英賽德 (INCY) 2008 Q4 法說會逐字稿

Greetings ladies and gentlemen and welcome to the Incyte Corporation fourth quarter 2008 financial results and 2009 financial guidance. 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, VP Investor Relations, Communications. Thank you, Ms. Murphy, you may begin.

Good morning and thank you all for joining us today. On the call are Paul Friedman, Incyte's President and Chief Executive Officer, Dave Hastings, Executive Vice President and Chief Financial Officer, and Rich Levy, Executive Vice President and Chief Drug Development and Medical Officer. Paul will begin with a brief update on the programs, progress we've made in our clinical programs and Dave will follow with a review of our fourth quarter financial results and 2009 financial guidance. We will then open up the call for Q&A.

Before beginning I'd like to remind you that some of the statements made during the call today including statements regarding our plans and expectations for a drug discovery and development programs, including timing of our clinical trials and 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 September 30, 2008, and from time to time in our SEC documents. Paul?

Good morning everyone.

I'm going to start by bringing you up to date with respect to the INCB 18424 program in myelofibrosis, specifically where would we stand with respect to beginning our registration studies in both the United States and in Europe, and then I'll review what we expect to accomplish in 2009 for our other programs. In late December we submitted an SPA to the FDA for a registration trial in myelofibrosis, and as we expected exactly 45 days from the date of submission of the SPA, we received written comments from them. While the FDA agreed with most of what were proposed in the SPA, I would say a high proportion, the majority, again, as we expected in this first round, they did make a number of suggestions for us to consider, many of which we will simply accept. There are a couple for which we wanted input from our lead investigators to help us determine the best responses to these suggestions. We have already received much of the feedback from the investigators and the remainder is expected promptly.

The key message here is that while we may choose to further discuss or negotiate one or more of the FDA's suggestions, we are optimistic that all of the remaining points with respect to the FDA can be resolved during the next rounds of the SPA process and this would keep us on schedule for starting the study as originally planned in the first half of this year. And I should mention as well that the registration study in Europe also remains on track. While it's frustrating for me and I know for you that we have to remain more opaque with respect to the specifics of the SPA than we wish it's simply not appropriate at this stage for us to be more detailed on the protocol until it's finalized both with our investigators and with the FDA. And I promise you as soon as it is we'll provide you with all the relevant details.

Finally for this topic, we continue to work aggressively to prepare for the study initiations. We've been working with well over 100 potential clinical sites in the United States, Canada and Europe so that once protocols are finalized we should be able to rapidly activate participating sites and begin enrolling patients. Moving to the phase II trial we are conducting in the other two myeloproliferative diseases, polycythemia vera and essential thrombocythemia, we've now enrolled 50 patients, the trial is progressing well, and we are quite encouraged by the initial results. We expect to present data at a scientific meeting later this year. It will most likely be at ASH.

For the oral anti inflammatory indications, as we indicated in this morning's press release, we've selected INCB 28050 as our lead compound, in one month studies in rheumatoid arthritis patients, 28050 has shown excellent efficacy comparable to what we've seen with 424. And with its longer half life, our intent is to develop 050 as a once a day treatment and we're on track to begin a three-month dose ranging phase II trial in the second quarter. This is the outcome for which we have had as having a second JAK inhibitor allows us to have different compounds for oncologic indications and for inflammatory diseases and provides us with greater flexibility for partnering this program. To be able to most competitively evaluate the potential utility of JAK inhibition in what is a wide range of inflammatory conditions, we've decided it's appropriate to consider partnership options. By that, I mean being able to evaluate the compound in parallel as much as possible as opposed to doing one inflammatory disease and then in series looking at another one. This course of action seems prudent when you consider that our main competitor in the inflammation area with JAK inhibitors is the pan JAK Pfizer compound which although it is being given as a twice a day therapy is now in Phase III for rheumatoid arthritis and Pfizer has indicated that it plans in parallel to evaluate the compound in other inflammatory diseases. As you'd expect there is a great deal of interest in our JAK inhibitor inflammation program amongst other companies and we've started dialogues with a number of them.

