this morning. Moving to our results for the third quarter. Revenue growth continued to be strong with total product and royalty revenues of $621 million, representing an increase of 16% over the third quarter of 2019. This reflects growth across both product commercialized by Incyte and those commercialized by our partners. Total products and royalty revenues for the quarter are comprised of net product revenues of $488 million for Jakafi, $26 million Iclusig and $8 million for Pemazyre. Royalties from Novartis of $68 million for Jakavi and $1 million for Tabrecta and royalties from Lilly of $29 million for Olumiant. Total costs and expenses for the quarter of $559 million on a non-GAAP basis include $120 million related to the purchase of an FDA priority review voucher fully expensed under R&D, which we intend to use to accelerate the FDA review of ruxolitinib cream for the treatment of atopic dermatitis and $21 million of upfront consideration and milestones related to our collaborative agreement. Excluding the impact of these expenses, our total costs and expenses increased 15% over the prior year quarter. Ongoing R&D expense for the quarter was $268 million on a non-GAAP basis, representing a 7% increase from the prior year quarter. This increase was primarily due to our 65% share of the global and U.S specific development costs for tafasitamab and the clinical trials of ruxolitinib as a potential therapy for COVID-19 and was partially offset by the timing of other development activities. SG&A expense for the quarter was $106 million on a non-GAAP basis, representing an 18% increase over the prior year quarter. This increase was primarily due to an increase in commercialization efforts related to Jakafi and Pemazyre, the preparation for the potential commercialization of ruxolitinib cream and the timing of certain expenses. Collaboration loss for the quarter was $50 million, which represents a 50% share of the U.S net commercialization of loss for Monjuvi. The total U.S. net commercialization loss of $30 million for Monjuvi, comprised of total net product revenues of $5 million and total operating expenses, including COGS and SG&A expenses of $35 million. Our financial position continues to be strong as we ended the quarter with $1.7 billion in cash and marketable securities. Moving on to our guidance for 2020, based on the continued strong performance of Jakafi in the first 9 months of the year, we are tightening our Jakafi full year guidance to a range of $1.91 billion to $1.94 billion. This implies net Jakafi revenues of $489 million to $519 million for the fourth quarter of the year. This range reflects some uncertainty associated with a resurgence in COVID-19. We are reiterating our guidance for both R&D and SG&A. As a reminder, the R&D guidance excludes the $805 million up front consideration related to our collaboration with MorphoSys and the $120 million of expense related to the purchase of the FDA priority review voucher. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q&A.

Great. Good morning, guys. Thanks for taking the question. I guess, I'll start with the obvious. Barry, can you just talk a little bit more about the real world physician feedback, the field teams getting on Monjuvi since launch. Is there anything that you're particularly surprised or pleased by relative to your prevailing expectations in these admittedly very early days? Thank you.

Sure. Cory, thanks for the question. It's actually been very good. I participated in a number of advisory boards. Lots of our interactions now are virtual, of course. But I think most physicians, most hematologists would choose Monjuvi as being the preferred second line agent for most of their patients with diffuse large B-cell lymphoma. So we're very happy. We think our trends will continue to grow in the right direction. I think it's going as well as it could possibly go. And even with COVID, for example, the -- our sales representatives and medical representatives in the field have actually been able to communicate and get into their accounts and talk about the benefits that Monjuvi provides.

All right, great to hear. Thanks a lot for taking the question.

Thank you. Our next question is coming from Brian Abrahams from RBC. Your line is now live.

Hi guys. Thanks so much for taking my question and congrats on the continued progress. I was wondering if maybe there's a question for both Christiana and Barry. I was wondering if you could speak to the acquisition of the priority review voucher in atopic derm. I guess, how you're -- you were thinking about a potential return on investment in the context of what an initial launch trajectory could look like and the potential pricing strategy there? Thanks.

