Welcome to the Incyte Second Quarter 2020 financial results conference call and webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation. 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 at Incyte. Please, go ahead.

Thank you, Kevin. Good morning, and welcome to Incyte's second quarter 2020 earnings call -- earnings conference call and webcast. The slides used today are available for download on the Investors section of incyte.com. I'm 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, as 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 the call today are forward-looking statements, including statements regarding our expectations for 2020 guidance, the commercialization of our products and the development plans and expectations 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 March 31, 2020, and from time to time in our other SEC documents. In addition, I would like to caution everyone that the COVID-19 pandemic is an evolving situation, and it is still relatively early to be able to assess the full effect of governmental, business and social actions and policies and overall economic conditions on our business. Accordingly, it is important to keep in mind that our statements on this webcast speak as of today. We'll now begin the call with the call with Hervé. Hervé Hoppenot: Thank you, Mike, and good morning, everyone. In the second quarter, we continued to execute well across the various facets of our business, driving strong revenue growth, achieving success in…

Thank you, Hervé, and good morning. Jakafi sales increased 16% year-over-year. We continue to see robust demand across all three indications and a number of patients on therapy continues to grow. In April and May, new patient starts were negatively impacted due to regional shutdowns related to COVID-19. However, since June – since early June, we have seen a rebound in new patient starts. Despite the challenges of the pandemic, I am proud of our team for their efforts to continue providing the level of service and responsiveness that our customers have been accustomed to over the years. We have expanded our multichannel engagements, and our field representatives are continuing, are conducting multiple, virtual and digital programs with our customers. Turning to Slide 9. We have been successful in identifying the appropriate patients, and there are already more than 100 patients on therapy. We have not had any unexpected reimbursement issues and patient refill rates are encouraging. We have maintained a good depth of prescribers in both academic and community settings and we are proud to be able to provide these physicians with a much needed therapy to help their patients. We are also excited about the approval of Monjuvi, the first FDA-approved second-line treatment for adults with diffuse large B-cell lymphoma. Monjuvi is an important non-chemotherapeutic option that has a convincing clinical profile as reflected in the clinical data included in the U.S. prescribing information. With compelling response rates and a long duration of response while avoiding many of the toxicities associated with other forms of treatment. Monjuvi represents a significant opportunity to transform the standard of care for patients with relapsed/ refractory diffuse large B-cell lymphoma. Our commercial and medical teams are fully staffed with joint Incyte MorphoSys team of approximately 150 full-time equivalents. We have identified 11,000 potential prescribers, which -- of which approximately 80% are also Jakafi prescribers. Executing successful launches for both Monjuvi and Pemazyre, and we expect Tabrecta royalties to increase following the approvals and subsequent launches by Novartis in both the U.S. and Japan. Before the end of 2020, we plan to -- oh, sorry -- we expect broad market access for Monjuvi and already have patient assistance programs in place. While the challenges presented by COVID-19 pandemic are not ideal for new patient launches, we believe Monjuvi's strong clinical profile, the significant unmet need in relapsed/refractory, diffuse large B-cell lymphoma, and our company's combined expertise leave us very well positioned for a successful launch. With that, I'll now turn the call over to Steven.

Thank you, Barry, and good morning, everyone. Recently, we announced the success of our REACH3 trial, evaluating ruxolitinib versus best available therapy in patients with steroid-refractory chronic graft-versus-host disease. This was the largest randomized trial ever conducted in this patient population and the positive data reinforce the importance of JAK inhibition in the treatment of graft-versus-host disease. Ruxolitinib met its primary endpoint of superior overall response rate at month six and achieved statistically significant and clinically meaningful improvements in both key secondary endpoints. The modify chronic graft-versus-host disease symptom scale and failure free survival. The safety profile of ruxolitinib was consistent with previously reported studies of ruxolitinib in graft-versus-host disease. Following these results, we expect to submit the data from REACH3 for presentation at an upcoming Medical Congress, and we are preparing the supplemental NDA submission to the FDA. Turning to our LIMBER development program on slide 13. As part of our life cycle management, we have multiple strategies ongoing, including the development of a once-daily formulation of ruxolitinib, combinations with ruxolitinib and potentially new targets, and we are making progress on all fronts. The most advanced combination within LIMBER is our ruxolitinib plus parsaclisib program and we recently presented positive proof-of-concept data, which showed the additional benefit obtained from adding five milligrams of daily parsaclisib through ruxolitinib in myelofibrosis patients with an inadequate response to ruxolitinib monotherapy. Importantly, the addition of parsaclisib was well tolerated and treatment-emergent adverse events common to PI3 kinase delta inhibitors were infrequent with the addition of parsaclisib. These results warrant further study of the combination and we are planning to initiate ruxolitinib plus parsaclisib trials in both first-line myelofibrosis patients and in MF patients with a suboptimal response to ruxolitinib monotherapy. Turning to slide 14. In June, at the European Hematology Association, we presented…

