Incyte Genomics Inc Q2 2026 Earnings Call

Good evening, welcome to the Incyte second quarter 2026 earnings conference call and webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. We ask you please limit yourselves to one question, then return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Alexis Smith, Vice President, Head of Investor Relations. Please go ahead, Alexis. Thank you.

Good morning. Welcome to Incyte's second quarter 2026 earnings conference call. Before we begin, I encourage everyone to go to the Investors section of our website to find the press release, related financial tables, and slides that follow today's discussion. On today's call, I am joined by Bill, Pablo, and Suky, who will deliver our prepared remarks. Steven, Dave, and Mohamed will also be available for Q&A. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties. Our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. I'll now hand the call over to Bill.

Thank you, Alexis. Good morning, everyone. At the start of the year, we laid out a plan to move Incyte from reliance on a cornerstone product to a company with multiple growth drivers. Six months in, this transition is well underway. We've made tangible progress. We've strengthened the core business, delivered key regulatory milestones, de-risked and advanced our pipeline to late-stage development. We added a novel phase III hematology asset through business development. Let me expand on each. First, our business continues to perform above expectations. Total net sales growth was driven by increased demand and higher net sales across every product. Jakafi remains foundational to the company and delivered another strong quarter. Keeping this product healthy is a strategic priority because it serves as a funding vehicle for the pipeline and new product launches.

At the same time, our core business, excluding Jakafi, continues to grow and is solidly on track to reach $3 billion-$4 billion in net sales by 2030. Importantly, this growth is not dependent on a single asset but is supported by multiple products and near-term launches. We have the commercial capabilities, resources, infrastructure, and management team required to execute successfully. The opportunity here is not simply the value of each individual product, but our ability to launch and scale multiple products in parallel. This capability will be a key driver of Incyte's next phase of growth. Second, we achieved several of the key regulatory milestones we identified at the beginning of the year, including the approval and launch of Jakafi XR, as well as the positive CHMP opinion of OPZELURA in moderate AD, with the final European Commission decision and signature expected in the third quarter.

In addition, regulatory reviews for povorcitinib in HS and MONJUVI in first-line DLBCL are underway, with anticipated approvals and launches through early 2027. Third, we moved multiple assets into late-stage development. We launched phase III studies for INCA033989 in second-line ET, INCB161734 in PDAC, and INCA33890 in CRC. We also have a catalyst-rich second half of the year with 10 data readouts across nearly all assets in our clinical pipeline, including data from our registration trials for OPZELURA in HS and povorcitinib in PN. As these programs advance, we are gaining greater visibility into the potential shape of our growth profile beyond 2029. We also strengthened our hematology portfolio through business development. The Vega Therapeutics transaction added latarcibart, a potentially transformative treatment for von Willebrand disease in phase III development and a potential new growth driver for the company.

latarcibart expands our most important therapeutic franchise, offers an attractive risk-reward profile, and the transaction was structured to preserve balance sheet flexibility. It checked all the boxes we looked for in business development and is a textbook example of the type of deal that makes sense for Incyte. Taken together, Incyte is no longer dependent on one asset, catalyst, or blockbuster. We now have a solid core business, a series of near-term launches, and a more mature late-stage pipeline supporting multiple avenues for future growth. Operationally, we're a stronger organization than we were a year ago. Our focus right now is execution, turning phase III studies into approvals and approvals into successful launches. Turning to the quarter. Total revenue in the second quarter of 2026 was $1.67 billion, up 38% year-over-year.

Total net sales in the second quarter were $1.49 billion, representing 40% growth year-over-year. The increase was driven by continued demand across the portfolio and by a one-time non-cash benefit from the CMS settlement. Excluding this benefit, total net sales increased 17%. This growth was broad-based, with every marketed product growing year-over-year in both the U.S. and international markets. Jakafi sales in the second quarter were $817 million, up 7% year-over-year. Prescription demand for Jakafi increased 9% across all indications, MF, PV, and GVHD, with PV being the largest growth driver. New patient starts remain strong. The prescriber base is stable, and formulary coverage is broad, providing an important foundation for the Jakafi XR launch. A few comments on XR. The launch has two parts, coverage and adoption.

On coverage, we're on track to achieve our year-end formulary goal of 50%-70%, supported by recent wins at Express Scripts, CVS Health, Optum, and more than 10 regional plans. On adoption, we expect physician adoption to build gradually through the remainder of 2026 as coverage expands and physicians gain experience with XR, with acceleration expected throughout 2027. Commercially, XR generated $10 million in sales in the second quarter, which primarily consists of initial inventory build. We expect XR sales to approach $40 million-$50 million for the full year, which is captured in our full-year Jakafi guidance. Sales for our core business, excluding Jakafi, were $671 million, up 127% year-over-year. Excluding the one-time OPZELURA benefit, sales grew 44%. This business is becoming an increasingly important part of how we transition Incyte through the LOE period and for long-term growth.

OPZELURA remains the largest contributor of business outside of Jakafi, generating $450 million in second quarter sales. This includes $204 million of net product sales and a one-time non-cash benefit of $246 million related to our agreement with CMS and the reversal of previously accrued balances associated with the resolution of Medicaid rebate litigation. In the U.S., sales excluding the one-time benefit were $161 million, an increase of 22% versus the second quarter of 2025. Demand here remains strong, with prescriptions increasing 26% year-over-year, which outpaced the overall market, which grew 21%. New patient starts also remain strong, with OPZELURA capturing 46% of branded topical NBRX volume, a leading indicator of future growth and business health. The resolution of the CMS matter improves the economics of the business, resulting in a favorable change to our average selling price and gross-to-net profile.

