英賽德 (INCY) 2008 Q3 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Incyte Corporation's third quarter 2008 financial results. At this time, all participants are in a listen-only mode. A 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.

Thank you and good morning. On the call today are Paul Friedman, Incyte's President and Chief Executive Officer, Dave Hastings, Executive Vice President and Chief Financial Officer, and Rich Levy, Senior Vice President of Drug Development. Paul will begin with a brief overview of the progress we've made in our clinical programs, and Dave will follow with a brief review of Incyte's third-quarter financial results. We'll then open up the call for Q&A.

Before beginning I would like to remind you that some of the statements made during the call today, including statements regarding our plans and expectations for our drug discovery and development programs, including timing of our clinical trials and the potential efficacy of our compounds as well as our expected financial results and financial guidance, are forward-looking statements. 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 Form 10-Q for the quarter ended June 30, 2008, and from time to time in our SEC documents.

With that, Paul, we'll turn it over to you.

During the third quarter, we presented additional positive data from several of our lead clinical programs at scientific meetings. Because these results have already been described, I'm going to focus my remarks on the status and timelines for these lead programs. I will also briefly review our business development efforts for each program since partnering is likely to become more important to us during these challenging economic times.

For the lead JAK inhibitor 18424, the myelofibrosis program continues to be our highest priority. Our objective is to file an SPA for myelofibrosis by year-end and move into registration trials as quickly as possible thereafter. Also, based on what we know today regarding study design, lengths of the studies, number of patients, and assuming the study goes as expected, we intend to file the NDA for MF in the second half of 2010.

At ASH, we will present an update on the ongoing Phase II trial with clinical data on over 140 patients. And importantly, based on recent discussions, now not only with the FDA, but also with CHMC, we believe we've defined a clear path for approval in both the US and Europe.

Now, before moving to the other JAK inhibitor programs, I am going to take a few minutes to describe to you some early interesting results on improving blood counts in a few myelofibrosis patients treated with 424. As you know, because of failing bone marrow function and the ineffectiveness of the extramedullary blood cell production that goes on in other tissues and organs, most notably the spleen, a high proportion of myelofibrosis patients have low blood counts. The anemia in myelofibrosis is further exacerbated by both inappropriately low levels of hematopoietic growth factors such as erythropoietin, as well as inappropriately very high levels of pro-inflammatory cytokines which many MF patients have and which have been called cytokine storm. In what is the anemia of chronic disease, the cytokine storm can further suppress marrow cell production, particularly the red blood cell.

As we have now studied a relatively large number of myelofibrosis patients, many on the drug for considerable periods of time, we have been able to establish a strong dose-response relationship with reductions in inflammatory cytokines, increases in erythropoietin levels, improvements in symptoms and reductions in spleen size. Importantly, at doses of 18424 which give only limited inhibition of JAK1 and JAK2, there are in general modest decreases in levels of pro-inflammatory cytokines and in spleen size. While there are certainly occasional patients who do show more notable decreases in the cytokines and in spleen size with this limited inhibition of JAK, more commonly higher levels of blockade of the JAKs are needed to get maximal responses in a given patient and to get the highest percent of responders among those treated.

But as the signs and symptoms of cytokine storm and splenomegalia are by far the issues that most negatively impact the lives of myelofibrosis patients, we continue to treat patients with doses of our JAK inhibitor that give these higher levels of inhibition. At these levels, inevitably there is to be expected some amount of suppression of signaling of blood cell growth factors like erythropoietin [since e prong] and the other blood cell growth factors all signal exclusively, exclusively through JAK2. Since patients vary in their sensitivity to this, we have and we will have, and will continue to employ a dose ranging and adjusting strategy for each patient to maximize the benefit of JAK inhibition for that patient while minimizing any side effect.

By employing this approach, we've seen a few patients who have had both excellent decreases in cytokine storm symptomatology and spleen size, and upon subsequently lowering their 18424 dose, have been able to maintain the earlier clinical benefit. Interestingly, one of these patients has become transfusion independent at the lower maintenance dose and a few others show increases in hemoglobin. While this is still an early observation, it suggests the possibility of inducing a major clinical improvement at one dose and then maintaining it at a lower dose which can allow for improved bone marrow function.