With respect to the 424 topical program, a three-month Phase II B. trial in mild to moderate psoriasis is fully enrolled with about 200 patients on study. We look forward to sharing the final data with you sometime this summer. With respect to our HSD I inhibitor program for diabetes we expect to have final results from the three-month Phase II B. dose ranging trial in the middle of this year. If the results are positive our goal would be to use them to finalize a global partnership. For our sheddase inhibitor, Incyte 7839 we continue to enroll breast cancer patients into a Phase II trial, evaluating the compound in combination with receptin. We plan to present data from the trial in the second half of the year, most likely at the San Antonio Breast Cancer Meeting.

As I previously mentioned, INDs for both of our new oncology programs, c-MET and IDO have been cleared, but we aren't planning on starting clinical trials this year unless we are able to bring in additional funding by partnering one or more of our other programs such as HSD1 or JAK for inflammation. This decision supports our objective which Dave will elaborate on momentarily to reduce our cash use in 2009 and focus intensively on programs that can generate the most near term value. I'm going to turn the call over to Dave Hastings now and he will take you through a quick review of our 2008 and our 2009 financial guidance.

Thanks Paul and good morning everybody. As Paul mentioned I'll start with a very brief overview of our year end financial results and then I'll provide financial guidance for 2009. Our ending cash at December 31, 2008 was approximately $218 million. During 2008, we used approximately $141 million in cash which was in line with our guidance. Our operating expenses including R&D expense were also in line with our expectations as we continued our investments in our key clinical programs while closely managing our G&A expenses.

Now turning to our 2009 financial guidance. We are focused on managing our expenses very tightly and have prioritized our spending in 2009 such that we will continue to invest in our key clinical programs but discontinue spending in our noncore programs. As a result, our cash use in 2009 is expected to decrease and will range from $122 million to $128 million. This guidance includes the use of approximately $5 million for net lease related cost in our closed California facilities and does not include any funds we could receive from future collaborations. We expect our 2009 revenue to be in the range of $2 million to $3 million. And again this guidance excludes any revenue that would be recognized from future partnerships or collaborations.

We expect our R&D expense to range from $115 million to $120 million in 2009 including a non-cash expense of $7 million to $9 million related to the impact of expensing stock options. As I previously mentioned in the past guidance, decreased R&D expense in 2009 versus 2008 is directly related to our prioritization of our clinical programs. We expect selling, general, and administrative expenses to be in a range of $21 million to $23 million in 2009, including a non-cash expense of $3 million to $4 million related to the impact of expensing stock options. Our increase in SG&A is directly related to expenses associated with our initial sales and marketing preparations for the commercialization of 424-myeloproliferative disorders. In terms of other income expenses, we expect interest income to be in the range of $1 million to $2 million in 2009, while interest expense is expected to be approximately $26 million. As a reminder, the $26 million includes a known cash expense of $11 million related to the amortization of the original issued discounts on our 3.5% convertible senior notes.

With that I'll turn the call back over to Paul.

Okay. Thanks, Dave, and so, operator, we can now open up the call for questions.

(Operator Instructions.) Our first question is coming from Tom Russo with Robert W Baird. Please state your question.

Good morning. Paul, recognizing that there's a limited amount you can say with regard to your interactions with the FDA and the SPA, can you comment if there's any disagreement on the basic design that you laid out? I think in December and the co-primary end points that you've suggested?

So we have, I would say the vast majority of what's in the spa they've agreed with. We've had some discussions going on with about certain analyses and certain things that bear on the end points but we are in very good shape at and what I don't want to do is lay out where we are in the discussions because I don't know for sure how it's going to ends up but we are very confident that we will be on our way to doing the registration study in the time frame that we originally laid out.

And at this point what would you expect in terms of enrollment to complete the enrollment for Phase III across all the sites that you mentioned earlier.

You mean in terms of time?

Yeah, time to complete enrollment.

About six months. Rich just confirmed what we've said before. We think it would be about six months.

Okay. Lastly can you comment just some additional color on what kind of sales and marketing preparation work is in the plans for 2009 for 424 and Myelofibrosis.

