英賽德 (INCY) 2010 Q1 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Incyte Corporation first-quarter 2010 financial results conference call. 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 and Communications. Thank you, Ms. Murphy. You may begin.

Good morning, and thanks for joining us. On the call today are Paul Friedman, Incyte's President and Chief Executive Officer; Dave Hastings, Executive Vice President and Chief Financial Officer; Rich Levy, Executive Vice President and Chief Drug Development and Medical Officer; and Pat Andrews, Executive Vice President and Chief Commercial Officer.

To begin, Paul will review the top-line results, the Phase II results for INCB28050, or 050, that we announced this morning, and then summarize recent progress for a number of our clinical programs. Dave will follow with a discussion of our first-quarter financial results, and then we will open up the call for Q&A.

Before beginning, we would like to remind you that some of the statements made during the call today, including statements regarding our plans and expectations for our drug development program, including timing of our clinical trials, regulatory submissions and the potential safety and efficacy of our compounds, as well as our expected financial results and guidance are forward-looking statements. These 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-K for the year ended December 31, 2009, and from time to time in our SEC documents. Paul.

Good morning, everyone. The positive top-line three-month Phase II results for 050 that we report today compare favorably with the current state-of-the-art biologic treatments for rheumatoid arthritis, as well as with oral and biologic molecules in development. If the 24-week data are also positive, and we have every reason to think that they will be, 050 has the potential to be an important new oral treatment for RA patients.

As you saw in the press release, we should shortly receive $30 million from Lilly in connection with a milestone for 050.

Now, while the results from this Phase II trial certainly need to be confirmed in larger studies, we believe 050 could provide advantages, including, but not limited to, better tolerability and once-daily oral dosing over existing DMARDs and other oral compounds and biologics in development. We look forward to presenting the full six-month results at the American College of Rheumatology meeting in November.

I know many of you will have specific questions regarding these results, and we will try to respond as openly as possible, but we also have to preserve our ability to present the full 24-week data at ACR. Additionally, the study is ongoing and it is still blinded. For these reasons, we are limiting our remarks to top-line results, which include the following.

One, 050 has a rapid onset of action, with responses seen as early as two weeks after initiation of therapy. Two, after 12 weeks of therapy, all three doses, 4, 7 or 10 milligrams once a day, were active and approximately equally effective with results comparing favorably not only with other oral RA treatments in development, but also with approved injectable biologics.

ACR scores at 12 weeks of treatment with 28050 included ACR 20s up to 60%, with a placebo response rate of 32%; ACR 50s of up to 36%, with a placebo response rate of 13%; and ACR 70 responses up to 16%, with a placebo response rate of 3%.

Additionally, 050 was as effective in patients previously treated with biologics, mostly anti-TNF therapies, as in patients previously treated only with traditional DMARDs, mainly methotrexate.

Now, in the study, anti-TNF failure patients made up 35% of the total population. So we are not talking about one or two patients here, a significant number of patients who were failures who did well on 050. And we see this as an important potential advantage, and it suggests that 050 could offer a broad range of RA patients a new approach for treatment.

Five, all doses of once-daily 050 were well-tolerated. And six, the 12-week results suggest that doses even lower than 4 milligrams once a day may be effective.

Before I continue, for people who are trying to laser in on the percent responses, I would refer you for comparison to the two doses in Pfizer's study 1025 that were taken into Phase III, 5 milligrams and 10 milligrams twice a day. If you look at the placebo-adjusted response rates at 12 weeks for those two doses, the results that we've gotten here are pretty much spot on with those response rates.

Now, our partner, Lilly, and we planned on finalizing the Phase IIb program once the full 24-week data are available. This keeps us on track for beginning Phase IIb in the fourth quarter.

To remind you, in our agreement with Lilly, we retained the right to codevelop 050. If we elect to do so, we would be responsible for funding 30% of the clinical development costs, beginning with Phase IIb through regulatory approval. And we would be eligible for tiered royalties then ranging from 20% up to the high 20s. And given the size of the commercial opportunity we see with 050 in RA alone, this increase in the royalty rate dramatically expands our financial upside, especially when compared to a straight license agreement.