In parallel with the development of 424 in myelofibrosis, we have a dose ranging Phase II trial underway in two other myeloproliferative diseases, polycythemia vera and essential thrombocythemia. As patients with PV and ET have elevated blood counts, 424's positive effect in normalizing these counts as well as improving the constitutional symptoms seen in the majority of these patients, suggests that 424 will be effective in these indications. And we look forward to presenting data from this trial, most likely at ASCO in June. PV and ET will require separate development and regulatory pathways, but expansion into these patients could substantially increase the market.

Moving to rheumatoid arthritis, the 28-day Phase IIa clinical results for 424 were just presented at ACR. 424 demonstrated a rapid and marked clinical improvement in these patients at both 15 milligrams and 25 milligrams twice a day, and 50 milligrams once a day with an attractive safety profile. The ACR scores for patients treated at the three doses compare very favorably with marketed RA biologics as well as other orally administered kinase inhibitors in development. Based on these IIa studies, we are planning on launching two six-month Phase IIb study trials starting this quarter, using a similar range of doses given once or twice daily.

We expect to enroll 280 RA patients whose disease is not being adequately controlled by current DMARD therapy. The second trial is expected to include 140 patients, previously treated for at least eight weeks with anti-TNF therapies. Top-line results in these trials are expected in the first quarter of 2010 and final results later that year, possibly at EULAR.

The follow-on JAK inhibitor compound, 28050, has completed single and multiple dose Phase I trials. Completion of required six-month toxicology trials, animal toxicology trials, as well as a number of drug interaction studies will allow us to begin a six-month Phase IIb trial which is planned for the first half of next year. And top-line results from this trial could be available around the same time as results for 424.

We also have a topical formulation of 424 that's demonstrated encouraging proof of concept results in a 28-day Phase IIa trial in psoriatic. We've initiated a three-month Phase IIb trial in which we will enroll 300 mild to moderate psoriatic patients with data expected in the second half of 2009.

In terms of our business development objectives and plans for the JAK inhibitor program, as you can imagine, there's a great deal of interest in this program for all indications. However, given the reasonably small size of the salesforce required to commercialize 424 in the myeloproliferative disorders, we intend to retain and commercialize 424 for these indications on our own. Obviously, inflammation indications, such as RA, offer significant commercial potential, but require larger study organizations and are materially more expensive to develop. And although no final decision has been made for the oral inflammatory programs, it could, it could make sense to partner these, perhaps in a 50/50-type co-promote agreement.

Turning to diabetes, we're conducting a three-month placebo controlled dose ranging Phase IIb study in patients with Type 2 diabetes with once-daily Incyte 13739, our lead 11beta-HSD1 inhibitor. We are looking at five different doses, plus a placebo arm, and intend to enroll 300 patients at clinical sites in the US and abroad. We have already enrolled over half of the patients and expect to complete this study in mid-'09. This is a program we do want to partner and we intend to conduct an interim review analysis -- an internal interim review analysis in early 2009 to support our partnering discussions.

Our other diabetes program targets the adipocyte localized GPCR HM74a; this is the receptor on which niacin acts as an agonist to lower free fatty acids. With our lead HM74 agonist, Incyte 19602, we're conducting a 28-day dose-ranging Phase IIa trial, involving about 120 patients with Type 2 diabetes. We expect to have top-line POC data from this study early next year. If positive POC is obtained, we'd seek a partner for this program also.

With our sheddase inhibitor, Incyte 7839, we continue to enroll HER2 positive breast cancer patients in a Phase II trial. The trial is evaluating 7839 in combination with Herceptin, and I look forward to describing top-line results later this year or early next year, and presenting full results at ASCO.

I will now turn the call over to Dave who will review our third quarter results.

Thanks, Paul, and good morning, everybody. I will start my brief overview this morning by discussing our cash position. We ended the third quarter with $250 million in cash and marketable securities.

Our cash used so far this year has been $109 million, excluding the net proceeds of $102 million from our follow-on offering completed in August. This performance is on plan and our cash use guidance for the year remains unchanged at $132 million to $142 million.

Given the volatility in the capital markets, we believe it is important to be proactive and make sure that we have enough resources to progress our pipeline appropriately. We have taken actions, such as raising capital during the third quarter and putting about 85% of our cash and marketable securities in Treasury and government agency backed money market accounts.

