Derek Archila: Got it. Understood. Thank you.
Operator: Thank you. Our next question is coming from David Lebowitz from Citi. Your line is now live.
David Lebowitz: Thank you very much for taking my question. You said that the fourth quarter revenues were negatively impacted by the number of Medicare Part D patients receiving free product. Could you perhaps elaborate on this? And also, looking ahead to 2024 and ’25, you spoken about how IRA dynamics could shift, which will drive PV share. Could you possibly give us some way to quantify the potential impacts of this shift over time? Thank you.
Barry Flannelly: So, to answer the first question, in Q4, we saw a significant increase in patient seeking assistance from Incyte in the form of free drug, of course. We know that these were paid patients who had Medicare Part D and our assumption is these patients were receiving financial assistance from independent charitable foundations to cover their out-of-pocket expenses. This assistance was no longer available to them apparently at the — towards the end of the year. And of course, they came to us and they met our eligibility criteria for free drug. With the changes in Medicare in 2024, as you know, the out-of-pocket in 2024 for Medicare Part D is greatly reduced. Therefore, we expect these patients to return to being paid patients.
And in fact, we know already that many of these patients already have. In terms of 2024, 2025 and the changes to Medicare Part D, we think it’s been very positive. We’ve been saying it for a long time that these co-pay out-of-pocket cost for patients — cancer patients who are in Medicare Part D was very much too high and should be reduced. And in fact, they probably are still too high. But because of the way it happens in 2025, $2,000 maxim out of pockets, they can spread that out over throughout the year. So, they pay about $167 per month for a 12-month period. We think that there’s lots of patients perhaps over the years who have walked away who have abandoned drug because they could not afford these out-of-pocket cost. We think that there’s an opportunity at least for those patients who abandon drug or just thought they could not afford the drug now that the Medicare Part D is greatly reduced, they could come back — so come back or option into drug therapy now.
So…
David Lebowitz: Thanks for taking my question.
Operator: Thank you. Our next question is coming from Jessica Fye from JPMorgan. Your line is now live.
Jessica Fye: Hey, guys. Good morning. Thanks for taking my questions. A couple of follow-ups on some of the previous questions. What’s your expectation for the proportion of Jakafi patients receiving free drug in 2024? And then, on Opzelura, for Europe, how are you expecting the average price to shake out for vitiligo? And can you recap your latest thinking on pursuing AD there? And then, in the US, I think you mentioned that recent script trends reflect kind of normal year-end seasonality. Is that to say you expect a volume reacceleration near term? I wasn’t sure how to reconcile that with some of the other 1Q comments you made about Opzelura. Thank you.
Barry Flannelly: Okay. I’ll try to answer the first and third question, maybe ask Hervé to talk about Europe. So, the expectation for free drug is easy for Jakafi. It’s been 3% to 4% of our volume for years and years and years. We expect it to go back. We think this is a one-time exceptional thing that happened because of the changes coming from Medicare Part D. So again, no more than it has been historically, which is around 3% or 4% of our volume. As far as what we talked about seasonality, we do expect that the first quarter to be down mostly because of because of out-of-pocket expenses, because of deductibles, because of the resetting of the co-pays, but then we should go back to our acceleration in volume in second quarter, third quarter and so on. And Hervé, Europe?
Hervé Hoppenot: So, in Europe today, Opzelura launched in Germany and Austria, in fact, where it’s commercially available. The price there is €750 per 100-gram tube. And then, we recently received reimbursement in France under a process called Accès Direct, which is a way to make — it’s one of the first product. In fact, it’s the second product to be part of that program. And that gives access to patients through a special distribution system and while the price is being discussed. So, the price discussion will probably take 10 months and we will start booking sales or recognizing revenue in France when the price is finally approved. So that should be late this year in the best case. And then, we are also in the process of getting reinvestment in other countries in Europe.
So hopefully, we will get multiple countries launching in ’24 and ’25. Regarding atopic dermatitis, we decided, obviously, to start with vitiligo for reimbursement reason because it’s a better case leading to a better price in most of these countries. And we have ongoing studies that have been, in fact, started relatively recently that could be used if we want to have a limited level in atopic dermatitis, which would be required to be able to maintain the price. So that process is ongoing, and it’s not going to lead to a new indication in the next two years. It will be coming after that.
Jessica Fye: Thank you.
Operator: Thank you. Next question is coming from Tazeen Ahmad from Bank of America. Your line is now live.
Tazeen Ahmad: Hi, good morning. Thank you for taking my questions. I was just curious as to the payer mix differences, if there are any for Opzelura between the AD indication versus vitiligo? And then secondly, as both of these launches start to mature a bit, do you have a better sense of how you’re going to land a number of tubes on average use per patient for a full year? Thank you.
Barry Flannelly: As far as the payer mix goes, there’s no real difference between payer mix. For AD, more patients perhaps have step therapies. In vitiligo, more patients don’t have any steps or have one step. In terms of the number of tubes we’ve said in the past that for AD, it’s around two tubes or a little bit more. We think that will continue to grow as people use the drug over larger portions of the body, obviously, they can go up to 20% of their body surface area, which is a very large body surface area. Some people start out in sensitive areas and now they’ll continue to use it over a larger [portion] (ph) of their skin. For vitiligo, it’s just too early. We’ll figure out. But we’re anticipating, obviously, as we’ve said, the refills will be much greater in vitiligo compared to AD.
