英賽德 (INCY) 2011 Q2 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Incyte Corporation second quarter 2011 financial results. (Operator Instructions.)It is now my pleasure to introduce your host, Ms. Pamela Murphy, VP, Investor Relations and Communications. Thank you, Ms. Murphy you may begin.

Good morning. And thank you 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, Chief Drug Developmental and Medical Officer; Pat Andrews, Executive Vice President and Chief Commercial Officer.

To begin, Paul will provide an overview of the second quarter. Then Dave will follow with a brief discussion of the quarter's financial results. We'll then open up the call for Q&A.

Before beginning we would like to remind you that some of the statements made during the call today are forward-looking statements including statements regarding our plans and expectations for our drug-development programs., the timing of our clinical trials, regulatory submissions, and anticipated product launch plans, the potential safety and efficacy of our compounds, as well as our expected financial results. 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 March 31, 2011, and from time to time in our SEC documents.

Paul?

Good morning, everyone, thanks for joining us. We've had an eventful couple of months here. The results from our two registration trials in myelofibrosis, COMFORT-I and II, were presented in full at ASCO and at EHA. And we submitted the NDA on June 3. While we await the official NDA acceptance letter which is due within 60 days of the filing date, the agency has verbally confirmed on multiple occasions, the latest yesterday afternoon, that we have been granted priority review and that our PDUFA date is December 3.

Novartis continues to make progress as well, they submitted the MAA in June. The presentations at ASCO and EHA demonstrated that treatment with Ruxolitinib gives very compelling results including significant reductions in spleen size, significant improvement in symptoms, and an overall improvement in quality of life measures. In contrast, and I think this is an important point, for patients who received placebo, even in a six-month period, and even -- or even the best-available therapy, their disease worsened.

Market research conducted over the past several years has consistently indicated that Ruxolitinib's ability to address these negative aspects of MF are expected to position the drug as a welcomed and important new treatment for both the patients and their treating physicians.

To support the anticipated launch of Ruxolitinib later this year, we're actively hiring the rest of the sales team, focusing on the recruitment of approximately 60 sales professionals with substantial prior experience in promoting hematology/oncology products, and I can tell you that we are well along in bringing that sales group on board.

Other high-prior commercial activities are far along. We are finalizing the specifics of a distribution network that will include a hub and a limited number of specialty pharmacies to ensure that our commercialization efforts meet the need of all patients with MF. We plan to implement a comprehensive patient assistance program.

Beyond myelofibrosis, we're also evaluating Ruxolitinib in patients with advanced polycythemia vera in a global Phase III trial called RESPONSE. We have been monitoring patient enrollment rates over the past few months and while Novartis has over half of its sites up and running recruitment remains behind schedule. Both Novartis and we have concluded that the study needs to be amended to accelerate enrollment.

We have initiated discussions with the FDA, and while I'm not yet in position to describe specific changes in the protocol to you, and I won't be until we've completed those discussions, I can tell you that we proposed keeping the dual end point of phlebotomy independence and spleen size reduction the same, and because the study is currently highly overpowered for the end point, we're also proposing to reduce study size.

Beyond that we're proposing to alter some of the entry criteria, which we made more restrictive than necessary, in a manner that in no way compromises the power of the study.

Assuming these changes to eligibility are acceptable, a significant portion of patients who failed screening would then become eligible to enroll in the study. Again, once we have agreement with the FDA, we'll be in a better position to describe the changes in appropriate detail.

In addition to MF and PV, and as described in today's press release, we have a number of ongoing or planned studies for further developing Ruxolitinib in indications where there's evidence that inhibiting the JAK pathway could lead to positive clinical outcomes.

One of these studies, a randomized Phase II trial in patients with pancreatic cancer, just initiated this month. And as I mentioned before, pancreatic cancer is particularly interesting, not only because there's a high therapeutic need, given the relatively lack of efficacy with existing agents, but because 424 has worked quite well -- and because 424 has worked quite well in preclinical models, but in addition since there is a high incidence of severe cachexia in this patient group, we think our positive results in myelofibrosis with respect to cachexia have the potential to be carried over to pancreatic, since cytokine oversignalling, and hypercatabolism are thought to play major roles in solid tumor cachexia as well.

