In the first quarter of 2022, Incyte Pharmaeuticals (INCY) reported a very strong quarterly results, highlighted by the solid launch of Opzelura, observes John McCamant, biotech sector specialist and editor of The Medical Technology Stock Letter.

On its core franchise legacy blockbuster Jakafi treatment for myelofibrosis, ICNY reported revenue growth of 17% YoY to $544 million. Management highlighted new patient growth across all indications, and that new patient growth is now above pre-pandemic levels. 

The company expects growth of new patients to continue in 2022 and raised the bottom end slightly of its FY revenue guidance to $2.33 billion-$2.4 billion compared to previous guidance of $2.3 billion-$2.4 billion. The Opzelura launch in atopic dermatitis (AD) continues to perform well with Q1:22 sales of $13 million easily beating the consensus estimate of $11 million. 

In our view, Opzelura has huge potential to treat a slew of dermatological conditions with both AD and vitiligo leading the way. Management highlighted the strong Opzelura script trends with 38,000 new patients were treated with Opzelura in the first full quarter on the market (57,000 since the launch). 

Importantly, Opzelura is now capturing 12% of all new-to-brand prescriptions post steroid failure. Physician and patient feedback continues to be positive, and INCY reiterated its guidance of $1.5 billion in peak US revenue for Opzelura in AD.

The company is showing growth with the payor process, and they have now added coverage of 75 million lives during Q1 bringing the total number of covered lives to 146 million, 60% of the 243 million total lives in the U.S. Opzelura has two important upcoming catalysts in vitiligo — regulatory decisions this year in both the US (July 18th PDUFA) and EU (H2:22).

On the commercial opportunity, management has noted that there are 1.5 million people living with vitiligo in the US (2 million people in the EU), and they expect that at least 150,000-200,000 would seek treatment given there are currently no FDA approved therapies for the disease.

INCY believes that vitiligo patients would likely use much more drug than AD patients – 10 tubes per year vs. 3-4 tubes per year for AD – which would translate on an annual basis to $100 million in sales for every 10,000 patients.

Incyte is also developing an oral JAK-1-inhibitor, INCB54707, for vitiligo patients with >10% body surface area and we expect Phase II data in H2:22.  ‘54707 is also being developed for hidradenitis suppurativa (data expected in H2:22), and prurigo nodularis, where management has noted there are limited/no approved therapies and significant unmet need.

Thee company announced that they are prioritizing two oral PD-L1 inhibitor candidates (INCB99280 and INCB99318; dose escalation ongoing) as they move towards lead program selection and expect to have more data in H2:22, after which they will share a development program based on the clinical profile.

To date, both INCB99280 and INCB99318 have demonstrated clear signs of anti-tumor activity/shrinkage and no evidence of peripheral neuropathy that was experienced with a different oral PD-L1.

Management highlighted that the potential benefits of an oral PD-L1 include the ability to manage immune-related adverse events due to shorter pharmacokinetic exposures (rapid titration and less toxic combinations with oral), oral-oral combinations, and ease of dosing/no need for in-office visits.

In our view, Opzelura has huge potential to treat various dermatological conditions with both AD and vitiligo leading the way. Most of Wall Street remains lukewarm as they are skeptical regarding topical drugs as a class in general given the historical lack of blockbuster pharmaceuticals with topical delivery. 

This skepticism will be a positive as once the drug starts to grow further — the consensus will have to upgrade their sales estimates. Jakafi sales remain solid and we have faith in the company's ability to manage the life cycle. The oral PD-L1 program is intriguing and positive proof-of-principle Phase II data would serve a nice stock catalyst.

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