Additionally, looking forward, we will continue to prioritize our development spending so that programs which we can develop and commercialize on our own are funded appropriately. We intend to accomplish this by seeking partners for HSD1 and HM74a and committing our funding to programs with the highest near-term value. This is illustrated by the fact that in 2009, the vast majority of our clinical budget will be invested in the JAK franchise. We believe this focus offers the best opportunity to create sustainable value and navigate through the current difficult financial environment.

So with that, I will turn the call back to Paul. Paul? Why don't we go directly to Q&A?

That would probably be the good thing to do.

Ladies and gentlemen, we'll now be conducting a question-and-answer session. (OPERATOR INSTRUCTIONS.) Our first question is coming from Katherine Kim with Banc of America. Please state your question.

Thanks for taking my question. The first question is on the filing. Paul, you had said that you expect filing for myelofibrosis indication in the second half of 2010. Can you just give us your assumptions in terms of that timeline?

Paul, are you still on the line?

This is Rich. I'll try to take that question. The assumption is that --

I'm still on the line. I'm assuming you want us to convince you that we will be able to file by then?

No, my question more pertains -- when do you expect to get the --- I mean, to start the pivotal trials and is there any changes in the length of time of the trials? Your basic assumptions.

I will start answering this question, then I'll pass it to Rich. We are still working diligently and are planning to file the SPA in December. And depending on whether it's blessed without an iteration or whether we have to go through an iteration, we will start the pivotals shortly thereafter, getting approval for the SPA. And so, Rich, what do you think is a likely date, like April, May, something like that, to actually begin those studies?

By regulation, the SPA has to be reviewed by the FDA in 45 days. The question is, is whether or not it will get blessed the first time through or whether there might be a need for a second cycle to review some tweaks that FDA may want. The current view is that we would probably either start in mid to late first quarter if the FDA accepts the SPA the first time through or that it might move into the second quarter if there's another round.

Okay. And is there any -- what's your assumption for length of trial? Because once you start, you're still looking at treatment for about six months?

Yes, we're looking at a relatively quick enrollment. We have tremendous interest in participating in the study. We have lots of investigators lined up, both in North America and in Europe. We expect to enroll the study relatively quickly, and then have six month follow-up on the patients before we then move into the stage of analyzing all the data, writing it up and submitting it. So that we think that we can comfortably do that in the second half of '10 and get approval most likely within a six-month period for this indication.

Okay. Thank you.

Our next question is coming from Annabel Samimy with UBS. Please state your question.

This is Stacey calling in for Annabel. Thanks for taking my question. Would you mind reviewing the study design of the Phase IIb rheumatoid arthritis trials? I heard some of it on your ACR conference call, but it seems like there's a lot of doses that are being studied. If you could provide some color around how you selected the doses and how the study is powered, that would be helpful.

Rich should answer that.

Sure, thanks. Remember that in the Phase IIa study, we studied doses of 5 BID, 5 milligrams BID, 15 BID, 25 BID, and 50 once a day. All of those doses will be included in the Phase IIb study, along with 25 milligrams once a day, given that 50 milligrams once a day was quite effective.

The power of the study is over 90% to be able to demonstrate differences versus placebo and to demonstrate that you have a dose response, not necessarily -- and this is the traditional way that Phase II studies are done now -- not to be able to compare each and every dose to each other and show statistically significant differences between them. There is also going to be a second study that is essentially the same design, only looking at patients who have had prior TNF experience, as Paul stated just a few minutes ago.

That's essentially the same doses, same design, just a separate study in order to make sure that we get enough patients who are TNF experienced. Does that answer your questions?

Yes. It does. Thank you. One more question. What's the longest duration of therapy that the MF patients have been on for 424?

The first patients entered in June of 2007, and so now they're on almost a year and a half.

Thank you.

Our next question is coming from Mona Ashiya with JPMorgan. Please state your question.

Good morning. I'm here for Cory. A couple of questions. One is, after ACR, I was wondering if your expectations on the time course of response with 184, as you'd treat patients for longer times, something has changed. Secondly I was wondering, given data from other competitor compounds, again at ACR, are you considering any additional monitoring for the planned Phase IIb trials?

I can start on that, and then Rich can chime in. Can you just repeat the first question again?

Yes. The first question was just whether your expectations on the time course of response with 184 in RA have changed. As you go out beyond 28 days, given what we've seen with the Pfizer data, what are your expectations given what you know of your compound?