I'm not going to go through the rest of the Ruxolitinib studies now, but if there are questions regarding any of these, Rich and I can certainly respond during the Q&A.

Our second oral, JAK2 inhibitor, Incyte 28050, is partnered with Lilly. The Phase IIb in rheumatoid arthritis is on track, and the three month double blind placebo controlled phase of the trial is expected to complete in early 2012.

Our earlier stage oncology programs include the Sheddase inhibitor 7839. We're still working with our academic collaborators who hold the clinical data to complete the analyses on the historical tissue samples from HER2 positive breast cancer patients. We plan to use these results as well as an updated analysis of the breast cancer market to determine whether moving into Phase III development makes sense.

Our indoleamine 2, 3-dioxygenase 1, or IDO inhibitor, and our oral c-MET inhibitor continue in their Phase I dose escalation trials in patients with solid tumors. We haven't reached the maximum tolerated dose for either compound. Future studies for the IDO inhibitor include at least one Phase II trial beginning in the first half of 2012 in either metastatic melanoma or advanced ovarian cancer. For the c-MET inhibitor, we'll transfer the program to Novartis, who you may recall has world-wide rights to the compound.

So I'll now turn the call over to Dave.

Thanks, Paul, and good morning, everybody. I'll start my brief overview this morning by discussing our cash position. We ended the second quarter with $364 million in cash and investments, excluding $28 million in restricted cash held in escrow for interest payments through October 2012 on our 4.75% convertible senior notes.

Our cash use this year has been $89 million, excluding $14 million in proceeds from stock-option exercises, and a $15 million milestone payment received from Novartis for the c-MET inhibitor program.

Our cash use so far this year is on plan, and our cash use guidance for the year is unchanged at $185 million to $200 million. This guidance, as always, excludes actual and potential milestones received from partners and proceeds from stock-option exercises. Our operating expenses were also in line with our expectations, and we're not changing guidance for either our R&D or SG&A expenses. We continue to focus our investments in what we believe are high-value R&D programs as well as preparing for the potential launch of Ruxolitinib in the US later this year.

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

Thanks, Dave. Operator, we can now open the call for questions, please.

Thank you. (Operator Instructions.)Our first question is from the line of Rachel McMinn with Bank of America Merrill Lynch. Please proceed with your question.

Thanks very much. And thanks for keeping the script short this morning. Paul, can you give us a little bit more color on the PV study? I guess what can you say about how -- the way the study is designed relative to the market opportunity? In other words do you think that the slow enrollment is a reflection of just smaller patients -- smaller numbers of patients that can benefit from Ruxolitinib or is it just really an overly stringent enrollment criteria, and maybe if you could give us a sense of the screen failure rate that would help?

It is the latter by far. We have had a tremendous amount of interest in coming in -- in patients coming into the study. And we are optimistic if our amendments are less -- relatively unscathed, that we'll be able to go back and recruit into the study a significant number of people who failed in screening. I don't know the exact screening failure rates. They are relatively high because -- in trying to answer more questions than in retrospect it made sense to try to answer in this study, we asked that patients have multiple parameters, and you end up with a Venn diagram with a very small sweet spot, and so there just -- there are a couple of questions that have nothing at all to do with the primary end point that in the redo will not be answered or at least the power to answer them will be smaller because we won't be making those parameters criteria that you have to have to get into the study. It's a relatively simple fix, but we just need a little time to talk to the FDA about it.

And just in terms of time line, I guess this is an SPA-approved study if I remember correctly. Is there anything that would make it more difficult to amend the study? I guess what are your expectations for how long these discussions will go back and forth?