Hi, this is Christiana. Thank you for the question. So on the priority review voucher, as Steven described, the way it provides us the potential to accelerate the overall timeline to market for RUX cream, both for AD and vitiligo. So for AD, it could shorten the FDA review period by 4 months, from 10 months to 6 months. And then if Ad review is completed earlier than under the normal 10-month period, it gives us the possibility to subsequently submit the vitiligo for a review earlier than we could otherwise do. So using the potential opportunity we see with the RUX cream in both AD and vitiligo, the unmet needs that we see in both indications. Getting RUX cream to market earlier than would otherwise could under the normal timelines -- review timelines, it's something that we say very attractive and was easily supporting the investment we made in the PRB.

And just to add, I think we're completely ready to go as a new dermatology business unit. We're excited about potential of RUX cream will offer to a whole range of patients with mild-to-moderate disease. And as far as pricing and launch trajectory, launch trajectory, we think it's going to be very good. Pricing decisions haven't been made yet.

Great. Thanks.

Thank you. Our next question is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Hi, everyone. Thanks for taking the question. This is Andrea on for Salveen. Maybe another question on the new product launches. Could you speak to what you're seeing with Pemazyre and any initial thoughts on what the drivers of momentum have been that have surpassed your expectations?

Sure, Andrea. Thanks. Barry. The drivers of momentum are simply that this is the first targeted therapy available for patients with the FGFR2 fusions or rearrangements. Really these patients had nothing after second line therapy. So testing has been easier than we expected, next gen sequencing, identifying the right kinds of patients and getting the drug to them at the right time. Patients are not only accessing the drug, but they're staying on the drug, at least for the time being. Obviously, it's very early. But yes we're quite pleased with the number of patients we have and the amount of patients that are coming back for refills.

Kevin, next question please.

Yes. Thank you. The next question is coming from Evan Seigerman from Crédit Suisse. Your line is now live.

Hi, all. Thank you so much for taking my question and really congrats on the continued progress. So it's really clear that dermatology is the focus for you now. Can you provide some colors why you opted to invest in build your own dermatology franchise? I know there've been questions about whether or not you’re going to do an in-house or partner out. And how large is this kind of commercial force expected to be? Then I have one follow-up there. Hervé Hoppenot: Maybe I'll take that. Hervé here.

Thanks, Hervé. Hervé Hoppenot: As you know, I mean, we have been sort of following the product. So the product led us into dermatology. Where if you remember, we had studies in our alopecia areata. In fact, that was the first study we did. And then we had the studies in atopic derm and vitiligo. I think what changed our view from finding a partner and getting royalties for this is when we realize the profile of the product in atopic dermatitis is in fact very much superior to what you have available today. And the number of patients is potentially very large. And then we also realized it was probably over the past 2 years, that the benefits we are providing in vitiligo is very unique. Vitiligo is not just a cosmetic issue. It's a life issue, and we can reverse for some patients. It's a disease that is hurting them. So when we came to the quantification of what it meant, we saw this opportunity in the U.S as being very meaningful for our goal of growth and diversification. So that's where we said we could potentially do it our self. We have a team, we are putting in place. I think I described this in the past as 200 people, more or less something of that size. And it's in good shape to being built now over the next 6 months with priority voucher. And I think it's an opportunity for Incyte to have literally a new franchise. It's not changing our attention or taking our attention from cancer and immunology and the methodology is literally a separate team. So there will be two legs now that will be basically driving the growth of Incyte starting in 2021. One of them will be the, we call it IAI immunology, dermatology, and the other one will be cancer. And frankly, there is no real change in our investments or energy that we put behind our cancer hematology portfolio. It's just an addition to what we had before. Now for the rest of the world we are still in a situation where we think we will have partnership for Asia and a large part of the world for the cream. And in Europe, we are looking at what makes the most sense.

One quick follow-up there. Beyond topical RUX, do you expect 54707 to be the next key asset in the franchise?

