Hello, and welcome to the Incyte First Quarter 2024 Earnings Call. As a reminder, the conference is being recorded. I will now turn the call over to Ben Strain, Associate Vice President of Investor Relations. Please go ahead, Ben.

Thank you, Kevin. Good morning, and welcome to Incyte's First Quarter 2024 Earnings Conference Call. Before I 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 call. On today's call, I'm joined by Herve, Pablo, and Christiana, who will deliver our prepared remarks; Barry, Steven, and Matteo will also be available for Q&A. I would like to point out that we'll be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. I will now hand the call over to Herve.

Thank you, Ben, and good morning, everyone. Before I get into the quarterly results, I'm pleased to share that Matteo Trotta has recently joined Incyte as General Manager of our U.S. Dermatology business unit reporting to me. Matteo comes to us from Novartis where he was responsible for the immunology business in the U.S., and he will be leading the U.S. Dermatology team at Incyte to continue to grow Opzelura, prepared for the launches of povorcitinib and other promising IAI pipeline products in the coming years. Now turning to our Q1 results. Total revenue grew 9% in Q1 versus last year, and I will discuss in the next slide the details of the underlying demand growth for Jakafi and Opzelura to clarify the performance of both brands in Q1. Starting with Jakafi on Slide 6. In the first quarter, Jakafi net product revenue of $572 million does not fully reflect the demand growth as total patients increased 5% in the first quarter versus the same quarter last year, with growth driven by PV and GVHD. Sequential growth versus Q4 was also strong in all indications, as you see on the graph on the right. Jakafi channel inventory reduction in the first quarter had a negative impact on net revenues of approximately $55 million. Based on the strong patient demand since this quarter and anticipated growth for the balance of the year, we are reiterating our full year 2024 Jakafi net revenue guidance of $2.69 billion to $2.75 billion. Turning to Slide 7 and looking at Jakafi total paid demand by indication during the first quarter of '22, '23 and 2024. As you can see, total paid demand growth in the top left corner continues to be strong. MF in the top right is consistent year after year, and the largest growth is coming from PV and GVHD. Additionally, Jakafi continues to maintain its leadership and market share in myelofibrosis. Based on market research, total patient market share and discontinuation rates have remained stable in the first-line setting over the past several months, with virtually no impact from competitors, which has been consistent with our expectations. Moving to Opzelura. Total Opzelura net product revenues in the first quarter were $86 million, up 52% when compared to the same quarter last year. The weekly prescription trend, as shown on the right of Slide 8, reflects continued growth of Opzelura in both atopic dermatitis and vitiligo, with typical Q1 seasonality. U.S. total prescriptions for Opzelura grew 41% year-over-year, outpacing the total ED market, which grew 23%. The ED market, including Opzelura, was impacted by the Change Healthcare cyber attack, particularly in March. Importantly, we are beginning to see in April a rebound in filled prescriptions to levels seen before the cyber-attack. From an access perspective, we have seen early encouraging results since Opzelura moved in January to a preferred position in the CBS network as TRx growth within the CBS network outpaced growth in other plans. Moving to Slide 9. As discussed in the past, we are on track to provide 10 high-impact launches by 2030. Importantly, many of the programs highlighted on this slide are derisked as they are post-proof of concept, including axatilimab, which has been submitted to the FDA for approval, ruxolitinib cream in Pediatric AD to be submitted to the FDA in Q3, and povorcitinib, where we are in Phase III in HS and vitiligo and initiating a Phase III study in prurigo nodularis later this year. Moving to Slide 10. In addition to our internal efforts to deliver multiple launches by 2030, we recently announced an agreement to acquire Escient Pharmaceutical for $750 million with cash on hand. This acquisition further strengthens our pipeline with 2 novel first-in-class medicines, EP262 and EP547, which have the potential to treat a broad range of inflammatory disorders.