Moving to our other inflammation program, topical 18424 for psoriasis, the 12-week Phase IIb results are being presented at the Society for Investigative Dermatology over the next few days. We described these results last September. We believe topical 424 may provide mild to moderate psoriasis patients -- that is 85% of all psoriatic patients -- with a promising alternative to existing treatments. Thus far, 424's profile includes a rapid onset of action and durable efficacy that appears to be comparable to existing treatments.

But, importantly and in addition, we've seen no skin thinning, nor have we seen any redness or irritation with 424. The compound has been extremely well-tolerated.

We will need long-term studies to confirm our initial results, but in particular, the absence of skin thinning may well allow for extended use of topical 424, and this could be an important advantage over existing therapies. We are continuing discussions with a number of companies regarding a potential alliance for this program.

So let's turn now to our most advanced program, oral 18424 for myelofibrosis. The US trial COMFORT I is now completely enrolled. Once physicians realized that recruitment was about to end, we saw a significant increase in the number of patients being screened, and this has resulted in over 300 myelofibrosis patients entering the study, instead of the 240 patients originally planned.

We are on track to have results from COMFORT I in the fourth quarter, as we stated before, although we may not have the data in time to submit a formal abstract for ASH. If not, we will find an appropriate alternative form to describe at least the top-line Phase III results, and would then present the full results at ASCO. And we remain on track to file the NDA in the first half of next year.

The European Phase III trial, COMFORT II, which called for 150 patients, also benefited from strong patient and physician interest and enrolled 219 patients. Novartis is now responsible for conducting this study and for presenting the results, most likely at EHA in June of next year.

Regarding two other myeloproliferative neoplasms, polycythemia vera, or PV, and essential thrombocythemia, ET, we recently learned that 424 was granted orphan drug status by the FDA for treatment of each disease. We are continuing our discussions with FDA to determine regulatory requirements for approval, first in PV. Provided the European Medicines Agency, the EMA, concurs with FDA's requirements, then we and Novartis would move forward with one global registration trial for approval in the US and Europe.

If the EMA and FDA are not able to agree, then we would conduct two different registration trials to secure approval in both regions. And our objective remains to begin the Phase III program in PV patients later this year.

Beyond these potential indications, the Novartis-Incyte joint development committee is in the process of identifying and prioritizing the next most appropriate cancers to evaluate. In the interim, we are actively supporting a request from the COGs group at NCI, the Children's Oncology Group, to study children with hematologic malignancies and solid tumors. They will be responsible for conducting this trial and have stated their intent to start screening patients sometime this summer.

Now regarding our earlier stage oncology programs, we learned that data from the ongoing Phase I/II trial for Incyte 7839, our oral sheddase inhibitor for breast cancer, has been accepted for poster presentation at ASCO.

In December, at the San Antonio Breast Cancer Meeting, we presented interim data from this study, suggesting that the combination of the sheddase inhibitor, Incyte 7839, and Herceptin-based regimens may be of value in a specific subset of cancer patients, that is those who -- breast cancer patients, that is those who are p95-positive. We've continued to enroll patients into this trial to confirm these initial findings.

Our oral cMet inhibitor, Incyte 28060, now licensed to Novartis, has been in a dose-ranging Phase I/II trial in patients with solid tumors since January. Once this study is completed, Novartis will be responsible for 28060's future development.

And lastly, for our indoleamine dioxygenase, or IDO inhibitor, Incyte 24360, we intend to initiate a Phase I/II trial in patients with solid tumors, and we plan to do that within the next few months.

I'm going to now turn the call over to Dave to go over the financials, and then we will open the call for Q&A.

Thanks, Paul, and good morning, everybody. I will start my brief overview this morning by discussing our cash position. We ended the first quarter with $422 million in cash and investments, excluding $56 million in restricted cash held in escrow for the first three years of interest payments on the 4 3/4% convertible senior notes.