Operator: Thank you. Next question is coming from Marc Frahm from TD Cowen. Your line is now live.
Marc Frahm: Hi, yes. Thanks for taking my questions. Maybe following up on a couple of the payer dynamic questions. Just on Jakafi, can you quantify the level of kind of script abandonment and things like that, that you are seeing and kind of what this opportunity is for volume gains with this redesign, recognizing, yes, some of it’s not going to play out over just in one year? And then similarly, in — for Opzelura, you had some formulary wins late last year that came into effect at the beginning of the year. Christiana, to your comment of only wanting to give price concessions to see enough volume benefit to end up within that net sales benefit, are you seeing early returns from that that are consistent with that view? Or do you kind of need to recalibrate how you do those negotiations for next year to make sure that trend is kept?
Barry Flannelly: Sure, Marc. Barry first. So, quantified a level of script abandonment for Jakafi, we don’t actually know. We know that it’s at least 10% just because we know when we go to specialty pharmacies — the patients who go through specialty pharmacies, it’s a little — we have a little bit more data there or clarity there and it’s at least 10%. But we don’t know. People who scripts never get sent to a pharmacy, we don’t know about that. So, we’re not exactly sure, but we think there’s a significant portion of patients that could benefit from these — from Jakafi specifically that aren’t because of the out-of-pocket cost, and that’s getting better and better all the time, we hope, in 2024 and 2025. As far as Opzelura goes and formulary wins, for example, CVS Aetna, that got changed this year to preferred status with one-step therapy for AD, no step therapies for vitiligo, it’s a little bit too soon to see anything because, obviously, when CVS makes a decision with us, it takes a while to funnel down to the various plans at the local level.
Okay?
Marc Frahm: Okay. Thank you.
Operator: Thank you. Next question today is coming from Ren Benjamin from Simpsons JMP. Your line is now live.
Ren Benjamin: Hi, guys, thanks for taking the questions. Given the rumors of your bid for MorphoSys, are you considering any other acquisitions in the MS space? Or was the rumor incorrect the whole time and you were just going after tafa? That’s question number one. Question number two, back to Steven on the Jakafi XR. I’m still — I’d love to get a little bit more color on the two years that it takes to get to the end of this — to solve this issue. What really is kind of involved? And is the probability of success, I would think it would be just quite high. It’s just for the lack of a better word, an engineering problem, but maybe I’m thinking about this wrong.
Hervé Hoppenot: Yeah. Maybe on the first question, as I said, I think the tafa acquisition for us is an excellent deal. It’s, in fact, very, very asymmetric, because it’s, as I said, with all of the synergies we can realize in the short term, it can compensate for what is left in terms of development costs in these two indications or in fact, most of the development has already been paid for in the past year. So, it is a case where the actual impact on the bottom line will be very minimal in the short term and very positive in the long term, whatever the scenario of the new indication. Now, if any of this new indication is hitting and its positive then it becomes obviously a super deal because we get all the benefit in terms of top line.
So that’s the aspect. Now, in the field of myelofibrosis, as you can see from our pipeline, we have a number of projects that we are pursuing ourselves. We have our own BET. There is still the ALK2 program where, as Pablo was saying, there is some additional data that we need to get certainty, but it’s very promising. And obviously, we have the 617F and CALR program on top of the XR formulation. So all of that is giving us a very full pipeline in the field of myelofibrosis. So that would not be the first priority for acquisitions.
Steven Stein: And, Ren, your question on XR, so just to go back to the CRL, remember, when we did the submission, we missed on Cmin to a small degree that per the FDA resulted in a theoretic concern on efficacy. And then we tried to do some more population PK analysis in that to reassure them, but their pathway didn’t work. And as we gave more granular detail at the end of last year, the route forward is new formulation, slightly larger tablet size and then repeat EBA work. And you’re right, it’s not — doesn’t take a great length of time. But to get that data in, analyze it, put it into a package and send it to the FDA and then have the discussions and approximation of best guess is an approximately to your journey from the beginning of this year to get it done.
And that, we feel, has enough conservatism in it that we should make it. In terms of probably of success, we can model from the formulations what we will likely achieve in terms of area under the curve, Cmin and even actually Cmax as well. And we think that is relatively high. Obviously, that’s why we’re doing it, and we’ll share that data as it becomes available and then take it to regulatory agencies. Thanks.
Ren Benjamin: Thank you.
Operator: Thank you. Next question is coming from Brian Abrams from RBC Capital Markets. Your line is now live.
Unidentified Analyst: Hi, everyone. This is [Navin] (ph) on for Brian. Thank you for picking us in. We just had a couple of questions on our part. So, on Opzelura, what is the latest that you’re kind of seeing on patient retention so far? How many patients persisted through the six to 12 months so far to kind of see the benefit versus how many are kind of dropping off or perhaps seeing early efficacy? And then if you could speak to a little bit of the education around the retention strategies as well. And then a second question on the MF space. So, as you kind of see the entry of additional competitors into the space, do you potentially foresee an expansion of the market as these competitors enter? Thank you.