Thank you, Herve, and good morning, everyone. In the first quarter, we continued to make solid progress across our pipeline, which is focused on 3 areas: MPNs and graft-versus-host disease, oncology and inflammatory diseases. In MPNs and graft-versus-host disease, we initiated a Phase I study earlier this quarter with a JAK2V617F inhibitor. As a reminder, the JAK2V617F mutation is the most common somatic mutation in myeloproliferative neoplasms and is present in 55%, 60% and 95% of patients with MF, ET and PV, respectively. Unlike ruxolitinib, which inhibits both wild-type and V617F mutation positive cells, 058 selectively binds to the JAK2 JH2 site, disrupting the V617F induced confirmation and thus allowing selective inhibition of mutant activity in the JAK2 receptor while sparing wild type. Together with our anti-mutant CALR program, these 2 potentially disease-modifying programs represent a fundamentally new approach to addressing MF, ET and PV, and could help to solidify our leadership in MPNs. As previously disclosed, we submitted a BLA for axatilimab for the treatment in third-line chronic graft-versus-host disease late last year. In February, the filing was accepted for prior review and we anticipate a decision by the FDA in the second half of 2024. We are excited by the possibility of bringing a new treatment option to patients with this devastating complication of hematopoietic stem cell transplant. In oncology, we continue to build out a robust pipeline with the potential to deliver meaningful innovation for patients. This quarter, we initiated a Phase I study with our KRASG12D inhibitor, INCB161734. 734 is a potent, selective and orally bioavailable KRASG12D inhibitor. And as highlighted at AACR earlier this month, it has shown excellent efficacy in several preclinical models. With no currently approved G12D targeting agents, 734 could address an important patient need as the KRASG12D mutation is found in 40% of pancreatic ductal adenocarcinoma, 15% of colorectal cancers and 5% of non-small cell lung cancers. In dermatology, we continue to maximize the potential of ruxolitinib cream and povorcitinib and believe the acquisition of Escient Pharmaceuticals will substantially expand our IAI pipeline by adding 2 first-in-class medicines with the potential to address a number of medical needs. The key driver of our interest in Escient is our MRGPRX2 program. MRGPRX2 is a specific novel mechanism for blocking mast-cell activation independent from IgE and has been a high-priority target to add to our IAI pipeline. EP262 is a first-in-class medicine, which entered the clinic in January of 2023 and has been evaluated in Phase II studies. In the Phase I healthy volunteer study, EP262 was well tolerated, had low interpatient PK variability, and achieved exposures well above predicted efficacious levels. EP262 is currently in a Phase Ib open-label study in CIndU and in 2 randomized Phase II studies in CSU and atopic dermatitis, with data for all 3 studies expected by early 2025. EP547 is a potent and highly selective antagonist of MRGPRX4. MRGPRX4 is expressed on neurons in the dorsal root ganglia and specifically activated by bile acids that are increased in cholestatic patients. Initial evaluation is being conducted in cholestatic pruritus with clinical proof of concept for cholestatic pruritus associated with PBC and PSC, anticipated by early 2025. A number of exciting readouts are expected by early 2025 with a potential first launch in CSU by 2029. At AAD earlier this quarter, we presented additional data from the randomized Phase II study of ruxolitinib cream in patients with mild to moderate hidradenitis suppurativa reinforcing the potential ruxolitinib cream in this indication. The study met its primary endpoint, demonstrating a significantly greater reduction in abscess and inflammatory nodule count compared to control at week 16, and further reinforces the efficacy and safety profile of ruxolitinib cream. We are currently engaging with the FDA to obtain agreement on a potential Phase III design. We also presented positive data at AAD from the randomized Phase II study evaluating povorcitinib in patients with prurigo nodularis and are on track to initiate a Phase III study in the coming months. As highlighted on Slide 21, the study met its primary endpoint of a 4-greater-point improvement in the Itch Numerical Rating Scale score, which was achieved by significantly more patients, who received povorcitinib across all dosing groups at week 16 versus placebo. We believe that with ruxolitinib cream and povorcitinib, we will be the only company with the ability to potentially provide both a topical and oral option for a number of indications, including prurigo nodularis, hidradenitis suppurativa, and vitiligo. We continue to make important progress in the first quarter by achieving several clinical and regulatory milestones. Within our oncology pipeline, we believe that our potentially best-in-class CDK2 inhibitor is an active agent, and we look forward to sharing data as well as our development plan later this year. In addition, the pivotal trial of tafasitamab in patients with follicular and marginal zone lymphoma, also known as inMIND, will read out later this year, and we look forward to sharing those results. With the BLA for axatilimab submitted late last year, we look forward to working with the FDA to make axatilimab available to patients with chronic graft-versus-host disease later this year and to initiate additional combination studies in patients with less pretreated chronic graft-versus-host disease. Within our dermatology portfolio, we expect to submit the sNDA for Opzelura for pediatric atopic dermatitis and expect multiple data readouts throughout the year.

