Greetings ladies and gentlemen and welcome to the Incyte Corporation, Second Quarter 2013 Earnings Call. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Ms. Pamela Murphy, Vice President Investor Relations Communications. Thank you Ms. Murphy.

Good morning and welcome to Incyte’s second quarter, 2013 conference call. On the call today are Paul Friedman, Incyte’s President and Chief Executive Officer, Jim Daly, Executive Vice President and Chief Commercial Officer, Dave Hastings, Executive Vice President and Chief Financial Officer and Rich Levy, Executive Vice President and Chief Drug Development and Medical Officer. Paul will begin with an overview of the quarter and highlight progress made in our lead clinical program. Jim will follow with an update on our ongoing commercialization of Jakafi and Dave will describe our second quarter financial results. Paul will then open up the call for Q&A. Before beginning, we would like to remind you that some of the statements made during the call today are forward-looking statements including statements regarding our expectations for the commercialization of Jakafi, our development program for Jakafi and other indications as well as other compounds in our pipeline and a revised 2013 financial guidance. These forward-looking statements are subject to a number of risk and uncertainties that may cause our actual results to differ materially including those described in our 10-Q for the quarter ended March 31, 2013 and from time to time in our SEC documents. Paul?

Good morning, everyone. I spend a productive quarter on a number of fronts, commercially, clinically and financially. Commercially, Jakafi continued to experience solid growth and in fact as Jim is going to describe in his remarks, we've increased our 2013 guidance for net product revenues. Clinically, important new data presented in the second quarter showed that Jakafi improved overall survival in myelofibrosis patients and that also advanced our scientific understanding of JAK1 inhibition may impact a basic aspect of the disease and we're in a strong financial position which Dave will address in his remarks. I'm going to start with the overall survival data representative to European Hematology Association meeting, three year data from the COMFORT-II show the treatment to Jakafi, not only led to sustained reduction spleen volume, but also provided a 52% reduction in the risk of death relative to patients treated with best available therapy. This survival benefit for patients randomized to Jakafi is particularly noteworthy given that all patients randomize the best available therapy had crossed over to receive Jakafi by week 48. The benefit observed underscores the importance of treating earlier with Jakafi and we expect this information further encouraged physicians to prescribe Jakafi for the intermediate or high risk MF patients and to do so earlier in the course of this progressive disease. Restructuring COMFORT-I, last year at ASH we showed that would two years of follow-up, Jakafi continued to be associated with the survival advantage over placebo. At that time there were 27 deaths in the group treated with Jakafi and 41 in the placebo group. This translates to a hazard ratio of 0.58. We look forward to sharing the three year data in December at ASH, at EHA and ASCO results from an exploratory analysis of long term exposure to Jakafi were…

Thank you, Paul and good morning everyone. The successful advancement of the clinical programs highlighted by Paul represents a building block of a well-diversified, high growth global immuno oncology business. Now from a commercial perspective, the immediate job at hand is to build a bedrock foundation with Jakafi in MF. And our second quarter results reflecting continued solid progress in executing our strategy. In terms of quarter-over-quarter growth, net sales grew 12% with the following components of growth. Underlying demand as measured by vials dispensed to patients grew by 15%. Net price accounted for 1% of growth reflecting an improvement in our gross to net line relative to the first quarter. Inventory depletion reduced growth by 4% and well lower inventories at the end of the second quarter remain within the normal range of three to 3.5 weeks. Our second quarter performance is consistent with our expectation for steady and consistent growth in dispense bottles. Based upon what we are seeing in new prescriptions and persistency, we expect to see continued solid growth in the second half. As a result, we’ve increased our 2013 net product revenue guidance in the range of $220 million to $230 million, a change from the previous range of $210 million to $225 million. Through the second quarter, our breadth and depth to prescribing to continue to expand as evidenced by the fact that nearly half of our target prescribers have prescribed Jakafi at least once and about a third of those have written for two or more patients. Turning to persistency, we believe that domestic, that dosing should be individualized for each patient with changing physician behavior. We continue to see the increase used of lower dose strengths both at the starting dose and in high trading if medically necessary. In the second quarter,…