The Phase IIb studies are six-month studies where we'll take three-month peaks. But the IIa study was a 28-day study so the only thing -- we observed persistence of efficacy and we checked blood parameters, for example, to look for any untoward effects after dosing. But that's the nature of that study. That's as far out as it went.

Having said that -- and this is a set of patients that we uniquely have and no one else has, including Pfizer, we have -- as the last questioner was told -- about 140 people on the drug with myelofibrosis, a good number of them who have been on the drug for more than six months. Some of them have been on the drug for well over a year. And some of the -- what I felt, even for the Pfizer drug, were relatively low percentage side effects, such as AFP elevations and serious infection, are just not things that we are seeing.

Not seeing it in that patient population gives us a higher degree of assurance that we're not likely to see those kinds of side effects, certainly not in any proportion in patients with RA. The caveat being that when you begin to combine a drug with an existing DMARD drug like methotrexate, you do to have prospectively look at whether that interaction can lead to more side effects appearing, and appearing at a higher rate. But both in the MF patients who have been on the drug for a long time, and for the RA patients who -- most of whom were on methotrexate for the month, the side effect profile for our drug was really pristine. You have to remember again that we don't take out JAK3. We don't have that burden of immunosuppression that a compound that takes out JAK3 would.

The Phase IIb study will give us much longer term data, both with respect to efficacy and side effects, but in the patient population of interest, we don't have that yet.

The other thing I think you should remember about the data is I've seen people opining on the Pfizer data saying, well, maybe the data isn't better than biologic. It may just be just as good, it could be better, we don't know yet. But if you look at the rate of improvement and the levels of improvement that you reach, both with our drug within four weeks, with the Pfizer drug within six weeks, you much more rapidly with this mechanism get to very high ACR numbers in a decent percentage of patients than was ever done with a biologic.

Also, we continue to see ACR-90 responses with the other doses. Those are rarities with the biologics. My view of this is, you get there faster, you're at least as good. If you did have a safety issue, you stop taking your pill and by the next day, that safety issue should have dissipated. So there are a whole handful of advantages with these oral agents over the biologics.

The second question of how do you do -- I think with competitors -- with other people developing these things. I thought the Pfizer data looked pretty good. I thought the Rigel data was pretty unimpressive, especially when you consider the issues they're dealing with, with the GI stuff in particular, going down even to the low relatively ineffective dose.

Rich, you might want to say more about these questions than I just have.

I think your answer was pretty comprehensive. The only thing I would say is that Pfizer's data looked like their peak effects, in terms of ACR responses, were at eight weeks. And although we're doing a six-month trial, the analysis we're going to do when all patients complete three months is the one that we plan to use for our end of Phase II meeting. And that gives us even greater confidence that the three-month data that we will have will be adequate to select between the doses.

Thanks. That's very helpful. I just have one other quick question with regards to 184 again. And that is if you've looked at all at cholesterol levels in your myelofibrosis trials, and if so, how do those change over time?

Paul, do you want me to handle that?

I think we -- in the Phase IIa trial, we looked at total cholesterol. We did not go into HDL/LDL. I think --- we're definitely going to be getting that in the Phase IIb trial. I think we will see increases in LDL and in HDL.

I think if you look at the Pfizer data across all dosing groups, the ratio of increase of LDL and HDL stays at about two to one. There are a couple of dosing groups where it's less than two to one. I think there was one dosing group where it approached three to one. But the two to one ratio is felt to be the appropriate ratio. HDL is protective if that ratio stays the same. The fact that LDL has gone up -- my view is that that does not put you at increased cardiovascular risk.

In the -- not rare, but in the uncommon patient who would have a great therapeutic response, but who, for whatever reason, did not bump their HDL, but did have their LDL go up, that patient would have to go on to a statin. I think that's going to be a rare patient. If you look at all the data that exists for -- in particular, for the biological TNFs where there are cholesterol increases seen, but there are also dramatic decreases in CRP that the data that exists suggests that that mechanism actually gives a cardio protective effect. So the totality of the data, to me, is one that's very reassuring. Although if you simply look at that one number -- totally taken out of context, the LDL, it will go up in a significant number of patients.

Thanks. But are cholesterol levels something you've looked at in the myelofibrosis studies at all or no?

It's interesting in myelofibrosis because many of these people are [protected] and they have low LDL. There is data, not our data, but data from population studies that I think Ruben Mesa has, that suggest that it is in fact a risk factor for death if you have very low cholesterol. We have seen, as we've treated these individuals, that their LDLs come up into the normal range and then -- if I remember this correctly, they don't keep going up, they stabilize.

