英賽德 (INCY) 2011 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Incyte Corporation third-quarter 2011 financial results conference call. A brief 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 of Investor Relations and Communications for Incyte. 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 and Chief Drug Development and Medical Officer; and Pat Andrews, Executive Vice President and Chief Commercial Officer. To begin, Paul will provide a brief review of the third quarter, then Dave will follow with a discussion of the quarter's financial results. We will 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 clinical trials; regulatory submissions and anticipated 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 June 30, 2011, and from time to time in our SEC documents.

Paul?

Good morning, everyone. Obviously, our top priorities right now are to secure approval for ruxolitinib for treating myelofibrosis, and being fully prepared for the product launch. With respect to the NDA, I remain highly confident that the FDA will reach a positive decision on or before our PDUFA date of December 3. Our launch preparations are very far along; all 60 reps are hired and well along in their training. They comprise a highly qualified group, with an average of more than 18 year's experience in industry, and more than 11 years in hematology and oncology sales.

We finalized contracts with a selected group of specialty pharmacies, and we have also set up a central hub to assist providers and patients in navigating payor paperwork, like verifying benefits, helping with prior auths, and if necessary, assisting with the appeals process. The hub will also help patients connect with programs that assist with out-of-pocket costs. In terms of manufacturing and supply, the tablets are made, the bottles are ready to go -- all we now need is the final package insert and we will be ready to launch.

Moving to ruxolitinib -- the Phase III trial in advanced polycythemia vera patients, we have received, just this week, confirmation that the FDA has agreed to our protocol amendment, and this will not affect the SPA already in place. So, a really good outcome. The amendment changes entry criteria, number of patients to be enrolled, and the duration of follow-up. But it does not change the primary or the key secondary endpoints. You will recall that the Phase II data stunningly shows that these endpoints are reachable in a highly statistically significant way for us in this study.

Specifically, the entry criteria now eliminate the need for patients to have either an elevated white blood cell count or platelet count, or to have a palpable spleen length of at least 5 cm. That entry criteria on spleen size now only requires a palpable spleen, with MRI or CT confirming that the volume is at least 2 times larger than in normal adults. The number of patients to be enrolled is reduced from 300 to 200; and importantly, the duration of follow-up is reduced from 80 weeks to 48 weeks. To remind you, the primary endpoint is based on response rates at 32 weeks, with responders defined as patients who both became phlebotomy independent and had at least a 35% reduction in spleen volume.

The key secondary endpoint of durability of this response remains unchanged, except as I said, that durability will now be assessed at 48 weeks rather than at 80 weeks. Prior to drafting the amendment, we determined that the requirements for elevated white blood cell count and platelet count, and to a lesser but significant extent, spleen lengths greater than 5 cm, were leading to a large number of ineligible patients. With this amendment, we expect enrollment to increase markedly.

The reduction in the number of patients, and the shorter duration of follow-up keeps the timeline on track to complete the study and submit the supplemental NDA in the second half of 2013. We have a number of other ruxolitinib trials underway, and many of these are described in the press release. If anyone has specific questions about the design or status of these programs, Rich and I would be happy to respond during the Q&A.

Moving to our earlier oncology programs -- in September, we announced we would not advance the Sheddase inhibitor 7839 into Phase III development in metastatic breast cancer. Our indoleamine 2,3-dioxygenase 1 or IDO inhibitor and the oral c-MET inhibitor -- the latter partnered with Novartis -- continue in Phase I dose escalation trials in patients with solid tumors, and we have not reached the maximum tolerated dose for either compound. For the IDO inhibitor, we have decided to move forward with 2 Phase II trials in 2012 -- the first will be in patients with melanoma, followed by a trial in patients with ovarian cancer. And both of these studies are likely to begin next summer.

And for our lead inflammation program involving Incyte 28050 and other selective JAK1 and JAK2 inhibitor -- as you know, it's partnered with Lilly to Phase IIb trial in rheumatoid arthritis is fully enrolled. While we can't speak for Lilly, we're hopeful that the data could be presented at a future medical scientific meeting, possibly at ULAR in 2012.

So now, I will turn the call over to Dave Hastings.

Thanks, Paul, and good morning, everybody. I will start my very brief overview this morning by discussing our cash position. We ended the third quarter with $317 million in cash and investments. That excludes $28 million in restricted cash and investments held in escrow for interest payments through October 2012 on our 4.75% convertible senior notes. Our cash use this year has been $138 million, excluding $16 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, right on track, and our cash use guidance for the year is unchanged at $185 million to $200 million. As always, this guidance 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 are not changing guidance for either our R&D or our SG&A expenses.