Thanks Jim and good morning everybody. We'll start with revenue this morning. We recorded $54.1 million of Jakafi net product revenue in the second quarter. And as Jim noted, we are increasing our 2013 Jakafi net product revenue guidance to a range of $220 million to $230 million from the previous range of $210 million to $225 million. Our gross-to-net adjustments for product revenue recognize was approximately $5 million or 8.5% for the second quarter. We still expect that our full year gross-to-net adjustment will range from 8% to 9%. In addition, we recorded $5.8 million in product royalties from Novartis for sales of Jakafi outside the United States. Now moving to our operating expenses, our costs of goods sold for the second quarter was immaterial as our starting and finished goods inventory was previously expensed as R&D prior to FDA approval. SG&A was within expectations while R&D expense came in slightly below our expectations. As we've mentioned in the past, our R&D expenses tend to fluctuate from quarter-to-quarter based on the timing of certain clinical trials, and we expect an increase in R&D expense in second half of the year. Now moving to the balance sheet, in terms of cash, we ended the second quarter in a strong position with $277 million of cash and investments. In addition, during the second quarter, the company entered into separately negotiated agreements with certain holders of our 4% and 3.25% convertible senior notes in which such holders agreed to exchange approximately $144 million in aggregate principal amount of the notes for the 16.4 million shares of the company’s stock and through which the notes were convertible. The holders also received $9.8 million which are recorded as debt exchange expense in the second quarter. Now importantly, this amount is significantly less than what we owed in future interest expense on the exchange bonds had the notes remained outstanding. As a result of the reduction in the outstanding principal balance of the notes, the company now expects interest expense to be approximately $38 million in 2013, including non-cash charges of $23 million to amortize the discount on the notes. So we are in a financial position. We have sufficient cash to fund our growth and we have multiple sources of cash flow. In addition, with our successful exchange of $144 million of our notes, we have improved our capital structure. And so with that, I'll turn the call back over to Paul.

Thanks, Dave. Operator, could you please now open the call for Q&A.

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Rachel McMinn with Bank of America Merrill Lynch. Please proceed with your question.

I have two pipeline questions actually. How is your thinking about, Paul, further your lead JAK1 inhibitor? It sounds like there is positive data in the psoriasis and you said in the past that you need to have a differentiated profile versus various fairly… Are you seeing that? Do you plan to develop this into a unique indication versus very significant Jakafi? And then separately on IDO, it sounds like you are gaining some traction there. Are there any plans to combine with your own internal pipeline? Thank you.

I am going to have Rich address to those questions because I think you should start and I will add on something if there are things that I have.

So, it's a little bit hard to answer the question directly before actually presenting the data, which will be presented, I guess, which has the psoriasis data at EADV. We expect data at ACR and myelofibrosis at ASH, but I think it’s fair to say that the data is positive and interesting and that we do see potential there. We are not in a position to compare the data to other unreleased information to say how it compares to other JAK1 and JAK2 inhibitors, but have not presented their data yet. But we do have the interest in moving 39110 forward in inflation, and the other JAK1 inhibitor this is already in the clinical 47986, we are targeting towards oncology. Now there are still are still some studies that are ongoing with 39110 in oncology. Simply because that was further ahead in development and we felt that we can answer some questions about the role of JAK1 inhibitors in oncology with that lead compound. With respect to IDO inhibitors, we are interested in combining it as was indicated in the prepared remarks with drugs that are active into immunology such as the PD-1s and PD-01s and in terms of our own pipeline, there is potential there for other compounds, which are not so much geared towards the immunologic treatment of cancer but that may have utility in those cancers, but we don’t have anything specific to present in terms of that at this time.

Our next question comes from the line of Jonathan Ashoff with Brean Capital. Please proceed with your question.