For that patient population, we would regard that as a sign of reversal of [pikexia], and therefore, an indicator of the patient being at less risk of dying. It's a different population, but you do see that. You do see -- most of those people have cholesterols -- on no therapy that are down in the 50, 60, 70 range. They come up into the 90 to 120 range when they -- when their symptoms improve and their appetite improves on 18424.

I see. Thanks a lot.

Our next question is coming from Rachel McMinn with Cowen and Co..

Thanks very much. Couple questions. One on the diabetes side. You mentioned something about an interim analysis in early 2009. Can you elaborate more on that?

It's going to be an internal analysis. We are not going to publicly give that information out. It's analysis that will allow us to reengage with several potential partners who had expressed a great interest in the program, but had wanted to see some hemoglobin A1C data which we couldn't get in the one-month study. But because it's a blinded study, and we need to keep the blind to have it be a legitimate Phase IIb study, we can't share that data publicly.

So it would just be some of the patients who had started early in enrollments in proportion of patents completing 12 weeks of therapy. Is that the right way to look at it?

Yes. It's going to be a fair proportion of patients, because the studies enrolled a lot faster than we thought.

Thanks. That's very helpful. In terms of the PV/ET study, how much data at ASCO should we be thinking about, based off of your projected enrollment?

Rich, can you try to handle that one?

That's a little bit hard to say. The study has already started. We have not that many -- probably not more than 10 patients enrolled right now. But we have a whole large group of new centers that are starting up as we speak. The abstract, which I think is due in February, probably will have significantly more than that. We'd probably present all the data that we had in May or June, when ASCO is. I think it will be a substantial number of patients, but it's hard to actually put a number on it.

Last question. I just want to understand in terms of the current economic environment, are you -- is there any -- are there any changes in the way that you plan on running studies, or programs that you would prioritize or not prioritize based off of the current economic environment? Or should we think about --- kind of the guidance that you had before is really the same strategy?

What we need to do is we need to partner at least one major program and the one that is farthest along is the HSD program. That will bring in money, and it will decrease our burn. Whether or not -- we certainly are cognizant of the situation where our stock price currently sits. We need -- we are in the process of doing a very thorough analysis, different scenarios, to get us through to launch for myelofibrosis with the absolute minimum amount of dilution.

There are different scenarios. They are not at this point ready for public consumption, but believe me, it's something we're extremely cognitive of. The conundrum basically is we burn -- on the high side. But what we have currently is with -- I would say maybe one program because I think -- I don't know which one it will be, but one program is going to fall out. But I don't think many more than one is going to fall out. The pipeline we have right now is as good as the pipeline that I had at DuPont Pharmaceuticals which was attractive enough that Bristol-Myers Squibb, along with Sustiva, they forked over $7.8 billion for that portfolio.

What we don't want to do now is hang our heads and sit on the sidelines, and let what is a terrific pipeline not move forward as efficiently as it possibly can. That's in the context of this nasty economic environment. We do know we are going to have to deviate somewhat. That's why we're going through scenario planning. When we've decided on the best scenario, we'll tell people what we think they should be told about it publicly, but we are in the midst of running those scenarios as we speak.

Thanks very much.

Our next question is coming from Derek Jellinek with Susquehanna International Group.

Do you hear me now? Paul, would you elaborate for us, if you wouldn't mind, and give us more color on -- you said you have a defined clear path for approval in the US and EU on 424 in MF. Given the perceived difficulties of incorporating the apparent need to dose range and adjust for each patient, can you give us a little more color on the trial design? Obviously, you don't have an SPA in place now, but help us understand what you are thinking in the defined clear path forward.

Some of it we're not going to talk about for competitive reasons. What's going to happen here is, anything we say that's really useful -- XCellentis and TargaGen will just piggyback on that information. What I will tell you is we know exactly how to dose adjust. We know exactly where to start for dosing. We know what makes sense for the intervals to change dose. We've been very successful at doing that now for some months in Amendment 5. That dosing strategy will be what we propose to the FDA and the CHMP when we actually put final protocols in.

As you know, we'll be measuring spleen size and certain other parameters. The data which is coming in, I feel very good about. I just don't want to get any more granular than that right now. We have an ASH presentation coming up where we've committed to tell you more. Around that time, or within a few weeks of that time, we'll be hopefully putting the SPA in.