Our cash used this quarter was $43 million, excluding the $90 million upfront payment received from Lilly, the $60 million milestone payment from Novartis for the initiation of the COMFORT II clinical trial and $159 million used to redeem the outstanding 3.5% convertible senior and subordinated notes.

Our cash used this quarter was on plan, and our cash guidance for the year is unchanged. It remains a use of $165 million to $175 million, excluding our actual and potential future milestones received from partners.

As noted in our press release, we announced two milestones this morning, $30 million from Lilly for 28050 and $3 million from Pfizer for our CCR2 antagonist program. As a result, we are changing our revenue guidance from $66 million to $68 million to $99 million to $101 million for 2010.

Now moving to our operating expenses. These were in line with our expectations, and our guidance remains unchanged in both R&D and selling, general and administrative expense. Our SG&A is beginning to reflect our investment in the commercial infrastructure required for a successful launch of 424 in myelofibrosis, and we expect to gradually increase that investment throughout the year.

Finally, I would like to note that we incurred in the first quarter a one-time $4 million non-cash charge related to the redemption of the 3.5% convertible senior and subordinated notes.

So with that, I will turn the call back to Paul.

So I think we should open the call now for Q&A, please.

(Operator Instructions) Cory Kasimov, JPMorgan.

Good morning, guys, and thanks for taking the questions. I actually have two for you on 050 and then one on 424 for PV. So on 050, are you able to disclose what the discontinuation rate was at the three-month time point?

I think I've disclosed for you as much as I feel comfortable doing, without getting into detail that could imperil our ACR presentation.

Okay.

The only thing I would say is that the 10-milligram dose, when we look at the degree -- when you look at the AUC and the degree of STAT Phosphorylation inhibition that you see there, that is a hefty dose.

Okay.

Rich, what would you say?

I just want to add that the efficacy results that Paul summarized, in those analyses, patients who might have dropped out prior to 12 weeks are considered failures in those analyses. So that is already counted into the data that you've heard about.

It is an intention to treat analysis.

Okay, that's helpful. I guess bigger picture on 050, Paul, you suggest that this particular compound could have potentially better tolerability versus the competition. Could you talk a little bit about what gives you the confidence to make that kind of statement, when you only have three months of data at this point?

Yes, so we couch that fairly carefully in the statement, because the n is small, and it is only three months of treatment. But the fact that the 4 mg -- when we set up this study, we were trying to have the low dose not have the same level of efficacy as the two higher doses. And it is gratifying that the 4-milligram dose has done as well as it has done.

And when you look at some of the safety parameters -- and I'm not going to get into the quantitation, again, because I think it will imperil our future presentation at ACR, if I tell you everything now and it ends up in notes -- but the 4-milligram dose is -- and even the 7-milligram dose -- are doses where you could well, in and of their own right, show safety advantages.

But your point is well taken; it is going to take longer time, and it's going to take bigger N. But the odds are when we design a Phase IIb study, although we are not there yet, is that we will look at doses lower than 4. And you start to improve the therapeutic index if you can get down there.

Okay. And then lastly on 424 for PV, are you seeking an SPA at this point, or does it not really matter to you?

We would rather have an SPA than not, so you could make the assumption that we are attempting that. But we don't need it to go forward, but obviously, we would rather have it. We would be more comfortable with it, and we will have to see how our discussions go with the FDA over the next few months.

It sounds to me, based on your comments, that you've made some pretty good progress with the FDA, and it's really just the EMEA that you need to see whether or not they feel the same way that the Agency here does. Is that a fair assumption?

No, I think you're overreading that. Let me go back and reread to you what I actually did say.

I said that we are continuing our discussions with FDA to determine regulatory requirements for approval, first in PV. And I said provided EMA would concur with the FDA's requirements, we would do a single global study.

But I am not implying that we are so far along with the FDA that we know we are a shoe-in and we are going to be able to come to agreement on an SPA. We are cautiously optimistic that could be the case, but we require a bit more interaction with them to be able to be more definitive about that possibility.