I was looking at this impact and market scam, claims databases and they put the MF prevalence in the US at about 12.817.7K versus 016 to 18 and the PV was like for 148K to 178K versus roughly 95 figures and I just wonder if you could help on explaining those differences?

Hey, Jonathan, this is Jim. Jonathan, I think it’s very important to look at when the claims data is gathered. Ours is more current and is not unusual when you have orphan indication without an effective treatment to actually see some under quoting and physicians will actually quote for what they can treat, and as a result, we think the more current data is reliable and we have a lot of confidence in our epidemiology of 16,000 and 18,000 MF patients. And quite frankly, as we look at our new patients starts quarter-over-quarter, we are increasingly confident in those numbers.

And then how about the PV over estimation on this…

Yeah, Jonathan, that again we’ll sit with our methodology and there is one we hope to wrong, we hope there is a 150,000 PV patients out there, but right now our best estimates indicate that there is at least a 100,000 diagnosed PV patients being treated in the office today.

Our next question comes from the line of Cory Kasimov with JPMorgan. Please proceed with your question.

Two of them for you, first of all, do you have any additional thoughts or strategies on potentially giving that the Jakafi survival data into the level given how strong that works and I am wondering how necessary you think that even is. And then the second question is how much off label user you currently seen in PV? Thanks

So I will answer the first question, this is Rich. We recently had a meeting with FDA in July to talk about the potential of adding the results of survival, announces of survival from COMFORT-I and COMFORT-II to the package insert. And they are quite amenable to some display of that, the details of which will be worked out after they review the dossier. And that is planned to be submitted mid second half and we just don't know how long yet that review will be. So, we're thinking that will be at in terms of its importance, I think it's now it's good to be able to have something in the package insert so that the sales reps can directly speak to something, Jim may add on that as he also addresses your second question.

Yes. No I think Kevin and Kaplan-Meier curves in the label, it is powerful and clearly that would support the rationale to treat early with Jakafi. And with respect to our current usage by indication, 90% plus of our usage is for MF, of the remaining 10%, plus half of that is for PV and the remaining portion is small numbers, but you're looking at [MVS and ETE] largely.

Our next question comes from the line of Matt Roden with UBS. Please proceed with your question.

Question on the pancreatic trial upcoming similar to what was asked before. The Phase 2 trial is kind of smaller to randomize survival trial and accordingly it doesn't have the most robust power. If the bar is high for the primary endpoint, can you talk about the way you think about the other endpoints, would you need to see to further develop Jakafi or JAK inhibitors for improving survival. I guess it’s a way of asking in the case of sort of a gray result how do you think about that in taking this forward. Thanks.

Yeah so when we look at this field a number of years ago there were a lot of companies trying to get into cancer cachexia and constantly running into issues with FDA as to what these surrogates were and whether they were truly established surrogates. And we decided to just study those things but put the emphasis on what is the survival data because that is in fact the bottom line here in terms of advanced pancreatic cancer. I mean it's one thing to make people feel better which I think you probably will find that it does based on no analysis of pancreatic data which has been our experience with the drug. But when you are talking about survival within months I think survival does become important. So the study is powered not necessarily to look at a two-sided P-value of less than 0.05 though it has the potential to show that but it wasn't initially designed with 80% or 90% power to demonstrate that because we wanted to get an answer on survival without doing essentially a Phase 3 trial at start. We just have to look at the remainder of the data and decide in the end is the next study a survival study? Is it something else and what is the impact of this initial study in pancreatic cancer in terms of other types of cancer cachexia component and we will have the results soon enough sometime this quarter and so it's just premature for me to try to speculate without seeing any of the data from this trial and knowing that it is coming pretty soon.

Thanks for that, Rich and when you think about advancing 110 and 96, these are coming in to a phase where there's already one JAK approved in RA and maybe by the time these guys get in the Phase III, there might be another. Just trying to get a sense for what you think this clinical and regulatory path would be for those and whether or not you would need head to head trials in those various indications you're looking at?