So there is no PDUFA specified time frame for the FDA to respond, and we are revising an SPA, but we have had discussions with them about this. We have had really very good interactions with the FDA and this division in particular, and we just don't anticipate that this will be protracted, and we'll see how it goes. We're also optimistic because the changes make perfect sense that the FDA will accept the amendment. I'm not saying we won't have some discussion back and forth, but we just have to wait and see. We plan within the next couple of weeks to have the amendment in to the FDA, so we'll be moving pretty quickly, and, again without getting in to specifics, if the what we think are very reasonable changes to the protocol are accepted without major alterations that we would not change our guidance with respect to time lines for completing the study.

That's very helpful. Thanks so much, appreciate it.

Thank you. Our next question is from the line of Thomas Wei with Jefferies & Company. Please proceed with your question.

Thanks. Just to follow up on RESPONSE, can you give us a sense as to what the current entry criteria are, just a reminder of that? And what are the reasons why people are failing the screening process? Is there a particular entry criteria? Can you address that?

Well again -- so the inclusion criteria are listed on clinicaltrials.gov. I'll give -- I don't want to get into all the details, but I'll give you an example of one where we lost a lot of otherwise eligible patients, and that is subjects had to -- in addition to being phlebotomy dependent and having a spleen, they had to have either or both elevated white blood cell count and elevated platelet count. It turns out that a lot of people don't have that, and yet they have big spleens, they symptoms and they are phlebotomy dependent. That particular criteria was meant to ask an interesting question, but it wasn't on the main path to making the co-primary end point. So you take that out, you retrieve a lot of people who didn't make the first cut.

I see. And can you address whether or not questions like that were part of the central debate with the agency when you --

No, they were not --

-- first drafted the SPA?

They were put in by one of the two partners.

Okay. And just in terms of process here, I have never been through an amendment of an SPA, but does that require you to go through a new SPA process?

Rich?

So, not exactly. You send in the amendment. You often -- and we will -- supply a brief backgrounder to explain the rationale for the amendment, and then the FDA reviews it and gets back to you. They just don't have a required timeline. But when we talk to them, they said, it's just an amendment to a protocol, it's not a big deal for them to look at it. So what we expect is that once they receive it in a couple of weeks, that even though you have a 45-day process for an original SPA, and there's no official thing, I would think that that's probably a reasonable time frame.

And then just back on the market opportunity, it sounds like maybe some of the ways in which you are considering amending the protocol actually would have no impact on the size of the patient population that you would have indicated on the label. Is that fair? That the label indication in either trial scenario, you think would be basically the same?

Yes, we actually think that what we're proposing to do will increase that population, not decrease it.

Okay. Thank you.

Thank you. Our next question comes from the line of Salveen Richter with Collins Stewart. Please proceed with your question.

Hi, good morning. It's Lori [Ekos] on behalf of Salveen. I guess with regard to the NDA are you anticipating a panel in the fourth quarter? And then I guess how are you preparing for the panel? And what do you anticipate the panel might focus on?

Well, so -- we have not been informed that there will be a panel, but we recognize it's a novel treatment, it's a novel class of drugs, so we are preparing, and Rich is leading that preparation, so I'll let him expand as much as he wants to in that regard.

Yes, so I think by either regulations or guideline, the FDA has to give the Company at least 55-days' notice before a public advisory committee, so we have not received any such notice, but we would plan on putting in more than 55 days to prepare for an advisory committee, so we're doing work that includes creating a whole bunch of potential questions, answers, slides that could be put up for that, as well as primary presentations.

If we got a warning within 55 days, we would probably do one or two mock advisory committee meetings as has become the practice in the industry these days.

We're not quite 60 days into their priority review yet, so I'm not surprised that we haven't heard anything one way or another at this point, but hearing nothing is certainly better than the alternative, because we would love to not do an advisory committee.

So when you ask what they might concentrate on, that's kind of an open-ended question. We've -- we all knew from the get-go that the studies were not designed -- nor could they really be designed -- to show statistical significant for overall survival. So that was recognized from the beginning, and so I don't see why they that should come up as a discussion point. Both studies show positive trends, and I think that's very reassuring, and that's buttressed by that data that Dr. Verstovsekshowed at ASCO on the ongoing Phase II study where there seemed to be clear survival advantages, but we don't have a properly perspectively controlled study dealing with survival end point. So I just can't see that being an issue for discussion, because it is what it is, and it has been recognized from the get go. I have actually had difficulty -- because it is a fairly straightforward NDA -- in coming up with obvious questions that could be addressed at ODAC, but we are -- we have an internal list, and we'll just -- we'll work with that.