Thank you, Pablo, and good morning, everyone. Our first quarter results reflect continued strong growth with total revenues of $881 million, up 9% versus the same period last year. Total product revenues of $730 million in Q1 were driven by demand growth for Jakafi and Opzelura and increase revenue contribution from Monjuvi following the acquisition in February of the global exclusive rights to tafasitamab. The product demand growth was partially offset by an anticipated reduction in channel inventory for Jakafi and the typical Q1 dynamics for Jakafi and Opzelura. Total royalty revenues, which are primarily comprised of royalties from Novartis for Jakafi and Tabrecta and royalties from Lilly for Olumiant, were $126 million, up 9% compared to the quarter of 2023, driven by strong demand for Jakafi. Total revenues included $25 million upfront payment received under our collaboration and license agreement with CMS for the development and commercialization of povorcitinib in China and select other Asian countries. Turning to Jakafi, net product revenues reached $572 million for the first quarter. This growth reflects continued demand, with total patients increasing by 5% year-over-year, driven by increases in PV and GVHD, alongside stable demand in MF. Consequently, we experienced the highest paid demand for Jakafi since its launch. As anticipated in Q1, patients who received free drug in the fourth quarter of 2023 transitioned back to paid demand, contributing to a decrease in channel inventory levels. It's important to note that channel inventory had risen by $46 million in the fourth quarter of 2023. In the first quarter of this year, we observed a drawdown in channel inventory, resulting in a $55 million negative impact on net sales compared to the fourth quarter of 2023. While we expect channel inventory to stabilize around the levels we concluded in Q1, customer buying decisions can be unpredictable. Additionally, net sales in the first quarter were affected by the usual higher gross net deductions in Q1 due to contributions for closing the Medicare gap and commercial copay assistance. Turning now to Opzelura on Slide 27. Net product revenues for the first quarter were $86 million, representing a 52% increase year-over-year, driven by growth in net new patient starts and refills across both AD and vitiligo as well as early contribution from the commercialization of Opzelura for vitiligo in Germany, Austria, and France. As expected, Opzelura net product revenues in the first quarter reflected the typical Q1 seasonality and the reset of deductibles and copays at the beginning of the year. Beyond the typical Q1 dynamics, Opzelura product revenues were impacted by the cyber attack on UnitedHealth Change Healthcare unit. Moving on to Slide 28 and our operating expenses on a GAAP basis. Total R&D expenses were $429 million for the first quarter, representing a 6% year-over-year increase, which was primarily as a result of the progression of our pipeline. Total SG&A expenses were $300 million for the first quarter, representing a 5% year-over-year decrease driven by the timing of direct-to-consumer marketing activities and certain other expenses. Now turning to the acquisition of Escient Pharmaceuticals. Under the terms of the agreement, we will acquire Escient for $750 million in an all-cash transaction. We believe Escient's 2 lead programs offer a multibillion-dollar potential commercial opportunity across multiple indications and have the potential to contribute to our revenue by 2029. In addition, we expect to be able to realize synergies by leveraging our current development and commercial capabilities and infrastructure. We anticipate the acquisition to become effective by the third quarter of 2024, and incur approximately $5 million per month in incremental R&D expense. Depending on the timing of the close, we expect the acquisition to add $20 million to $30 million to the full year 2024 R&D expenses. Finally, following this acquisition, we'll continue to have a strong balance sheet, which will allow us to consider additional opportunities. As of the end of the first quarter, we have $3.9 billion in cash and no debt. Moving to our guidance for 2024. Excluding the impact of the acquisition of Escient, we are reiterating our full year 2024 guidance for Jakafi, our other hematology/oncology products, COGS, R&D, and SG&A. Operator, that concludes our prepared remarks. Please give your instructions and open the call for Q&A.

Our first question is coming from Kelly Shi from Jefferies.

So for Opzelura, could you give us some more color on the gross-to-net for the rest of the year? And what is the latest review you see in both AD and vitiligo? And I also have a follow-up.

Kelly, it's Christiana. Let me take the first part of the question, and then I will turn it to Matteo to comment on the second part. So in terms of the gross-to-net in the first quarter, it was at the same level as last year Q1, so at around 60%. Going forward, as we have previously discussed, we will not be making forward-looking comments on gross-to-net. Our focus is on maximizing the potential of Opzelura, and by this, I mean maximizing net sales versus looking at gross-to-net in isolation.

And on the split of business between the 2 indications, when we look at the IQVIA data, triangulated with external and internal sources, we see a 40-60 split consistent over time, where 40% is non-segment of Vitiligo and 60% is atopic dermatitis. And we're very happy to see that both indications are growing at quite a healthy pace.