So those are really difficult questions. I mean I think it really is going to depend upon the data and the differentiation as to whether or not the strategy is to just be another JAK inhibitors with some improvements over what's out there versus going to slightly different indications where we might be first or potentially second, something like that. You know, clearly it's not our goal to just have a need to third potentially JAK inhibitor for indications with nothing additional to offer.

Our next question comes from the line of Thomas Wei with Jefferies. Please proceed with your question.

I was just wondering if you could give some extra color around the contribution in new patient starts versus persistency improvements during the quarter and for that 46% at the lower doses, when you take a look at your overall clinical database and model out what the ratio should be based on the efficacy safety parameters, what do you think is ultimately going to be the stable ratio at lower dose versus higher doses? Thanks.

Thanks, Thomas. Well Thomas our initial guidance was predicated on the fact that we would see a gradual meaningful improvement in persistence. And as well as a gradual deceleration new patients starts over the course of the year. Now we're certainly seeing the improved persistence and the favorability to our initial guidance expectations it really attributable to the fact that we're not seeing any slowing in new patient starts. So that’s a major driver, in fact we're seeing continued strong new patient starts month-over-month that's driving our ability to increase the guidance. In terms of the lower doses mix, interestingly, we're still well behind Jakavi in Europe in terms of the use of lower doses. So they certainly want to school on us, I think it's very hard to quantify, but I would be surprised Thomas if we weren’t well above half of our units being in five and 10 milligram strengths.

Can I just add in terms of the clinical trial experience, what we found in for example the COMFORT studies, is that those patients who started at a dose of 20 milligrams b.i.d., because they had baseline platelet counts of greater than 200,000 those patients tended to either remain at 20 b.i.d. or go down to 15 with the mean overtime, being 15 so higher than the five to 10, whereas those patients who started with the 100 and 200,000 platelets and started 15 tended to 10-day average down to doses around 10 milligrams b.i.d. and then from the separate study of patients with starting platelet counts less than 100,000 who start at 5 b.i.d. those patients tended to end up at 10 b.i.d. So it really depends upon the patient mix as to what the eventual doses are going to be. And so I think you wouldn’t necessarily expect to get much over the 50% and 60% of patients and doses of around 10 overtime, because some patients can tolerate and may receive additional benefit from doses around 15 b.i.d.

Our next question comes from the line of Brian Abrahams with Wells Fargo. Please proceed with your question.

Hey, this is [Shane] calling in for Brian and thanks for taking my questions. You've mentioned cachexia as one of the potential mechanisms of actions for improving survival and pancreatic cancer. Could you talk in little more details about the mechanics of rational on behind targeting JAK2 and pancreatic cancer such as intrinsic factors mediated by IL-6 signaling axis, extrinsic factors involving GM-CSF mediated immuno-suppression and whether you think the fact that Jakafi had an effect on bone marrow myelofibrosis translate to any impact on desmoplasia in pancreatic cancer and whether you have tested these hypothesis in preclinical models?

Okay, so let me just rather than answering each of your individual questions, kind of go through how we think about this. So first of all, in myelofibrosis we see the patients are cachectic, they gain weight and they live longer. And there have been plenty of animal models where in chachectic statistic models IL-6 is a key driver and the if you inhibit on IL-6 singling through whatever mechanisms where these (inaudible) levels use siRNA any of those things in animal models that reverses the chachexia and leads to a the greater survival. Additionally, there are animal models that look at IL-6 inhibition in pancreatic cancer that has benefits and then our Xenograft models of pancreatic cancer even without necessarily having a cachexia component, we see that our JAK1 and 2 inhibitors lead to tumor growth delays, reductions in tumor mass et cetera. So we have not looked specifically at impacts of fibrosis within and various things like that it's part of our rationale and we look forward to seeing actual clinical results soon.

Okay. A quick related question is how confident are you dosing used in MF should translate to an effective dose in pancreas are there any biomarkers that you're tracking to assess whether you have reached that effective dose?