Yes. Hi, it's Steven. So as you saw, it's another JAK inhibitor we have in our portfolio. It's relatively JAK1 selective. We are developing it currently in hidradenitis suppurativa. We believe based on research we've done that there remains an unmet need there because the available drugs aren't as effective as patients want them to be. And we're very encouraged by early data, which I showed you in terms of abscess reduction and skin pain relief. So it's an important entity to study with a compound that is clean for that indication. Beyond that, what we do with the compound still needs to be determined. Hervé Hoppenot: Yes, there are additional indication for RUX cream, we are also looking at. So the way we see is that there is a developing portfolios that is evolving, and at the same time, if you look at Eczema and vitiligo, we have two very large opportunities that are just in front of us, where we will have the first-in-class, we'll have the first JAK topical. And in the case of vitiligo it would be the first medicine to be approved for this patient. So there are two very important short-term growth driver. And then there is, obviously, other products that will be or other indications that will be coming subsequently.

Excellent. Thank you so much for the color. Very helpful.

Thank you. Our next question is coming from Tazeen Ahmad from Bank of America. Your line is now live.

Hi, good morning. Thanks for taking my question. Just wanted to get some color on what data points we could expect from the CITADEL program at ASH?

Hi, Tazeen. It's Steven. I think you're asking for a little bit of color granularity on the CITADEL program at ASH. As you can see at a high level the program continues to advance in terms of maturity of data. We have data being presented there as in terms of an oral presentation in marginal zone lymphoma, and then further presentations in terms of mantle cell and follicular lymphoma. And the mantle actually is broken down into different presentations with prior BTK inhibitor and then the lack of prior BTK. In totality, the data continues in our view to be extremely encouraging. The response rates have been maintained over time in the independently reviewed response rates and then keeping with what they should be in those different entities. And then very encouraging is the duration of responses held up and the progression free survival as well. So we are encouraged by the totality of the dataset and this is exactly what we wanted. We wanted to have those response rates and now with further follow-up to be able to show that they're both durable and give you a appreciable median progression-free survival. So we are on track to in the U.S. to submit an NDA, hopefully in the second half of 2021. And that's where we are with that important program for delta in lymphomas. Beyond that delta has other indications we are pursuing. And obviously, in myelofibrosis in combination with ruxolitinib, we start in our Phase 3 there as part of the LIMBER program. And then also just to mention in autoimmunity and inflammation, we also studied it in autoimmune hemolytic anemia. It's a very comprehensive program for a very active compound in our view.

Thank you. Our next question is coming from Michael Schmidt from Guggenheim. Your line is now live.

Hi, guys. Good morning. Thanks for taking my questions. I had one on Monjuvi. With the application now being under review also by European regulators, I was just wondering, if you had any prior interactions with the EMA and what your confidence level is in potential accelerated approval in Europe? There's been a few rejections recently of oncology products based on single arm study.

Hey, Michael. It's Stephen. Thank you for your question. We correct and we've always prefaced European regulatory discussions on single arm studies has been more difficult. As you just alluded to some recent examples in areas where they've declined, approvals in certain entities. For tafasitamab itself, as Hervé even said up front, there -- and then Barry further by the real world experience, there's a -- obviously, a very strong data set to very high complete response rate that median duration of response for the CRS continues to improve. In the update, the CRS was not even reached, but the median for the combined with CRS was 34 months. So we think that represents a very appreciable efficacy combined with a safety profile. That's horrible. Obviously, our job is to convince European regulators of that, given the single arm study and the real-world evidence we have remind to say, there's a discernible treatment effect that's appreciable, and that we'd like you to approve it, given that. And we are in that process now, and all I can tell you is it's going well. I mean, it's marching through the different day, 120 etcetera questions that we need to have, and we'll see how it goes with them. It's hard to give you any further color other than that.

Perfect. Thank you. And then just on first-line, the planned first-line DLBCL regulatory study. Looking at the abstract from First-MIND, it looks like both of the combinations look very safe. Is there anything else that you're looking for in the first-line study before completing your plans for the Phase 3?

Thank you for pointing that out. So you're right. The abstract is live now for the safety component of First-MIND, which looks at Tafa plus R-CHOP or Tafa len plus R-CHOP. And you're right. Our interpretation is the same as yours. That there's a comparable safety for both. And we've already announced publicly that we go in ahead thus with the Tafa, len R-CHOP combination in the first-line study. And then we're just working at the final details with regulators on size and those sort of things end points, et cetera, but we'll be ready to go soon. And obviously a very important study not only to us, but to the community in terms of first-line diffuse B-cell lymphoma to try and improve the cure rates from R-CHOP.