No, I can appreciate that. And lastly, if you wouldn't mind outlining for us your partnering strategy for 424 and 050 in inflam. How do you overcome the possible split indications for 424? Obviously, you're going on the oncology -- you've taken that yourself. You are also looking into the inflammatory side. Where does that leave 050?

050 is the compound that -- it behaves well in RA. There's every reason to believe that it would, but we just don't know enough about the compound. We've set up the IIb studies in a way that we get relevant data for partnering from the IIb 28050 study in about the same timeframe that we get the data from 18424. We are going to learn off the early part of the 18424 study things that we will need to streamline and make the 28050 study go more quickly.

So that, within a couple of months of each other, we get the data from both studies we need to either decide to keep it ourselves or to show to potential partners for partnerships. If things go the way we expect them to go, then 28050 would likely be the lead dog in an oral inflam program. But 424 is there as a fallback, even though it's a more complicated way to develop for two wildly divergent therapeutic areas. There are things -- look at Rituxan. There are agents which cross that line and do well, but if you had your druthers and you had the second compound, and you had data on the second compound to show to a partner, that would be the easiest path.

Right. We're looking for data on those programs. Remind me again, is it the first quarter of 2010, did you say?

I think that's right. Is that right, Rich?

Yes. It will take about a year to do these studies and then have -- take less than a year to do the studies but by the time the analyses are ready, it will be about a year so early 2010.

Okay. Great. Thanks so much for taking the questions.

Our next question is coming from Lisa Bayko with JMP Securities. Please state your question.

In terms of the discussions you have had with FDA or the European group so far, have you come to some sort of an agreement generally on what the two co-primary end points would be?

Yes. I would say the answer to that is yes, but until we actually put in an application, that's not locked in stone, because there are multiple possibilities.

Okay.

Is that okay, Rich, do you think?

I agree with that statement completely.

Will we get some more information on the various co-primary end points that you are looking at ASH as well? Or it that something --

Maybe -- we're discussing that internally. There's two ways of looking at this. One is if our competitors don't know what the co-primary is until it appears on clintrials.gov, it gives us another four, five months before they can piggyback on what we're doing.

If we lay it all out at ASH in all its glory, it's from that moment on that they can begin to piggyback in their programs. We're trying to figure out how we could best reassure you that we have a lock on what we need without telling them everything that they want to know to piggyback. I'm not sure how we're going to present at ASH yet.

I certainly appreciate that dynamic. I just wanted to have our expectations set appropriately. Final question is, in terms of going forward into the pivotal studies, you will start with a high dose, then maybe taper off to a low dose. Will you start with multiple different actual doses or are you just going to go forward with maybe one or two doses? And how many (multiple speakers)

The way we're -- the way we're likely to do this is you'll start on one of two doses. They will be within 5 milligrams of each other. They will either be 10 and 15, or they will be 15 and 20.

What you start on depends on what your platelet count is at entry. If you have a low platelet count, you'd start, for example, on 15. If you had a high platelet count, you'd start on 20. This is twice a day. After a month, you get evaluated.

If you therapeutically haven't done terrifically, but your counts are solid, you can go up 5 milligrams, not to go above 25. That would be, let's say, the top you could go to. If you are doing well, but your platelet count has slipped down a little, the doctor could decide to drop you by five. You move back and forth within the range of what I think for most patients will be 10 to 20 milligrams twice a day.

All of those are active doses. That's what we've been studying. We seem to be doing a very, very good job of getting efficacy and minimizing thrombocytopenia by using that kind of dosing paradigm.

Sounds great. Thanks.

Our next question is coming from Tom Russo with Robert W. Baird. Please state your question.

Good morning. Real quick, back on 424 in MF. Can you state how many patients in the expanded Phase II you've now been able to collect data for the second co-primary end point, even if you don't ultimately show all the detail?

I think we have probably somewhere between two and three dozen people on study right now. We have -- they've been in study for different period -- different lengths of time. By the time we get to ASH and the SPA, we will have that kind of data on -- we'll certainly have one-month data on quite a few people and a smaller but significant amount of data, up to three months, to show that the effects that we're seeing at one month are still there or have gotten a little better at three months.