Well, I mean we know by following ex-vivo [STAT fast correlation] that the blood levels that we get in these patients are sufficient inhibit the JAK pathways to the degree that we want to inhibit them. And we certainly do we have measurements that we're making in the study, but all that data is blinded at this point.

And the dose, the starting dose here is 15 milligrams BID and because these patients do not have bone marrow disease, they're able, they're virtually all of them as far as I know are able to maintain that dose, which is the highly active dose.

Our next question comes from the line of Ying Huang with Barclays.

So the first question I have is, on the volume change from this quarter for Jakafi shipment because I know you guys took a price increase, so can you give us basically the volume change for Jakafi shipments from 1Q to 2Q? And then second question I have was regarding to a new drug you guys just put into the clinic. I think you said codename INCB40093, it was in Phase I for B-cell malignancy. I was wondering if you could clarify what method of action this drug has. Is it a PI3K inhibitor and what your thoughts are in terms of getting into this B-cell malignancy given you know the product exposure already on -- in the clinical phase now?

So the first question I have is, on the volume change from this quarter for Jakafi shipment because I know you guys took a price increase, so can you give us basically the volume change for Jakafi shipments from 1Q to 2Q? And then second question I have was regarding to a new drug you guys just put into the clinic. I think you said codename INCB40093, it was in Phase I for B-cell malignancy. I was wondering if you could clarify what method of action this drug has. Is it a PI3K inhibitor and what your thoughts are in terms of getting into this B-cell malignancy given you know the product exposure already on -- in the clinical phase now?

This is Jim. In terms of quarter-over-quarter price volume, volume grew 15% -- 15% unit growth and price contribute 1% and that was really a function of our gross to net going from 9.5% down to 8.5% and we burned off 4% of growth in inventory and that netted the 12% net sales quarter-over-quarter growth.

Second question 40093 is a selective inhibitor of PI3K delta. We are currently exploring its safety and biological activity in the Phase I trial. We are not going to provide at this time greater detail on the compound or our development plans. We will disclose those details at the appropriate time as the program matures.

Second question 40093 is a selective inhibitor of PI3K delta. We are currently exploring its safety and biological activity in the Phase I trial. We are not going to provide at this time greater detail on the compound or our development plans. We will disclose those details at the appropriate time as the program matures.

Our next question comes from the line of Eric Schmidt with Cowen & Company. Eric Schmidt - Cowen & Company: It sounds like Jim has been doing some work on the TB opportunity. You mentioned the next situation of therapist to be longer there. Do you have any estimate for the percent of patients with TB who might be appropriate for second line Jakafi therapy?

Yes, we believe that 20% to 30% of the 100,000 patient population would fit the criteria for being refractory to or intolerant of hydroxyurea. Eric Schmidt - Cowen & Company: Okay. And then just a quick one for Dave on cost of goods, can you update us on how much left has been, how much pre-expense inventory has left to be sold and that does work its way through the channel, what the gross margins going to be?

Sure. So for 2013 Eric we will continue to use the validation batches that we had clinically. So I would expect sometime in 2014 and what we've guided for in terms of overall cost sales are somewhere between 4% and 6%.

Our next question comes from the line of Josh Schimmer with Lazard Capital Markets.

As the topline grows now going forward, you are so close to profitability. Do you expect starting next year to be profitable and growing the bottom line or is the strategy to more use the topline growth to broaden R&D effort? How do we think about modeling going forward?

Yes, I think it's important to note that we really believe that the pipeline at Incyte is developing an investment and its offer the very high return on -- potential high return for our shareholders and we're going to continue to invest into. So we are not giving any guidance in terms of when we will be profitable, but certainly we believe that the company is in excellent shape financially, strong cash position with multiple sources of cash flow now, including royalties and strong milestone flow to come. We reduced our leverage and we are really in a strong position to continue our investments in the pipeline.

Then maybe a quick question on 39110, why do you feel you need three different Phase III studies to explore the difference in JAK1, JAK2 versus JAK1 as opposed to maybe adding some new innovative indications, whether it’s reasonable either proof of concept or expectation for success?