And also at the AAD Dermatology conference, we saw the data of topical ruxolitinib cream in both Hurley Stage I and II, HS patients. Could you share what kind of physician feedback do you hear? And also, how do they see or manage in both Hurley Stage I and II and 2 patients for a novel topical drug like Opzelura needed to manage disease in this specific population?

Yes. Thank you for the question. It's Steven. So the milder type of HS still represents about 100,000 to 150,000 patients in the United States. It still has morbidity and unmet need, and these patients have abscesses and nodules that cause them discomfort and morbidity, which lends itself to a topical treatment because it's not as extensive as the moderate and severe cases. So we conducted this PoC study and saw this data, which is extremely encouraging in this mild stage of HS in terms of abscess and nodule decreases. And as Pablo said in his prepared remarks, we're now working with regulators to get an appropriate endpoint in this entity for which no drug is approved and has this unmet need I spoke about. To the specifics of your question, the physician and KOL feedback is excellent. I mean, they were surprised by the efficacy seen with the topical agent in this entity. So we're excited about it as well.

Your next question is coming from David Lebowitz from Citi.

Could you comment on Jakafi growth dynamics going forward given IRA and shift to the out-of-pocket expenses for patients?

Sure. As you saw from our guidance, $2.69 billion to $2.75 billion, we're very optimistic about the continued growth of Jakafi. Obviously, we benefit from the IRA because, as we talked about before, we have the small biotech exemption. So beginning in 2025, for example, with the reduced out-of-pockets for patients, it really just helps the patients, of course, but we don't have to contribute that 20% to catastrophic that other oral drugs will. So we think there is a benefit in 2024 for the reduced out-of-pocket in Medicare Part D being around $32.50 billion for patients for the entire year and then next year, being $2000 all patients who are taking oral oncology drugs, I believe, will benefit, but we continue to see our growth, as Herve pointed out, coming from PV, GVHD and in myelofibrosis where we are very stable and remain the market leader in that setting.

Could you provide additional insights on how growth in 2025 might compare to 2024 given these factors?

No. We obviously said we're still confident about $3 billion plus by the time we hit 2028, so that's what we're still confident in. And so we think that '24 and '25 should be just fine.

Your next question is coming from Kripa Devarakonda from Truist.

On Jakafi, you mentioned that you see very little impact on Jakafi's share from competitors. Can you talk a little bit about whether the competition has changed the average duration on Jakafi? They do start on Jakafi in the frontline, but are you observing any trends of people discontinuing Jakafi sooner? Additionally, there was a recent report of increased AML incidents in patients on the Jakafi/BET combination for a competitor. I wanted to get your thoughts on how this may or may not affect your internal BET program.

Kripa, I'll take your first call, and then I'll hand it over to Pablo for the second part of your question. So for Jakafi share from competitors. There really hasn't been any impact on our duration of therapy or discontinuation rates at all, certainly in myelofibrosis. So we're very confident. We remain the market leader. Other JAK inhibitors may be used in the second line, third line setting. If anything, the market size itself is growing because now patients will go on 1, 2, 3 therapies, and I'll hand it over to Pablo for the second part of your question.

Thank you for the question. I cannot comment on data from other companies. Our BET inhibitor program is progressing well, and we will share additional data over the year. We are planning a potential pivotal trial that we will reveal later this year. Based on our internal program data, we currently have no concerns regarding safety related to AML transformation. It's known that if you monitor several patients with MF for a sufficient duration, some may undergo transformation to AML as part of the disease's natural progression. However, at this moment, we have no concerns with our program.

Next question is coming from Michael Schmidt from Guggenheim.

I had a question on povorcitinib and again, commenting about another data set. But I just wanted to get your insight on the reasons RINVOQ head-to-head study against Dupixent in AD and whether or how that impacts perhaps your view on the potential of povorcitinib across various dermatology indications?

Yes, Michael, thank you for the question. Now we've seen the data. Obviously, it's an impressive data set. At this point, as you know, we have a number of studies ongoing with povorcitinib. We've had internal discussions about the potential to extend the trials of povo to atopic dermatitis. What I can say right now is we're encouraged by the data from RINVOQ. I think that it's an indication that povo could work very well in this disease. We have not made an internal decision as to whether to develop povorcitinib in atopic dermatitis yet, but it's certainly something we're contemplating.

Your next question is coming from Marc Frahm from TD Cowen.