It effectively offsets some of the investment we made to expand and maintain formulary access at the beginning of the year. As a result, prescription growth should translate more efficiently into net sales growth going forward. That said, we continue to view the pricing and reimbursement environment as dynamic, so maintaining broad access and a disciplined gross-to-net profile remains a priority. OPZELURA is in a stronger position today than it was a year ago. Demand is robust, and access is broad, and while we're encouraged by this momentum, this is not a business we can put on autopilot. Sustaining growth will require effective commercial execution and continued focus on the access and pricing dynamics that support growth. Internationally, OPZELURA sales were $43 million in the second quarter, up 34% year-over-year. Growth remains robust in vitiligo, where we see strong demand across markets.

We remain on track for potential approval and launch of OPZELURA for moderate atopic dermatitis in Europe during the third quarter. We expect modest revenue contribution in 2026, with momentum building through 2027 as additional countries launch and reimbursement expands. We continue to view the international expansion of OPZELURA as an important long-term growth driver for the franchise, with the potential to deliver two to three times the international sales today. Finally, in hematology and oncology, net sales grew 69% to $222 million. Niktimvo, MONJUVI, ZYNYZ were the biggest contributors to growth in the quarter. Niktimvo net sales were $60 million in the second quarter of 2026, representing a 67% increase versus the prior year. The performance was entirely volume growth-based. More than 300 new patients initiating therapy during the quarter and more than 1,200 patients treated. We currently hold approximately one-third of the third-line+ market.

MONJUVI net sales were $54 million in second quarter, up 72% year-over-year. Growth was primarily driven by uptake in follicular lymphoma in international markets, including the recent approval and launch in Japan in the second quarter. MONJUVI is expected to have three sources of growth, relapse refractory DLBCL, follicular lymphoma, and potentially first-line DLBCL. We expect the existing indications to remain incremental contributors, while first-line DLBCL has the potential to become the largest growth driver for the franchise over time. Finally, ZYNYZ net sales were $50 million in the second quarter, a 4x increase year-over-year, with rapid and robust adoption in SCAC across markets. In the U.S., ZYNYZ is becoming the leading prescribed regimen with over a 40% share in first-line SCAC in just 12 months post-launch. Now I'll turn the call over to Pablo.

Thank you, Bill. Good morning, everyone. At the beginning of 2026, we outlined ambitious development plans for the R&D organization, including 4 anticipated approvals, 2 new product launches, 7 key data readouts, and the execution of 14 pivotal studies across our portfolio. As we have reached the midpoint of the year, I am happy to report that we have made significant progress and remain well-positioned to deliver on the milestones we outlined. In the past 12 months, we have fundamentally changed the maturity of our portfolio, advancing multiple programs from early development into late-stage clinical trials while delivering regulatory submissions and approvals. Today, we have late-stage opportunities across all 3 of our core franchises, creating multiple opportunities for sustained long-term growth. All regulatory submissions supporting our 4 anticipated approvals for 2026 are now complete.

Jakafi XR was approved in the second quarter, representing the 1st of our 2 new product launches planned this year. In June, OPZELURA received a positive CHMP opinion for the treatment of patients with moderate atopic dermatitis in Europe, with an approval anticipated in the third quarter. If approved, OPZELURA would become the 1st topical JAK inhibitor treatment available in Europe for moderate AD. Our submissions for povorcitinib in hidradenitis suppurativa and tafasitamab in newly diagnosed diffuse large B-cell lymphoma are under regulatory review, with anticipated approvals and launches beginning later this year and into 2027. Beyond our regulatory progress, we delivered multiple important data readouts across hematology, oncology, and dermatology, including registrational data for tafasitamab in first-line DLBCL and povorcitinib in vitiligo, as well as additional data for 989 in essential thrombocythemia and myelofibrosis.

At the same time, we expanded our late-stage pipeline with additional latarcibart and have advanced 13 of our now 15 planned pivotal studies, with the remaining 2 study initiations expected by year-end. Our teams continue to execute well against our development priorities, positioning the portfolio for both near-term value creation and long-term growth. Importantly, many of our highest value catalysts, including data readouts and regulatory decisions, remain ahead, positioning us for a catalyst-rich second half of the year. With that, I'll now turn to the pipeline. Our hematology strategy combines leadership in established disease areas with first-in-class mutation-directed therapies designed to redefine treatment across graft-versus-host disease, myeloproliferative neoplasms, and now bleeding disorders, with additional latarcibart for von Willebrand disease. In chronic graft-versus-host disease, we continue to advance axatilimab in 2 studies evaluating its potential use earlier in the treatment paradigm, including in combination with ruxolitinib and in combination with steroids.

We remain on track to share top-line data from the phase II study in combination with ruxolitinib in the second half of 2026. Top-line data from the phase III study with steroids is expected in early 2028. We're also advancing a portfolio of molecularly targeted therapies for myeloproliferative neoplasms, or MPNs, focused on the underlying driver mutations of disease. Our MPN strategy is built around targeting the underlying biology of disease through highly selective therapies directed against key disease-driving mutations, CALR and JAK2 V617F. Our portfolio includes 989, a mutant CALR monoclonal antibody in late-stage development, 784, our CALR by CD3 bispecific in an ongoing phase I trial, and next-generation programs in preclinical development. We continue to evaluate emerging data as these programs progress and prioritize those we believe have the strongest profiles and greatest potential for patients.