Great. Thanks, Steven.

Thank you. Our next question is coming from Jay Olsen from Oppenheimer. Your line is now live.

Oh, hi. Thanks for taking the questions. I appreciate the comments on the Pemazyre launch. It seems like it's outperforming your expectations. And I was wondering I know you only promoted for cholangiocarcinoma, but are you seeing any spontaneous use in bladder cancer or other tumor types? Thank you.

That I’m not aware of, Jay. We really haven't dug into it all that much. It seems that just about every patient that I'm aware of comes in is for cholangiocarcinoma. Occasionally, we'll get a request for an individual patient for an individual IND for some tumor type or another, but it's very rare.

Great. Thanks for taking the question.

Thank you. The next question is coming from Mara Goldstein from Mizuho. Your line is now live.

Yes. Just a follow-up on that question. The announcement to discontinue the studies in bladder cancer. [Technical difficulty] the studies that you're looking at for [technical difficulty].

Mara, hi. It's Steven. Your question was breaking up a little bit, but I think you just wanted some view on our strategy in bladder cancer with our FGFR inhibitor. I think if you step back and you look at how bladder cancer, particularly metastatic bladder cancers evolve in with new datasets with checkpoint inhibitors with EV from Seattle Genetics. Clearly, there's a change now in the treatment paradigms and treatment posts in line therapy in bladder cancer. And what we want to do is, is literally do that. We feel that in conjunction with advisers that our current first-line study does becomes irrelevant given how care standards are changing. And we -- and obviously have stopped recruitment there. And we are relooking at the bladder program in totality, looking at the biology, particularly just to give you some granular detail, given EV's effect in [indiscernible] Express in bladder cancer. We want to ascertain whether if GFR3 on its own is a separate driver in the setting. And if it is, how that will play with our FGFR inhibitors. And we are busy doing that preclinical work to understand the biology right now. This doesn't change our strategy for pemigatinib agnostic program …

Right. Okay.

… which is recruiting very well, nor in the myeloproliferative neoplasm 8p11. But we feel bladder is evolving enough that we need to step back and understand the biology there.

Okay. Thank you. I appreciate it.

Thank you. And [technical difficulty] coming from George Farmer from BMO Capital Markets. Your line is now live.

Hi. Good morning. Thanks for taking my questions. Nice to see the rebound in new patient starts with Jakafi after the slowdown due to COVID. Where do you see that going forward? And could you just comment on your progress with Jakafi in chronic GVHD?

Sure, George. I'll take that. So new patient starts have actually especially within the last two weeks even come back to almost pre-COVID levels. So we're happy with that. If you recall, in the first quarter, in fact, our new patient starts, we're extremely pleased with. And until COVID hit, we look like we're going to have a very, very good year. So we're hoping to get back to that number of new patients on each of the indications. Of course, we're looking forward to the approval in steroid-refractory chronic GVHD sometime next year. And we really think that this is going to be a great benefit for patients. We know that there's the prevalent population in chronic GVHD is fairly high compared to the acute steroid-refractory GVHD patients. So we really believe that there's an opportunity for more growth there with the patients longer duration of therapy when you're treated for a chronic GVHD. So we're looking for that approval.

Thanks, Barry. Its Steven. Just to add a little bit, you saw the abstracts go live yesterday and the REACH3 is an oral presentation at ASH. And again now a second study, large study randomized study in GVHD, that's positive. So it's a good achievement, obviously for drug -- for the drug and really important for patients. And if you look to the totality of the data in the abstract, it's superior efficacy versus best available therapy with a higher response rate, longer failure free survival and better symptom improvement. What's not in the abstract, but will be presented at the actual median is also a best overall response at any time, just to try give you comparative data to other agents. So it's an important oral presentation at ASH. And as Barry said, our intent is to get the submission in as soon as possible, given that.

Great. Thanks very much.

Thank you. Our next question is coming from Kenneth Atkins from Cowen. Your line is now live.

