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Item 2. Management’s Discussion and Analysis

2024-04-30 compared with 2023-10-31 · 283 added, 278 removed, 556 unchanged (50% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations as of and for the three and nine months ended September 30, 2023 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 previously filed with the SEC.

The following discussion of our financial condition and results of operations as of and for the three months ended March 31, 2024 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2023 included in our Annual Report on Form 10-K for the year ended December 31, 2023 previously filed with the SEC.

Forward-Looking Statements

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In this report all references to “Incyte,” “we,” “us,” “our” or the “Company” mean Incyte Corporation and our subsidiaries, except where it is made clear that the term means only the parent company.

Incyte, JAKAFI and PEMAZYRE are our registered trademarks and OPZELURA and ZYNYZ are our trademarks.

Incyte, JAKAFI, MINJUVI, MONJUVI, OPZELURA, PEMAZYRE and ZYNYZ are our registered trademarks.

We also refer to trademarks of other corporations and organizations in this Quarterly Report on Form 10-Q.

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◦ Competition for our products could harm our business and result in a decrease in our revenue.

• Public health pandemics, natural disasters, and other geopolitical events, could adversely affect our business and results of operations.

◦ We or our collaborators may be unsuccessful in discovering and developing drug candidates, and we may spend significant time and money attempting to do so, in particular with our later stage drug candidates.

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◦ If we fail to enter into additional in-licensing agreements or if these arrangements are unsuccessful, we may be unable to increase our number of successfully marketed products and our revenues.

◦ Business disruptions, including those resulting from public health pandemics, natural disasters, and other geopolitical events, could adversely affect our business and results of operations.

◦ Even if one of our drug candidates receives regulatory approval, we may determine that commercialization would not be worth the investment.

• Any approved drug product that we bring to the market may not gain market acceptance by physicians, patients, healthcare payors and others in the medical community.

◦ We have limited capacity to conduct preclinical testing and clinical trials, and our resulting dependence on other parties could result in delays in and additional costs for our drug development efforts.

• We face significant competition for our drug discovery and development efforts, and if we do not compete effectively, our commercial opportunities will be reduced or eliminated.

◦ Our reliance on others to manufacture our drug products and drug candidates could result in drug supply constraints, delays in clinical trials, increased costs, and withdrawal or denial of regulatory approvals.

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◦ Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data could harm our business and subject us to liability or reputational damage.

• Increasing use of social media could give rise to liability, breaches of data security, or reputational damage, which could harm our business and results of operations.

Incyte is a biopharmaceutical company focused on the discovery, development and commercialization of proprietary therapeutics.

Our global headquarters is located in Wilmington, Delaware, where we conduct global clinical development and commercial operations.

◦ Increasing use of social media and new technology could give rise to liability, breaches of data security, or reputational damage, which could harm our business and results of operations.

Incyte is a global biopharmaceutical company engaged in the discovery, development and commercialization of proprietary therapeutics.

Our global headquarters is located in Wilmington, Delaware, where we conduct discovery, clinical development and commercial operations.

We also conduct clinical development and commercial operations from our European headquarters in Morges, Switzerland and our other offices across Europe, as well as our Japanese office in Tokyo and our Canadian headquarters in Montreal.

As described in more detail below, we operate in two therapeutic areas that are defined by the indications of our approved medicines and the diseases for which our clinical candidates are being developed.

One therapeutic area is Hematology/Oncology, which comprises Myeloproliferative Neoplasms (MPNs), Graft-Versus-Host Disease (GVHD), and solid tumors and hematologic malignancies.

We are focused in two therapeutic areas that are defined by the indications of our approved medicines and the diseases for which our clinical candidates are being developed.

One therapeutic area is Hematology/Oncology, which comprises Myeloproliferative Neoplasms (MPNs), Graft-Versus-Host Disease (GVHD), solid tumors and hematologic malignancies.

The other therapeutic area is Inflammation and Autoimmunity (IAI), which includes our Dermatology commercial franchise.

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Medical Affairs department is responsible for providing appropriate scientific and medical education and information to physicians, preparing scientific presentations and publications, and overseeing the process for supporting investigator sponsored trials.

In September 2023, we were notified by the Centers for Medicare and Medicaid Services (CMS) that ruxolitinib phosphate qualified for the Small Biotech Exception for initial price applicability year 2026.

In September 2023, we were notified by the Centers for Medicare and Medicaid Services (CMS) that ruxolitinib phosphate qualified for the Small Biotech Exception.

Myelofibrosis.

