Incyte Genomics 8th Annual Wolfe Research Healthcare Conference

Good morning, everybody. My name is Andy Chen, one of the SMID Biotech analysts here at Wolfe Research. Today we have Incyte. We have Bill and Pablo from Incyte joining us. We're very excited. Maybe starting from the big picture, right? Incyte right now is benefiting from a lot of products moving toward the pivotal stage, moving toward the launch mode. Can you maybe talk about just basically the overview here, how you're viewing the business right now compared to, let's say, last year?

Sure. It's a good question. It's nice to see you, Andy. Good morning, everyone. We laid a framework out at the beginning of the year that I think is still intact and has progressed significantly over the past 12 months. The framework was, we have a core business, JAKAFI, that serves as a foundation, and that's on track to reach at least $3 billion-$4 billion by 2030. We report on that business each and every quarter. In fact, in the third quarter, that business was up north of 30% on a year-over-year basis. It's supported by several launches that'll be important. We have the XR launch, the povorcitinib launch, and then OPZELURA in the international markets.

The second part of our framework is our pipeline, and over the past 12 months, we've moved several compounds from phase I development into phase III, and that includes 989 for MPNs, G12D in pancreatic cancer as well as colorectal cancer, and then TGF-beta bi PD1 for colorectal cancer, and then latarcibart. You look at those four assets, I would say, especially for 989, G12D, and latarcibart, those are high PTRS projects. So on a risk-adjusted basis, they have a great deal of value when we think about the recovery, and the pipeline will drive the recovery. TGF-beta bi PD1, we shared very impressive data at ESMO. It was response rate data, and if that response rate holds up, that is an outlier opportunity inside of Incyte. On a risk-adjusted basis, it's not quite as valuable as the other three that I just mentioned.

You put those two pieces together, a $3 billion-$4 billion core business, you layer on a pipeline that on an unadjusted basis doesn't require heroic assumptions to believe it could be, on an unadjusted basis, $8 billion-$10 billion, and we will have sort of created a recovery for Incyte post-2029 where the company can grow at a top quartile rate, call it a 10%, 15% CAGR. The last pillar part of the framework is business development, and we'll use that like any company does, which is to supplement what we're doing internally. We're focused on assets that can be approved in the 2029 to 2032 window and be accretive during that period of time. Pretty agnostic as it relates to therapeutic area. Hematology, oncology, and immunology are relevant to Incyte, and we have the capabilities to operate in all three areas.

Then as it relates to stage of development, we can do early-stage deals with less upfront capital or later-stage deals with more upfront capital. We have about $4 billion on our balance sheet, and that will grow to $6 billion if we don't use it. We believe we have all the ingredients to transition the company away from JAKAFI. I think what we're focused on is increasingly execution. The biology risk is not zero, but it's a lot lower than what it was at the beginning of the year.

You talked about the current business, you talked about the outer years and where it could be in the future, but what about, let's say, in the next one or two or three years? What are you hoping to unlock in 2027, 2028, 2029?

Yeah, I'll break it up between core business and pipeline. In the core business, what you want to watch for, and what we're judged on, is the launch of povorcitinib. We expect to get an approval in early 2027. We think that is going to be a very important growth driver for the company. Watch the conversion rate of XR on a quarterly basis. We'll provide an update. We're at about 3% right now. We expect that that's going to land, broadly speaking, between 10% and 30%. If it was 15%, that would be the midpoint. That would be a solid outcome for the company. We expect some data on povorcitinib in PN at the end of the year, which will be another indication for that product in addition to vitiligo, so it would be a three-indication JAK inhibitor.

We'll have data on OPZELURA in HS, in mild to moderate HS also, towards the end of the year, and those are catalysts for that core. As it relates to the pipeline, we'll provide updates, and Pablo can go through this, on 989, G12D, and latarcibart, which will be advancing into phase III, and we have to convert these phase III programs into FDA approvals and then ultimately revenue earnings and cash flow.

Maybe we can talk about each of these products, right? Maybe starting from JAKAFI XR, so 3% share so far, but it has only been four or five months. Can we extrapolate from that 3% for the next two years? Because I think we can get to more than 10%, right?

Yeah. The way I look at it, just mathematically, there are 26 months between now and we lose JAKAFI IR. If we converted IR to XR 50 basis points a month, that is 13, add it to three we got, we are at the midpoint. If we do a little bit better than 50 basis points a month, we can get to the upper end of the range. The most important step in 2026 was formulary coverage, which by the end of this year, we will have all the formulary coverage we needed, which will be 80%-90%. So that is a positive. Now, we have to actually convert, and that is done through obviously a sales organization. As you get into early 2027, we will have a much better sense of where we are going to land in that range.

Got it. After JAKAFI, you have your non-JAKAFI heme-onc business, a lot of the smaller products, but is there anything that is easily missable by investors here that you want to emphasize?

I think that NIKTIMVO, MONJUVI, and ZYNYZ collectively- Yeah is a very sizable business and important part of growth.

You see the results that we're posting on those three products each and every quarter, and they're on a good trajectory. Each one is in their third year of launch, and so there'll be some growth moderation, but nothing there that anyone should be surprised by.

Right. With future indication expansions, would MONJUVI be one of the top growers?