You said Phase III, did you mean Phase II?

Yeah, of course Phase II, thank you.

Well, we wanted to go to places in which there where data already in the public domain on JAK1, JAK2 to be able to see how this may differentiate, but not necessarily committing to development in those same indications that were there. So as we move into the next stage development, we may not be limited or even focused necessarily on those same indications, but it was going to be harder I think in a relatively short term with relatively small studies to start exploring indications for which we didn’t know what the effect of JAK1, JAK2 inhibitors were. Now there are some other indications, for example Pfizer has data in inflammatory valve disease for which there was some data out there, but those trials are hard to enroll quickly and we wanted something where we can get results into 2013 timeframe.

Our next question comes from the line of Do Kim with Piper Jaffray.

First question was for you Jim, just curious about the sensitive (inaudible)?

This is Jim. I am guessing that the question was talk about the sensitivity you have in distinguishing between a new patient and repeat patient?

That is correct.

Okay, I think that is a good question. And there is some noise in the data, we have become increasingly more sophisticated in how we try to separate signal from noise. So we believe that our assessment of new patient starts is directionally consistent over time. And therefore as when we say that new patients start [backing assistant] we have good reliability on that. As you point out there is a sensitivity between new patients and repeat patients. To the extent that we overstate new patients we will be understating repeat and therefore understating our persistence, so it’s a closed system and there is some compensatory practice there, but as we look at total bottles being sold clearly with the 15% quarter-over-quarter, we are seeing very nice growth both in persistence and in new patients.

Our next question comes from the line of Navdeep Singh with Goldman Sachs.

Hi, this is Lisa Zhang in for Navdeep Singh. Thanks for taking my question. So, do you believe you can still match the Jakafi growth seen and now expected in 2013, also in 2014 given a potentially new and change in 2014?

It's too early for us to be giving specific 2014 guidance, but as we look forward to 2014, clearly we do have a competitor. I think the share that competitor will take will be a function of the data and the profile that they present at ASH and there also will be a function how will they execute. We think we are in a very strong production, our data continues to build very nicely, whether it'd be survival, whether it'd be fibrosis and we'll left the competitors to speak about their product, but we'll be looking very closely at off-target GI toxicity, we'll be looking at durability response and we're confident that it'll be very difficult to displace Jakafi as first line treatment in MF. Having said that, we think it will be helpful to market growth to have a second entrant, having more people talk about the need to treat should expand the overall market and we think whatever share impact we have should be more than offset by market growth.

Our next question comes from the line of Skip Klein with Gauss Capital.

Yeah, two quick ones please, thanks. One for Dave, the $9.8 million [case] of the convertible debt holders, was that paid in cash or stock and can you give me rough estimate what the savings were versus the interest over the life of the convert?

Yes, we paid that on cash and the interest savings are a little bit over $7 million over the life of the convert.

And then for Jim, is there any way you could help me, I mean I like wake up at night thinking about duration of therapy believe it or not. And I was wondering if there are any sort of [meters] or bounds if you can give us on you know duration of therapy in MF, what could it be, what are the ranges and the same thing in [PV]. And if you don't feel comfortable with specifics, is there an example of an oncology compound that we can look at, it’s on the market that you kind of use as an exemplar.

The answer to that question, I think it is important to separate the idea of discontinuation rate or persistence versus duration of treatment, and duration of treatment assuming you have a patient successfully benefiting from the drug and tolerating the drug, that's the function of how long they live. So I will defer the risk to comment on survival of MF patients versus survival of PV patients and what we've seen in Phase II studies with the extension. But if you look at persistence or discontinuation rate, what we said in the past and we believe it today is that we should be able to keep 70% to 80% of the patients on the product for the first 12 months. Now if you look at the Phase II COMFORT-I, COMFORT-II you had a 14% discontinuation rate at six months 18% and at 12 months, that's probably an unrealistic hurdle, but having a 20% to 30% discontinuation rate at the end of 12 months we think that's achievable and we are working towards that goal. So I'll ask Rich to comment on the overall of treatment that you may see in MF versus PV.