Thank you, Steven, and good morning, everyone. The financial update this morning will include GAAP and non-GAAP numbers. For a full reconciliation of GAAP non-GAAP, please refer to slides 25 and 27 in the backup section of the deck and to the press release we issued this morning. Moving to our results for the second quarter. Revenue growth continued to be strong, with total product and royalty revenues of $593 million, representing an increase of 16% over the second quarter of 2019. This is comprised of net product revenues of $474 million for Jakafi, $23 million for Iclusig and $4 million for Pemazyre. Royalties from Novartis of $66 million for Jakavi and $1 million for Tabrecta and royalties from Lilly of $26 million for Olumiant. We recorded revenue growth across both the products commercialized by Incyte and those commercialized by our partners, with the exception of Iclusig, where we recorded a 7% decline in revenues, as a result of some stocking that we experienced in the first quarter of the year due to the COVID-19 pandemic. Total revenues increased 30% over the prior year quarter, driven by both the increase in product and royalty revenues, as well as $95 million of milestone revenue related to the approvals of Tabrecta and Pemazyre. Total cost and expenses for the quarter of $400 million on a non-GAAP basis represent an increase of 5% over the prior year quarter, well below the growth rate in product and royalty revenues. Ongoing R&D expense for the quarter was $250 million on a non-GAAP basis, representing a 6% increase from the prior year quarter. This increase was primarily due to our 55% share of the global and U.S. Pacific development costs for tafasitamab, the clinical trials of ruxolitinib as a potential therapy for COVID-19 and other pipeline…

Certainly. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Vikram Purohit from Morgan Stanley. Your line is now live.

Hi. Thanks for taking my question. So I had two questions on the LIMBER program. First, I just wanted to see if you could talk a bit more about what you saw in the initial PIM plus RUX data that led you to the decision to discontinue that facet of the LIMBER program? And then secondly, for the RUX plus PI3K combination studies, you're looking to start in first-line and the refractory setting. I just wanted to see if you could talk a bit more about what those studies would look like from a design perspective and how you're thinking about what the initial bar for success there is going to be? Thanks.

Vikram, hi, It's Steven. Thanks for your question. In terms of the PIM RUX program, as far as we know, we were the sort of last perm inhibitor left standing across R&D programs, and it's largely due to on-target effects in terms of the liver and transaminitis. And we weren't able to get the PIM dose much above 80 milligrams, and then if you look at that tolerability profile in combination with some of the efficacy we've seen, although interest in and pre-clinically very interested in, it wasn't a program that we felt had high chance of success going forward. So for those two reasons, both tolerability, in terms of the liver and reaching adequate efficacy buyers. Turning to the RUX-delta program, as we alluded to in our remarks, this is our lead program. We've shown our internal proof-of-concept data. We explored various dosing and schedule regimens and clearly, there's a delta effect. If you go back to the biology, PI3-kinase delta as a pathway is upregulated in myelofibrosis, this preclinical data that makes sense. And in terms of the clinical effect we've seen, although very strictly defined in our proof-of-concept that patients had to have been on six months of RUX and a stable dose for a couple of months. Even with that, we saw increased spleen response, as well as symptom responses. So we're initiating two studies, a suboptimal responder RUX study, as we've spoken about for people who've been on at least three months and they're not having an adequate RUX response, as well as a first line study. In terms of the endpoints, you're going to have to wait for the clinicaltrials.gov listings to go up when we start these studies before we make those public. They should be relatively obvious for the first-line study and then the suboptimal responder study that will go up on that particular listing. Thanks.

All right. Thank you.

Thank you. Our next question today is coming from Cory Kasimov from JPMorgan. Your line is now live.