As part of this assessment, we decided to discontinue developing 058, our lead asset in our JAK2 V617F-targeted pipeline, and are no longer expecting to report data later this year. Based on the totality of the data to date, we do not believe the molecule demonstrated the profile necessary to become a differentiated therapy. Importantly, this decision is specific to 058 and does not change our conviction in JAK2 V617F as an important therapeutic target in MPNs. We are prioritizing our next-generation JAK2 V617F-targeted assets. We believe these next-generation programs provide a clear opportunity to realize the promise of selectively targeting JAK2 V617F. These programs are progressing through IND-enabling studies, and we'll plan to share more information, including preclinical data, by the end of the year. Turning to our most advanced MPN program, 989, the first and only mutation-specific therapy to enter late-stage development in CALR-mutated MPNs.

Early in the quarter, at the European Hematology Association annual meeting, we presented additional phase I data in mutant CALR-positive patients with ET and MF. As this data has matured, we continue to see evidence supporting the differentiated clinical profile of 989, strengthening our confidence in both the ongoing phase III program and the broader development strategy in MF. As mentioned earlier, our phase III study is now underway in mutant CALR-positive patients with ET who have received prior cytoreductive therapy. In MF, we remain on track to initiate a phase III study in JAK-experienced patients in the second half of this year. We'll provide an update following the completion of regulatory discussions. Additionally, we continue to advance our phase I cohort, evaluating 989 as a first-line treatment for patients with MF, both as monotherapy and in combination with ruxolitinib.

We expect to share data from this cohort, along with additional data from the JAK-ineligible cohort previously presented at EHA later this year. We also continue to advance the subcutaneous formulation of 989 and initiate a phase I study in mutant CALR-positive patients in the second quarter. In addition to our ongoing efforts, we recently entered a global collaboration and license agreement with Halozyme to evaluate the subcutaneous formulation of 989 using enhanced technology. This collaboration complements our internal subcutaneous development efforts and provides additional flexibility as we optimize the administration profile of 989 for future commercial use. Earlier this month, we strengthened our hematology portfolio through the acquisition of Vega Therapeutics, adding latarcibart, a novel protein S modulator in phase III development for patients with von Willebrand disease, to our late-stage pipeline.

At the International Society on Thrombosis and Haemostasis Congress earlier this month, data from the multi-dose VIVID-3 study evaluating latarcibart in patients with VWD were presented during a featured oral session. In VIVID-3, latarcibart demonstrated an 81% median reduction in annualized bleeding rate across patients with different von Willebrand disease subtypes and bleeding types, along with a favorable tolerability profile. With once-monthly subcutaneous dosing, latarcibart also has the potential to significantly reduce treatment burden compared with current prophylactic therapies, which are typically administered 2 to 3 times per week. Taken together, the efficacy, tolerability, and dosing profile, combined with its novel mechanism of action, give us confidence in the potential of latarcibart to establish a new standard of care. Our focus now is on advancing the phase III VIVID-6 trial, and we remain on track to deliver top-line data by early 2029. Turning to our oncology portfolio.

All 3 of our lead solid tumor programs, A90, our TGF-beta receptor 2 by PD1 bispecific antibody, 734, our KRAS G12D inhibitor, and 667, our CDK2 inhibitor, are progressing through pivotal development, reflecting the continued maturation of our oncology pipeline. In parallel, we continue to generate data in robust phase I programs, exploring the potential of these assets across different indications, lines of therapy, and combination settings, which will help inform broader development efforts. At the European Society for Medical Oncology Congress in October, we plan to present 4 rapid oral presentations highlighting phase I data across all 3 assets. This includes data for 734 in first-line pancreatic and late-line colorectal, 890 in first-line and late-line colorectal, and 667 in recurrent ovarian cancers.

These presentations will represent the most comprehensive clinical update we have provided across our leading oncology programs and includes substantially larger and more mature datasets than we have previously shared, providing greater insight into the depth of the clinical efficacy and overall safety, and helping further define the emerging competitive profile of each program. For 890 and 734, the presentations will include data in combination with chemotherapy and in patient populations directly aligned with our ongoing phase III studies. At the same time, the breadth of data across all 3 programs will help inform potential expansion into additional indications and treatment settings. Now I'd like to turn to our I&I portfolio, where we continue to build a dermatology franchise across both topical and systemic therapies with multiple opportunities for continued expansion. Regulatory and clinical efforts for ruxolitinib cream and povorcitinib continue to progress.

We remain on track to report top-line results from our registrational phase III program evaluating ruxolitinib cream in mild to moderate HS by year-end. If positive, this data could support the first topical therapy specifically developed for patients with HS and would further expand OPZELURA's role across inflammatory skin diseases. For povorcitinib, we continue to execute a broad development and regulatory strategy designed to support a multi-indication franchise. Povorcitinib is under review for the treatment of moderate to severe HS, and we expect potential approvals in Europe in late 2026 and in the U.S. in the first quarter of 2027. In the first half of the year, we shared positive results from our phase III program in vitiligo. Additionally, we remain on track to report top-line results from our phase III program in prurigo nodularis in the fourth quarter.