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There were no FDA approved therapies for MF until the approval of JAKAFI.

The FDA approval was based on results from two randomized Phase III trials (COMFORT-I and COMFORT-II), which demonstrated that patients treated with JAKAFI experienced significant reductions in splenomegaly (enlarged spleen).

The FDA approval was based on results from two randomized Phase 3 trials (COMFORT-I and COMFORT-II), which demonstrated that patients treated with JAKAFI experienced significant reductions in splenomegaly (enlarged spleen).

COMFORT-I also demonstrated improvements in symptoms.

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In December 2014, the FDA approved JAKAFI for the treatment of patients with PV who have had an inadequate response to or are intolerant of hydroxyurea.

The approval of JAKAFI for PV was based on data from the pivotal Phase III RESPONSE trial.

The approval of JAKAFI for PV was based on data from the pivotal Phase 3 RESPONSE trial.

In this trial, patients treated with JAKAFI demonstrated superior hematocrit control and reductions in spleen volume compared to best available therapy.

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At this time, 83% patients were still on treatment, and 76% of the responders at 32 weeks maintained their response through 80 weeks.

In June 2016, we announced data from the Phase III RESPONSE-2 study of JAKAFI in patients with inadequately controlled PV that was resistant to or intolerant of hydroxyurea who did not have an enlarged spleen.

In June 2016, we announced data from the Phase 3 RESPONSE-2 study of JAKAFI in patients with inadequately controlled PV that was resistant to or intolerant of hydroxyurea who did not have an enlarged spleen.

These data showed that JAKAFI was superior to best available therapy in maintaining hematocrit control (62.2% vs.

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In September 2021, the FDA approved JAKAFI for the treatment of chronic GVHD after failure of one or two lines of systemic therapy in adult and pediatric patients 12 years and older.

This approval was based on data from REACH3, a Phase III, randomized, open-label, multicenter study of JAKAFI in comparison to best available therapy for treatment of steroid-refractory chronic GVHD after allogeneic stem cell transplantation.

This approval was based on data from REACH3, a Phase 3, randomized, open-label, multicenter study of JAKAFI in comparison to best available therapy for treatment of steroid-refractory chronic GVHD after allogeneic stem cell transplantation.

The overall response rate through Cycle 7 Day 1 was 70% for JAKAFI compared to 57% for best available therapy.

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In January 2020, we and MorphoSys AG entered into a collaboration and license agreement to further develop and commercialize MorphoSys’ proprietary anti-CD19 antibody tafasitamab (MOR208) globally.

The agreement became effective March 2020.

Tafasitamab is an Fc-engineered antibody against CD19 currently in clinical development for the treatment of B cell malignancies.

We have rights to co-commercialize tafasitamab in the United States with MorphoSys, and we have exclusive development and commercialization rights outside of the United States.

In July 2020, we and MorphoSys announced that the FDA approved MONJUVI (tafasitamab-cxix), which is indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT).

MONJUVI was approved under accelerated approval based on overall response rate from the MorphoSys-sponsored Phase II L-MIND study, an open label, multicenter, single arm trial of MONJUVI in combination with lenalidomide as a treatment for adult patients with r/r DLBCL.

Under the terms of the collaboration and license agreement, we received rights to co-commercialize tafasitamab in the United States with MorphoSys, and exclusive development and commercialization rights outside of the United States.

As more fully described in Note 6 of Notes to the Condensed Consolidated Financial Statements, in February 2024, we entered into a purchase agreement with MorphoSys, the result of which we now hold exclusive global rights for tafasitamab, and the collaboration and license agreement was terminated.

In July 2020, we and MorphoSys announced that the FDA had approved MONJUVI (tafasitamab-cxix), which is indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant (ASCT).

MONJUVI was approved under accelerated approval based on overall response rate from the MorphoSys-sponsored Phase 2 L-MIND study, an open label, multicenter, single arm trial of MONJUVI in combination with lenalidomide as a treatment for adult patients with r/r DLBCL.

Results from the study showed an objective response rate (ORR) of 55% (39 out of 71 patients;

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In August 2020, we and MorphoSys announced that MONJUVI in combination with lenalidomide had been included in the latest National Comprehensive Cancer Network (NCCN) Clinical Practice Guidelines in Oncology for B-cell Lymphomas.

In August 2021, we and MorphoSys announced that the European Commission (EC) granted conditional marketing authorization for MINJUVI (tafasitamab) in combination with lenalidomide, followed by MINJUVI monotherapy, for the treatment of adult patients with relapsed or refractory DLBCL who are not eligible for autologous stem cell transplant (ASCT).