With that, Paul, I will turn it back over to you.

Operator, let's open the call for questions now, please.

(Operator Instructions) Rachel McMinn, Bank of America.

I apologize if you said this at the beginning of the call, I might have missed it -- but for the PV study, are the physicians going back and rescreening the patients that had failed initially, are you actually seeing that? Or is it too early to know if that is going to happen?

Well, that's exactly what we are expecting to have happen. The amendment has to go back through the IRBs; in the meantime, we will continue to recruit from the original protocol. But quite a few patients are sitting on the sidelines who failed the first time around. And that's why we made the comment that the study should now recruit fairly quickly.

Fairly quickly, okay. And a question maybe for Pat. Can you talk about some of the premarket education efforts that you have going on for ruxolitinib right now? Assuming an on-time approval, what are you going to be doing at ASH? And is your focus more about the drug or more about the disease? If you can give us a bit of a sense of how you're educating the market. Thank you.

Sure, Rachel. Premarket, of course, you can't talk about the product or anything associated with it, so the focus has been on disease and education -- myelofibrosis and what causes it, and what some of the symptoms and consequences are of it, and how it was part of myeloproliferative neoplasms, things along those lines, and a number of different forms online, significantly. And then, at ASH, we would expect, of course, the product to be approved since we have a PDUFA date of December 3 and ASH occurs afterward. ASH would have a booth where the product would be there, as well as, of course, medical information for additional questions that we are not able to answer from a promotional commercial perspective.

One last question. Paul, any early insights into the c-MET program, in terms of activity?

Rich, do we have anything we wanted to say?

The Phase I is an unselected group where we are not determining whether their tumors have abnormalities in c-MET to begin with. We have seen some positive data, but in terms of quantifying it, you really can't relate it to what the response rates, et cetera, might be when you have a select group of patients that you already know have abnormalities in c-MET function.

But I will say, we have succeeded in giving the drug once a day, and having trough levels at the [IC90] concentration, which was our objective; and it's been well-tolerated. So, in terms of straight up c-MET inhibition, it's going to be hard to inhibit that target any more effectively than is being done with this drug -- and appears to be well tolerated, while we are doing it.

Great, thanks very much.

Matt Roden, UBS.

I was wondering if we could talk a little bit about the forthcoming label [NMS] and what it means for eligibility in myelofibrosis. Can you remind us what the exact indication is that you are seeking? And based on your discussions with the FDA, whether or not you think a broad label is still achievable? And then, related to that, Pat, assuming you have been in dialogue with payers in the lead-up to the launch; are you getting a sense for what will be required for reimbursement? Will there be a minimum spleen size? Will there be -- to what extent will patients need to be symptomatic? Will payers determine a minimum platelet count, if not specified in the label? Maybe if you could talk broadly about what you think the eligibility will be from the label, and then from the payers perspective.

We are not in a position right now to be expansive on what the label is ultimately going to look like. What we asked for was a very broad label to treat all patients with myelofibrosis, and we would expect to have something approximating that, or that exactly. But it's just premature to be talking about that. I would let Pat expand on other aspects of the question, but we just can't get into those discussions with you right now.

As far as for an oral drug, it's really about what coverage it gets. And coverage will generally fall into what Medicare does and what commercial payers do. And for Medicare, ruxolitinib is an [anti-neo-plastics], so it falls into being a protected class. And in protected classes, they cover all drugs in a group. So, one could be highly confident, based on historical precedent, that it would be covered under Medicare. Commercial plans, they generally follow suit. They look at it in terms of what tier placement does a product get -- tier 2, tier 3, tier 4. They have different levels of copay or coinsurance.

And the commercial plans -- particularly because this is the only product that treats this disease, would be highly, highly likely to cover it. It's just a question of which tier it would go on, and that is something that they determine later. To be honest, they don't usually determine it based on how expansive or narrow your label is. They usually just -- they have a place where put oncology products, and that's where it goes. Within that, they also follow what your label is, so if it's a broad label, it's broad coverage.

Okay. And then, related to that also, I imagine in the pricing work that you guys have done, you guys have talked a little bit about thoughts on pricing. Have you looked at this sensitivity to various price points to end-user demand, assuming certain copay levels? And also tiering, and then Medicare coverage as well?