We just had come into the room our new Executive VP for Commercial Operations, Pat Andrews, and so I'll let her comment on that.

Thank you, Paul, good morning everyone. So we are out to build an infrastructure for Incyte to be able to successfully launch 424 myelofibrosis and we also have to do all of the standard marketing to prepare the market for that which includes a lot of market research, it includes identifying target audiences, it includes things along those lines. The infrastructure is a very important part, identifying vendors who will be able to provide the services that we need in a very cost-effective way. Those would be the main plans that we are working on for 2009.

Okay. Thanks.

Our next question is coming from Cory Kasimov with JPMorgan Chase. Please state your question.

Good morning everyone. Thank you for taking the questions. I guess I'll skip any SPA related questions and save you there but as far as 050 is concerned, Paul, you had indicated in the past that in addition to waiting on some of the data from those one month cohort studies you were also waiting on the long-term animal tox studies. Have you in fact gotten that? Is that built into the decision to proceed with 050?

Yes, we have dog and rat six-month results which are reassuring and indicate that we have room to move in dose ranging studies that we were hoping to have. So, yeah, we had to have that plus the early good looking RA results in the one month studies and we have both.

And then a couple of partnership questions on two compounds here. First is still with 050, and I realize it's early but could you characterize the level of interest that you've seen from perspective partners at this early stage?

It's unprecedented and I really do mean that. From mid to large biotech companies, I mean you can figure out who they are, to your classical big league pharmaceutical companies. This is, I believe, for a once in a lifetime opportunity defined an oral agent that looks as good if not better than the anti-TNFs. If you don't have one in your stable and you want to be or are in the inflammatory disease area you have to be interested in this and that's the kind of interest that we are seeing.

Okay. Great. Then also from a partnering standpoint with regard to the HSD1 could you also characterize discussions there post the FDA updating the draft guidance for diabetes trials?

Remember what we've said is that we are going to do an, an interim analysis that will not be made public. We haven't done that yet. We are coming up on it and at that time we will reinitiate talks with companies who wanted to see three-month data plus some who we did not interact with the first time around. And so we are waiting on that. With respect to the FDA guidelines or, I'm not sure they are written in stone yet but they are likely to be accepted, the characteristics of the HSD1 inhibitor are precisely what the FDA guidelines would hope a compound would have. In other words, the worry here is obviously that the glitazones in particular seem to if anything exacerbate cardiovascular risk.

We could debate mechanistically how that happens but the HSD mechanism is compatible with a lowering of hemoglobin A-1C. plus the kinds of cardio protective changes in people, people with a metabolic syndrome, for example, that would, that would be cardio protective, and therefore, you would not expect unless you got unlucky in phase III study to see a signal which would then necessary to do these larger trials and possibly have some delay in getting registered that you would have with a compound where you would get a signal. We've seen statistically significant lowering of LDL cholesterol, lower cholesterol, trends in triglycerides. We've seen blood pressure lowering both systolic and diastolic, we've seen no weight gain. So it is the reverse of what you see when you put in the HSD gene into a transgenic animal and have it expressed in fat you create the metabolic syndrome and so what you are doing here is you are reversing the metabolic syndrome. So if I were a business development or a thought leader at a company that is in the diabetes business, This would be the kind of compound that I would want to have, and for that reason, despite those guidelines, I would thing this would be a very attractive program as long as the interim analysis shows what we are anticipating it's going to show.

Okay. That's helpful. Thank you.

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

Just wanted to confirm on 424 for myelofibrosis that the basic design of the trial, the duration, the size of the trial isn't affected by these points that the FDA has come back to you with.

So I'm not going to get into details. I'll say that the, we said six months to recruit, the trial is going to be about the same size, there are good firm end points and we are quite confident that we will be able to resolve the few issues that you always get the first time the SPA response comes back.