Okay. Back over to RA, is there any thought -- I think Pfizer may be heading in this direction -- to having a starting dose and more of a maintenance dose there as well? Or will you more likely envision in Phase II the dose that the patient starts on is the dose they get for the whole six months?

So that's your understanding, that Pfizer is considering that for Phase III?

I know they showed some data for longer durations at 5 milligrams. I'm not saying that's for sure what they are going to do, but at least it looked like that might be one of the things they'd be considering.

Yes. That's a very, very rational approach. In the prepared comments I gave you today, where we've got this very small number but -- a few people who, for one reason or another, had a high -- had one of the higher doses and did really well clinically. Then we lowered their dose, and we saw in one case, the guy became transfusion independent, and in the other cases, the hemoglobins went up nicely and they maintained their effect. I think there's every reason to believe you can use this mechanism that way. Like with RA, if you looked at the Pfizer data, after about two months you seem to plateau at doses. Then there were people who came into their studies and were kind of maintained at 5, and their BAT scores, for example, if anything, they didn't get any worse. If anything, they drifted down and got a little bit better.

That is a strategy one could use and that could give you the best of both worlds. It could give you a more rapid and complete therapeutic response up-front. Then you could be maintained on a lower dose where -- whatever dose-related safety issues rear their heads with this mechanism can be minimized by going to a low-maintenance dose. So I think it makes a lot of sense. It would certainly be an approach that we would consider both for myeloproliferative disease and for oral inflam in our programs as well.

At this point in time, when you think about the value of the program in RA, in order to make inroads against the entrenched anti-TNFs. What do you think is the price point that we're talking about for an oral drug? Do you think you need to do any radiographs at some point to demonstrate the impact on disease progression?

Somebody is going to have to do the radiographs. I'm not -- I will let Rich add to this. I'm not sure whether each agent, it will have to be done for. I have a feeling, at some point, you will have to because we all take down different spectrums of the JAK. For example, Pfizer did it and showed disease-modifying activity. But has the JAK3 component -- that would not mean necessarily that even though we had clinically the same or better therapeutic responses, that the disease-modifying activity at the level of radiographic analysis would be the same.

I suspect that it will have to be done. I'd ask Rich to continue on the question, if he has anything to add. I don't know when it would have to be done. I don't know what bearing it would have on approval or on pricing. And pricing, we -- obviously we're nowhere near where that's an issue -- where we've reached a drop dead date. We think you could price very competitively and these would be very, very large products. But back to the clinical stuff, Rich, is there anything you would want to add about the radiographic analysis?

Yes. The plan is that we would start a radiographic study at the same time as all the other Phase III studies. That study needs to be one year in duration. Most likely, we would file once we have that data to have the disease-modifying claim right from the beginning.

However, depending upon where the mechanism stands, in terms of the acceptance that JAK inhibition will lead to disease-modifying effects, we might potentially make a decision at that time to file without having that data initially and then have a quick follow-on indication to get the disease-modifying claim. That's a typical approach that most companies take, which is that they start the studies and make a decision based on the competitive situation as to whether or not to delay the filing a little bit or to file early and then follow on quickly. But it certainly would be started at the same time as the other registration studies and would be a study of one year's duration.

Okay. Thanks very much. Appreciate it.

Our next question is coming from Thomas Wei with Piper Jaffray.

You had mentioned a potential end of Phase II meeting for RA after you had done the three-month interim analysis. Are you going to wait for both 424 and 050 to reach that point? And when you talked about early 2010, presumably that was for the full six-month data. Would you be meeting with the FDA actually in advance of us hearing what the Phase IIb data look like?

Rich, you want to do that?

Sure. I think the plan is, as Paul alluded to earlier, the timing of the 424 and the 050 Phase II studies is not particularly far apart. They'll get started within about four months of each other and might finish even closer together than that.

The plan also, though, is to do an interim analysis of the 050 data at the time that we do the final analysis or the primary analysis of the 424 study so that we have data for both so that we can decide at that point in time whether to continue to wait for the final data from 050, which would probably be a couple months' delay, and then have an end of Phase II meeting on that because that would be the only drug that we would take forward. Or if by some chance, the data with 050 doesn't look as good as the data with 424, we could potentially make a decision to go with 424 as the Phase III compound. So the business reasons that Paul talked about in terms of being able to partner, our bias is towards taking 28050 into Phase III if it's as good as 424.