Yes, we have, that would be a critical part of the work that we have done and completed -- very thorough research, and we've done it at a couple points in time. We've done it most recently with a substantial number of -- with a number of pairs representing a substantial number of lives. And with all of that, we have a good sense at different price points what the coverage and restrictions would be. We will, of course, not set the price until we have final approval.

Okay. But I guess it's safe to assume that the pricing strategy that you come up with is one where you assume that there would be no suppression of end-user demand or coverage.

We would want to make sure that our price does not restrict unnecessarily the product's availability to the public. And when I say restrict, I generally mean prior authorizations, because as I have already said, Medicare is going to cover it and commercial plans are likely going to. If all of them cover it, it's a question of what restrictions they put on it. So, even if a drug is, say, tier 2 or tier 3, which has a copayment of maybe $30 to $50, they could still put prior auths on it.

And the most common prior auth, which is very easy to live with, is that they have to have a diagnosis of myelofibrosis. We wouldn't want there to be significantly other restrictions on the product, and that does have a level of price sensitivity to it. But we know what those sensitivities are, and we are very comfortable with what level of flexibility you have in pricing this drug, which we will do later when it -- assuming it did get approved.

Okay, that's great. Really great color, I appreciate it.

Salveen Richter, Collins Stewart.

I have two questions. Firstly, in terms of RESPONSE, how does it change its impact, the powering of the study? And also, what is the rationale for changing the follow-up period?

The power of the study actually is not affected much at all, even though we are going from 300 patients to 200 patients. Because when we initially powered the study, we were not aware of what the response rate in terms of spleen size reduction would be with the best available therapies that we used in COMFORT-II. Then, there's some of the same drugs that would be used in PV. Since that response rate was in fact zero in COMFORT-II -- we're not assuming that it's going to be zero here, but that it's going -- the assumption is going to be lower than we originally assumed. The power for the primary endpoint is still around 95%.

Great. And then, for Pat, on the launch, how do you intend to target community oncologists and educate them on MS, [JAK], and ruxolitinib?

We do have a sales force of 60 reps in place, with significant experience both in the industry and in hematology oncology. In fact, for nearly all of them, we hired them from -- for territories where they were in with their previous employer. In many cases, they actually already know the physicians. Certainly, they know the office and the facility, for the majority of their new physicians --physicians that they would want to be targeting for Incyte.

With that, we will be sending them out with their new information on the myelofibrosis and on ruxolitinib, and that will be a major source of education for the community oncologists. And we have supportive materials to help them understand what the product is indicated for, how they can get it, what the distribution system is, how they would dose it, call center, they have questions, medical information is set up. So, we have everything in place to be able to facilitate their easy understanding of the product and starting to prescribe it.

The other part of the first part of the question you asked -- why the observation period for durability was decreased from 80 weeks to 48 weeks? We did that because the data from the ongoing Phase IIb trial, the data from the COMFORT trials, indicates that as long as you stay on your tolerated dose of drug, spleen size if anything continues to get smaller -- at a slower rate, but it continues to get smaller. And we haven't lost the phlebotomy response.

And so, we convinced the FDA that 48 weeks was enough, considering the fact that there will be a significant number of people, when the last patient exits the study at 48 weeks, who have in fact gotten to 80 weeks. So, we will have a subset of people to show them at 80 weeks. And that was sufficient. And it's good for us, because it keeps us on our timelines.

Great, thanks. If I could just ask one more follow-up. I know you've retrospectively identified MS patients. Are they mostly in community or academic centers? And has any work been done to reach out to these patients?

They are mostly in the community, very typical for a lot of cancers, that the patients are primarily treated in the community. That's where the doctors are. There's a lot more community docs in our academic hematologists, oncologists. We have had -- because the disease has had no effective therapies, there's not been a lot of materials out there to help people who have the disease understand it better.

So, we did have a disease education website up for both professionals and for patients or caregivers, or whomever was interested in the disease. And we did have a number of them sign up and ask for us to communicate with them in the future, as new information comes out. And it's not an insignificant number, but it's not a huge number either. And we would probably not reach out directly to patients, we would more likely be working through physicians, because they are the better audience to start with on a new medication.

That's where our focus would be, not really on the patient, initially. That being said, we know that some of the advocacy groups do follow what is happening with ruxolitinib, because they are very interested in having the first approved therapy for their member groups. And it would not be surprising to me if they communicate -- or other organizations also following this communicate with patients. But Incyte would not do that much initially, directly to patients, unless they have sought it out by coming to us

Great, thank you.

Cory Kasimov, JPMorgan.