Hey, good morning guys. Thanks for taking the question. I wanted to ask you around GVHD. And can you just kind of describe next steps and timeline we should be thinking about on -- for the chronic GVHD opportunity and expanding the label for the syndication? And would you expect more -- I know you're not going to market to, but would you expect more spontaneous use in this setting even ahead of approval, given the promising REACH3 data and the unmet need that's out there? Hervé Hoppenot: So Cory, I'll start off and then the second part of your question, Barry, will take. I assume you're alluding to the REACH3 study that we have recently press released the outcomes. It's an outstanding outcome for patients and for us in terms of hitting both the primary, very strictly defined overall response rate endpoint at month six, plus failure-free survival and the PRO, the patient put it outcome in terms of the modified lease symptom score. So a great outcome for that, obviously, we will -- we filed REACH2 as well now. Now we'll be going ahead with filing REACH3 as a supplemental NDA as soon as we can in terms of getting it into the label. I just -- I don't know if you were talking also about steroid naive, chronic graft-versus-host disease, that work with itacitinib continues this year in terms of dose exploration. We're looking at various doses and schedules plus the steroid effect there before initiating further work with itacitinib here. So across the entire spectrum of graft-versus-host disease we’re still very active both with filing and then with itacitinib in steroid naive. In terms of your question, well, Barry?

Hey, Cory, yeah, in terms of spontaneous use in chronic GVHD, obviously, we know that there's already some use in chronic GVHD with Jakafi and I think because we only released the top-line results from REACH3, not until there's a full presentation or publication will the awareness increase. At that time, some additional spontaneous use may occur. But we'll have to wait and see.

Okay. And Barry, did you see any major impact from COVID on the GVHD front, fewer transplants that was presumably taking place?

Well, we certainly saw a decrease in new patients. So, as you know, Cory, new patient starts really represents a relatively small part of the total number of patients that are on Jakafi. So we do know that bone marrow transplants were delayed. We saw a decrease, perhaps in April and May. And we know that patients that need a bone marrow transplant have to come back when they're feeling more safe and when their disease requires it. So as more bone marrow transplants go up, then GVHD will go up.

Okay. Appreciate it. Thank you.

Thank you. Our next question today is coming from Brian Abrahams from RBC Capital Markets. Your line is now live.

Hi, guys. Thanks very much for taking my question. Maybe a follow-up question also for Barry. Can you talk about any shifts in growth patterns that you saw with Jakafi, maybe across the other two indications due to corona. I guess, I'm curious if there's any inventory impact that you're seeing or any patient level stockpiling changes in compliance or persistence? And then, would you expect to see any changes now with the pandemic rebounding in July and August to the overall patterns of Jakafi use? Thanks.

Sure, Brian. Well, I don't think that the percentage of patients who are taking Jakafi for PV GVHD and myelofibrosis has really changed at all due to COVID. Now we do know, as I said, particularly in certain regions, you can imagine the East Coast, particularly New York and New Jersey, you saw new patient starts for each of these indications go down. In June and now in July, we have seen week after week, small increases in new patient starts, but new patients start to relatively small in each given quarter and each given month anyway. But we have seen week or week, starting in June, new patient starts coming back. So, again, we haven't really seen any movement in one area versus another in terms of total amount of bottles sold.

Thank you.

Thank you. Our next question is coming from Salveen Richter from Goldman Sachs. Your line is now live.

Good morning. Thanks for taking my question. So as we look towards proof-of-concept data from the oral PD-L1 inhibitor later this year, can you help frame expectations on the type of data we'll see? And what level of activity you're looking for to move forward?

Salveen, it's Steven. Thanks for the question. So in terms of our oral PD-L1 program, we've been progressing well, and we're in this phase now where the second half of this year, from our clinical program, we'll be able to present translational data from the actual clinical specimens to show directionally the right degree of PD-L1 inhibition, T cell changes that we want, et cetera, that are supportive of continuing the program. Substantive clinical data in its entirety will be more likely next year. But all the data we have in hand and that we presented in the second half of this year and a prepared median are supportive of continuing. Thanks.

Thank you.

Thank you. Our next question today is coming from Evan Seigerman from Crédit Suisse. Your line is now live.

Hi, all. Thank you so much for taking my question and congrats on a really great week with strong results today and the approval of Monjuvi late last Friday. So just on Pemazyre, the tumor-agnostic setting, can you just remind us of the status of this program, I can't remember if you mentioned it earlier, is it also delayed as with the bladder trial? And then any color on the penetration into the eligible patient population and cholangiocarcinoma following the launch earlier this year?

Evan, Steven, thanks. So in terms of your question, actually, the tumor-agnostic program has not been affected by COVID much at all. It enrolled in extremely well, probably speaking to an extreme unmet need there, so it's across in a various fusions in terms of the molecular biology as well as rearrangements as well as testing if there's any activity in amplifications as well. So they're different buckets. We fill up that are histology agnostic, and that's progressing well. Now you spoke a little bit about the bladder program, the data we will be getting in the second half of the year will complete the continuous dosing experiment. But in terms of presenting the data, it will be next year. So that's the status of bladder program, and then I'll turn it over to Barry.