In August 2021, we and MorphoSys announced that the European Commission had granted conditional marketing authorization for MINJUVI (tafasitamab) in combination with lenalidomide, followed by MINJUVI monotherapy, for the treatment of adult patients with relapsed or refractory DLBCL who are not eligible for autologous stem cell transplant (ASCT).

The conditional approval was based on the three-year results from the L-MIND study evaluating the safety and efficacy of MINJUVI in combination with lenalidomide as a treatment for patients with r/r DLBCL who are not eligible for ASCT.

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PEMAZYRE is the first internally discovered product to be internationally commercialized by us.

In April 2020, we announced that the FDA approved PEMAZYRE (pemigatinib), a selective fibroblast growth factor receptor (FGFR) kinase inhibitor, for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test.

In April 2020, we announced that the FDA had approved PEMAZYRE (pemigatinib), a selective fibroblast growth factor receptor (FGFR) kinase inhibitor, for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test.

PEMAZYRE is the first FDA-approved treatment for this indication, which was approved under accelerated approval based on overall response rate and duration of response (DOR).

In March 2021, PEMAZYRE was approved by the Japanese Ministry of Health, Labour and Welfare (MHLW) for the treatment of patients with unresectable biliary tract cancer (BTC) with an FGFR2 fusion gene, worsening after cancer chemotherapy.

Also in March 2021, PEMAZYRE was approved by the European Commission (EC) for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or rearrangement that have progressed after at least one prior line of systemic therapy.

Also in March 2021, PEMAZYRE was approved by the European Commission for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or rearrangement that has progressed after at least one prior line of systemic therapy.

In July 2021, the UK’s National Institute for Health and Care Excellence (NICE) recommended PEMAZYRE for patients with cholangiocarcinoma with a fibroblast growth factor receptor 2 (FGFR2) fusion or rearrangement that have progressed after at least one prior line of systemic therapy.

NICE’s guidance enables all eligible patients in England and Wales to have access to PEMAZYRE through the National Health Service (NHS).

In March 2022, PEMAZYRE was approved by the National Medical Products Administration (NMPA) of the People ’ s Republic of China for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with a fibroblast growth receptor 2 (FGFR2) fusion or rearrangement as confirmed by a validated diagnostic test that have progressed after at least one prior line of systemic therapy.

In March 2022, PEMAZYRE was approved by the National Medical Products Administration (NMPA) of the People ’ s Republic of China for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with a fibroblast growth receptor 2 (FGFR2) fusion or rearrangement as confirmed by a validated diagnostic test that has progressed after at least one prior line of systemic therapy.

Cholangiocarcinoma is a rare cancer that arises from the cells within the bile ducts.

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In FIGHT-202, and in patients harboring FGFR2 fusions or rearrangements (Cohort A), PEMAZYRE monotherapy resulted in an overall response rate of 36% (primary endpoint), and median DOR of 9.1 months (secondary endpoint).

FIGHT-302, a Phase III trial of pemigatinib for the first-line treatment of patients with cholangiocarcinoma and FGFR2 fusions or rearrangements, is ongoing.

FIGHT-302, a Phase 3 trial of pemigatinib for the first-line treatment of patients with cholangiocarcinoma and FGFR2 fusions or rearrangements, is ongoing.

In August 2022, PEMAZYRE was approved by the FDA as the first and only targeted treatment for myeloid/lymphoid neoplasms (MLNs) with FGFR1 rearrangement.

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ICLUSIG (ponatinib)

In June 2016, we acquired the European operations of ARIAD Pharmaceuticals, Inc.

and obtained an exclusive license to develop and commercialize ICLUSIG (ponatinib) in Europe and other select countries.

In June 2016, we acquired the European operations of ARIAD Pharmaceuticals, Inc., and obtained an exclusive license to develop and commercialize ICLUSIG (ponatinib) in Europe and other select countries.

ICLUSIG is a kinase inhibitor.

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ZYNYZ (retifanlimab-dlwr)

In October 2017, we and MacroGenics, Inc.

announced an exclusive global collaboration and license agreement for MacroGenics’ retifanlimab (formerly INCMGA0012), an investigational monoclonal antibody that inhibits PD-1.

In October 2017, we and MacroGenics, Inc., announced an exclusive global collaboration and license agreement for MacroGenics’ retifanlimab (formerly INCMGA0012), an investigational monoclonal antibody that inhibits PD-1.