Mine are probably for Pat, as well. First one is following up on Salveen's question -- when you think about a community, do have a good feel at this point how the awareness is among community docs prior to the launch for ruxolitinib, specifically? Not just the disease itself? And then, I have a follow-up to that, as well.

Yes, Cory, we have a good understanding of the awareness, because we periodically survey a subset of doctors. Sometimes we track the same ones, sometimes we open up and do a different set each time. From that, we have seen an increasing knowledge, certainly of JAK inhibition and its role in MS. That has increased fairly significantly over the past couple of years. I will say awareness of ruxolitinib remains low. And that is, of course, because we do not in any way focus in on that product. We have always only spoken about the disease. So, it is not surprising that there is that gap in awareness.

Keep in mind that for most communities, hematologists, oncologists, MS is a very, very small percentage of their patient population, and they see a lot of patients. And they have to keep up and current with all of these other medications and treatments. And so, they tend to focus less on things that are in development, that don't immediately affect their practice, their patients. However, that will change very dramatically once the product gets approved and we can talk about it and it is available for them to use. Our research suggests that, in fact, within six months, 90% of the physicians we have surveyed have said they will try the product on at least one patient. So, I do expect that dynamic to change dramatically after approval.

Okay. And then, from a patient standpoint, do you have a sense here of just how motivated the moderate to severe MS patients are in terms of seeking therapy?

Yes. Well, they're quite motivated, because they really have a significant burden of disease. It's really a massive splenomegaly -- it's manyfold larger than what their spleen should be. They probably have a significant assortment of symptoms which could keep them up at night, which make them lose weight, which make them find it difficult to walk and to move around. And a lot of them would be following or trusting that their physician is following what is happening in this space, and they will have a lot of incentive to want to understand this product and whether or not it would benefit them.

Okay. And then, lastly, Paul, I would be interested to know whether or not you are surprised the FDA decided not to convene a panel, and ODAC panel, ahead of your December 3 PDUFA. Thanks.

I will answer that in a second. I would add to Pat, that we do talk to the people who run the foundations, the Myeloproliferative Neoplasm Foundation, and it's pretty obvious that the patients are very aware of this. They are very excited about the possibility of having a drug that for the first time impacts their disease. And so, there is a lot of interest out there. Is it universal? No, we will have to do some good marketing to bring it there. But I think we are off to a pretty good start. And it's not a tabula rasa for sure.

On the ODAC -- I'm actually not surprised at all, because it seems to be a direction that the agency is moving in, and especially the oncology division. Because if you run with these things under an SPA, you meet your endpoints, the safety is adequate, there are frankly not that many questions to ask that the reviewing group, the division at the agency, cannot handle, and routinely handles anyway. And so, it sometimes becomes a dog-and-pony show that's just not necessary; and you see a lot -- there have been three or four drugs in the last year -- three of them, I think, are oncology drugs, where they have been approved without the panel being called. We thought in the beginning that we would have one, and I guess it's always still conceivable that you could have one, but I'm not surprised that it appears that we are not going to have one.

Thank you.

Tom Russo, Robert W. Baird.

Back over to the RESPONSE trial, just wanted to check in -- is Europe on board with those changes too, or do they need to be? And then, what percent of the PV population meets the revised entry criteria?

Europe is on board with this. It is one trial, so it all has to be done according to the same trial. Remember that there's no official FDA process in Europe, but the buy-in is still there. And with respect to the percentage of patients, actually this broadens the number of patients that would be within the study -- and therefore, potentially within the label, depending upon what that is defined as. And we've always felt that the percent of patients who were hydroxyurea-resistant or intolerant is in the range of the high 20%s to low 30%s.

Okay. Paul, I would be interested also, now that the New England Journal letter has been out there for a few weeks, broadly, if you have any take on that, any potential impact you might see in the marketplace. And then, maybe any update on when your Phase III data is expected to publish?

There was a publication? Oh, that one. You mean the non-peer-reviewed letter in the New England Journal, right. There's some pretty squirrelly letters in the New England Journal. So, I'm sure that didn't impact our stock positively. Let me go through a couple of things and just say -- we know all the data that is in that screed. And the FDA knows all that data. We've analyzed that data upside and down before we put the NDA in, and reviewing it again after the letter appeared.