Just in terms of whether or not that is a six-month data, there will be a lot of six-month data there. But our plan is to go to FDA at the time that the last patient completes three months, and because enrollment will not be overnight, there will be a substantial number of patients who will already have six-month data at that snapshot in time analysis.

Does that mean that potentially that could occur in the fourth quarter of next year?

No, no. We think that the earliest end of Phase II meeting would be in the first half of 2010.

That's helpful. Then for this RA study for 424, why not look at a 10 milligram twice-a-day dose? Why still fall back on 5 as the lower end of the dose range?

We are looking at -- I'm sorry, I misspoke before when I said we're also only adding the 25 once a day. We're also adding 10 milligrams BID to that study.

That's helpful. Lastly, for the few patients who have had a hematologic improvement when they have lowered their dose of 424 in myelofibrosis, have you been able to figure out anything different about those patients to predict who might have that sort of response?

For the hemoglobin?

Yes.

If I had my -- I think we don't yet have an end that's big enough to be able to figure that out. I think what -- if I had to hypothesize, which is about all this is, there -- you know with the [immits], like [pomalidomide]. They see -- we'll see what their actual percentages are and what their levels of increase of hemoglobin is. That mechanism is not well understood , but it's felt to have -- be somewhat of an anti-inflammatory effect. They get some decent increases in hemoglobin in, depending on who you listen to, 35%, 40% of people.

I think there is a subset of myelofibrotics who have the additional burden, on top of a failing bone marrow, of what's called the anemia chronic disease. The problem with trying to pick them out beforehand is that some of them -- some people who have an X amount of inflammatory cytokine do not have -- will not -- just will not have as much bone marrow suppression as the next person because there's so many variables. So it's at this point, it's not clear, but I think the patients that we're seeing -- where we're seeing this response, I would bet if you gave them pomalidomide, you would probably see a decent response in those patients as well. I think, over time, we'll be able to figure it out. But I don't think they understand it, and we certainly don't have a big enough end to make any global statements about what makes them

Thanks. That's very helpful.

Our last question is from Safna Srivastava with Morgan Stanley. Please state your question.

Thanks. It's Dave calling in for Safna. On the second endpoint for the myelofibrosis trials. If we don't see it at ASH, is there a chance that we will never see the data before those trials get going? Or would you put the data out at the time that your protocols go up? Or how are you thinking about it if you don't present it at ASH? (multiple speakers)

That would be another way to get you the data. It's not clear we won't present it at ASH, but we're thinking that it is possibly -- it could very likely be to our competitive disadvantage simply to give you numbers as opposed to reassure you that we have one and we're supremely confident, the FDA agrees, blah blah blah. And then wait until we actually to have put the study design up to, in some kind of [carse] of public disclosure -- give you the numbers.

Do you think there's a chance that we'll just never see this data set -- and that it will never get presented, in terms of these second end points? Or do you think ASCO would be a possibility?

ASCO could be a possibility. I think that's a possibility. I would think we would have started the study before ASCO. I think it will be obvious then, both because the investigators talk to each other and it will be -- the study will be available on the web. But we could, if it made sense, find a mechanism to get you that data. I think you'll find, at the end of the day, that it's pretty straightforward. It's just that we know which ones make sense now, and nobody else does, and we'd like to keep it that way for a while.

Okay.

Paul, that's our last question. If you would like to close up with a couple of comments.

We have an exquisite pipeline. We have a drug for myelofibrosis that is doing things for these people that are unprecedented. We're feeling good about what we're seeing in this Amendment 5 -- feeling very good about it. We remain on track to get the SPA in before the end of the year.

We thought we -- I'd reiterate again that for RA, if you look at the totality of what you have now with these oral agents, although it is early days. You have oral agents that more rapidly get you to at least DMARD level of responses that you see with the biologic. No drug has no side effect, so you just to have put that into the equation and look at what the therapeutic index is here. I think this is going to be a wonderful new oral mechanism for treating inflammatory diseases. It takes time.

The last thing I would say is, just to reiterate, the economic conditions are challenging. We're aware of that. We're aware that if we do exactly what we're currently doing, even with the terrific pipeline that we have, that we will have financial issues that will be unappealing, both to us and to you. We're going to have to do something to prevent that from happening. All we're asking for now is a little bit of time to get that done and I assure you, we will.

With that I will close the call and thank you for your attention this morning. Bye-bye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.