Great. Thanks. And then just one more quick question, if your PDUFA is December 3, I guess how quickly could you launch the drug? And would you potentially be prepared to launch it by ASH? Which I guess is about a week later?

Yes, absolutely. We -- Pat Andrews can expand on this, but we have been very proactive about this, and if anything we would be ready to launch substantially before that, and then -- just to be on the safe side. What would you say, Pat?

Oh, definitely there's some detailed steps that we need to take in order to get the approved label on the bottles, and get the bottles QCed and then sent to the warehouse and then sent to our distribution network, and we are very confident, since we have mapped out all of those steps, we have all the vendors on board, we have mock ups of draft labels, et cetera, that we can do that within, let's say, a ten-day window.

Great. Thank you.

Thank you. Our next question comes from the line of Corey Kasimov with JPMorgan. Please proceed with your question.

Hey, good morning, guys. Thanks for taking the questions. One thing I'm wondering is how much guidance you are getting from Novartis, if any, with your preparations for a potential panel as well as the pending US launch of Ruxolitinib? And then I have a couple of follow-ups.

Rich? Pat?

At this point we have not been getting specific guidance from Novartis on preparation for an advisory committee in that we would do that if we actually had 55 days' warning. The people here at Incyte have all done advisory panels before, not necessarily here at Incyte, but in their experience at other companies. So we're well experienced in this as well, and I'm sure Novartis would be directly involved in preparations, mock committees, et cetera, should that come to pass, but at this point in time, we're just basically focusing on preparation, questions and answers, back up slides, primary presentations.

Okay. And then as far as their guidance with regards to the launch itself?

Okay, so just a reminder to everyone that US market is Incyte, and that the rest of the world is Novartis', and because approval in the rest of the world takes longer, we're actually ahead of them on most preparations, all of the standard things one would do with market research and branding and positions, and concepts and then the distribution processes are different, because we're in the US, and they are ex-US, so there's not really that much overlap, andthey do have their own focus on their primary responsibilities. That being said, we have committees in place. We do talk to them all the time. It's been a very supportive and interactive, and continuously engaged relationship. So we get some information from them, they get some information from us.

Okay. And then on 050 with the three-month portion expected to wrap up in early 2012, do you Lilly's plan for releasing the data? Is this something that would be press released? Or would they hold it for a medical meeting?

We don't know the answer to that, and I think you have to ask them. We certainly -- if it were our program, we would give something top line while we waited for one of the arthritis meetings. Larger company, they may wait for one of the meetings, but you would have to ask them. It is conceivable they would be in Phase III before they actually presented Phase IIb data if they wait for one of those meetings.

Okay.

Think about --

And then --

Yes. Go ahead.

And then the last question is for Dave on the model, and how we should think about the SG&A line in the second half of the year as you ramp up the sales force?

Yes, so we're not changing guidance, Corey, so as you look at the first two quarters, the spending is a little bit less than we're anticipating, and as Paul mentioned, we're well underway in hiring the sales force and putting the infrastructure in place. So again we'll spend within the $50 million to $55 million, but you'll see that ramp up in Q3 and Q4 in particular.

Okay. Great. Thank you.

Thank you. Our next question comes from the line of Tom Russo with Robert W. Baird. Please proceed with your question.

Hi. Good morning, thank you. Some of ming have been asked, but just circling back real quick to the PV trial. Are you fully committed and fully expect to still emerge under SPA after these discussions with the FDA?

We're optimistic that will accept the amendment. That may require some discussion. You would rather do this under SPA if you could. We'll have to see what the timing implications are, and how they get back to us. Is that a fair answer, Rich?

I mean, I think that -- it depends on exactly -- if they don't agree with exactly what was proposed, it would depend to a certain extent on what the areas of disagreement might be, how long we thought that they would take to resolve. So we're just going to say that it's nothing is absolute, but our intent is to stay with the SPA, and we'll make a final decision when we have more information.