And at the right time, which this is not, we will show you all the data. And you will see that it completely supports everything that we've said and concluded about what ruxolitinib does. [I'm] not [the time] in the middle of an NDA review to be displaying a lot of data that is in the NDA. But what I will tell you is -- I will give you some top-line points about that data. Firstly, what it shows is that if you don't keep your patients on the drug, their symptoms will come back and their spleens will begin to grow again. Okay? And we will be able to show you how many patients came off when, and it will be a fairly eye-opening result for you.

Secondly, if you don't give enough drug, you will not get a maximally effective response, in either spleen reduction or symptom control. I think there is a very cogent example of that in the YMI program, which is what I've been telling you for over 2 years, that they were very low on the dose response curve, and now they have doubled the dose and gone back and done Phase II over again. If you were down on that part of the dose response curve, dosing with ruxolitinib, you would not get a maximal response either.

Thirdly, if you did not keep your patients on drug for any decent length of time, and then you used them as subjects for a survival curve, the results are fairly meaningless. And then, lastly, with respect to the 5 sick patients who were hospitalized when they stopped drug, that were described in the letter, you can find several of them in the appendix to the New England Journal paper were -- Dr. [Tafari] was a senior author and Dr. [Pardenani] was also an author. The authors agreed that that's where that data belonged, because you have space limitations in those manuscripts.

We took those cases very seriously when we designed Phase III. And we designed Phase III to look very closely at the possibility that there could be a withdrawal syndrome. In Phase III, and also, frankly, at MD Anderson, which amounts to over 400 patients who have been on the drug for a long time, and some of them who had to stop for (inaudible), we found not a whiff of evidence for a withdrawal syndrome. These patients, in the beginning, were very sick patients with multiple possible causalities for what led to their clinical outcomes and complications -- only one of which could have been the drug.

However, in Phase III, we look very hard for that, and there is no evidence for it whatsoever. If you look at the data that was presented by [Serg Rostasfik] twice at ASCO, during the day, during his presentation, and during the analyst affair we had that evening, he showed a very interesting slide that bore on that data -- specifically, what happens to the symptomatology of patients who stop the drug. And what happens is exactly what you would predict if you stopped taking a drug where you haven't cured the disease, and that is the symptoms will slowly recrudesce back to baseline.

There was no evidence for a rebound, and it was what you would have expected to see, despite how it's been misrepresented by some people. So, we will get into that data in much more detail for you at a later date. But suffice it to say, there is nothing in there that is unknown to the FDA or to us, and there is nothing in there that changes in any way either the efficacy or the safety profile of the drug.

Just to the last part of your question, in terms of publication. We don't have a precise date yet, but it will not be before the PDUFA date. And not before ASH.

Okay. I have another question, but I will save it for later. Thanks.

Josh Schimmer, Leerink Swan.

Paul, when you refer to getting into some of the MS data at a later date, presumably post-approval, do plan on publishing the data minus the Mayo Clinic experience? And someone might suspect that if you [disclude] all the patients from that center, the rest of the patients would look like they had done remarkably well. And perhaps respond to the New England editorial after the drug is approved with that data? That would be very useful for us to see, I think.

What we are obviously going to do -- so, to respond to a letter, the rules in the New England Journal require you to do it within three weeks. We are not in a position to do that with the NDA under review. I think what we do is, we present our data holistically, and then we show what we've found at MD Anderson and what we've found at Mayo, and why the differences are there. And the differences are perfectly logical differences that you would expect, based on different behavior.

It sounds like differences that could help in the forms of community on how to optimally use the drug.

I would say -- I think it would be pretty obvious.

One other question -- that there's probably like 30 other inflammatory indications that could benefit from 050 or (inaudible). Some of them have a higher need than RA. Can you talk a little bit about how you and your partner are thinking of prioritizing those and ultimately developing for these indications and moving past the RA indication?

Well, that's a little awkward, because of the way the partnership is. It really has to be Lilly that -- opines on that. There are some obvious areas to go for, that Pfizer may already be in; and I'm sure that beyond those, and those are attractive, there are -- they are areas where Lilly would like to go that Pfizer hasn't gone. Just to do something that differs. And the obvious ones, when you see what has happened, are psoriasis, inflammatory bowel disease, there are the other arthritides, and then, there are some other things that I just am not at liberty to talk about. And they would have to be the ones who would talk about it.

Got it, thank you.

Lucy Lu with Citigroup.

Just switching gears a little bit back to the PV, the RESPONSE study, I guess I didn't hear it correctly, but you said you were throwing out the 5 cm splenomegaly requirement. Did you still say that patients need to have twice the normal size of spleen? I wanted to understand if that's even the palpable spleen?