Maybe just start. One, just following up on the prior BET question. Were your comments based on the clinical data regarding those concerns of AML? Or can you discuss preclinically, since I believe that a competitor's BET inhibitor has shown genotoxicity in some preclinical assays. Has yours shown genotoxicity?

Yes. It's Steven answering your question. So just to reiterate Pablo's remarks and remind you that our BET program was in the clinic a while ago in solid tumors. And then we've obviously pivoted to study myeloproliferative neoplasms. We've treated close to 200 patients to date. And in the clinical data set, which is the most powerful, as Pablo said, we have no concern as regards AML transformation or any concerns that we've seen in that regard. From prior preclinical work on things like AIMS assay and genotoxicity, et cetera, we also have no issue, and we are aware of the issue with the competitor drug that was seen in preclinical work.

Next question is coming from Brian Abrahams from RBC Capital Markets.

I wanted to explore the dynamics of Jakafi further. Can you provide your insight on the recent decline in total Jakafi demand? Is this drop possibly seasonal, as you often see in the first quarter? Additionally, I'm interested in why you believe there hasn't been any effect on market share or patient persistence at this time. Do you anticipate this might change in the future, or do you expect market share and persistence to stay consistent based on what you're learning from market research and discussions with key opinion leaders?

Maybe I can start on the uptick. I mean what we said, and you can see on the slide is that, in fact, there is an increase in the number of patients treated across all 3 indications in Q1 versus Q4, and there is a growth that you can see on the so-called paid-demand graph also shows that versus last year there is a lot of growth in PV and GVHD. So the unit growth of Jakafi sequential to Q4 and versus Q1 of last year is there and fairly visible. So reason for the sequential growth versus Q4 is what we discussed when we discussed Q4 a few months ago is that there was an abnormal free drug ratio in Q4 that has been completely fixed in Q1. So we are back to normal rates of free drug in Q1. Now on the competitive side, maybe Barry, if you want to speak about why we don't see the impact of the new competitors.

Sure. I think the new competitors, such as momelotinib, are primarily being used in the second-line setting or for patients with very low platelets. We expect that due to the overall survival benefit of Jakafi, its tolerability, and its ability to relieve symptoms, it remains an excellent medication that will continue to be very beneficial for patients with myelofibrosis going forward.

Next question today is coming from Vikram Purohit from Morgan Stanley.

So we had 2, one on LIMBER and then one on Opzelura. So on LIMBER, were the ALK2 PoC data set we're expecting to see by the middle of the year, could you just frame for us kind of what the scope and size of the data set is going to be? And what you would define as sufficient for continued development for that program based on what we see for that PoC data set? And then secondly, on Opzelura, I just wanted to revisit the topic of potential guidance and see when you think might be a good potential time to provide revenue guidance for Opzelura since you mentioned that it seems like the script shared seem stable between AD and vitiligo?

Vikram, it's Steven. So on your first question, just reminding of ALK2's mechanism felt to work through hepcidin inhibition and then ameliorate anemia by releasing iron and making it available for hemoglobin production. As we've already shown in multiple presentations, we can decrease subsiding levels. The question you get into, does this translate to some sort of clinical benefit? Just to remind you of the study, it has 3 groups, treatment group A, B, and C. A was monotherapy, B was in combination with RUX, but those were in later-line patients. And the real focus right now, as you can see on clintrials.gov is treatment Group C, which is the treatment-naive group of patients to see in combination with RUX will help make an effect that will be of clinical benefit to patients, either by raising hemoglobin or preventing the decrease that sometimes occurs with JAK inhibition. And then if we're able to demonstrate that as we dose increase in the second half of this year, then we'll have a clinical proof-of-concept that we can then potentially take forward to a regulatory environment, but we'll have to be clear that we are benefiting patients from a clinical benefit point of view in that treatment-naive group, and we'll have that data set in the second half of this year. I'll turn it over for the second question.

Vikram, it's Christiana. I'll take the second part. As we discussed on our last call, before we provide guidance for Opzelura, we are looking to have more real-world data on utilization, especially for vitiligo. And data that goes beyond that first initial phase of therapy, which may represent a phase of experimentation by patients. So we are still early into the launch. We are still going through that initial phase of patients on therapy. So we're waiting for more real-world data before we are in a position to give you guidance.

Next question today is coming from Derek Archila from Wells Fargo.

Just 2 quick ones from us. I guess, first, just on Jakafi. As you noted, the Jakafi growth is coming from GVHD and PV. So I guess, what does this mean for future assumptions around myelofibrosis? I know you said stable, but how should we be thinking about that for the rest of this year? And then in terms of CDK2, I guess, where do you think the bar is right now, I guess, from a PPP? And I guess what do you intend to show this year for proof-of-concept?