By year-end, we expect to have delivered 6 registrational study readouts for ruxolitinib cream and povorcitinib across HS, vitiligo, and PN, further strengthening our dermatology franchise spanning multiple diseases and treatment modalities. To close, we continue to make meaningful progress across our pipeline in 2026, delivering important clinical and regulatory milestones. Our portfolio is broader, more mature, and increasingly diversified, and we expect an active second half of the year with multiple registrational data readouts, regulatory decisions, and development milestones across our 3 core franchises that we believe will further strengthen our long-term growth trajectory. With that, I'll turn it over to Sukhi for a financial update on the quarter.

Thanks, Pablo, good morning, everyone. I'll begin with comments on our second quarter results and then turn to our updated full-year outlook. As Bill mentioned earlier, total revenue in the second quarter was $1.067 billion, an increase of 38% driven by strong product sales. Total net product sales were $1.49 billion, reflecting 40% growth versus the prior year. The increase was driven by strong product demand and a one-time non-cash benefit of $246 million. Excluding the one-time benefit, total net sales increased 17% versus the prior year. Total GAAP expenses for the quarter were $976 million, an increase of 42% compared to the prior year. The year-over-year increase reflects a lower expense base in the second quarter of 2025, resulting from the Novartis settlement of $242 million. When we exclude the favorable adjustment in the second quarter of 2025, total operating expenses grew 5%.

GAAP cost of goods was $105 million, representing 7% of total net sales. This is in line with our expectations, and we expect COGS to be between 8%-9% for the full year. Our GAAP R&D expenses were $517 million, an increase of 4%, driven by continued investment in our late-stage development assets across hematology and oncology. Moving to GAAP SG&A. Expenses were $352 million, increasing 6%, driven by pre-launch activities for povorcitinib. We ended the quarter with $4.5 billion in cash and cash equivalents. This includes the close of the Vega Therapeutics acquisition in July, which I'll provide more color on momentarily. Turning to our outlook for the remainder of the year.

We are updating several components of our existing guidance for the full year, including total net sales, which is driven by guidance updates to OPZELURA as well as hematology and oncology, and R&D and SG&A operating expenses driven by the close of the Vega acquisition and related incremental costs in the second half of the year. Starting with net sales, we are raising our full-year 2026 total net sales guidance to $5.13 billion-$5.26 billion. For OPZELURA, we are updating full-year 2026 net sales guidance to $1.05 billion-$1.10 billion. Our new guidance reflects the previous guidance of $750 million-$790 million and the incremental estimated impact of $300 million-$310 million of net sales related to the CMS settlement. This impact includes two key components. First is a one-time non-cash benefit of $246 million related to OPZELURA net sales that was recorded in the second quarter.

As a reminder, this amount is associated with the reversal of previously established accrual balances through the first quarter of 2026. Second, higher net sales from an improved gross to net profile in the second quarter through the fourth quarter. In the second quarter, the impact of U.S. OPZELURA net sales was $15 million. This is a net impact after consideration of certain one-time prior year state-related liabilities that became effective at the conclusion of the CMS settlement. On a go-forward basis, we expect the impact to be approximately $40 million-$50 million for the second half of the year. Regarding our hematology and oncology portfolio, we are narrowing and raising full-year guidance range to $860 million-$890 million based on strong performance in the first half of the year. Turning to operating expenses. We are updating our full year 2026 operating expense guidance.

We are narrowing and raising our 2026 GAAP R&D and SG&A operating expense guidance to $4,915,000,000-$4,995,000,000. We are also raising total non-GAAP R&D and SG&A operating expenses to $4,625,000,000-$4,695,000,000. The new guidance reflects an increase of approximately $1,270,000,000 related to the upfront payment for in-process research and development and associated transaction costs in tandem with approximately $50 million in ongoing phase III development of latarcibart in von Willebrand disease. To close, we are pleased with our performance for the quarter and for the first half of the year and remain confident in our outlook. With that, I'll turn the call back over to the operator for Q&A.

Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. As a reminder, we ask you please ask one question and then return to the queue. Our first question today is coming from Marc Frahm from TD Cowen. Your line is now live.

Hi. Thanks for taking my questions. Congrats on the strong quarter commercially. Maybe this is mostly for Pablo. Just on the kind of CALR program and your regulatory discussions, can you maybe just review what the major questions are still kind of awaiting resolution on that trial design in MF? How much of that is the endpoint, whether you can include something like anemia and some sort of composite versus how much of that is still outstanding dose selection work for particularly the type 2s and might on that latter part that take a little bit longer for type 1s versus type 2s and lead to kind of different trial initiation timelines?

Good morning, Marc. Thank you for the question. When we think about the regulatory path in MF, there's basically two paths, right? One would be the standard, which I think we all know about, which would include SVR35 and TSS50 as endpoints, or an alternative one, which will include other endpoints. Let me spend a minute on why we think the second is important to discuss with the FDA. We thought and still think it's important to discuss with FDA. INCA033989 is a completely novel mechanism of action, as we all know. On top of delivering benefit, as we saw in the EHA data update that we provided, on top of delivering benefit on SVR35 and TSS50, it delivers an extraordinary benefit on improving hemoglobin levels in these patients.