Yes. So, they have to have a palpable spleen, unless they are clearly obese -- in which case, you could go directly to measuring the spleen by MRI or CT. And it has to be at least twice what the normal range is. Now, if you think about the spleens in MS, those are about 10 times normal size. We also know that in our MS experience, where there's a range of spleen sizes and baselines, the smaller spleens are just as likely to decrease by 35% as the larger ones. So, we don't think that this hurts us in any way, in terms of the overall response rate. And it opens it up to more patients, both in terms of the study and in terms of the implications for what the patient population would be after approval.

And then, so if that's the case, Rich, are you changing requirements for whites cell count or platelet count? Just looking at the other entry criteria besides the spleen -- and also, what you said -- I'm just wondering if there are other major changes to other markers.

Just to be clear, the original protocol, so that you not only had to have a white count and a platelet count above the upper limit of normal, it had to be substantially above the upper limit of normal. And there are patients who have platelet counts and white counts that are above the limited normal, but not to this extent that we put into the original protocol. But this protocol no longer cares what your baseline platelet count is or not. It can be normal, it can be slightly above, and it will still include those patients that have a particularly high white count or platelet count. There were other trivial wording changes to the protocol that are largely clarifications, that have no impact. And we did not go through every single one of those. But what you've heard today is really everything that is important.

Okay. And then, the last question is, obviously, you're changing the sample size from 300 to 100, but maintaining the power. Does that mean the assumed treatment, [you said the effect] is higher? Can you give us a little bit more detail on the assumed treatment effect for the RESPONSE study?

We are not really changing our assumed response rate with ruxolitinib. We are changing the assumed response rate for best available therapy downward, to account for the -- essentially, the same power. As I said before, in COMFORT-II, where we used best available therapy, the number one of those drugs being hydroxyurea, the response rate in terms of 35% or greater reduction in spleen volume was zero. This primary endpoint, you have to accomplish two things at the same time to be a responder -- you have to become lobotomy independent, and you have to have a 35% reduction in the volume of your spleen. When we designed the study, we did not know what the response rate on the control arm of COMFORT-II was going to be. Now that we knew that -- we said we were way overpowered at 300, and the FDA agreed with our changes in the protocol.

Okay, thank you.

Bret Holley, Oppenheimer.

I'm just wondering, have you gotten feedback from [KOLs] on the alterations to the RESPONSE trial protocol? Are they comfortable with the outlines you have given today? And specifically, I guess I'm wondering, is 48 weeks adequate duration in their mind? I'm asking for more of a commercial perspective, longer term.

Let me just try to answer this from a -- the people that we have actually talked to about (inaudible), and then perhaps Pat might want to add something. Probably not. So, we have talked to a large group of both investigators who are experts, both on the US and European side, before making any changes to the protocol, and had their buy-in. In fact, the fact that there is a consulting group on the protocol that does not allow us or Novartis to make changes without the buy-in of those people. So, they're comfortable with it.

The second thing is, that as Paul said, we have had patients enrolled in this study from as early as October of 2010. And we are going to go into -- close to the middle of 2013 before this data gets cut off. So, there will be durability data on patients beyond 48 weeks, that we will be able to talk about and show that it's long-lasting. Plus, you still have the study -- what we call 7256, which was a Phase II PV study, which started several years ago. I don't remember how far patients are out, but they're out more than two years, now, I believe, and those patients are still going strong. So, there will be a lot of data showing in the ability.

Okay, thank you.

David Friedman, Morgan Stanley.

Regarding the timing of the PV study and when you look longer-term, it looks like you've made it a smaller trial with shorter follow-up. But the timelines for filing or data are still the same. So, I'm wondering, is that a function of the delay that you have already seen to date, in terms of slower enrollment than originally expected? And then, needing to go back and change the protocol? Or do you expect, going forward, that you would still have a slower enrollment trajectory than you originally thought?

It's the former issues. We have had a delay in the current -- we thought we would be much further along in enrolling. Now, we have to make up for that, and before we can do that, we have to get through IRBs.

Yes. And the IRB process -- some of the central IRBs will probably approve the protocol within a couple of weeks, and those patients will start coming in quickly. Others will take a little bit more time, because of their local sites, and in some cases, will take longer. So, it's not as if everybody is just going to come in, in two weeks. But we fully expect that this will put us right back on track with where we were before.

Great, thank you.

Brian Abrahams, Wells Fargo.