Sure, Evan. So you talk about penetration. I think I said in my prepared remarks that there was over 100 patients treated already. And actually, we know that there's more – most of those patients have come back for refills as well as they're continuing. So the duration of therapy is something that will continue to follow. But even the $4 million that we reported in this quarter and the more than 100 patients on therapy right now is ahead of what we predicted internally.

Excellent. Thank you so much.

Thanks. Our next question is coming from Tazeen Ahmad from Bank of America. Your line is now live.

Good morning, guys. Thanks for taking my questions. I just wanted to get a sense perhaps on how you're thinking about the first-line study. Is there a particular combination of the two that you're looking at that you would prefer? As it relates specifically to lenalidomide, is it somewhat of a priority to potentially avoid having that in the combo, given its side effect profile and its possibility, or I'd like to hear your thoughts of how that might impact some patients' desire to be on therapy? Thanks.

Yes. It’s Steven. Thanks for your question. If you look at first-line diffuse B-cell lymphoma, the standard of care remains R-CHOP with approximately a 40%, 50% care rate. Many have tried to beat that and hasn't been easy historically in the past to do that. So it's really about upfront efficacy and improving the cure rate. That's what you have to achieve beat that bar. So – and a little bit maybe in terms of sacrificing tolerability because it's about care upfront. So we'll see. The safety data, as we said on the call yesterday, will be key, looking at either tafasitamab alone, plus the R-CHOP regimen or tafasitamab plus len plus the R-CHOP regimen. If the safety ends up and let's get the data by the end of this year, being is mostly a wash, and there's no increased talks that's talks that's worrying from the doublet with R-CHOP, that may be the way we end up going because it's about getting to the efficacy bar. As the MorphoSys CMO said with us on the call yesterday, this is still subject to getting that data in-house and then regulatory discussion on the appropriate endpoint. So those are the caveats there. But I just want to reiterate, you have to win on efficacy here. You have to improve the cure rate in diffuse large B-cell lymphoma upfront. Thanks.

Appreciate that. Just maybe a follow-up, what percent of this population with the older patients, given that they might be potentially more prone to side effects?

In terms of the epidemiology on age, we'll have to get back to you. I'm not sure what percent if you are asking is above 65. I'll have to find that out for you, sorry.

No worries. Thank you.

Thanks. Your next question today is coming from Marc Frahm from Cowen & Company. Your line is now live.

Yes. Thanks Barry to take my questions. Barry, just to follow-up on your comments about the Pemazyre launch and the success relative to your internal expectations. I guess, what learnings have you had on virtual launch about things that are working, maybe some things that aren't working and how are those going to get applied to the launch of tafasitamab?

Yeah, Mark, I think we learned a lot, actually. I think we -- despite this pandemic, we learn things that really work that we'll keep doing. Virtual programs, virtual visits, virtual speaker programs, virtual advisory boards, all of these things work. For Pemazyre, we really targeted the positions that we wanted to target ahead of time that we know our GI docs that specialize in cholangiocarcinoma, liver cancer and so forth. And we were able to reach them virtually through our representatives. And then, of course, before that, our medical affairs people had relationships with these docs and our oncology clinical nurse educators help them manage the dosing and side effects, and they were each able to reach out to them. What we also learned about Pemazyre about a new launch during this time period, and I think it relates to Monjuvi very much is that docs want to hear about new launches and how to use drugs, particularly Pemazyre is being used for the first proved drug for a patient population. It's never had anything that was really effective before. And in terms of Monjuvi, the first drug approved for second-line diffuse large B-cell lymphoma. They want to hear about these new options for their patients who desperately need new therapies.

Okay. And then just on the initial demand you're seeing, is that all-in cholangiocarcinoma or you're already seeing some off-label use either in that tumor-agnostic indication or even maybe people who can't tolerate the available inhibitor in the bladder cancer?

Yeah. It's the best of our knowledge, Marc. It's really all-in cholangiocarcinoma for patients that have FGFR rearrangements infusions.

Okay. Thank you.

Thanks. Your next question today is coming from Alethia Young from Cantor Fitzgerald. Your line is now live.

Hey, guys. Thanks for taking my question, and congrats on all the progress. I just wanted to ask you a question on the Pemazyre program, and now that you have the combination data. It looks interesting, kind of, wanted to talk about your focus on monotherapy there? And then can you just talk a little bit about continued investment for AB heading into the upcoming launch for the program? Thanks.