Okay. That's fair. For the HSD1 program, can you just remind us what the trial is actually powered to show on A1C ? What would you consider the minimum threshold for

Rich, I would say, you certainly would like to see, You have to realize the kinds of patients that come into trials these days do not come in on nothing. So they tend to have lower hemoglobin A1Cs than in the olden days, you know, when people would come in with tens and 11s. They tends to come in in the eights now or even the sevens. So you are not going to see in most people, or in very few people 2% changes. You are looking for, I'd say, you would like to see something at least 0.5% or greater and when you couple that -- I mean if you look at what the DTP4s do, for example, they are in that range. But if you had that or more plus the good lipid effects, no weight gain and in fact a blood pressure lowering, I would say that would be a pretty interesting profile. Rich, what do you think?

I agree. There have been studies with glitazones for example that are now showing about 0.4% where in earlier studies they showed 0.6, 0.7, simply because the patient population has changed. But we are really looking, feel very comfortable with a 0.5%.

And among this if for some reason the interim analysis did not meet your expectations would you tell us next month, would you consider that to be a material event?

I think if it were a dead blank study which it isn't going to be, we would probably pull the plug on it and tell you. But if, let's say we saw 0.48% hemoglobin A1C or 0.486, probably not, we would keep running the study. What I will tell you and I expect to be able to tell you this is that we've reinitiated talks with companies which should give you some feeling that we are seeing something.

That's very helpful. Then just lastly on the TVET trial what did you mean by initial encouraging data, what sort of feedback are you getting from the first 50 patients enrolled?

It actually is interesting. I don't see any great harm in saying here what we're seeing because I think it is pretty interesting. We are -- it's a small number of patients, all right? And the way the study is designed, it's a dose ranging study for the first two months. And what that means is its the same thing we did in myelofibrosis because this is the way the investigators wanted to design the study. It does not allow to you make dose adjustments unless there is a safety issue for the first two months. And so we've had a couple of people who came into the study who had borderline hemoglobins for example, who were on a high dose, and their hemoglobin bounced right below grade one. Those would be people who you would in real life start on a lower dose. These were people with ET not with PV as I recall.

But the majority of the people in the study have done remarkably well. We normalized their blood counts. People who have been phlebotomy-dependent have required no phlebotomies since they've been on the drug. As you would expect if they have big spleens, their spleens shrink. And if they have constitutional symptoms, they are dramatically relieved just like they were in the myelofibrosis patients. We expected that. But what we were looking for beyond that was normalization of counts. And so we are becoming more and more confident that with the same kind of dosing regimen that you would use in the, that we are using in the myelofibrosis trials where you can dose adjust in a more facile way than the current PV ET study allows that the vast majority of patients are going to be controllable with respect to their counts and their phlebotomy needs as well as with respect to their organomegaly and constitutional symptoms. So the early results are pretty exciting.

And aside from this hemoglobin issue and what sounds like a couple of patients that you mentioned on the it, ET side does it seem like the therapeutic window is wider in this population?

I would say yes because the counts are higher. These are. I wouldn't call them side effects. They are variability in measurement from time to time so we've had a couple of people who had hematocrits of 31 then 29.5, that sort of think but you probably would not just randomize them to a high dose if you were dose-adjusting, you would start them on a lower dose when they came into your office and then you would work your way up. So we've seen nothing again except for that, and it would look like these people, because they are marrows are hyperproliferative mainly even though some of them can be just phlebotomized, or they can be near maybe close to going over to myelofibrosis, but the majority of them have quite active marrows and so they are more resistant to the toxic potential of JAK suppression that you see in the myelofibrosis patients if you dose too high.

Thanks, that's very helpful.

Our next question comes from [Lisa Bako] with JMP Securities. Please state your question.

Congratulations on the great progress. Just want to do see if you could maybe give us a flavor as to the design of the RA trial now that you've identified the compound, you are going to take forward, a little bit more about the doses you are going to explore.

As Paul said earlier all the doses we are going to be exploring is once a day. The drug has a longer half life and looks good as a once a day drug. And the trial is really a two-part trial. The first part is kind of a relatively small approximately 100 patient, three doses and placebo with an interim analysis that we'll do around the end of the year. And at that point we will either expand some or all of the doses or potentially add higher or lower doses if by chance the ones that we picked so far were not exactly ideal. But we are pretty confident with the doses. And I would say that all of the doses are 10 milligrams once a day or less. It's a more potent. It has a longer half life than 424. So the dose -- the absolute number of milligrams per day is quite a bit less.

