Greetings, and welcome to the Incyte Corporation Fourth Quarter Year End 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. 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. Please go ahead.

Thank you. Good morning, and welcome to Incyte's fourth quarter and full year 2020 earnings conference call and webcast. The slides used today are available for download on the Investors section of incyte.com. I am 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. 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 our call today are forward-looking statements, including statements regarding our expectations for 2021, concluding our financial guidance, the commercialization of our products and our development plans 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 September 30, 2020, and from time to time in our other SEC documents. We'll now begin the call with Hervé.

Thank you, Mike, and good morning, everyone. So 2020 was a year of strong growth for the products commercialized by Incyte and by our collaboration partners. Total product and royalty revenues grew 18% fueled by continued growth demand for Jakafi, which grew 15% year-over-year. Revenue from other hematology and oncology products was up 46% versus the prior year, benefiting from a strong launch of Pemazyre and good performance from Iclusig. The launch of Monjuvi is progressing well as we continue to observe market share gains. Royalties were up 28% to nearly $400 million, with Jakafi up 23%, Olumiant up 38%, and the launch of Tabrecta now contributing to our royalty revenues. We also received over $200 million in milestone payments during 2020, resulting in an increase of 24% in total revenues year-over-year. In 2020, we presented positive data from several pivotal trials and submitted several regulatory filings, and we expect to have decisions on all of these during this year. These decisions include the potential FDA approval of Jakafi in chronic GVHD, retifanlimab in squamous cell anal carcinoma, tafasitamab in DLBCL in Europe, and pemigatinib for cholangiocarcinoma in Japan and Europe, where we recently obtained the positive CHMP opinion. We’re also just a few months away from the potential approval of ruxolitinib cream in atopic dermatitis and the expected sNDA submission for vitiligo. I will now pass the call over to Barry for additional details on product performance as well as our commercial preparations for the launch of ruxolitinib cream.

Thank you, Hervé, and good morning, everyone. Jakafi performance was excellent in 2020 with revenues growing over $250 million to reach $1.940 billion. The demand for Jakafi remains high with the total number of patients being treated continuing to grow across all three indications. We are also encouraged by the partial recovery of new patient starts in the third and fourth quarter of 2020. For 2021, we expect strong Jakafi growth as we reach a normalization of oncology visits with a broader availability of COVID-19 vaccines. The potential approval of Jakafi in steroid-refractory chronic GVHD would represent its fourth indication and an additional important growth driver. The range of Jakafi guidance we have provided today for 2021, up $2.125 billion to $2.200 billion reflects the ongoing impact of COVID-19, especially in the first half of the year, as well as the expected increase in the gross-to-net adjustment with the largest impact coming in the first quarter. The launch of Pemazyre has gone quite well, as we have been able to capitalize on our relationships and experience in oncology. Since launch, over 300 physicians have prescribed Pemazyre. As expected, community-based oncologists are driving adoption, and testing patients for FGFR2 alterations is going smoothly. Given the refill rate, we know that appropriate patients are being identified and treated with Pemazyre. The launch of Monjuvi is progressing well. Sales in the fourth quarter reached $17 million versus $5 million in Q3. We believe the strong safety and efficacy profile of Monjuvi resonates with physicians, and as expected, we are seeing good utilization in the community setting. According to market research in BMT and eligible diffuse large B-cell lymphoma patients, the Monjuvi-LEN regimen is the most used treatment in the second-line plus patient population. We expect the initial uptick of ruxolitinib cream to be driven by specialists in medical dermatology and allergy. Over the past several months, we have been able to recruit an exceptional team with significant experience in successfully launching dermatology products in the United States.

Thanks, Barry, and good morning, everyone. In 2020, we made significant progress across our development pipeline. Some highlights include positive results from our pivotal trials of ruxolitinib in chronic graft-versus-host disease, ruxolitinib cream in atopic dermatitis, retifanlimab in squamous cell anal carcinoma, and parsaclisib in non-Hodgkin's lymphomas, with each study forming the basis for regulatory submissions in their respective indications. We also announced multiple product approvals, including Pemazyre and Monjuvi in the United States, and Tabrecta in the United States and Japan, and a new indication for Olumiant in atopic dermatitis in both Europe and Japan. We expect multiple regulatory actions during 2021 with seven expected approvals and six additional submissions during the year. We expect an FDA decision for Jakafi in chronic graft-versus-host disease. And our partner, Novartis, is expected to submit Jakavi in acute and chronic graft-versus-host disease in both the EU and Japan during the first half of 2021. We expect an FDA decision for ruxolitinib cream in atopic dermatitis in June, and we look to submit an sNDA in vitiligo shortly thereafter, assuming our Phase 3 program in this indication is successful.