Okay. And then on Sheddase, I noticed -- I think this might be new, that you are now highlighting kind of a commercial analysis as part of the go or no-go criteria. If that is a new element, can you give any additional color there, and maybe including if anything has changed in how you look at the opportunity?

Well, there certainly have been other agents, which have appeared on the scene like the TM1 is one, and -- what is the other one?

Panabinostat.

Yes, and so we have to make sure that the niche that we believe is there is in fact there.

The other agent is the one that prevents the dimerization of the receptors.

It's a monoclonal.

Yes. An antibody. Right.

Begins with a P. And so the data at ASCO with both of those agents, we thought was -- were impressive, and we just have to make sure that our return on investment, should we go in to Phase III with the Sheddase inhibitor, is the best place to put our money. Since we can't do everything.

Okay. And just something else that I think got of a bit of air time at ASCO and was kind of a theme was the inadequacy of the current IWG criteria for transfusion independence, and the preference for something more like the Gale criteria. And I know it has only been a couple of months, but curious if you are seeing any signs of activity kind of in the guidelines community on that front? And that's my last question.

I think there was a plan. And the initial meeting may have occurred for the IWG to meet and have further discussion on that, but that's the last I heard about it. I think it would make a lot of sense because the transfusion independent criteria currently in the guidelines is -- as you know, not a very challenging hurdle.

Okay. Thanks, Paul.

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

Hi. Thanks for taking my question. I'm just wondering if you are getting ready for a potential panel and the launch of Ruxolitinib,what are you thinking with respect to what post-marketing approval -- I'm sorry, post-approval requirements might be required? Do you think you will need to have some sort of study monitoring outcomes, potentially leukemia-free survival, and/or bone morphology changes?

I guess you could be asked to follow any of those things. You could be asked to look at durability. You could be asked to follow leukemia-free survival. I don't know how easy that is, with the crossover rules, Rich?

You can look at durability in the arm -- I mean, you have demonstrated clear superiority to placebo in a number of things as well as best available therapy.

Right.

In study of 351, or COMFORT-I, the US study, patients have essentially all crossed over, and the intent is that the COMFORT-II patients will cross over soon. So it's really more what you can get out of those studies, as well as study 251, which has already been going on for four years, to get more durability to look at things, but not necessarily in a comparative way. We do not believe that there is really much chance at all that after FDA agreed that we didn't need to show anything around survival at the time that we set up these SPAs that they would come in now, so we think it would more likely just be around greater durability, greater exposure around the things that we've already -- or in the patients that we already have, but we haven't had those discussions with the FDA yet.

Okay. No, that's fair. That makes sense. And then a question for Pat, just wondering what kind of preliminary payer feedback you guys are getting with respect to Ruxolitinib's profile, just considering the dramatic symptomatic and quality of life benefits, the fact that there's really nothing else effective for the MF indication, but not quite having disease modification at this point? And then can you remind us what the potential payer mix is in the MF population, how that might influence your pricing decision? Thanks.

Sure. We have actually have completed our pricing work, so we now have significant feedback from payers in the US, and as expected it's very favorable because of the profile of the product.

And as you know in the United States, it's really about what tiers they place your product on. It's not whether they will cover it if you are an oncology product, because they are covered, so the tiers are second, third, fourth. The first two are generally copays, the third is a coinsurance.

And usually it's the practice of the organization in some regards, more than it is the results from the study. So we would expect we'll have a mixture across those three tiers.

And let's see the second question was on the mix, of which about 60% of patients are over 65, so theoretically it could be covered by Medicare. Some portion of those are still covered by private insurance through retiree benefits or other things. So it ends up being around, let's say 40% are covered by Medicare, and 12% covered by self pay, and 5% Medicaid, and the rest commercial pay. So -- and that's how we're looking at it. And as you also know there's different things that we can do to support patients in those different buckets to ensure that if the script is written, they are able to afford the medication.