Hi. Thanks for taking my question. For your JAK1 inhibitors 707, what do you think you need to show in hidradenitis in the Phase 2b to have a compelling profile there versus standard of care?

Yes, Kenneth. Hi. It's Steven again. Thank you. So it's a disease as we were outlining in our formal presentation that has a lot of morbidity for patients given this abscess formation in different skin falls on -- in the body. Obviously, TNF inhibitors are licensed and used there with not the efficacy that I think patients fully want. So the idea was here to try given the biology in a relative JAK1 agent to try and get further improvements in abscess formation, sinus tract, et cetera. We use -- so you got to be really careful on what you do cross trial comparisons. Yes, so for this data set, we use what's called an AN count. And we believe that’s the best way to measure patient benefits here. But there are other endpoints that are used in other studies. So particularly for TNF this HISCR that's used, which is a greater than 50% reduction in AN count, but no increase in new lesions. So it's a combination thereof in terms of the lesion improvement plus ways of measuring clinical benefit and morbidity on patients. And that's why it's very step wise development. We now go into Phase 2b with a 200 patient study and we are likely to the need, a Phase 3 program to get it across the finish line. But we told repeatedly by people in the area that there remains this unmet needs. Yes. And that's what we're going to try and address in the Phase 2b that we have, enough efficacy to get there in terms of AN count reduction.

That's helpful. Thanks.

Thank you. Our next question is coming from Andrew Berens from SVB Leerink. Your line is now live.

Thank you very much. This is Gang Li for Andrew -- Andy. Just a quick question regarding the atopic -- Jakafi -- atopic Jakafi. So how do you see the opportunity in more severe atopic dermatitis patients [indiscernible]. Do you see that more in combination with other systematic treatment, or it's a monotherapy? Thank you.

So thanks Gang Li. So I think there's an absolute -- well, if you look at our studies 281 and 282, you see there's a high proportion of patients with moderate disease. So we think when we look across trials, we could have an opportunity there. But we really think it's going to be the best drug available for patients from the -- from steroids all the way up to biologics. So we think we have a clear opportunity there. If it's going to be used in the future with biologic like Dupixent, for example, we'll have to wait and see. Obviously, Dupixent is often used with topical steroids now because you have to have some local control for particular parts of the skin disease. So it could happen in the future, but that's certainly not our indication. We didn't study patients with severe disease, but we do believe that there's a wide range of patients who will absolutely benefit from RUX cream.

Thank you. Our next question is coming from Stephen Willey from Stifel. Your line is now live.

Yes. Good morning. Thanks for taking the question. Maybe one for Steven, I guess, how should we just be thinking about the go-forward dosing strategy for parsaclisib in some of these B-cell malignancies subtypes? I know that ASH abstracts kind of highlight a little bit of a response rate delta between the weekly and daily dosing, which I think also appears to be a little bit tumor type and maybe line of therapy dependent. So should we expect that you're going to be pursuing kind of a different dosing strategy in some of these different subtypes, or would you expect to have one that kind of covers the whole gamut of B-cell malignancies?

It's a good question. And thank you for it because we did spend a little bit of time trying to work out the optimal dose and schedule to get the therapeutic ratio we wanted in terms of the efficacy and safety benefits that we want to do. For the class, it had a bit of a rocky run over the years, starting off with idea less early on, and particularly people were concerned about longer term toxicity and things like colitis. We knew from the get-go the drug is incredibly active. So we wanted to work that out and we spent some time doing it. So where we are now is where we think is the optimal way of doing it. And you'll see in the abstracts the totality of the information. But we start off at a high dose, 20 milligrams daily for the first eight weeks, and the idea there is to maximize efficacy. These patients when they respond, they respond early and quickly. So the vast majority, if not all of the responses happen in that time period. And then we stepped back and we looked at after that weekly maintenance versus daily. And again, look at both retention of efficacy then as well as safety. And it turns out that’s best for us is afterwards to switch to the daily dosing and not the weekly maintenance. So if you look at the totality of the data there, you retain efficacy, we are getting the durability of response in PFS, we want -- but we've also been able to tone down some of the toxicity with that regimen. So I think going forward from a regular point of view, obviously you're going to have to work with regulators around the world. Yes. You'll be looking at 20 milligrams induction for 8 weeks followed by the daily schedule thereafter.