Thank you, Steven, and good morning, everyone. Turning now to our financial results, our fourth quarter results reflect continued strong revenue growth with total product royalty revenues of $680 million representing an increase of 17% over the fourth quarter of 2019. Total product royalty revenues for the quarter are comprised of net product revenues of $517 million for Jakafi, $29 million for Iclusig, and $14 million for Pemazyre. For the full year 2020, total product royalty revenues were $2.46 billion, an increase of 18% over 2019. Total revenues for 2020 of $2.67 billion increased 24% over 2019, reflecting the higher product royalty revenues and an increase in milestone payments from our collaborative partners. Moving on to our operating expenses on a GAAP basis, ongoing R&D expenses of $380 million for the fourth quarter increased 23% from the prior year period due to our 55% share of the global and U.S. specific development costs for tafasitamab and product supply related costs to support the potential launch in 2021 of ruxolitinib cream as a treatment for atopic dermatitis. Our collaboration loss for the quarter was $12 million, which represents our 50% share of the U.S. net commercialization loss for Monjuvi. Finally, we ended the year with $1.8 billion in cash and marketable securities.

Thank you, Christiana. Slide 24 provides a list of the important updates we expect in 2021. These include pivotal trial results for ruxolitinib cream in vitiligo, as well as the approvals for ruxolitinib cream in atopic dermatitis, retifanlimab in SCAC, and Jakafi in chronic GVHD. So before moving into Q&A, I want to take a minute to let you all know that Mike Booth will be leaving Incyte at the end of the month ahead of his planned return to the UK. I want to take this opportunity to thank Mike very much for all of his contribution to Incyte over the past seven years, and we all wish him well in his future endeavors.

Certainly. We’ll now be conducting a question-and-answer session. Our first question today is coming from Vikram Purohit from Morgan Stanley. Your line is now live.

Great. Good morning. Thanks for taking my question. So I wanted to touch on the dermatology franchise. And I had two questions for rux cream in advance of the Phase 3 vitiligo data that we're going to be getting over the next couple of months here. So first, could you characterize for us any key differences between the Phase 2 and the Phase 3 patient populations that you're looking at for vitiligo? And then second, how should we think about which portion of the vitiligo patient population that rux cream could be most suitable for?

Vikram, hi, it’s Steven, I'll take your question. In terms of the question on the translatability of the Phase 2 to the Phase 3, given the magnitude of the size of the Phase 2, the geography we conducted it in and the eligibility criteria, we actually expect it to be no differences in population or in outcome. We expect the read in the Phase 3 to be of similar efficacy, magnitude to the Phase 2 and the safety to be the same. The one nuance on the difference is we in Phase 3 limit the body surface area of vitiligo patients with depigmentation to be up to and including 10%, whereas in the Phase 2 they were a little more liberal and allowed up to 20%, but that is the only difference. We expect no other differences in outcome and in read-through of the population.

Hey, guys. Good morning. Thanks for taking my questions. I had a few on the ruxolitinib cream launch coming up here as well. Maybe, could you help us understand how far are you with your launch prep in AD, especially when it comes to interactions with payers around pricing and market access?

Hi, Michael, it's Barry, I'll take the first part of your question, and I'll hand it over to Steven for the second part of your question. But as far as the preparation goes for the launch, it's going very well. We started off at Incyte with an excellent clinical development team that's very experienced in dermatology and immunology. We built a medical affairs team in the U.S. that's outstanding and has deep experience in dermatology and immunology. Now we're building out the sales force and we have built out an excellent market access team, again, that has deep experience in immunology and dermatology. We have had interactions with payers across the nation with advisory boards and we'll begin the process of negotiations with the payers in the very near future. So we think that launch preparation is right on schedule.

Yes. Michael, thanks for the question. Given the recent post-marketing safety data emerging from Celgene, you asked a question on the read-through to rux itself and then potentially to topical rux. We've been with rux on the market since 2011. We have many, many thousand years of patient exposure, including with our partner, Novartis, as well as long-term follow-up on our clinical trial programs. So let me just talk a little bit about the clinical trial programs. If you look at the COMFORT data in MF, now with five years of follow-up on those studies, there's been no signal for any of those events that are worrying in that particular exposure. In polycythemia vera, the response study also has five years of published follow-up, and we've looked across the board at thromboembolic events, cardiac events and malignancies there. We don't expect any read-through there at the moment.

Hey, good morning, guys. Thanks for taking my question. I'll stick with the same line of questioning here on rux cream. And Barry, I wanted to follow-up with – around your comments on the pending launch for AD.

Well, as far as impediments go, I don't really see very many impediments. We've actually – we think we're really in a very good situation. We think we really can help patients with mild to moderate eczema and atopic dermatitis, from steroids all the way up to Dupixent to biologics. So we think that there is a broad range of patients who will be very happy to use a cream like rux cream as opposed to using systemic therapy that may in fact suppress their immune system in general. So we were very excited about it.