I'll take the first part of your question. For Jakafi, we continue to see myelofibrosis. Currently, there are about 18,000 prevalent patients with myelofibrosis. As the market leader, with the overall survival and symptom benefit that Jakafi offers, we view patients as either currently on Jakafi, having previously used Jakafi, or likely to use Jakafi in the future. When patients progress on Jakafi, there are fortunately other options available to them. Looking ahead to 2024 and beyond, we expect to maintain our position as the market leader in first-line myelofibrosis. I'll turn the call over to Pablo.

Yes. Thank you for the question. So in our CDK2 inhibitor program, we continue to be encouraged by the data that we've seen. And regarding your part of your question about what data we're going to reveal later this year, we're in the final stages of optimizing the dose for the CDK2 inhibitor program. Our idea will be later this year to provide a substantial clinical data set, including the dose selection for patients. Initially, the focus will be on ovarian cancer, but not necessarily only over the longer term as well as we are starting combination trials in ovarian cancer, and we're continuing to enroll patients with breast cancer. So later this year, you will see the dose selection as well as the data for ovarian cancer as well as the development plan in ovarian cancer patients. When it comes to the bar for efficacy, if you look at the CDK2 inhibitor landscape today, most of our competitors have decided to focus on breast cancer or other areas. We continue to believe that ovarian cancer is an important opportunity. Other competitors in the space like ADCs are coming into play. We're tracking those closely to figure out what is the overlap between the different patient populations and different molecular markers. But basically, in the second part of the year, later this year, we'll provide clarity on dose, schedule, and the development plan in ovarian cancer patients.

Next question today is coming from Jessica Fye from JPMorgan.

First, on Opzelura, is it possible to quantify the impact of the Change Healthcare issue for that product? And what about Jakafi, was that impacted at all by the Change Healthcare issue in the quarter? And then on povorcitinib, the Phase III studies in vitiligo, I noticed on clinicaltrials.gov, it looks like there's a single primary endpoint of FVASI75 for the Phase III trials, whereas RINVOQ, I think, has 2 primary endpoints of FVASI75 and TVASI50. So what's the rationale for only having a single primary endpoint here relative to the competition? And how do you expect that to kind of play out based on the endpoints you're studying?

Thank you, Jessica. I'll discuss Change Healthcare regarding Opzelura. At the end of February, we experienced a cyber-attack that resulted in network interruptions for a few weeks. Consequently, Change Healthcare was unable to process claims during that time. Upon reviewing the data, we noticed a decline in March within the entire atopic dermatitis market that we track, leading to an estimated negative impact of $4 million to $5 million from Opzelura in Q1. The positive aspect is that we're observing April's demand, and weekly demand has returned to pre-cyber-attack levels and continues to improve.

And Jessica, just on Jakafi, we may have actually had an impact from Change Health, but we don't know. We did have when it first happened some requests from specialty pharmacies that wanted extended terms for payment. But we really can't see a big impact because most of the specialty pharmacies were able to switch over to the other system that provides the service for the specialty pharmacies.

And then just to address your question on povorcitinib in vitiligo, we have 2 identical Phase III studies ongoing STOP-V1 and STOP-V2 in patients 18 years or older with 5% or greater body surface area involvement of non-segmental vitiligo. It's a little tricky on the endpoints. But just to tell you, our primary endpoint for the FDA in the United States is actually identical. It's facial-VASI75 and Total-VASI50. For other parts of the world, there may be a different primary endpoint. For example, in Europe, they're interested most in the Total-VASI50. So that leads to some of the confusion. But for our study, for the FDA, it's both Facial-VASI75 and Total-VASI50, measured at week 52.

Next question today is coming from Tazeen Ahmad from Bank of America.

On Opzelura, can you talk about refill rates for patients who have been on therapy for a few quarters? Can you discuss their usage of tubes and what the average usage is? I'm curious if patients who are experiencing good results with the cream are taking breaks when their itch is less severe.

Yes. Matteo can expand on the comment. The situation regarding the refill rate is that in atopic dermatitis, we've seen an average of slightly over 2 tubes per patient, which has remained relatively stable, though it's increasing a bit. In vitiligo, however, the trend is changing rapidly, and we haven't reached a steady state yet. Unfortunately, we have noticed that some patients are not adhering to the prescribed treatment, and we are actively collaborating with both physicians and patients to address this issue. From our clinical trial experience, we estimate that if everything goes well, the refill rate could reach around 10 tubes per patient. Currently, the actual number is lower when we consider patients with sufficient treatment history. Do you want to discuss our marketing efforts?