Okay. Thank you for taking the questions.

Brian Abrahams, Oppenheimer.

Thanks very much for taking my questions. Congratulations on the data. Paul, recognizing that I know you can't be very specific in quantifying all of the side effects, but you had mentioned in the past that you might expect to see LDL and HDL increases, given the mechanism of action, over a three-month time course. I was just wondering if -- generally speaking, if you did observe those and if there was any dose dependence to those.

Yes, we have seen that, and we wouldn't -- I don't think the drug would have worked if that wasn't part of what we were going to see, because it is an IL-6-related phenomena, and we certainly block IL-6.

It is hard to know at this point whether there is a dose response. I can tell you that, again, without getting into so much detail that we've kind of given away the whole story for ACR, we are pretty comfortable and pleased with what we've seen with respect to the quantitative aspects of changes in the lipids. When you look at what we have at this point, again, with a small N relative to what Actemra shows and what the CP compound for Pfizer shows. So that is probably as granular as I would feel comfortable answering that question right now.

Okay, fair enough. And then on the efficacy side, you mentioned that the doses showed similar ACR scores. I was wondering if you could just give us a little better sense of what degree of variability that you saw. And obviously, you reported what were the best scores that you saw. Was it about a 5% or a 10% differential between the doses? And were the scores that you reported from different doses, or were those all from one of the three doses that you used? Thanks.

Well, the up to is 1, but the variability for ACR 20 and ACR 50 is small, and those numbers are in line with what we saw at all three doses. Which is why we said that all three doses were essentially equivalent in their activity. And again, I would refer you to the 12-week data for the Pfizer -- the Pfizer 1025 study for the 5 and 10 milligram BID doses, which were the doses they took into Phase III. I mean, we are pretty much right there with their results.

When you get out to ACR 70s, and you are talking about 16% with a 3% placebo at 12 weeks, and you only have 30, 31 people in an arm, you're not talking about very many people. And if you look at the curves for the biologics, like between 12 and 24 weeks, and you look at the Pfizer data for between 12 and 24 weeks, what you see -- and I suspect this is what we'll see at 24 weeks as well -- is you see that the ACR 20 and ACR 50 responses are asymptoting, to a large degree, by 12 weeks. There are slight increments between 12 and 24 weeks. But some of those patients moved from 20 and 50 scores into the 70 category between 12 and 24 weeks, and so you see the one curve for the CP compound that goes up fairly nicely between 12 and 24 weeks is the ACR 70. And we expect that is what we will see as well.

So the most variability we see is at the ACR 70 response rate, which is a matter of one patient one way or another. But the results, again, are right there with what the Pfizer data showed. They are right on.

Got you. That makes sense. Just to clarify, you mentioned the two doses reported were for -- or the up to ACR scores were for one dose. Was that the 10-milligram dose?

Say that again.

You mentioned -- am I correct that the scores that you reported were for --

No, that's not the case. One of them could be a 4-milligram dose, one could be a 7, one could be a 10.

Okay, I understand. Thanks for the clarification, and congrats again.

Thomas Wei, Jefferies.

I just wanted to clarify a couple of things that you mentioned in the press release and in the prepared comments. First, when you say there is no thrombocytopenia, should we interpret that to mean that you didn't see a decline in platelet counts at all?

That's correct.

So even when you look at it on an overall kind of mean basis, you've shown us these curves before for 424 where we actually see kind of the mean change in these blood counts over time. But that means that there was really no change from baseline to the end of 12 weeks of dosing?

That's correct.

Okay. And when you say that the efficacy data and TNF failures looked good, should we interpret that to mean that kind of when you do these sub-cuts, TNF failures, non-TNF failures, that although the numbers are small, that the outcomes looked very comparable between those subpopulations?

That's right. And if you consider -- if you lump the three groups together, we've said that 4, 7 and 10 are essentially equivalent in response rates. Each group has 31, 32 people in it, so you are getting close to 100 people. 35% of those people are TNF failures, so you are talking about 30 to 32 people. And so we are not -- it is not like we are looking at four or five people. We are looking at a decent number of people. And they do just as well as the people who have not yet seen a biologic. So it is actually pretty impressive.