Under this collaboration, we obtained exclusive worldwide rights for the development and commercialization of retifanlimab in all indications.

The molecule is currently being evaluated both as monotherapy and in combination therapy across various tumor types.

Two Phase III trials evaluating retifanlimab in squamous cell anal cancer (SCAC) and non-small cell lung cancer (NSCLC) are ongoing.

In March 2023, we announced that the FDA approved ZYNYZ (retifanlimab-dlwr), a humanized monoclonal antibody targeting programmed death receptor-1 (PD-1), under accelerated approval, for the treatment of adults with metastatic or recurrent locally advanced Merkel cell carcinoma (MCC).

The molecule currently is being evaluated both as monotherapy and in combination therapy across various tumor types.

Two Phase 3 trials evaluating retifanlimab in squamous cell anal cancer (SCAC) and non-small cell lung cancer (NSCLC) are ongoing.

In March 2023, we announced that the FDA had approved ZYNYZ (retifanlimab-dlwr), a humanized monoclonal antibody targeting programmed death receptor-1 (PD-1), under accelerated approval, for the treatment of adults with metastatic or recurrent locally advanced Merkel cell carcinoma (MCC).

This represents the first regulatory approval for our PD-1 inhibitor.

In April 2024, the European Commission approved ZYNYZ (retifanlimab) as monotherapy for the first-line treatment of adult patients with metastatic or recurrent locally advanced MCC not amenable to curative surgery or radiation therapy following a positive opinion from the Committee for Medicinal Products for Human Use (CHMP).

Clinical Programs in Hematology and Oncology

As part of our ongoing LIMBER (Leadership In MPNs BEyond Ruxolitinib) clinical development initiative, which is designed to improve and expand therapeutic options for patients with myeloproliferative neoplasms, we are evaluating combinations of ruxolitinib with other therapeutic modalities, as well as developing a once-a-day formulation of ruxolitinib for potential use as monotherapy and combination therapy.

We are evaluating combinations of ruxolitinib with other therapeutic modalities, as well as developing a once-a-day formulation of ruxolitinib for potential use as monotherapy and combination therapy.

Bioavailability and bioequivalence data were published for ruxolitinib’s once-daily (QD) extended release (XR) formulation at the European Hematology Association (EHA) Virtual Congress in June 2021.

In March 2023, the FDA issued a complete response letter for ruxolitinib extended-release (XR) tablets for once-daily (QD) use in the treatment of certain types of MF, PV and GVHD.

The complete response letter stated that the FDA could not approve the application in its present form but acknowledged that the study submitted in the NDA met its objective of bioequivalence based on area under the curve parameters but identified additional requirements for approval.

We will work with the FDA to determine the appropriate next steps.

Phase II trials combining ruxolitinib with investigational agents from our portfolio such as INCB57643 (BET) and INCB00928 (ALK2) in patients with MF are ongoing, and in June 2023, at the American Society of Clinical Oncology (ASCO) annual meeting, updated data was presented which demonstrated early signals of clinical activity of both agents in monotherapy and in combination with ruxolitinib.

Additional discovery and development initiatives are also ongoing within the LIMBER program, which are evaluating internally-discovered compounds, and candidates from collaboration partners.

We recently announced the discontinuation of LIMBER-304 and LIMBER-313, two Phase III studies evaluating ruxolitinib in combination with parsaclisib in MF patients with a suboptimal response to ruxolitinib monotherapy and in first-line MF, respectively.

These studies were discontinued as a result of planned interim analyses which indicated that the studies were unlikely to meet their primary endpoint in the intent-to-treat patient population.

The recommendation to stop the studies was not due to safety.

In December 2023, we received FDA feedback and agreed on the requirements to address the complete response letter.

Phase 2 trials combining ruxolitinib with investigational agents from our portfolio such as INCB57643 (BET) and INCB00928 (Zilurgisertib) in patients with MF are ongoing, and updated data demonstrating early signals of clinical activity of both agents in monotherapy and in combination with ruxolitinib were presented in June 2023 at the American Society of Clinical Oncology (ASCO) annual meeting and in December 2023 at the American Society of Hematology (ASH) meeting.

Additional discovery and development initiatives are also ongoing, advancing two Phase 1 studies with INCA33989 (mCALR) and INCB160058 (JAK2V617Fi), both of which hold the potential to be disease modifying therapeutics and address significant unmet need in MF, PV and ET.

In September 2021, we and Syndax Pharmaceuticals, Inc.

announced an exclusive worldwide collaboration and license agreement to develop and commercialize axatilimab, Syndax’s anti-CSF-1R monoclonal antibody.