Yes. The only comment that I can add is that in this quarter, we're launching a very promising adherence program that we're confident will continue to impact the refill rate growth that we see across both indications, AD and Vitiligo.

Next question today is coming from Salveen Richter from Goldman Sachs.

Could you just give us an update on how the ex U.S. launch of Opzelura is progressing with the addition of France at this point? And how you're thinking about the pediatric uptake in 2025? And if I could also just ask one on business development. Post the recent acquisition, you still have significant balance sheet capacity. Could we see you do meaningful M&A in the near term on top of Escient?

Okay. So maybe starting, I'll take the first part about the European launch because, in fact, there are a lot of activities going on there. As you know, we launched in Germany and Austria. So that's the base that we have. Recently, we are part of Accès Direct, which is a French process where you can commercialize your product while you are negotiating the price. So what you see in the numbers today is that there are around $2 million that are recognized sales from France. And it's a sort of an estimate with a conservative price per tube that we are using to do that. But the process there is moving very well, and we anticipate by the second half of the year to be fully reimbursed and paid for at a good price in France. And we have now in Italy and Spain agreement on the price where we will be launching between midyear and the second half of the year in both countries. So Germany, Italy, Spain, and France will be fully operational by Q3 and will be contributing to the top line. There are also some smaller countries in Europe where the process is ongoing, and there is always the big question mark of the United Kingdom, England, where, as you know, the pricing discussion can take more time, and we are in the process there. So it's a very positive outcome for Opzelura in Europe because we got reimbursement now in many countries and most of the large countries. And we see a very good uptake of the demand in terms of volume in the countries where it's available, specifically in France.

Now the second part of your question was about the pediatric uptake in the U.S. when we get approval. So maybe if you want to speak about that? Yes, sure. Thanks for the question. And we're very excited by the potential opportunity to help 2 million to 3 million children in the U.S. And we see data consistent with what we would expect. So pending FDA approval, we are excited by another contribution and tailwind to our top line. This is a patient population that maybe the parents will be a little more sensitive to our box warning, but at the same time, it's 2 million to 3 million patients and children that we potentially have the opportunity to help going forward.

On the business side, maybe, Christiana, you can...

Yes. Sure. So Salveen, as you commented on, we have a strong balance sheet, and we'll continue to have a strong balance sheet following the Escient acquisition. So as of the end of this quarter, we have $3.9 billion of cash. We don't have any debt, which obviously gives us additional firepower. So that puts us in a position to be able to look at additional opportunities, and that's something that we are continuing to explore.

Our next question today is coming from Eric Schmidt from Cantor Fitzgerald.

Maybe just following on Salveen's question on capital redeployment. Can you talk about your broader strategy there about also whether you consider returning cash to shareholders in the form of a dividend or a share buyback in addition to potentially using cash to expand your business?

I can address that. We have been discussing acquisition and external opportunities, which is a clear goal for the company to diversify our revenue in the future and increase growth from our current portfolio. So that's one option. Additionally, as we are discussing with our Board, there are alternatives being considered. However, as you have seen with Escient, we have opportunities that align well with our timing and therapeutic areas of interest. Therefore, we are looking at both options.

Next question is coming from Jay Olson from Oppenheimer.

Congrats on the progress of your KRASG12D. It seems like Incyte is increasingly focused on targeted oncology versus immuno-oncology. Can you describe your strategy in oncology? And also, how are you planning to leverage your oral PD-L1 for your targeted oncology programs, in combination with your KRASG12D, or do you plan to develop additional KRAS inhibitors?

Yes. So thank you for the question. Your observation is correct. We are moving more aggressively into targeted oncology and trying to shift away from immuno-oncology. And that's a journey that has started a little bit over a year ago, and we intend to accelerate in the future. The idea here is well-defined patient populations, large treatment effect ideally single-agent activity with early proof-of-concept, and that will allow us to have a much more efficient drug development process to accelerate some of these programs. We're very excited about the G12D program. We think it has the potential to be best-in-class. And as you point out, one of the things that we can leverage is we have access to what we believe is the most advanced for sure, oral PD-L1 inhibitor, and that will allow us to do oral-oral combinations in patients with a range of indications. And that applies also to the rest of the pipeline. And as I mentioned, that journey will continue to accelerate in the future.