So it's ten, five and two or what are the doses?

It's four, seven and ten.

Okay. Okay. And then the second trial?

We are only doing one study but it's two-part. The second trial would actually be a much larger, the last trial we do before we start Phase III with again probably about 300 additional patients added to the II-B study so we have a really robust data set and no issues with going into Phase III.

And then can you talk about background therapies and all that kind of stuff?

So I think that it's going to be patients who have failed DEMARDs, and often will be on a DEMARDs. Mostly methotrexate, but others would still be allowed. But patients do not need to have been TNF experienced although I believe they are not excluded from this study and no one would be on anything like a TNF.

Okay. And then how many sites?

I am not actually familiar with all those details at this point. My team is but I don't have that number at hand.

Okay. When do you think you are going to start this specifically?

Mid second quarter.

Great. A question for David. Have you begun to thinking about addressing or restructuring any elements of the balance sheet? Can you comment on your progress on that?

Certainly managing our capital structure is a key objective for us in 2009. On the convert side as you know they are due in a couple of years but because of their size and significance we will take advantage of any advantages that we see to reduce or restructuring those. I don't want to get into all the details of that but there are various alternative strategies we could seek and we will obviously look to do that when the opportunity strikes.

Okay. Thanks a lot.

Our next question is coming from Eun Yang with Jefferies and Company. Please state your question.

Thanks very much. Regarding the follow on JAK inhibitor now that you are ready to start the second dose ranging study some time in the second quarter, in terms of the partnering options doesn't that depend on the interim analysis that you are planning at the end of this year?

It may or it may not. It depends on what people are willing to put on the table. If you just think about this logically, we have at one month with both compounds, we have results which look better than what you see with anti TNFs at six weeks. Our data look a little better than what you see with the Pfizer compound at six weeks. The Pfizer compound is a little dirtier than our compound. They've successfully completed three-month studies and are now in Phase III. We have six-month animal toxicology.

And the data at three months with Pfizer looked somewhat better than at one month. It didn't look as much better at three months as it did, as you see the range with the anti TNFs because I think you get the effect, you get more dramatic effects quicker with the JAK compounds but you would expect improvement at three months. So if you were on the other side of a negotiating table and you were willing and able to connect all those dots, which is I think not too hard to do you should expect that the Incyte people would be looking for a Phase II-B. type deal.

And if we can get that now we would probably would do the deal because we would like to be able to begin to explore things like inflammatory bowel disease and ocular indications, anterior uveitis, for example, dry eye, and systemic psoriasis, things that we can do but we don't have the money to do that you will all in parallel. So you also have to consider what that's worth in, maybe you take a slight discount to the absolute deal that you could get with post Phase II-B data but it could go that far if we don't get the terms that we are looking for. I can tell you that with the level of interest that we have in the program, the number of companies that are interested in it, that we expect to be in an auction like process which would also give us a fair amount of leverage to maximize deal terms.

Okay. And the second question is on the diabetes product, 739. If the data from the Phase II-B study is not up to your expectation would you plan to move with a follow on program to continue the diabetes program at a site?

No. As we have matured here and evolved we have decided not to continue with any other metabolic disease programs, with the possible exception of doing something with HM 74A in the future. But if this particular compound -- if this compound doesn't work, then the HSD mechanism is bogus. I mean early data says it works. All the animal results say it works. It's been safe. And it's, we get with low doses, once a day. You couldn't ask for anything more appropriate to test the hypothesis or take to market if the thing works. So our feeling is that if this doesn't work then HSD is not a mechanism that's useful in diabetes.

I will say just as one side view of this, we believe that one of our competitors developed their HSD compound in, not in their metabolism group but in their cardiovascular group. And took their compound in for a cardiovascular indication not for type 2 diabetes. Weather that was as a lipidation and/or a antihypertensive is not completely clear to us but that is an avenue that we don't anticipate we are going to have to explore, but the hemoglobin A1C results are, to me they are about as binary as they could get but they are not absolutely binary because if you are disappointed there had but had real good lipid results and or blood pressure results, you could see that there still might be a more limited number of potential partners who would be interested in the mechanism. So we just have to wait until we do the interim analysis. But we expect we are going to see an adequate amount of hemoglobin A1C lowering on top of those other attributes.