Got it, that is very helpful. So now that you have completed your pricing work, is it fair to say you are still guiding towards the upper end of the $40,000 to $60,000 per year list price range.

We're actually not going to be setting the price until right at approval, so you'll hear more of it then. But there has been -- our Phase III data has been really positive. There have been higher-priced drugs coming to the market. So those are all things that factor in to what that final decision will be.

Thanks again.

Thank you, our next question comes from the line of David Friedman with Morgan Stanley. Please proceed with your question.

Hi. Thanks for taking my question. Just two really quick ones. One is, on clinicaltrials.gov for the PV study,a lot of sites are listed as not recruiting. Is that just -- are all of the sites are up and recruiting and it's more of the criteria, or is it also a question of finishing out getting all of the sites up and running? And then -- maybe we can just start with that one.

It's a combination of both. This recruiting study has been frustrating for some of the sites because of some of the things that we have talked about, and they are aware that we're planning an amendment, so some of the sites have not been rushing to get up and running until the amendment goes through at the same time, but we're quite confident that once the amendment that goes through, the sites we have will be enrolling patients, a number of the patients that did not meet the screening criteria originally will come back in and enroll in the study. So I think looking at the past clearly says that changes needed to be made which is why we're taking steps to make the changes. But we're confident that they will work.

And then just quickly on pricing, I mean, is there a good -- or what do you think is the best comp in terms of other drug on the market that is sort of the most relevant to think about pricing for Ruxolitinib?

In our research we did ask both payers and physicians, what they thought would be a comparable product, and actually they were -- they named many. So within that group there's pretty much the obvious comparisons with other CML products, which are chronic, Tasigna, Sprycel, Gleevic, some other products that are newer to the market, Afintor, Sutent, some people named products more like Promacta -- so it really -- it's a wide range that they name, and we would be, again, aware of that in choosing what price we have, but earlier Brian had asked the question are we still in the $40,000 to $60,000 range or the high end of that. So if we're in that range, we're at the high end of that range, but we may be out of that range.

Great. Thank you.

Thank you. Our next question comes from the line of Josh Schimmer with Leerink Swann. Please proceed with your question.

Great. Thanks for taking the questions. Dave on R&D should we look at this as kind of a few floor on the quarterly spend or going forward how should we look at that, and then a question for Pat, maybe you can give us a little bit of color on what your expectations for the speed of uptake of Ruxolitinib in the market to be? Is this swift like we see with a lot of oncology drugs, or is this more slow and steady or is it a mix between the two? Thanks.

Josh for the rest of the year, we see a little bit of an up trend in the R&D expense, but again, it will be within the guidance that we have previously given, which is $175 million to $185 million.

And on uptake, there are a couple things. As you were reviewing these reps that Paul had mentioned a lot of them have actually commented to us that they have spoken to some of their physicians to see if this is a Company that they should join, what they thought of this product, and the physicians said yes. It's a great product. I have patients waiting. So I think there are a certain number of patients out there who are following this, who are active and engaged, physicians who have these patients, and they are waiting for this product.

So there will be a certain amount of that at the beginning. At the same time, physicians are often cautious, they are more likely to put their more severely ill patients, those who clearly match the exact criteria in the study, those who have very enlarged spleens, those who have a lot of symptoms, and put those patients on the drug first and see how they respond to it.

We believe based on everything we have seen in earlier studies, most, the majority of those patients, the vast majority will get some benefit, many will do extremely well. It will be restoring their lives in a lot of ways. That will be encouraging to the physicians. They will then put other patients on the drug, maybe those who are more moderate in spleen enlargement, more moderate in symptoms, so -- and that takes a while. So if I were characterizing the launch, I would probably do it more slow and steady than enormously fast and then flat.

What does your market research tell you in terms of the prevalence numbers you have identified, what number of patients are severely affected? What number is in the moderate versus the mild camps?

Sure. So there is about 16,000 to 18,500 MF patients in the United States, about a third of them are severe, about a third are moderate, and about a third are mild.

Okay. Great. Thanks very much.