This is Jim calling in for Brian. I would appreciate it if you could give us an update on the status of additional ruxolitinib studies in MS, particularly studies of patients with low platelets. We also noticed that there's a new study and clinical trials on alternative dosing. It would be helpful if you could discuss the rationale of the study, whether the study was borne out of observations from the COMFORT studies, and what types of results you would be looking for. Thank you.

I will let Rich answer, but just let me start. For the alternative dosing, although we studied once a day, early on, at -- I think 50 mg worked pretty well, you get a very high peak to trough, with immediate release. And so, we -- because some of the would-be competitors were dosing once a day, we thought it was prudent to see what a sustained release formulation for this compound -- relatively easy to make, because it has some solubility, would look like, both in respect to efficacy and safety. And it may turn out that you want a peak and a trough, and you don't want to be inhibiting the enzyme above a certain percent all day long. But we thought we would look at that. And so, that's what we are doing in that study. And on the platelet study, I will let Rich answer that.

Yes, so, the original COMFORT studies only allowed patients whose baseline platelet counts were less than 100,000 into the study, but still had -- okay, sorry. Only allowed in patients with platelet counts at or above 100,000. And although we treated patients whose platelet counts dropped to below 100,000 successfully in that study, we also wanted to be able to get additional data to help guide dosing in patients who have less than 100,000 to start. And that study is ongoing.

It is not in a position where we will be presenting data at ASH this year. I think we probably will be presenting data by ASCO this coming year. But I can tell you that patients are tolerating doses reasonably well without having patients having to drop their platelet counts so low that they need to come off drug. So, that study is going well.

Okay. One more question is -- how much of ruxolitinib's pricing assessments and decisions are coordinated with Novartis? And how do you see EU pricing and US pricing playing out relative to each other?

Of course, we have a great ongoing dialogue with Novartis on key issues, and pricing does come up. But the reality is, the markets are very different places; and Novartis may have a different approach than Incyte does, and that's perfectly fine. That being said, we have not been far off in how we look at things. But I think you would expect to see differences between United States and Europe and the rest of the world.

Great, thank you.

Ian Somaiya, Piper Jaffray.

This is Matthew in for Ian. Just a couple of quick ones. I wanted to come back to MS. And we talked a little bit earlier about pricing and price sensitivity. I just was wondering if you could give some color on patients and describe for us a little bit the socioeconomic background of typical patients, what your take is on typical price points for other drugs that community hematologists use, and then linking that, how we might want to think about the impact of the Medicare donut hole on (inaudible) or first-half 2012 sales. Thank you.

Okay, so the MS patients are generally older than the population as a whole. We believe about 60% are going to be over 65. So, when you look at the socioeconomic background that they come from, you have to factor in that age is a variable. But putting that aside, what we did for pricing is a number of different ways of looking at what is an appropriate price for our drug. One of them is to show a blinded product profile of your product to a variety of payers and physicians, and say -- when you see a product that looks like this, with these types of benefits, what other products do you think of? And there wasn't a consensus answer for ruxolitinib, everyone we talked to gave the same products.

There is definitely a pretty wide range of products that they gave. But when one looks at what the most common responses were, they were generally -- the reference products were the CML products -- (inaudible), and [Consigna]. So, that's one data point that we would incorporate into our thinking. And those products are particularly -- [Glevik], of course, but the other two too, are widely used within the practices where we would be expecting ruxolitinib use to be too. So, they are very used to using oral oncolytics, and what the process is for making sure that the patients can get those products, and what coverage looks like in dealing with the managed care organizations associated with it. So, in all of that, our product is just very similar in process to some others that are out there. So, that is nothing that will be new or surprising to them.

And then, on Medicare, you had asked about the donut hole and the process that patients need to go through. Again, that's somewhat -- it's independent of our product, there is a standard benefit [design] out there for Medicare patients; and usually products that are over $600 -- and I think that's a year, but it could be a month -- over that amount fall into the standard benefit design. So, oral oncolytics are nearly always in that category. And it does mean that the patient would have some level of deductible and coinsurance, and then they would enter into a donut hole. And based on changes in the law last year, they would have to pick up about 50% of the donut hole cost, and the rest of it is picked up by the manufacturer. Which means that they might have outlaid $2,800 or more by the time they are actually through the donut hole.

And that can be a significant amount for anyone, but maybe Medicare patients, you might think of some of them being on fixed incomes; maybe it is more significant for them. The way the laws are set up, the manufacturers cannot directly help people covered by a federal government program, so we would not be able to directly help Medicare patients. In recognition of this, some time ago a number of charitable foundations took on part of their goal to help Medicare patients be able to manage the cost -- not just drug cost, but the cost associated with their illness. And so, those charitable foundations are in effect. And Incyte recognizes this challenge that Medicare patients have, and we would of course try to do what is possible to help through the foundations and the foundation support in that community.