Hey, guys. Thank you so much for taking my questions. Staying on rux cream, I was wondering what sort of conversations have you had around the NDA that you filed with the FDA following your submissions? Have you had any further conversation? And also can you talk about your strategy for rux cream in pediatric populations?

Kripa, hi, it's Steven. Thanks for your question. We don't talk in detail about any ongoing conversations with regulatory authorities. But I will tell you as we've said publicly, the submission went in successfully in December. We utilized a priority review voucher that will give us a six-month review and we expect an action in the middle of the year on that. We have to do more safety enabling work in the pediatric population to enable those studies to look, for example, at bone effects, and we've gotten through those hurdles successfully.

Hey, guys. Thanks so much for taking my question. First off, I just want to thank Mike for all his help throughout the years and wish him well at his next endeavors and offer congratulations to Christine.

Sure, Brian. The uptake of Monjuvi, like I said, is going very well in the second-line plus patient population. Like any new therapy that launches, you end up starting in later line therapies. Our uptake at launch was mostly in the academic centers, and we continue to try to move physicians to the second-line setting because we think that's where the patients will benefit the most. We're doing very well. Patients referred to academic centers for CAR T therapy sometimes are not eligible for CAR T therapy, so they need another therapy to choose. As we progressed with our launch, more and more of the community oncologists are taking up Monjuvi, surpassing the number of patients being treated in the academic center. We think Monjuvi has a long way to go with treating patients with diffuse large B-cell lymphoma.

You talked about the successful launch and the uptake in the academic community settings and market share gains. So curious to hear your latest thoughts, and if you believe Monjuvi could be a $1 billion product in the existing indication, or if you need the frontMIND and inMIND studies to be successful.

What we said several times in the past is that in the current indication Monjuvi could reach $500 million to $750 million. And we'll as we continue to develop more combinations and move up to front-line setting and that's $500 million to $750 million in the U.S. So anyways, that's where we're at.

Hey, guys. Thanks for taking my question. I did want to ask two questions. One, just about your thoughts on your PI3 kinase with the approval of TG Therapeutics yesterday, and how do you think about positioning in that market after them?

I think the approval from TG Therapeutics is good for patients. We think it has somewhat of an unfair overhang from the past and that many have now addressed many of the untoward side effects. So we viewed that as a positive outcome. It doesn't impact our plans in terms of where we go with the CITADEL studies and the filings this year, hopefully in follicular, marginal, and mantle cell lymphoma.

Hi, good morning. Thanks for taking my questions. As you approach the rux cream launch, I just wanted to get a little bit more color on how you're thinking about how the gross margin for rux cream will start with atopic derm might differ from the gross margins that you see for Jakafi.

In terms of the COGS for the rux cream, the guidance that we provided on COGS is 6% to 7% that does reflect rux cream as well. In the near term, as we indicated, we have been billing on the supply of API for rux cream and that would result in COGS being lower as we use up the supply that we have already expensed in 2020, which was reflected under R&D.

Hi, thanks for taking my questions. I'm kind of curious as to what percent of the relevant population already has this kind of coverage and is recognized by their plan as a true medical in a reimbursable condition? And then kind of what efforts do you need to do between now and launch to grow that number?

I can tell you that currently there aren’t very many therapies, and we do have to continue to educate both payers. I don't think we really have to educate dermatologists very much. Dermatologists know that this is an autoimmune disease that drastically impacts patients' lives.

Hi all. Thank you for taking my question. I just want to quick shout out to Mike for everything over the past couple of years, you will be missed. So I wanted to ask on the LIMBER program. While it might be early, can you characterize kind of maybe some demand or feedback you've gotten on the QD rux option among both physicians and patients?

The once-daily formulation of ruxolitinib continues to go well. The bioavailability and bioequivalence work is being completed. We’re now in stability and we need 12 months of stability to complete the submission. We would expect a 10-month review from that and thus expect an approval before the end of 2022 if everything goes smoothly. We're hopeful this will be a successful submission.

Hey thanks for taking the question. I appreciate the progress there, and I was wondering if you could provide any details on your BET inhibitor? And what level of incremental benefit for the combination of BET inhibitor plus rux versus rux alone would be clinically meaningful?

This is not a new compound. It's a compound we had in the clinic years ago. We dosed more than 100 patients in a solid tumor framework at that time. It’s exciting, and we think that we have a lot of options with incremental improvement in safety and efficacy.

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

Thanks. Thank you all for your time today, for your questions, and also for your kind words. You will be in excellent hands with Christine, I'm sure, and both of us are available for the rest of the day for any follow-up questions. But for now, thank you all very much, and goodbye.

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