So Alethia, I'll start off. It's Steven. On your first question related to the CITADEL program. So all the studies have enrolled really well. Follicular, mantle cell and marginal zone, we presented data at various points along the route for all three histologies. We have in the range of the high activity we wanted, as well as the durability of response that we wanted. So we will get that in-house, and we will proceed with appropriate regulatory filings for monotherapy in the different parts of the world where it's relevant. They are all likely to be under accelerated approval or conditional marketing authorizations. And we'll meet, as you allude to, confirmatory programs, and those are likely to be in combination. The designs of which still need further refinement and discussion with regulators, but they're likely to include combinations with CD20 or even CD19 antibodies, given that we are treating lymphomas. And then, I'll hand the question over about the investment related to the launch.

Yes. So, Alethia, I guess you were asking about the continuing investment in AD related to the launch, obviously, it's AD and vitiligo, because we anticipate vitiligo could be relatively soon after we get approval for atopic dermatitis. But I think Hervé said multiple times that we're building a separate business unit for dermatology or autoimmune diseases. So we already have on board are a good part of our medical affairs team, our market access team. We're building out the commercial organization. So that's our continuing investment. And, obviously, we're really getting ready, because we believe that RUX cream could really transform the treatment of atopic dermatitis in the United States. Hervé Hoppenot: Regarding, just – so that's for the U.S., where the situation is very clear. Regarding the rest of the of the world, in the – in Europe, we are looking at the scenario where, in fact, vitiligo could be the first indication that we will be submitting. So the timing for Europe is slightly different from what we have in the U.S., like more than slightly, it can be a few months behind. And we are still looking at the best commercial deployment there. And frankly, we want to have – take our time. And I know some of you are asking with the model that we'll be following in Europe, and we are really going through a level of division that requires more time and we'll be able to communicate how we are going to commercialize in Europe probably early next year.

Thank you. Our next question today is coming from Mara Goldstein from Mizuho. Your line is now live.

Great. Thanks so much for taking my question. I had a question just on retifanlimab and the status of where you are from a clinical trial perspective and which data from the PODIUM program are we likely to see initially? And then secondarily, is there an update on the Jakafi COVID-19 program from CRS?

Yes. In terms of retifanlimab, our IV PD-1 inhibitor, the niche programs have, again, all enrolled incredibly well. Squamous cell anal carcinoma, MSI-high endometrial in the Merkel cell program, we intend to submit data from Merkel and anal cell carcinoma at a medical meeting second half of this year, and that's when that data will be public. In terms of RUX in COVID-19, just a reminder, there are two programs. There's one in conjunction with Novartis globally called RUX-COVID, those that's in patients that are pre mechanical ventilation, but have evidence of cytokine storm and is looking at RUX 5 milligrams twice daily, plus standard of care versus standard of care. It's in 400 patients. The primary endpoint for that study was the proportion of patients who die, develop respiratory failure or require ICU care by day 29. And that's progressing well. And obviously, we hope to have data, a complete study with an endpoint and report out before the end of the year. The second study we run in ourselves largely in the United States is the ventilator study. So it's again, adults with COVID-19 associated respiratory failure who are on ventilation, it has two dosage arms in terms of RUX, a 5-milligram BID arm and a 15-milligram BID arm, both with standard of care versus standard of care and that is tracking a little bit behind in terms of enrollment, largely because there's less because there's less ventilation than there was those people are trying to avoid that. So again, we hope that data before the end of the year, but it's hard to tell you exactly when at the moment, the N on that study, just to remind you, was a little larger. So that was of 500 patients because there's three arms. And the primary endpoint was a very clean one, was overall survival due to any course through day 29. So that's the status of those studies. Thanks.

Thanks, again.

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

Hi. Congrats on the progress. And thank you for taking the question. I wanted to follow-up on the LIMBER program where you've tightened up the focus a little by discontinuing RUX plus PIM and you're moving RUX plus parsa into pivotal trials but you still have quite a few shots on goal. So I was wondering, which of those are you most excited about with the highest probability of success and the greatest clinical differentiation? Thank you.