In the partnership discussion for this product does that also include potential for cardiovascular indication?

Sure.

Okay. Thanks very much.

Our next question is coming from Sapna Srivastava, Morgan Stanley. Please state your question.

It's Dave calling in for Sapna. Just a question on the launch preparations for 424 and MF. I was wondering if you could talk about what you think the overall costs are to get a US launch up and running and if you are still thinking about partnerships for that program either in the U.S. or Europe?

I will let others talk about how granular we want to be about the cost. But we have said -- we definitely do not want a partner in North America. We are preparing to launch the drug ourselves and are quite confident that we can do that. And we think it would be, if we are going to grow up to be something we have to become fully integrated somewhere and this is our shot. And the European rights are, I don't exactly know how to say this, if you had, if you had a way of retaining them and effectively selling either with a rent of force or your own sales force. The numbers look better than if you get yourself a partner to do it there. But what we would do in Europe really depends on discussions that we have with people about the program and there are multiple options for what we could do in Europe.

But since European sales of this kind of agent are higher than those that, those in the United States, you have to look at what your margins are going to be before you can make that decision. And I can assure you that we have multiple options from one end of the spectrum to the other on the table and they are all being looked into now. And by looked into, I mean actively, not just sitting at a desk and talking about it. But we can't tell you at this point what would be best for us in Europe. But I can tell you unequivocally that in North America we are going to sell the compounds ourselves. So I would have Pat elaborate.

Okay. So preparation for launch is centered around really understanding the market and the needs and what the physicians want and how the patients come in for treatment. And those types of fairly classic things. And within that, we believe that we will be able to prepare the market in a very cost-effective way, because there is a limited prescribing audience here. It's a high unmet need. We are going to be first to market by we think a couple of years. The product works very effectively. The physician audience is very active online, and active in education. So there's lots of ways to reach them, ways that are very cost-effective. And the U.S. itself has a remarkable vendor network in place that one can access for very specific tasks that one needs, and can do that very cost-effectively.

So I think when you consider a launch in the U.S. of a new oncologic product think of one that could be done in a highly cost-effective way, because it's targeted and that's about what we would probably need to spend. We are still working on the specifics of that, and would have a better idea next year on the level of infrastructure that we would build and own versus what we would go outside for. But that's probably a year out to give a more precise answer for the U.S. And we are working in parallel to prepare for Europe, and but again a very early stage analysis on that. But our goal is to prepare for both, and if it turns out that we are able to proceed with Europe on our own, we would do that. If we are able to get a superior offer to take our Europe and ex US rights, we would certainly look into that too.

Thank you.

Our next question is a follow-up from Tom Russo with Robert W. Baird. Please state your question.

Thanks for taking the follow up. Just touching again on the MF opportunity outside of North America, Paul, could you characterize the level of interest that you are receiving for that and if there's any sort of catalysts as this year plays out that partners might be looking for? I think thinking something along the line of an SPA or single regulatory step for Europe?

Well, we've had really good discussions with the European regulatory agency and we have kind of agreed on fairly specifically how we would conduct the study and for how long and we've had and continue to have companies come in who have an interest in ex North America rights. And the challenge for them -- some of these companies are once that have already, or already are selling a compound in the same therapeutic class in Europe and rest of world and the challenge that's been given to them is they are going to have to show us financially that what they are putting on the table is, reaches an indifference range to what we think we could, the profits that we could make if we embarked on this ourselves, even considering what the costs of start up would be.

Okay. And lastly on 050 I don't know if you mentioned this earlier but it sounds as if you did collect ACR data in the Phase I trial. I was wondering if you could confirm that and I was wondering if you might see that the data from trial from 050.