Yes, so Jim basically gave you the key data in terms of what we're seeing in the clinical trials, remembering that those clinical trials didn’t include patients with the lowest platelet counts. So those are very sick patients we're not showing included in those trials making them really hard to absolutely meet those numbers, but what we did see as an example and Jim made reference to this, I think, in his prepared remarks was that we expect longer duration in therapy in PV. And so last year we actually presented a three-year follow-up in PV and again in the clinical trial setting, 75% for the patients were still on drug at three years as opposed to about 50% still on drug at three years in the comparable Phase II MF trial, indicating that where the absolute numbers may never be matched in the clinic, the ratio about twice as long duration of therapy at least as measured at three years in PV versus MF probably is a realistic estimate, but again we will have to launch the product and see how that goes over time.

Fair to say that patients feel better, they don’t feel worse, like in many hypertension and the data supports them feeling better and supports the physician and the payer being willing to pay for. I guess the other piece that you really didn’t comment on is treating earlier aspect, what were you gaining at the front end you think over time? Is it much as six months or nine months or 12 months by getting them earlier and convincing the doctors and the patients going to the doctors, I want to be put on those drug. There is survival benefit, there is fibrosis benefit, put me on the drug. So is it six months or 12 months?

So if you look at the reasons for discontinuations in the market place, a fair number of those are because of anemia and thrombocytopenia. What indicates in the clinical trials where they were very well managed and the doses were adjusted, but as you start earlier you are that in the sense means last anemia and thrombocytopenia baseline, which it gives those patients a better chance to be treated longer and of course in PV, where they don’t have anemia and thrombocytopenia, they have too many red cells and in those cases more platelets than they need. Those are actually benefited from that reasons to discontinue. So starting earlier should lead to quite a bit longer treatment but have quantify that they at least start six months, are you just going to get six more months of treatment or are you going to get many more years of treatment, that I really couldn’t speculate on.

Our next question comes from the line of Salveen Richter with Canaccord.

Good morning and thank you for taking my questions. This is Andrew Goldsmith on the line for Salveen. I just had a couple of related questions, on Europe. I was wondering if you could talk a little about the one time issues in Q2 that led to kind of the small decrease in revenue. And then similarly what went into the kind of delay in getting a third contributor for pricing.?

Yes, well, I think Novartis is the definitive source on that, but what they have shared with us is with respect to the non-recurring events, one of those was destocking in Germany and that is pretty typical for a product launch in Germany and the other was a one-time accrual reversal in France. And then with respect to the reimbursement, I think as you know right now Europe is a very difficult marketplace in terms of reimbursement. And I think we just had a not unexpected year credit delay with the second major market and we were confident that we will get third major market in the first half of next year.

And any other event I mean in the second half or you think (inaudible)?

I am sorry.

I am sorry, do you see any other of this kind of one-time events coming in second half?

No, again I would defer to Novartis on that, but to the best of our knowledge we got these one-time events behind us.

Our next question comes from the line of Boris Peaker with Oppenheimer.

I just had a question on clinical studies ongoing, you have highlighted a number of upcoming data release, but you also mentioned that there is a number of investigator sponsor trails. I am just curious if you could summarize some of the investigator’s sponsor trials and when we may see some of that data?

Yeah, so we are selecting -- there are number of things selling that some of which are higher on our radar screen than others. We have a couple of cancers going on and breast cancer including triple negative breast cancer and inflammatory breast cancer. We have studies ongoing in lymphoma and there are just reasonable number of other things going on but I don’t think it’s necessarily keeping all in my head. Certainly some of them are still related to myelofibrosis including combination therapies and uses in myelofibrosis and other setting for just pre-transplant, but in terms of new potential indications, those are the ones that come to mind there. We also actually do have some IFTs with some of our other products including IDO inhibitor and it was mentioned in the prepared remarks there is an IFT starting in late stage MDS with our IDO inhibitor. So a number of interesting things timeline wise, but that's really something that isn't very hard to predict. And that's the -- the upside of IFTs is lot of things you can do without spending a lot of time on them, but the downside is we really don't have anywhere near the control of the timelines that we have when we do studies ourselves.