Yes, Jay, it's Steven. So it's an extremely important program to us for all the obvious reasons, plus we have a lot of scientific ownership of the myeloprotective neoplasm space, just even beyond ruxolitinib, the diseases we feel very passionately about. Just remind you, the LIMBER program has three pillars to it. The first one is the formulation work, which we spoke about in our prepared remarks. And the once-daily formulation work is going well, and we intend to file that sNDA next year. And we believe that is important in itself and also potentially from a convenience point of view, and it may lend itself down the pike to us doing fixed-dose combinations with other once-daily mechanisms. In terms of the second arm, which are ways to either enhance efficacy in a particular disease setting or safety or both. Those programs, the lead one is the RUX plus parsaclisib program. Again, we spoke about in the prepared remarks, we feel we have internal proof-of-concept data, and we're initiating both the suboptimal responder to RUX study as well as the first-line myelofibrosis study this year. The other programs that are really important to us are our resurrected BET inhibitor program, so we're doing in monotherapy work this year, just to prove safety at the dose we've chosen, and then we'll very quickly go to combination to work there. And we'll see where that leads us. Again, that could be potentially in a second-line setting as well as in the first-line setting. And then very importantly, although on the surface, looks like a tolerability play in terms of the ALK2 inhibitor, and the hepcidin mechanism improving anemia, either due to the underlying disease, myelofibrosis or due to the effect of a JAK inhibitor, not only if that works, should it improve the anemia, but then it will also allow patients to stay on RUX longer and should improve efficacy as well. So that is in, again, monotherapy safety now and should also go to combination, hopefully, by the end of this year. And then the third pillar, which for obvious reasons, we speak less about, but it's all around discovery efforts run out of Dash shop looking at other ways, other new targets, epigenetic targets or other ways that we may be interested in even in PVR itself. And those will obviously be announced if and when they get to the clinic. So that's the entirety of the program. Thanks.

Okay. Thanks for taking the question.

Our next question is coming from Tyler Van Buren from Piper Sandler. Your line is now live.

Hey good morning. Great to see the quarterly results, especially in the light of ongoing pandemic. I had a question on the Jakafi product revenue guidance, which was reiterated and seems very conservative. You mentioned that new patient starts have rebounded in June. You have a growing pool of total patients and robust demand in all tree indications, yet the midpoint of the guidance assumes relatively flat quarter-over-quarter growth on an absolute basis. And if you look at the top end of the guidance, it's still lower year-over-year growth rates or a deceleration in the second half. So it's just factoring in the ongoing uncertainty due to the pandemic? Or are there any potential year-over-year pressures that the guidance is factoring that we should also consider? Hervé Hoppenot: Tyler, you are absolutely right. If you look at Jakafi in the first half of the year, we grew 19% when you compare to the first half of 2019, with the growth primarily coming over 70% of this growth coming from volume, from demand. So if you were to look at this, you would think that at this point in the year we would be, if anything, bringing up the low end of the guidance. The low end of the guidance implies a flat Q3 and Q4 to Q2. So given the significant uncertainty that remains around COVID-19, the risk for a broader resurgence, we felt that this year, it's appropriate to keep the guidance to where we had set it to keep a broader guidance at this point in the year to be able to address any potential impact that we may see from impact that we may see from a resurgence in COVID-19.

Okay. Thanks for the additional comments.

Thank you. Our next question today is coming from Josh Schimmer from Evercore ISI. Your line is now live.

Thanks for taking the question. Was a positive REACH3 data reflected in your long-term guidance for $3 billion peak cells of Jakafi? And are you considering expanding your dermatology portfolio to further complement ruxolitinib cream? And if so, what might that look like? Thanks. Hervé Hoppenot: Hervé here, I'll take it. So obviously, the REACH3 results are very positive. And it's -- I don't say more than expected, but it's certainly a very good study. You will have the opportunity to see the results when they are published. And the question of what does it mean in terms of long-term guidance came up when we saw the results. So I think your question is totally appropriate. We have said in the said in the past $2.5 billion to $3 billion for Jakafi, you can see where this year is going. So we are ahead of the curve, if you look at it from that standpoint. What we also looked at is political uncertainty and the fact that in the U.S., there are a number of questions still open related to the health care system in general and reimbursement of products. So I think the best way to think about it is probably to see how this is evolving. Also see the data that we have in REACH3 publicly, and then it will give us with both of them an opportunity to look again at the long-term guidance if we need, and that's again, something that will be after the end of this year. The second question is dermatology. So, we are very excited. I must say, over the past few months, we have had a number of advisory board and sessions of feedback with dermatologists in the U.S. and in Europe on the profile of RUX cream. And that has…

Thank you.

Thank you. Our next question today is coming from Ren Benjamin from JMP Securities. Your line is now live.