Your next question is coming from Matt Phipps from William Blair.

I guess I'll ask about the CALR-mutant antibody and data in early 2025, will that be monotherapy or mono and Jakafi combo and also myelofibrosis only or also including essential thrombocytopenia? And I guess just from a high level, the combination with Jakafi, is that primarily to provide faster symptom relief? Or do you think it is just kind of necessary to achieve efficacy for the antibody?

We have not yet determined the specific details of the data disclosure for the mutant-CALR antibody later this year. However, the plan is to combine the mutant-CALR antibody with Jakafi. Jakafi has a significant impact on symptom relief in patients, which we believe could be crucial in the early stages of disease management, even when a mutant-CALR antibody is present. The purpose of the mutant-CALR antibody is to change the treatment objective to focus on eradicating the malignant clone. Nevertheless, an early treatment or induction with Jakafi could still be very beneficial for patients. In response to your other question, yes, we will have data in myelofibrosis and essential thrombocytopenia as well.

Our next question is coming from Evan Seigerman from BMO Capital Markets.

Two from me. One, just taking a step back looking at P&L management. How do you think about being most efficient with your OpEx? And then kind of a follow-up there. Would you ever consider using some of your balance sheet to, say, do buybacks, especially with the stock in the $50s? And then just as you think about your positioning in the derm space, a lot of focus on Opzelura. Where do you want to win over the next 5 years when it comes to derm? Where do you think Incyte is best suited to really take share? Maybe you can walk me through some of the most exciting parts of your pipeline in your view.

I believe the first question addressed the efficiency of our spending. As you can see in our P&L, this quarter we had relatively flat SG&A expenses and slower growth in R&D. We have consistently aimed to grow our top line at a faster pace than both of these expense components, thereby increasing leverage. While the rate may vary from quarter to quarter, the overall direction is clear. Regarding the buyback, I mentioned that all options are open for discussion, and that topic is certainly part of our current considerations. Now, in dermatology, perhaps Pablo or Steven would like to elaborate on that.

I'm happy to comment. Look, I think what we're building is an important portfolio of first-in-class or best-in-class in some cases, best-in-disease medicines in the - I would expand the questions in the inflammation space. And I think that was a key driver of the acquisition of Escient to complement that with 2 first-in-class medicines, 262 and 547, that can really address a range of indications. We believe that, that added to the portfolio that we have with povorcitinib, which is a promising pipeline within a drug, we can win across a range of indications by providing patients and payers with a portfolio approach to some of these diseases, including prurigo nodularis, atopic dermatitis and now the new inflammatory diseases.

Your next question is coming from Reni Benjamin from Citizens JMP.

Just a couple of quick ones. One on Jakafi XR. Can you provide any sort of an update as to how that's progressing? And as you think about the strategy going forward, is this something that you're already starting to evaluate in combinations? Or do you only start doing that after an approval? And then just as a follow-up, tafasitamab, just wanted to get your thoughts on the FL, MCL data that's coming out. Is this really going to be meaningful from a commercial perspective versus the real opportunity in first-line DLBCL, which is expected in 2025?

So Ren, it's Steven responding to your question. As Pablo mentioned earlier this year, the XR process is currently underway with regulators, focusing on bioavailability and subsequently on BE work, which will include stability. This process is anticipated to take about two years, and we expect to complete it in time for the LOE. Our aim is to have the once-daily option available on schedule. This does not affect our fixed-dose combination work, which we are continuing to progress alongside BET and ALKs. Regarding tafasitamab, the studies are completed for both mind and front mind. The study for low-grade follicular and marginal zone lymphoma is set for the second half of this year, while the first-line diffuse large B-cell lymphoma results are expected around Q1 2025. We are eager to see that data, as we are aware of the regimen's strong activity and tolerability in lymphomas. There is also growing interest in exploring autoimmune applications with CD19 antibodies, which we are currently assessing. To address your main question, we expect the forthcoming data to be significant, as we have a well-tolerated and active regimen, and we look forward to those results.

Our final question today is coming from Gavin Clark-Gartner from Evercore ISI.

Just wanted to ask one quick clarification on the CALR data. Did you note that you're planning to show some of that data later this year? Or could that still be a 2025 event?

We haven't provided specific guidance. I think we mentioned 2025. So if I mistakenly implied 2024, I apologize, but the goal is 2025.

Thank you all for participating in the call today and for your questions. The IR team will be available for questions throughout the day. Thank you 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.