Okay, thank you.

Lisa Baker, JMP Securities.

Just a little bit more about the MS market, as we are anticipating a launch here in the near term. Can you talk about what gives you confidence in the patient numbers? How you get to your patient number assumptions in the US? And then, maybe could you further break that down into those patients -- I don't know how you think of it, but are they all addressable? Is there a mild to moderate to severe? Or is there some of those that are maybe have more severe splenomegaly, or what is the breakdown in terms of the available patient population?

I will let Pat elaborate on what I say. We have done a lot of research identifying numbers, and are really quite confident that we are dealing with a population that is in the 17,000, 18,000 range of registered and known patients. If it's anything like the CML market, where -- that being a disease that's frankly a lot easier even to diagnose than myelofibrosis, but there was no effective therapy, how many more patients actually existed once there was something that worked -- so we would anticipate -- I am anticipating that that same phenomenon will play out here. But just assume 17,000, 18,000 people. About two-thirds of them are in the -- are exactly what we studied in the COMFORT trials. They are intermediate 2 and high-risk patients. Every one of those, if there is not a counterindication, would benefit from the drug. Intermediate 1 patients and low-risk patients make up the remaining 30%, divided equally.

And I think Pat has said that we think that we have something to offer, and the drug should be reasonably attractive to the intermediate 1 risk people. Many of them have spleens, and they could have constitutional symptoms. The low-risk people, we thought that would be a tougher climb at first. And I don't think we have gotten publicly into what our marketing research says about penetration rates in that group. But obviously, that's not the low-hanging fruit. But it actually turns out that over half of those people have splenomegaly. And you would expect that although they can have constitutional symptoms, they do have -- you would expect the symptomatology related to the big spleen. So, that group could be attracted to the drug, as well. But that's going to be, up front, the hardest group to make heavy inroads into, as you would expect. Pat?

I would just add -- so, earlier we had talked about moderate and severe MS patients, they really have a significant burden of disease. And we have always expected that both first use in greatest use would be in those two populations; and then over time, it would go to maybe patients who are -- who have slightly less burden of disease. So, we've always seen it unfolding in that way. That's the only thing I would add to Paul's comments, which were very [comparable].

Great, that's helpful. And then, just as we think about what the shape of a launch curve could look like, can you maybe discuss any hurdles or barriers that you anticipate you're going to have to overcome in the -- at least, let's say, for the first year? Maybe the sense of urgency to treat -- I don't know if there's any other reimbursement things we need to think about, the frequency of visits the patients tend to have with their physicians. I don't know if age plays a role in the level of awareness, those kinds of things.

Lisa, when you think about the market, and we talked about these moderate and severe patients and how often -- and how burdensome the disease is for them, we also have to think about -- and how often do they come in and see their physicians? And it could vary -- probably the severes are really in maybe once a month, but maybe moderates are in every 3 months or every six months. And they have -- over time, they have gotten accustomed to living with their illness. And that, more so than almost everything else, is the thing that makes this a slow and steady uptake. Because physicians are not going to call in these patients.

The majority of physicians are not going to call in their patients and say -- here's the new therapy, come and get it. They are actually going to wait until the patient comes in during their normal cycle time, and they are going to redo the blood test and talk to the patient about going on the drug, and they're going to put them on the drug. And the patient is going to come back in 2 to 4 weeks. And over time, the physician will get comfortable with this drug and this patient, and then they will expand a little bit more.

But they're not going to put everyone on at once. They're going to want themselves to get familiar with the drug and how it works, and who will it work best in and why, and what additional care and treatment will they need, and all of those things. They do take some period of time. So, that's how I see it unfolding.

Okay, great, that's helpful. And then, just finally, have you gotten any feedback on -- and obviously, you won't be promoting it in this way, but the level of interest of using the drug, perhaps, in off-label fashion [on TV]?

We have our compliance officer in the room here. We can't -- there will be some. But we have to be very, very careful about that.

Fair enough. Thanks a lot.

Thank you. We have no further questions at this time. I'd like to turn the floor back over to Management for closing comments.

Okay. Thank you all for tuning in today. Obviously, we are ready to go. We just have to get over the finish line. And we are hoping to be talking to you again very soon. And I would say, with that, stay tuned. See you.

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