Hi. Good morning, guys. Thanks for taking the questions and congrats on the quarter. Can we talk a little bit about the patent extension strategies? I see the once-daily can definitely seems to make sense and can extend, obviously, your patents there. But how do we think about these combinations that are being evaluated, particularly in the liver studies? Do they ultimately have to be developed as once-daily formulations as well to continue to extend the patents? Hervé Hoppenot: I mean, the patents extend from RUX, I would not comment on that. So what is – obviously, part of our plan is to improve our ruxolitinib from the clinical and the patient benefit standpoint, and to do it in a way that will help us extend the life of our franchise in MF and PV and potentially in GVHD. So the QD is very important for two reasons, is that by itself, it has a longer pattern than we have with twice a day. And it is also a way to do combination with other one sided products that we have in our portfolio. And when you think of two oral products being once-a-day, then you're obviously looking at the possibility of doing fixed-dose combination. And if the product you are combining with as the patent life goes beyond the patent of Jakafi, ruxolitinib itself, it's obviously increasing the exclusivity that you have on this fixed-dose combination. So you can think of ALK and parsaclisib and BET as potential partners for ruxolitinib that we are testing in the clinic, first, to establish the superiority from the clinical standpoint, and then that could give us an opportunity to develop, fix those combination if possible, that would be certainly helping maintain the leadership that we have in the field of MFPV and GVHD. So that's really the way we the way we are looking at it.

Got it. And then just as a quick follow-up with Monjuvi. Can you just remind us the gross to net assumptions that we should be factoring?

Well, this is Barry. So we didn't really comment on the gross net assumptions. We talked about the price, the average monthly price. And obviously, we're working on that together with our partners some. Obviously, discounts are required through government programs, through CMS and so forth. But we really haven't said what the gross to net will be, we'll have to see as we go forward.

Okay. Thanks for taking the questions.

Thank you. Our next question today is coming from Aydin Huseynov from the Benchmark Company. Your line is now live.

Thanks for taking my questions. I have one on Monjuvi. So given this is a combinational agent given that Revlimid is already expensive drug, I think, more than $20,000. Do you expect any pay resistance or impediments, especially in budget conscious EU pay environments such as French authorities?

So I'll take the first part of the question, address the United States and Hervé can address outside the United States. So we think the combination of this injectable and oral drug together is priced appropriately. For the benefit that the regimen provides. If you look to other analogs, for example, particularly in multiple myeloma, injectable drugs that are combined with Revlimid or approximately the same price per month, per year, and others are actually priced higher. If you compare it to CAR T therapies, obviously, there are many different complications there, but obviously, that's in the same sort of price range per patient. And Hervé? Hervé Hoppenot: And just to comment on the EU. The cycle of patent expiration for lenalidomide is different in the EU. They are generics already available in a number of countries already today, and when we look at the approval timing for approval and reimbursement timing for Monjuvi or tafasitamab in Europe, in fact, it is almost coincidental that it is when lenalidomide is going generic in many of the large countries. So what we anticipate is to be negotiating the price as we have to do in all of these countries in Europe, at the time where the cost of lenalidomide will be going down very drastically. So it should be a it's a little bit by chance, but it should be a good timing to be able to have a reasonable good price for tafasitamab in Europe.

Thank you. Appreciate it. And I have one follow-up regarding Jakafi. So how would you compare the performance of Jakafi versus Jakavi in Europe? Because both showed 16% growth, but Jakavi actual sales only grew 9%. And just was curious what's the MF growth in Jakafi indications, MF growth? Hervé Hoppenot: No. The comment on Jakavi in Europe versus Jakafi in the U.S., I think what we have seen since the launch is sort of a classical curve where obviously, the volumes are higher, the price are lower in outside of the U.S. that's a general statement on all of these products. And Novartis has done an excellent job to ensure that Jakafi became standard of care in MF and PV. The GVHD launch has not been yet done in Europe. GVHD, the decision was to submit together REACH2 and REACH3. So there are two large, largest ever pivotal studies that will be used for the submission Europe and outside of the U.S., in fact, in general, that will be used together. The reason to do that is related to pricing because every new indication is leading to price reduction. So the decision was made by Novartis to do it together. And now that we know the results of REACH3 are fantastic. It is certainly a very good decision. So we will see the GVHD expansion happen later than what we have seen in the U.S. but overall, I must say the growth ex-U.S. and U.S. has been first, exceeding expectations for both sides and has been very parallel in term of how MF and PV have been evolving. So it's a story of good partnerships that, frankly, now for 10 years has been working very well.

Okay.

Thank you. Our next question is coming from George Farmer from BMO Capital Markets. Your line is now live. Mr. Farmer, perhaps your phone is on mute. Please pick up your handset. Please proceed.

Hi, can you hear me? Hervé Hoppenot: Yes, we can.

Okay, great. Thanks I'd like to talk more about your strategy with parsaclisib and ruxolitinib in MS. And how do you see that combination fitting in with BMO other JAK inhibitors?