I'll let Rich elaborate, but I think in JPMorgan one of the slides that one of the cohorts of 050 on it. I think it did. So we've shown one of the cohorts, because I think that was a one we completed at the time and I will tell you that -- I mean, you see a good number of ACR 50s, You see ACR 70s and we recapitulated ACR 90 responses with this compound and that was once a day, 10 milligrams once a day is what I think we showed. So, Rich?

Yeah, so what Paul says is obviously correct. We did a couple of cohorts. We may do another one going forward. And again we've collected ACR information as well as DOS which is basically the same types of things and seeing results comparable to what we said before is what we said. In else the of actually presenting the data, we haven't made decisions yet on this relatively small study as to whether or not it would be presented in a scientific session or whether it might just be presented by Paul at one of the conferences, or at some point in time. The data has not been presented to any meeting at this point.

So let me correct myself. When he that slide in the JP Morgan presentation but we removed it. So we have not shown the data. But what I just told you is I think what you would see when we show you the data at 10 milligrams, once a day.

Okay. Thank you.

The next question is coming from Lucy Lu with Citigroup. Please state your question.

It's actually [Tnom] standing in for Lucy Lu. Thanks for taking my questions. Recently, Paul you spoke about the need to prioritize and you focused on certain R&D programs that will give you more value for the best bang for the buck type approach thinking. I was wondering, your R&D 2009 guidance of 150 to 120 is significantly less than for '08, probably about 20% less or so. What is that guidance based on? Is that on the previous recent approach or maybe a new developmental R&D thinking and maybe finally, can you tell us if the guidance includes the new clinical trial programs with the oncology programs at c-MET and the IDO compound? Thanks.

Dave, you want to.

Sure, so the reduced spending in R&D is directly related to prioritization of the pipeline. So 90% of our development costs will be in the JAK programs. So that's our focus and our highest value. And that guidance does not include any investments in IDO or c-MET.

So you guys don't aren't planning on taking in any new trials or programs for '09, then.

That's correct.

I would say, in an ideal situation if we weren't trying to really conserve our money in this horrible market to make sure we get to launch for MF in the best financial shape for us and our shareowners, we would move very aggressively with both of those programs. Especially the c-MET program, because the compounds is, because there is proof of concept with the Exelixis compound and with the [RCUL] compound and this is clearly a better compound, both from a safety standpoint from the ability to get to mets in the central nervous system and with respect to being able to at trough, without exceeding toxic, to getting tox levels at peak at trough to be able to to be at an IC 90 concentration. It's really a very interesting compound and we are hoping that we can bring in cash in some kind of deal this year that will allow us to then aggressively move on that. Alternatively if we, if someone was sufficiently interested in the program, there may be some way of forming an early collaboration that would allow that program to move more quickly.

And if the 90% of the expense is involves the JAK program, so about $100 million of 2009 guidance is already precommitted then, the JAK program.

That's just a development part of the spending so we also have the discovery portion as well.

But is it precommitted? Is there any more room for further cuts or is that sort of committed for '09 already?

There's always variability on the R&D line item depending on status enrollment and cash flow and billings from CROs. But we don't want to be so rigid that we don't have built in flexibility either in our cash guidance or in our plans, that if circumstances change we can do that but we try to plan specifically particularly for the JAK inhibitor program to be pretty much on track and committed unless something changes.

Okay. Great. That's very helpful guys, thank you.

This does conclude the question and answer session. I'd like to opportunity floor back over to management for any closing comments.

Okay. This is Paul. Thanks for spending some time with us this morning. We are excited and optimistic about the myelofibrosis opportunity. I think those of you who followed this and saw the presentations of competitor compounds at ASH now realize that this compound is by far the best compound. It's not only ahead but it may be the only one that's really viable.

So we just have a few Ts to say across and Is to dot with the agency before we embark on what I think will be an exciting Phase III study that will lead to a successful product both financially but also something that will dramatically change the lives of these myelofibrosis patients who truly have nothing else at this stage. And we are looking forward to that as well. As soon as we across the Ts and dot the Is we will be back to you with the relevant details of the registration study and I'm cautiously optimistic that we will be doing that within the next couple of months with you. Thanks for tuning in, and we will keep you informed of our progress as we go forward. So long. Bye.

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