Is there any particular maybe IFT that is high in your radar that may inform some kind of an internal development decision or most of these that kind of early exploratory at this point?

Well, I think they are all geared towards helping us make investment decisions to further develop into ourselves and I do think that solid tumors with Ruxolitinib for example, a lot of that is going also depend upon the result of RECAP as well as the IFTs that are reading out and in terms of liquid tumors, I think that the lymphoma study is one a particular interest to us.

Great. Thank you very much for taking my questions.

Our next question is a follow-up question from Matt Roden with UBS.

Great, thanks so much for taking the follow-up. I just want to come back to this PV problem questions. Jim, you mentioned that you're sticking with few numbers a 100,000 problems in the U.S. 20% or 30% addressable. When you think about the addressable numbers, when you I guess it's just a methodology question, do you get that percent based on an estimate of how many patients are hydroxyurea-refractory or intolerant or is it just, do you think of it in terms of a proportion or an absolute number because if the number is really 150 then that has implications. Thanks.

We do it as a proportion, Matt. It's based on an extremely large, we did a thousand patient chart on it and that's how we derive the 20% to 30% estimate. So it is proportionate to the overall universe, so if it’s 150,000 that we have upside and so that's one estimate that we would mind being wrong on.

Our final question is a follow-up question from the line of Ian Somaiya with Piper Jaffray.

It's actually Matthew on for Ian. Just two quick questions if I may for Jim and Rich regarding 110, you keep focusing on differentiation and the need to focus versus other JAKs particularly on the efficacy front but it seems like thinking about things from a safety point of view the market’s really wide open and so I'm just, we are just wondering why not focus on safety, why [research] is coming to be such a high bar and internally in terms of differentiation?

So one of the issues with respect to Phase 2 is the size of the population in order to be able to really assess what the long term risks are of infrequent things. So if you look at tofacitinib as an example know where they get 5000 patients and they studied them for many years and now they're having some issues particularly in Europe. Those, unless you actually have a problem, it's not something that you are likely to pick up in relatively small Phase II. So and what we're doing right now is really focusing on the things that we can see within the Phase 2 trial and just making sure that we're not running into any issues related to immuno-suppression. Now, of course we do avoid JAK3 with both our JAK1, JAK2 inhibitors as well as our selective JAK1 inhibitors which gives us a likelihood of having -- not having the same immunosuppressive issues that tofacitinib does but we just don’t have studies designed at this stage to able to prove that.

Okay, and if I could just squeeze in one last one please, regarding pancreatic cancer Phase 2, can you give us a sense or help set expectations for what you are viewing or how you are defining good data that would support advancement into Phase 3 versus say one of the other back up compounds? Thank you very much.

I mean, we look at hazard ratios and I think that’s the most important thing and hazard ratios tell us two things. One, they tell us what the likelihood of success is and whether it's worthy investment and they also tell us what the size of the patient population, what the size of the study would need to do in Phase 3 in order to be able to adequately power the study. And so, I don’t have any particular number in mind in terms of what it is, it is our go-hazard ratio but it was just a barely, small difference, not only was that taken to question the likelihood of success, but also the size of the study would be necessary. So we would be looking for something that would be both highlight for the success and manageable and in terms of differentiation between other compounds, I mean I think that's more driven by the ability to combine ruxolitinib with various chemotherapies than it is based on hazard ratios.

Mr. Friedman, appears we have no further questions at this time, I would now like to turn the floor back over to you for closing comments.

Thank you. Thank you all for joining us this morning. We certainly appreciate your time and we're looking to a busy second half of the year and we look forward to keeping you updated on our progress. Thank you and with that we'll end the call.

Ladies and gentlemen this does conclude today's teleconference you may disconnect your lines at this time. Thank you for your participation and have a wonderful day.