Most of the patients treated, whether it is first or second-line MF, show increases in hemoglobin that are clinically significant. In addition to that, there's clear evidence of what we discussed as disease-modifying evidence, including reduction of malignant megakaryocytes in bone marrow, reduction of malignant progenitors in peripheral blood, et cetera. When you put all that together, we thought and still believe it's important to have a constructive dialogue with the FDA to see how we can incorporate some of these endpoints that reflect the benefit patients receive from 989 and that reflect the mechanism of action of 989, that they need to be reflected in the clinical trial design. We have initiated those conversations with the FDA. They're going well. They're being constructive.

As soon as we complete those, we will give you clarity on what the regulatory path will be, first in second-line MF, which we intend to start this year. Then as a result of that, we'll continue the conversation with the agency on first-line MF, which we will initiate next year. At this point, our intention is to conduct a study in MF in all comers, type 1 and non-type 1 patients, potentially with a differential dosing strategy, not quite like NET, because NET we have a dose escalation. The rapid normalization of play of the NET allows you for a rapid dose escalation. In MF, we would start type 1 and non-type 1 patients at 2 different dose levels instead of doing the dose escalation. That's where we are today with the planning of the study.

Thanks for the question, Marc.

Thank you. Our next question today is coming from Eric Schmidt from Cantor Fitzgerald. Your line is now live.

Thank you. Maybe a higher-level strategic question for Bill and team. Given you touched just on the Vega acquisition, how are you feeling about the breadth and depth of your pipeline? Do you have more capacity, and is there some sort of a target R&D as a % of sales level that you might want to be spending at as we go into the Jakafi expiration? Thanks. Yeah, it's a good question, Eric.

A couple of things. As it relates to business development, and frankly, R&D, our job is to keep this product line and pipeline moving. I think you can never underestimate attrition in any business. We are actively looking at potential opportunities that meet or check the same criteria that Vega did. I think that we have a very clear framework for doing business development. When we see opportunities that meet certain strategic and financial criteria, we can act quickly. Alternatively, or on the other hand, we're not solving right now for a fixed margin %.

What I will tell you is if there's any margin compression in this business, let's say, as we get to 2029, there'll have to be a clear and positive correlation with materially increasing the risk-adjusted value of our pipeline. Right now, every line item in our P&L is either absorbing, offsetting, or directly funding the growth strategy. As you know, in SG&A, we're funding product launches. As it relates to R&D, 80% of our investment is concentrated on what we think are really smart investments. If any of the investments that we're making, if the facts and circumstances around those investments change or performance is not what we are expected, we stop making those investments.

As we get closer and we have more clarity on our pipeline, where I think we're set up very well right now, I think when you look at the pipeline, there's four assets that have a high PTRS and the potential to deliver outsized returns. That's povorcitinib, 989, G-12D, and VGA-039. Now, that's not to say that there's not value in TGF-β by PD-1 or CDK2, but the four assets I just mentioned have the potential to move Incyte way beyond Jakafi, which is ultimately what we're solving for. To wrap it up, 12 months of margin compression to set up 10 years of revenue and earnings growth, I think is a smart calculation. That's what we look at every day.

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. I wanted to maybe ask one quick one about the announcement you made last week about your global collaboration with Halozyme to use their enhanced drug delivery technology to help with 989. Can you maybe give us a little bit more color on what exactly you'd like to improve and when you think this could move into clinic and we could start to see data using this technology? Thanks. Thanks, Tazeen. Pablo, why don't you set up where we are with the program overall and then get into Halozyme?

Certainly. Let me remind you a couple of points that we made, which are really important about this program and the subQ development. We have completed healthy volunteer work. We are right now with the existing subQ formulation in patients with MPNs. That's the status of the program. We have a clear path here to continue that program forward and by optimizing the existing formulation and the existing subcutaneous device for infusion, which is not a wearable, as we discussed before. This is something that patients will have to apply for 15-20 minutes every other week to deliver the desired dose. That path is clear. We have discussions with FDA on a bridging strategy for that path that I just described. We thought it was important to continue to add optionality to this program.

As you can imagine, the conversations with Halozyme have been going on for quite some time before signature of the agreement. They're not related in any way to any data that has emerged from the ongoing subcutaneous development. We thought it was important to have an additional option to improve flexibility and potentially to improve the patient experience when it comes to subcutaneous formulation administration of 989. That's basically the plan we have in place. We're executing the existing subcu plan with existing formulation. We're adding another option now with the enhanced technology.

Thanks a lot for the question.

Thank you. Our next question today is coming from Faisal Keshav from Jefferies. Your line is now live.

Hey, guys. Thank you for taking the question. Can you set expectations for the G12D update that you're going to have at ESMO? Can you possibly give us some more perspective on how you think about competitive positioning and how you see your opportunity to differentiate within the class? Thank you. Great. Pablo, you want to take the first part of the question?

Certainly. Thank you for the question. When we think about our INCB161734, our G12D inhibitor, I think we are convinced we have in our hands a highly selective, highly potent, novel medicine that combines well with existing standard of care, which is in first-time pancreatic cancer is chemotherapy, either FOLFIRINOX or Gem/Nab. In that context, when we think about the development plan, our goal was to accelerate as much as possible development in first-time pancreatic cancer in combination with those two chemotherapy regimens. What we will do at ESMO is provide approximately 50 patients worth of data, half and half with Gem/Nab and FOLFIRINOX, with a fair amount of maturity, showing you where we are on efficacy and safety in that context. We think that's a really important de-risking for the first-time pancreatic cancer strategy that we're pursuing. The phase III study in first-time pancreatic cancer is ongoing.