And then just lastly, on the neutrophil counts, I don't have the press release right in front of me, but I don't remember seeing any sort of commentary there. Should we assume that it looks similar to the old data for 424 or that there was actually no effect seen on neutrophils either?

Rich, do you want to answer that?

Sure, Tom. So there is really no affect on neutrophils either. There are -- an occasional patient who has this daily drop is due to the margination affect. But in every single one of those cases, it was knocked down to more than a [great] one. It was a very small percentage of patients who had that at all. And if you look at the means, they don't change at all. So really there was no affect on neutrophil count or platelet count.

Thank you. That's very helpful.

Rachel McMinn, Bank of America Merrill Lynch.

Thanks very much and my congrats as well on the data. I am curious if you can give us a little bit more color on the anemia commentary. You mentioned you saw some modest anemia declines over time in just the highest dose. So can you give us any color as to what level of hemoglobin drop you are seeing? And would you expect the lower doses with longer-term duration to have any anemia, or do you think this is a threshold effect?

I think except -- we had one patient who -- at 10 -- who had a greater than 2-gram decrease, I think. It is about a 1 gram per deciliter decrease at 10 mgs. At 4, you don't see anything, and at 7, you see virtually nothing. And by 90 days, you should be asymptoting, because, you know, you come to a new steady-state of red blood cell production. And so with longer periods of time, you should not see -- the individuals at 10 should be leveling out.

Now, that is a big dose, and that was why I made that comment earlier, because I figured someone would ask me about the hemoglobin drops. It's not surprising at 10, based upon what we know about Pfizer, STAT Phosphorylation inhibition over the dosing interval, and what we know about 424 STAT Phosphorylation inhibition over the dosing interval, to expect to see a modest hemoglobin drop at 10, and that is what we have seen.

Our prediction is, based on everything we know about red cell kinetics and the PK and the coverage, is that we are asymptoting by 12 weeks. And the average hemoglobin at 10 -- even at 10 milligrams should not continue to drop significantly.

Okay, that's helpful. And then just other types of side effects that we've seen with some of the other oral compounds -- you already mentioned no effect on neutrophils. But in G.I. or hepatic signals, any expectation there?

I can tell you that we don't see any of that so far.

Okay. And then just one last question on the serious adverse event. You said that it was -- the bleed was completely unrelated. Any more color you can share with us there? Was the patient just not on drug for very long, or --? Because I think there has been some IL-6-related gastric perforations.

So this is a patient who had a long history of multiple G.I. bleeds, was on major doses of proton pump inhibitors, as well as H2 blockers, had had a surgery called a fundoplication, where are wrap the stomach around the esophagus to prevent heartburn. And this patient actually, one of the complications that you can get from a fundoplication is a so-called Mallory-Weiss tear, which is a tear that occurs right at the esophageal-to-stomach junction, and that was found. So it was in no way related to the drug.

Okay, thanks very much.

Ziad Bakri, Cowen and Company.

Congrats on the data. Just one question on whether you saw any changes in blood pressure at any of the three doses.

No, we did not.

Okay. And then I guess moving on to 424, can you give us any color on -- assuming 424 is approved for myelofibrosis -- what you might need to get compendia listing in PV and maybe ET -- would the data from the Phase I/II studies be enough, or would you really need to wait for data from a pivotal study?

We wouldn't need to wait necessarily for data from a pivotal study, but we would probably want to continue studying the product in the two diseases and get more data than we currently have.

Okay, and then one last bookkeeping question. The $33 million of milestones, I assume, given that you've raised guidance by that amount, that all that is going to be recognized in Q2.

Yes, that's correct, and just to be clear, our net cash burn this year will be obviously $33 million less than our current gross cash burn guidance as well.

Okay, great. Thanks, guys.

Avik Roy, Monness, Crespi, Hardt.