Great. Thanks for taking the question.

Thank you. Our next question today is coming from the line of Matthew Phipps. Your line is now live.

Good morning. This is Rob Andrew on for Matt Phipps here. So maybe just on the early stage programs with the BET and ALK2 inhibitors. Just getting started up here and maybe what are the expectations with those programs, given the monotherapy dosing? Are we clearly looking for a safety profile acceptable for Jakafi combinations, or what are the expectations there? Thank you.

It's Steven. Thank you for your questions. I'll separate them out because BET has a slightly different history. So if you look at BET BRD this is a compound we had in the clinic a few years ago, primarily targeting solid tumors and working on a slightly different hypothesis around MYC inhibition, and we were at multiples at the dose we were at now. We were at 12 to 16 milligrams, whereas we had 4 milligrams now. And what we saw there in that program a couple of years ago was on target toxicity in terms of thrombocytopenia as well as other some worrying toxicity. So we had put ourselves on a clinical hold at the time for that compound. And then what happened over the ensuing year with BET as you saw the data from constellation and CPI come forward and we knew by the way, the biology was relevant in myelofibrosis. And we think there is something to that data set, and there is clearly an effect from addition of BET therapy to ruxolitinib. So we revitalized our own program there. We worked with the FDA to come to what we think is a safe starting dose to avert a lot of the toxicities, modeled off what we saw happened in an external world and we've restarted the program. What we have to do is, is demonstrate monotherapy safety, which we do in now with the BET. And we expect that to be the case, given the dosing we using and then quickly go to combination with ruxolitinib. So that's the story behind BET. In terms of ALK2, this is a very exciting program to us. We think the anemia seen in myelopoiesis neoplasms, particularly myelofibrosis is mediated through the hepcidin pathway, building a little bit on the momelotinib data there as well as the anemia seen with the use of JAK inhibitors. So we're trying to ameliorate that anemia of the underlying disease, plus potentially the JAK induced anemia, so that you can maintain dose in. And in fact, as a priority of that actually increase efficacy as well because you can stay on the combination. So again, the idea is to get to ALK2 monotherapy safety pretty quickly, and then start the combination very soon with both. ALK2 in terms of its mechanism of action may have utility in anemias across the board, in terms of hepcidin inhibition. So that's something we interested in. And then there are some entities where solid tumors may have underlying genetic mutations that may be amenable to this as well. So it's a very interesting program, a very interesting mechanism and we are going fast.

Great. Thank you.

Yes, just to add one more thing, because I didn't just -- we are also studying a rare disease, which is also mediated by the program FOP, which is a condition where you get premature bone formation in soft tissues, a lot of morbidity from it and sometimes early death as well. It's a rare entity. But again, it's something we committed to doing as well. So we will have an FOP program as well with the ALK2 agent.

Thank you. Our next question today is coming from Aydin Huseynov from The Benchmark Company. Your line is now live.

Thank you for taking my question. I have one about dermatology. So given relatively high vehicle responses 10% to 20%, so what would be your sales speech to a dermatologist, especially when we hypothetically compare RUX cream to other standards of care, not necessarily the vehicle. Thank you.

Well, Aydin, this is Barry. First of all, I think that our response from the 281 studies and 282 studies are very good and the difference of the delta between the active drug and the vehicle is very good. And as compared to other therapies, well, oral therapies for that maybe coming oral JAK inhibitors and maybe coming for atopic dermatitis, obviously, you're suppressing the entire immune system when you take an oral drug. So that doesn't seem to be the best way to go about it. We have a great check inhibitor1 that's topical, that you can apply right on the area that's most effective. So we think that's an advantage for us. And as far as just some of the evolving data that might be coming from other topical JAK inhibitors we've seen the data so far, we don't see any reason to be concerned about it. And there's still some questions about dose response of those therapies. So our sales pitch is actually we've had many interactions with dermatology, very positive interaction with dermatologist, and they feel very strongly that this is a drug that they've been looking for, RUX cream. So, I think it'll be a relatively straightforward approach. We'll talk about the science and we'll talk about the benefits that it offers to patients who are really suffering from this autoimmune disease, atopic dermatitis.