As far as we know, based on public disclosures, we are neck and neck with our competitors. We don't think we're behind, and our team is executing on that as fast as possible. Let me add a little bit more context on the program because I think it's important the breadth of how we're looking at this program in other indications. We're going to present data as well at ESMO of combination in colorectal cancer. We think that is a really important indication for G12D inhibitor. There's two basic ways to do it, is late-line in combination with EGFR inhibitors and in early lines in combination with chemotherapy and EGFR inhibitors. We'll show some of that data as well at the ESMO meeting.

When you start thinking about our G12D program, if things go well and the data that we present continues to de-risk the program, you should think about it in a couple of different tumor types and in a couple of different lines of therapy. Specifically, in pancreatic cancer, in first line, in combination with chemotherapy, and potentially in the adjuvant setting as well, and in colorectal cancer, in late line, in combination with EGFR inhibitors, and potentially in earlier lines, in combination with chemotherapy and EGFR inhibitors. We'll talk about it at ESMO. We think the data we're going to present is a significant de-risking event for this program in first-line pancreatic and potentially in colorectal cancer as well. Thank you for the question.

I would just add to what Pablo said as it relates to competitive positioning. I think it's unlikely that pancreatic cancer becomes a winner-take-all market. You rarely see that in oncology. I think generally speaking, oncologists resist dependence on a single treatment. This is not, I believe, an either/or calculation. Populations are different. There's various combination strategies that can be put in place. I think at the end of the day, this will become about sequencing and matching the right drug with the biology. We believe a selective G12D inhibitor will be used first in G12D patients and then a non-selective later, but there again, it's not either/or. What we do know is there's only two companies right now in phase III studies with the first targeted G12D treatment in pancreatic cancer.

Whether you're first or early, this for Incyte can be a real needle mover. I think when you look at the data that we'll share at ESMO, you'll be reassured about the activity of this compound in terms of response rates as well as durability of response.

Thank you. Thank you for the question.

Our next question today is coming from Jay Olson from Oppenheimer. Your line is now live.

Oh, hey. Congrats on all the progress, including closing the Vega deal. Based on everything you've learned, including feedback from KOLs at ISTH, can you comment on the potential for latarcibart to expand beyond VWD? Eventually, do you think latarcibart can be the next Hemlibra? Thank you. Jay, thank you for the question.

I'm going to turn it over to Dave Gardner and let him make a few comments.

Yeah. Thanks, Jay. Yes, we did get very favorable feedback, both from KOLs and importantly from the patient advocacy channel as well at ISTH. A lot of the discussion was around the impressive clinical profile thus far from latarcibart, but a secondary discussion did emerge around the treatment of bleeds and the urgency to use better prophylaxis to prevent bleeds in a broader set of patients. Coming out of ISTH, absolutely, we are emboldened by the feedback that if we deliver on the target product profile, there is potential to deliver a transformative Hemlibra-like opportunity to these patients.

Jay, if you think about it, there is a hemophilia A-like population in von Willebrand's, that is a sizable pool of patients who are severe frequent bleeders. If 039 comes out of phase III, like David said, with a substantial reduction in the annual bleed rate and a good benefit-risk profile, adoption in that group, which could be almost 10,000 people, would turn this into one of the largest products Incyte would have. The most important thing for us to do right now is execute this phase III program, maintain the quality of the data, then of course, get it approved. All of the substrate is there for this to be a large product. Thanks for the question. Thank you.

Our next question today is coming from Derek Archila from Wells Fargo. Your line is now live.

Good morning, thanks for the update, thanks for taking my question. Given Niktimvo's IPF data, phase III data is going to come from Syndax later this year. I know you guys have an opt-in, just wondering if you could walk us through kind of the decision framework, what sort of data threshold may trigger an opt-in, how you communicate that decision, and just remind us of the split on the development cost if you decide to proceed. Thanks. Great. Thanks for the question.

Pablo? Yes. Derek, good morning, and thank you for the question.

The disclosure of the data, since they're conducting the study, will be done by Syndax. It will not be done by us. Obviously, they'll share the data with us. We'll discuss the results, and depending how clear they are, it will take a little bit longer or not to make the decision to pursue the indication together with Syndax. When it comes to the existing agreement, it's the same type of agreement we have for other indications, both in sharing development cost and sharing economics, so there's no difference. When it comes to the opt-in, I just want to make clear that if we decide to opt-in, there's nothing to prevent us from doing so. We really look forward to hearing the data from our colleagues at Syndax, but they will be the ones releasing those results.

Thanks for the question, Derek.

Thank you. Our next question today is coming from Andy Chen from Wolfe Research. Your line is now live.

Hi. Thank you so much for taking my question. This is Jason taking it for Andy, I just wanted to ask, how well is the Jakafi XR conversion tracking along your internal metrics so far? Do you know when payer reimbursement might kick in, which specific earnings will this specifically impact the most? Thank you. What was the second part of the question?

Oh. Go ahead. When payer reimbursement might kick in and which of the earnings coming up will this impact the most?

Thank you. Great. Thank you.