It's Steven. So again, just to reiterate, the program, as we set it up. So there will be two studies. The first-line study would be in RUX plus part of -- first RUX. So if there ends up down the pipe being successful, then that particular combination would become the standard of care there. In terms of the suboptimal responder study, that is for patients who've been on at least three months of ruxolitinib at a stable dose, but are having a very carefully defined inadequate response in terms of spleen volume reduction and/or symptoms. And then you add on you add on parsaclisib to that particular patient profile and looking for added benefit, the end point for that, as I said earlier, we will announce when the study goes live and we'll go up on clinicaltrials.gov. But it's a very different patient segment, because these are people who have had inadequate response to ruxolitinib. If you play this out in your head, if the first-line study wins and is more efficacious, then there are less patients with inadequate responders down the pipe. So that's how you work out the patient flow through the various lines of therapy in myelofibrosis.

Okay, great. And then Hervé, could you comment a little bit more on how we should think about launching RUX for atopic dermatitis in Europe, in the meantime you had said that maybe you’d file vitiligo, or maybe launch ahead -- with vitiligo ahead of AD. Can you just clarify that? Hervé Hoppenot: Yeah. I said that because there was a discussion on how the price will be impacted by the sequence of launch and what we believe today, and I'm not – you never know what can happen. But at this point, what it looks like is that, if we do a sequence of atopic derm followed by vitiligo, we will end up with reimbursement that will be very much lower than if we do vitiligo first. So that's what we are now thinking about. I was saying that, because there were a lot of questions on the commercial model in Europe. And I think what seems to be emerging is that the launch in Europe may be delayed compared to the launch in the U.S., if we start with vitiligo.

Okay, great. Thanks very much.

Thank you. Our next question today is coming from Stephen Willey from Stifel. Your line is now live.

Yeah. Thanks for squeezing me in. Maybe for Steven, I guess, your comments around endpoint selection in the – in adequate RUX responders trial, maybe it implies like there's still some regulatory dialogue that's ongoing there. I think AbbVie just posted details around the Phase 3 transform study in the relapsed/refractory setting, and it looks like they're using SVR35 as a primary. I guess, should we think about this as a surrogate of regulatory flexibility around the potential use of lower SVR thresholds?

Yeah. I'm not going to satisfy you with my response, because you'll have to wait for the outcome when we publish it. But we did see they published their endpoint at an SVR 35% decrease in the second line. That is the established endpoint that we established in the first line, as you well know, and that’s no secret, its likely to be the endpoint in any further first-line studies at the moment. So you'll just have to wait to see what we – we’ve completed our negotiations with regulators, and we're all set to go, but you'll have to wait until we put it up. Thanks.

All right. Thanks.

Thanks. Our next question is coming from Matt Phipps from William Blair. Your line is now live.

Hi. Good morning. Thank you. An editorial associated with the recent Lancet publication on topical RUX and vitiligo, it does bring up the acne side effect of a potential limitation, given a lot of exposure to the face. So I was just wondering, if there's any temporal nature of acne. Is it associated with chemo exposure? Or was it more transient and then does this -- do you guys think this has any potential commercial impact, mainly on duration of therapy?

Yeah. It's Steven. I'll comment a little bit. We haven't seen a temporal link per se in terms of the onset of some acne, nor has it been particularly problematic. So from the data we have thus far in the proof-of-concept study, that's the conclusion. Obviously, as we've been telling you, we're enrolling now two large Phase 3s, it'll be north of 600 patients total, with longer follow-up, and we'll see how that plays out. But it's just not something that – other than the adverse event being reported, which is important for patients, that's particularly problematic in terms of long-term use thus far.

All right. Thanks.

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

Hey, guys. I had a question on your bispecific antibody program, MCLA-145. Maybe, Steven, just wondering what your level of excitement is for this asset and based on what you've heard from other similar product candidates. It seems like there's some interest there. Just curious where you are and when we might see initial data from the study?

Yes. Thank you for mentioning our bispecific program. No, there – it's a very interesting doublet from a biology point of view. It's 4-1BB or CD137 as a target coupled with PD-L1. So 4-1BB has a long history in the past, of other companies trying it on its own and ran into toxicity, particularly LiverTox. So the coupling with PD-L1 was done as a delivery mechanism to take that 4-1BB to PD-L1 expression areas. And the theory been would avoid the associated toxicity plus then get the enhanced efficacy either additive or synergy wise, and the program is going well. We'll present data probably next year. We won't see data this year from it. But it continues to go well. There is a tremendous amount of interest from people who work in the field around it and the sort of balls in our hands, so to speak to get to a safe dose and then progress it. But we're encouraged by what we've seen thus far and the program is enrolling pretty well. Thanks.

All right. Thank you.

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

So thank you all for taking the time to join us on the call today and for your questions. Of course, Christine and I will be available for the rest of the day for any follow-ups. But for now, we thank you again, and we'll close the call. Thank you, and goodbye.

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