Thank you.

Thank you. Our next question today is coming from Vikram Purohit from Morgan Stanley. Your line is now live.

Good morning. Thanks for taking my question. So I had a follow-up question on real-world use for Monjuvi. So to the best of your knowledge, has there been much or any off-label use of Monjuvi in combination with another agent like bendamustine or has it so far primarily been in line with the labeled use in combination with lenalidomide?

Yes, so Vikram, I don't -- well, it depends on what you call off-label. Certainly, we've been used in a whole variety of places, relapsed refractory for a second line and plus. Obviously, we're studying the drug in combination with bendamustine in the future. So we'll have multiple other studies that we'll have a chance to see what different combinations including parsaclisib that we'll try to study the drug with in the future. So we're excited about that, but I think that most hematologist oncologist are most excited about what Steven was talking about before, about our complete response rate and how high that is and long duration of response that continues to get better. So the combination of len plus Monjuvi right now has both the efficacy and safety profile that most physicians who treat diffuse large B-cell lymphoma are looking for.

Okay. Understood. And as a follow-up, I had a question on the ASH abstract on the first-line safety data. So I believe that abstract mentions that we could see some initial efficacy data during the presentation at ASH. To the extent you can discuss it, could you characterize a little bit about what we could see there and what we should make of it and how we should interpret it when thinking about Monjuvi in the first-line setting?

Yes. The entire intent of the abstract and presentation is safety, and that's what I'll point to. And just to be maybe a little bit repetitive on my earlier comments, given that the safety of the combination of Tafa, len or CHOP was very similar to Tafa or CHOP given that you have to -- you are aiming for cure here and maximizing cure rates. It became automatic then that Tafa len or CHOP was the way to go in terms of the first-line study. I think, given the intent to safety, that's where you should focus on what the presentation will be about. And then obviously we'll have to wait for a large first-line study to deliver here.

Okay. Understood. Thank you.

Thank you. Our final question today is coming from Alethia Young from Cantor. Your line is now live.

Hi, good morning. This is [indiscernible] for Alethia. Thanks for taking our call. Maybe just one on your PD-1 program. How does your Phase 2 data that you presented at ESMO match up with standard of care. And can you just remind us of your strategy in the PD-1 space is crowded. Are you looking at indications that sort of less develop, are you looking at combinations or both? Thanks.

Yes. Thank you. So, again, to step back, we acquired this compound to use on its own, and then in various combinations, which we needed for within our own program, and that's what we've been doing. At the same time, the intent was obviously to get it registered, and we had a upfront, the niche tumor approach in squamous cell anal carcinoma, Merkel cell carcinoma, and MSL high endometrial. And those studies have all enrolled well. And this is the data you see come to fruition. In terms of squamous cell anal carcinoma, the benchmark is the keynote 158 study from Pembro, but the mature data set where the Pembro overall response rate was 11%. You can see our response rates a little bit north of that territory in the 13%, 14% range that's independently reviewed. In addition, there's a subgroup of patients who are HIV positive with this that have that unmet need and were addressed in our study, which hasn't been addressed in other studies. So we're very encouraged obviously by their data set and thus initiated a Phase 3. And it's right in the territory of what seen just to be repetitive with other PD-1 inhibitors in this entity plus other entities that are very similar, like cervical carcinoma. Beyond the niche tumors, we have an ongoing lung program that's now initiated globally, a lung study. And then as I said we continue to utilize retifanlimab with various internal combinations.

Great. Thank you very much.

Thank you. We reached the end of our question-and-answer session. I'll like to turn the floor back over to Mike for any further or closing comments.

So thank you all for participating in the call today and for your questions. Of course, Christine and I will be available for the rest of the day, and we look forward to engaging with many of you in the coming weeks at investor, and also at medical conferences. For now, though, thank you again and goodbye.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.