Go ahead, Pablo. I mean, Mohamed, why don't you go ahead and comment on that?

Yeah. Thanks, Bill, and Jason, thanks for the question. Look, like we mentioned earlier this year, we're focused on accelerating XR formulary access because that will serve as the basis for demand growth, and we're well on track to achieve that goal of 50%-70% formulary coverage by the end of the year. To answer your question specifically, when will payer reimbursement kick in? It has kicked in, and like Bill mentioned in the prepared remarks, several major payers have already moved and put XR on formulary. We've already seen demand start to pick up, and if by the end of the year, let's just say December, we exit the year with XR maybe representing somewhere between 3%-5% of our demand. That'll put us somewhere in that $40 million-$50 million range that Bill mentioned in the prepared remarks.

That puts us well on our way to that 10%-30% conversion before Jakafi LOE. We're very pleased with the access so far. The market access team has done a really nice job of getting us and putting us in a position for demand generation to accelerate later in 2027.

Thanks, Jason. Thank you. Our next question today is coming from Matt Phipps from William Blair.

Your line is now live.

Good morning. Thanks for taking my question. Nice execution in the quarter. Pablo, you mentioned the totality of the data did not support continued development 058 for the JAK2 V617F indication. Were there other factors as you changed the formulation of things that contributed to this totality of the data? Can you just run us on the timeline for moving that backup program into the clinics and how you're thinking maybe about the internal program versus the Prelude option? Thank you. Certainly. Thank you for the question.

I think you captured the key point there. It was not just about bioavailability. It was not just about exposure. We think the new formulation showed promise, we will continue to escalate. When we started to look at the emerging data, what we look at, as you can imagine, is obviously the PK that you just pointed out to, as well as the safety and efficacy that it's emerging from a particular program. We look at that in the context of other programs that we have in-house and that we have been advancing pre-clinically over the last couple of years. When we put all that together, it just made no sense to continue to develop 058. The next generation programs have moved along very, very well. We're really excited about what the data looks like pre-clinically.

We will provide an update pre-clinical data later this year, just so you have clarity on what the differences are between this program, this new program, and 058. We're looking to basically file the IND in the relatively near future. I won't give you a precise point in time right now, we'll provide an update later this year when we present the data, but it's reasonably close to an IND filing. On the Prelude agreement, obviously, those programs are managed by Prelude. In terms of updates, they can provide them. The lead is in the clinic, there are other programs that we discussed with them that they are advancing through different stages of pre-clinical development. We will sit down with them and discuss the current data that they have.

in terms of providing further updates on that should be done by Prelude since they're programs at this point until we opt-in.

Thanks for the question, Matt.

Thank you. Our next question today is coming from Evan Seigerman from BMO Capital Markets. Your line is now live.

Hi, guys. Thank you so much for taking my question. I want to touch back on some of the data at ESMO, specifically on INCB161734. As you prepare to present the PDAC and CRC data later this year, what benchmarks should we use to judge success, and how would you frame your conviction in this asset versus the competitive profile that we had talked about earlier on this call? Thank you very much. Thanks for the question, Evan.

Pablo? Certainly. Thank you for the question, Evan.

The way I think about it is as follows. The first thing, we initiated a phase III trial in pancreatic cancer in combination with chemotherapy, as you know, with INCB161734, and we've shown very little data other than ASCO GI last January. We thought it was very important to have an expanded cohort of patients, as I mentioned, about 50 patients, about half and half with each type of chemotherapy, with some maturity in order to de-risk this program and generate more conviction around that first-line indication. We look at benchmarks, there's two sets of benchmarks here. One is existing chemotherapy, and that's pretty clear. There's a number of publications with response rate in the 30%, 40%, 45%. There are our competitors, which have presented some data as well in combination with chemotherapy.

As we put the data at ESMO, we'll discuss it in more detail, We think potentially we have a best-in-class agent here in combination with chemotherapy in front-line pancreatic cancer. We'll discuss those results and hopefully you'll share our level of conviction around that program. When it comes to colorectal cancer, obviously, that's a smaller data set, We'll have data in combination with Erbitux that we also think potentially starts to show signs of being a best-in-class agent to combine with an EGFR inhibitor in patients with colorectal cancer, which we think it might be an underappreciated opportunity for a G12D inhibitor that we intend to pursue.

Thanks for the question, Evan.

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

Hey, guys. Thanks for taking my questions. I had one on the PD-1 TGF-beta asset 890. Pablo, I guess, what is your level of conviction that this could succeed in frontline colorectal cancer? How is that positioned longer term in the CRC space relative to other emerging therapies, including amivantamab or ivonescimab, which are in phase III? Then how do you think about other opportunities for this agent longer term?

Thank you for the question, Michael. Okay, let's start with frontline colorectal cancer. What we know today is that TGF-beta receptor 2 by PD-1 antibody generated what I would describe as the best single-agent activity ever reported for a PD-1 therapy in patients with MSI colorectal, particularly in patients with liver metastasis. That led to an acceleration of that program. We generated data in combination with FOLFOX/bev that first showed it was tolerable and they show increasingly a level of responses and durability that convinced us that was the right path forward. What we're going to show at ESMO is a pretty large data set with a fair amount of follow-up that we believe supports the frontline strategy with FOLFOX/bev. We're fully aware of the competitive landscape.