On the RA drug, first of all, are you -- should we understand that the response rate is actually equivalent on its own, or are dropouts or increased amount of dropouts driving the equivalence in response rate?

And then on 424, should we expect to see any sort of incremental data on 424, either at ASCO or at the European Hematology Meeting that follows ASCO?

The Pfizer data is also presented in the same way, which is an intent to treat analysis. So it would be difficult for us to know exactly how Pfizer's data was driven in terms of, let's say, a completers analysis.

But obviously, the intent to treat analysis is always lower than the patients who continue on drug.

With respect to the upcoming ASCO and EHA meetings, there are no major presentations on 424. We basically presented the Phase II data in myelofibrosis a number of times. Right now, we are in a phase where we are collecting the Phase III data, so don't have data to present.

And with respect to the PV and ET data, further progress has been made with that study that we presented at ASH last year, but we didn't think it was ready to be presented again this early. But likely we would present an update on that study later in the year.

All right, thanks.

Liisa Bayko, JMP Securities.

My congratulations on the data as well. I know one thing that you talked about on the last call was just monitoring for -- sorry, we already discussed that -- the cholesterol changes; there are none.

When you think about the next possible dose, just thinking about the exposure levels here, how far down do you think you might explore?

We have to reach agreement with Lilly on that, and it ultimately it is going to be there -- they'd make the final call. But if I thought it through and I had -- and I was as expansive in such a study as if you go back and look at some of the Pfizer studies -- they studied a lot of doses -- you could -- I certainly think something like 2 would be an interesting dose to study. Whether you would study 1 or not, I don't know. You'd probably want to bracket 4 and have something above 4. So that would kind of be the range that I would think would make sense.

Okay. Are you surprised that there wasn't a dose response or does that in hindsight kind of make sense?

Well, I think there is only so much accuracy with which you can hang your hat on PK kinds of analyses. For example, with 424, when we went initially into people at 25 BID, we thought we had outsmarted nature, and we ended up with a dose that was a bit higher than it should have been. 4, we thought was right on the edge and could go either way. What we have found reasonably consistently is that for whatever reason, the patients with inflammation, at least patients with RA, tend to have higher AUCs than normal volunteers. And so the levels at 4 in these patients are certainly sufficient to give significant inhibition to STAT Phosphorylation for reasonable intervals during the entire dosing interval.

So it is not surprising that we got activity. It may yet turn out, when we have a bigger n for longer periods of time, that 4 -- maybe 7 will be slightly better than 4. But the data to date suggests 4 is pretty active. So it is a little bit surprising, but when you look at the totality of the data that we have, it is not shockingly surprising. It is certainly within range of what could be expected.

Okay, that's helpful. Thank you. And then you didn't see any change in the cholesterol, correct?

No, we did. And what I said is that it would be very -- it would almost be impossible not to see it, because if you block IL-6 signaling, even though that mechanism is not completely clarified -- Actemra does nothing but block IL-6 function, and you do see it there, and since we block IL-6, you almost have to see it.

What I've said is that at the -- somebody asked me whether there was a dose response, and we really aren't seeing much of that. And when we look at our data and compare it to what was reported with Actemra and what has been reported with Pfizer compound, we are pleased with what we've seen so far.

Okay, good. That's helpful. Thank you very much.

Lucy Lu, Citigroup.

Great, thank you. A couple of questions on 050, as well. First, congratulations as well. Can you just remind us where you are with some of the preclinical studies with this compound, I guess carcinogenicity studies, QT, all of that?

Rich, can you answer that?

Yes. So we are completing the longest range [oven] carcinogenicity study in dogs now, so that the next studies will allow patients to be treated essentially indefinitely. Right now, the completed tox studies were limited to six months, which is why this study stopped after six months.

There is some time still to start the carcinogenicity studies before the filing here, and the QTc study also has not been done. I will say, however, that we have with our related molecule 424, we've completed one of our carcinogenicity studies and the QTc study, and those have both been fine.