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

Hi, thanks, this is Andrew [Honna] filling in for Matt. Couple of questions on PV, you mentioned kind of the screening failure rates. Is one of the causes the requirement for the hydroxyurea resistance or intolerance, and is that something you are looking at potentially dispensing with?

As I said a couple of times, I don't mean to be evasive, but we're not going to get in to the details of what the -- those issues were in until we had a chance to talk to the FDA. I gave you one example. Sure there have been some people who have not met the strict definition of hydroxyurea resistance or intolerance. That percentage, for example, is significantly lower than the white count, platelet count thing I told you about. So that alone would not matter that much, and I just would rather not get into the details of what it is we're addressing both because our partner would not be happy about that, and it could bollocks up our discussions with the FDA.

Okay. And then secondly, when we look at the Phase II PV data, it looks like two-thirds of the patients were at a titrated dose below the 10 milligrams BID, is this your expectation for the achieved dose in the Phase III? And what potential impact could that have on pricing versus what you expect in MF?

So the starting dose in this study is 10 milligrams BID, that's not something that we're proposing to change, and everybody still continues to get titrated, and 10 milligrams was chosen because that is about where people end up around -- and I'll turn it over to Pat to talk about pricing.

So what -- as I said earlier, we're going to set to price at launch, but we certainly have been thinking about flat pricing, so it doesn't matter what strength the patient is on. And so that would obviously affect, if the PV were different, the pricing would still be the same per patient, so to speak, than per dose, so that's how we have been looking at it.

Okay. Thank you very much.

Thank you our next question comes from Ian Somaiya with Piper Jaffray. Please proceed with your question. Mr. Somaiyayour line is live. I'm sorry our next question comes from the line of Ying Huang with Gleacher and Company. Please proceed with your question.

Hi, guys this is Ryan in for Ying. Thanks for taking my question. I guess, going back to the pricing issue, since you said you had about 40% of patients on Medicare, have you communicated or do you plan on communicating with CMS with pricing discussions?

It's something that we think about and talk internally about whether we'll do or not. It's more critical if you are in an infused product than if you are an oral oncologic because of the way that coverage works. And so I think many biotech companies coming forward with a monoclonal antibody, something that they think of probably more strongly than we would think of doing it.

Okay. And then one more question on Ruxolitinib. You guys are initiating the Phase II trial on pancreatic cancer, do you guys have any clinical or preclinical evidence of activity in pancreatic?

Yes. Not that I would bet the ranch on any of those preclinical models, but we have very good activity in mice, which everybody does experiments in, but seriously there have been so many. You don't want a negative experiment there, but a positive, I don't think tells you that much until you get in to people.

Great. Thanks a lot.

Thank you. Our next question comes from the line of Lucy Lu with Citigroup. Please proceed with your question.

Thank you for taking my question, this is actually [Anson] on behalf of Lucy. I just have two quick questions. One is when do you think we'll see some of the Phase I/II data Ruxolitinib on other hematology malignancies? And the second question is can you please confirm for us the fully diluted share count? Thank you.

What was the second question?

The fully diluted share count.

Why don't you do that one first.

Sure. So if you take in to account all employee stock options and the convertible notes, it's about 190 million.

Rich, you want to answer the other?

We don't expect to have any results from the Phase II type of new indications this year or early next year. It really -- we're in early stages of getting those studies started. We don't know yet what the recruitment rates are going to be, so I wouldn't anticipate anything, probably at a medical meeting until earlier than maybe after 2012, but I just don't have enough information to really answer the question.

Okay. Thank you.

Thank you. Dr. Freedman there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

Okay. Thanks very much. Thanks for dialing in today. We are -- we will keep you updated as we interact with the FDA as it's appropriate. We'll let you know when we get the actual written confirmation to what we have been assured of verbally multiple times, and I suspect that will be within the next week to ten days, because that's when the 60 days run out. The things -- everything else is moving along. I'm hoping that we have assured you that we are really focused and on top of preparing for a successful launch, and that we have left no stone unturned in doing that. And, again, we will keep you informed as to how that progresses. Thanks again, and with that, we'll say good-bye.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.