I think the difference here, both approaches might work, Michael, I think the difference is bevacizumab is a very important drug in patients with colorectal cancer. When you give a PD-1 by VEGF, you cannot give full dose bev. By giving a TGF-beta receptor 2 by PD-1, we can give the full dose bevacizumab, which we believe could potentially be a differentiating feature. Data over time will decide which one of those approaches is better, and both might be successful. That's point number 1. The second is we've generated data also in combination with bevacizumab alone. Some of the data might be presented at the meeting as well, and we believe also continues to show the potential of TGF-beta receptor by PD-1 in colorectal cancer more broadly. When it comes to other tumor types, as you know, we've done some work in other tumor types.

I'm not sure we're going to have time for an update on that at ESMO. We want to focus at ESMO on the three things that I discussed in my prepared remarks. G12D in pancreatic and colorectal, TGF-β x PD-1 in colorectal, and INCB123667 in patients with ovarian cancer now in combination with bevacizumab, which we also think it's an important update de-risking the maintenance study that we're conducting in that program.

Thanks, Michael. Thank you. Our next question today is coming from Jessica Fye from J.P.

Morgan. Your line is now live.

Hey, guys. Good morning. Thanks for taking my questions. Just wanted to confirm what the right way to think about OPZELURA gross to nets is going forward. Also, can you just remind me of your regulatory plans for povorcitinib in vitiligo? Thank you. Great, Jess. I'll take the first part of the question and Muhammad or Suky can add.

In simple terms, we were working with a gross to net in the low 60s. With the settlement, now we're in the high 50s. As I had mentioned at the start of the call, it just simply improves the gross to net profile and average selling price for OPZELURA. We made a strategic decision at the beginning of the year to expand access. There was an investment associated with that. I can tell you, here we are seven months later, I think it was the right decision because when you look at the fundamentals of this business, which is basically volume growth coupled with coverage, we're in a really good spot. Our job right now is to just manage this selling price as we get into 2027 and 2028.

I think that pretty much covers it, I think I can turn it over to Pablo or Steven to talk about the vitiligo regulatory plan.

Thank you for the question, Jeff. The plan in vitiligo, after discussions we had with FDA over the past year or so, is to submit right after the approval in HS with two years of safety data, safety follow-up in the vitiligo patients. Basically, the team is preparing the filing. As soon as we get the HS and we sort of collect the two-year follow-up, we will submit that. It's going to go in early next year.

Thanks, guys. Thank you. Our next question today is coming from Salveen Richter from Goldman Sachs.

Your line is now live.

Thank you. Good morning. Could you speak to your target profile for the mutCALR program-INCA033989 as we look to first-line data by year-end in both the mono and combo cohorts, versus what you've established with Jakafi and the traditional endpoints of spleen and symptoms? Maybe put this in the context of the composite endpoint that you're trying to create as well. Thank you. Great. Thanks for the question.

Thank you, Salveen. As I mentioned, I won't repeat myself, early in the call, there's two regulatory paths here. One, traditional endpoints, as you allude, with SVR35 and TSS50, and the conversations we're having with FDA on second-line MF. Depending on the success of those conversations, some of those lessons may be applied to first-line MF or not. Our conviction here remains because of the data we presented in a small subset of JAK-ineligible patients, which is basically a JAK-naive population, which we present at EHA, and we will update later this year. We show pretty solid numbers in terms of SVR35 and TSS50, stronger in type 1 patients than non-type 1. Certainly, when you think about, if you remember the EHA data, there were very few non-type 1 patients that received a higher dose. We do know those patients do need a higher dose.

When you put all that together, our conversations with FDA will complete the second-line MF conversations. Depending on that, and whether we are able to advance a different endpoint or not, we will decide the regulatory path for first-line MF. As of today, our plan continues to be in first-line MF to develop INCA033989, both as a single agent and in combination with Jakafi, and both in type 1 and non-type 1 patients. That's still the plan. Thanks, Savine.

Thank you. Our final question today is coming from Mitchell Kapoor from H.C. Wainwright. Your line is now live.

Hi, this is Mitchell. Thank you for taking our question. I guess in the same vein, could you help set the stage for the 2H 2026 treatment-naive MF readout? What would support advancing INCA033989 monotherapy versus plus ruxolitinib or both? How are you viewing the analysis of the incremental contribution of INCA033989 in the combination arm?

Mitchell, could you just repeat the question? Your audio broke up. Oh, yeah, no problem.

I was just asking if you could help set the stage for the treatment-naive MF readout. What would help support the decision to advance INCA033989 monotherapy versus in combination?

Oh, terrific. Thank you. Look, we have the JAK-ineligible cohort from EHA. That's the first data set that we have, which is about 20 patients that showed what I would describe as strong SVR35 and TSS50 data. As I mentioned to Salveen, maybe we needed more data at the higher doses in non-type 1 patients to sort of complete the picture. Later this year, we'll have between 50 and 60 patients worth of data with long follow-up, both in combination with Jakafi and as a single agent. That's a small randomized cohort. I think all that data put together is what's going to determine which path we go forward. Based on the emerging data that we have, our plan today is to develop INCA033989 in front line, both single agent and in combination, both in type 1, non-type 1 patients.

Obviously, the data that we're generating as we speak, and that we'll provide an update on later this year, will make the final determination there.

Thanks for the question, Mitchell.

Thank you. That does conclude our question and answer session. Ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.