Okay, great. And then when you say patients previously treated with biologics, does that mean that they failed the previous therapy or just they've been treated previously?

The overwhelming majority, virtually all of them, are failures. There are a couple of people who I think for financial reasons stopped the biologic, but the overwhelming majority of the people who I referred to are failures.

Okay, that's great. Then last question is in terms of onset of action, was there a dose response there?

No, it was not. That is -- we looked at that and again, the 4 milligrams dose, the patients quiet down just as quickly as at 7 or 10.

Okay, and then if Incyte were to decide to codevelop this, can you comment on maybe what Phase IIb would look like?

Well, Phase IIb could involve multiple studies. It would not necessarily be one study. There certainly would be a dose-ranging study that would extend beyond a three-month initial readout. Although we may well have -- and we may look at three-months results, and it would probably bracket the 4-mg dose in some way.

But there are other studies that you could conceive of; we just have more discussion that we have to have with Lilly, which I think we are still planning and hoping that we will start the Phase IIb in the fourth quarter some time. But you could envision induction maintenance as a parallel study, where maybe you could start at higher dose and then maintain at quite a low dose. I don't know that we will do such a study, but it is certainly something that we've discussed multiple times. But those are the kinds of studies that I think one would do.

Great. Thank you very much.

(Operator Instructions) Dave Witzke, PioneerPath Capital.

Congrats on encouraging early data. A recent Nature publication and other research has implicated IL-17 in multiple sclerosis in general and non-response to interferon in particular. And I guess given the fact 050 is a potent IL-17 inhibitor, I guess I am curious where you and Lilly are in thinking about developing 050 as an oral drug for MS.

Well, that is kind of like information that if we were thinking about it, we probably wouldn't be talking about it on this call anyway, Dave. I think it is a very interesting possibility. Multiple sclerosis is a difficult area, and it certainly would be a therapeutic area to talk about with Lilly.

Paul, I guess in general, how about other inflam indications? When can you and Lilly kind of discuss how you think about Crohn's, oral psoriasis, other ones?

That is part of our discussions with the joint development committee. There is Crohn's, there is all the other arthritities, psoriatic -- if you -- the place that I think has by far -- the two areas that have the highest probability of technical success would be oral psoriasis, since we already know Pfizer's drug worked in a small study, and our topical works. So the remaining 15% to 20% of the psoriatic population who require systemic therapy would certainly -- I would predict with a high degree of confidence that, if tolerated, it would give good results in that population.

The psoriatic arthritis, ankylosing spondylitis, reactive arthritis -- if you add all those up, that N equates to about 25% to 30% of the RA market. So that is a very significant group of people with inflammatory arthritis. And the likelihood of efficacy in those diseases, I think, is very high.

The area that is, I think, a little cloudier are the G.I. inflammatory diseases. And while in theory it should work there, and there is some evidence, I believe, with Humira that in Crohn's they have -- I think they have an indication for Crohn's. Is that right?

It might be Remicade.

It is Remicade -- yes, it's Remicade. We -- so -- but that is a little hazier, and it is certainly an area where it makes sense to talk seriously about exploring, but --. So those conversations are ongoing with our partner, and there is interest in all those disease areas.

Okay, thanks.

It appears we have no further questions at this time. I will now turn the floor back over to management for closing comments.

This is Paul. I thank everybody for their congratulations on the data. We are gratified by it. I think something in the low-single-digit milligram once a day oral with these kind of results is pretty exciting. And we recognize that we reported only 12-week data, and it is still in a smallish number of people, but it is enough now that we believe it is convincing to the point that we are confident that with longer periods of time and larger Ns, we will replicate these results.

We also expect that the ACR 70 results, as you go between 12 and 24 weeks, will bounce up significantly. And hopefully, when we get into Phase IIb, these fairly extensive responses will be maintained for long enough periods of time to benefit a group of people who are pretty sick without significant therapy.

In any event, I appreciate your attention this morning, and we will end the call, and we look forward to giving you more data as we get it. Thanks very much, and good morning.

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