Together, we plan to develop axatilimab as a therapy for patients with chronic GVHD as well as in additional immune-mediated diseases where CSF-1R-dependent monocytes and macrophages are believed to contribute to organ fibrosis.

In December 2021, updated positive data were presented at ASH from the Phase I/II trial evaluating axatilimab as a monotherapy in patients with recurrent or refractory chronic GVHD after two or more prior lines of therapy.

Together, we plan to develop axatilimab as a therapy for patients with chronic GVHD where CSF-1R-dependent monocytes and macrophages are believed to contribute to organ fibrosis.

In December 2021, updated positive data were presented at ASH from the Phase 1/2 trial evaluating axatilimab as a monotherapy in patients with recurrent or refractory chronic GVHD after two or more prior lines of therapy.

A 68% overall response rate and broad clinical benefit across multiple organs were observed at doses being assessed in AGAVE-201, a global pivotal trial evaluating axatilimab monotherapy in patients with chronic GVHD in the third line setting.

Additional trials of axatilimab are planned in patients with chronic GVHD, including a Phase II trial in combination with ruxolitinib in patients with cGVHD.

In May 2022, Syndax announced that axatilimab was granted fast-track designation by the FDA for the treatment of patients with chronic GVHD after failure of two or more lines of systemic therapy.

In May 2022, Syndax announced that axatilimab had been granted fast-track designation by the FDA for the treatment of patients with chronic GVHD after failure of two or more lines of systemic therapy.

In July 2023, we and Syndax announced that AGAVE-201 had met its primary endpoint across all cohorts with an overall response rate (ORR) of 74% at the dose of 0.3 mg/kg administered every two weeks.

The data highlight the durable response seen at the 0.3 mg/kg dose with 60% of patients who responded to axatilimab still responding at one year.

In December 2023, a Biologics License Application (BLA) was submitted to the FDA for axatilimab for the treatment of patients with chronic GVHD after failure of two or more lines of systemic therapy and accepted for Priority Review in February 2024.

Plans are underway to initiate two combination trials with axatilimab in cGVHD in mid-2024, including a randomized Phase 2 combination trial with ruxolitinib and a randomized Phase 3 combination trial with steroids, both directed at treating patients with cGVHD in earlier lines of therapy.

INCA033989 (mCALR)

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CALR mutations are responsible for disease development in approximately 25-35% of patients with MF and ET.

In July 2023, we initiated a Phase I study evaluating INCA033989.

In July 2023, a Phase 1 study evaluating INCA033989 was initiated.

INCB160058 (JAK2V617Fi)

In December 2023, new research detailing the development and mechanism of action of INCB160058, an Incyte-discovered, investigational novel potent and selective JAK2 pseudokinase domain binder with potential to be a disease modifying therapeutic was disclosed at the 65th American Society of Hematology (ASH) Annual Meeting.

Pseudokinase binding offers a new mechanism of action for selective inhibition of JAK2V617F, with potential to eradicate mutant clones.

In preclinical studies, INCB160058 inhibited cytokine independent activity of JAK2V617F while sparing WT JAK2.

The JAK2V617F mutation is found in 55% of primary myelofibrosis, 95% of polycythemia vera and 60% of essential thrombocythemia patients.

A Phase 1 study of INCB160058 was initiated in the first quarter of 2024.

Tafasitamab is an anti-CD19 antibody and is being investigated as a therapeutic option in B cell malignancies in a number of ongoing and planned combination trials.

An open-label Phase II combination trial (L-MIND) is investigating the safety and efficacy of tafasitamab in combination with lenalidomide in patients with relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL), and the ongoing Phase III B-MIND trial is assessing the combination of tafasitamab and bendamustine versus rituximab and bendamustine in r/r DLBCL.

firstMIND is a Phase Ib safety trial of tafasitamab as a first-line therapy for patients with DLBCL, and frontMIND, a placebo-controlled Phase III trial evaluating tafasitamab in combination with lenalidomide added to rituximab plus chemotherapy (R-CHOP) as a first-line therapy for patients with DLBCL, is ongoing.

A placebo-controlled Phase III trial (inMIND) of tafasitamab added to lenalidomide plus rituximab (R 2 ) in patients with relapsed or refractory follicular or marginal zone lymphomas is ongoing.

An open-label Phase 2 combination trial (L-MIND) is investigating the safety and efficacy of tafasitamab in combination with lenalidomide in patients with relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL), and the ongoing Phase 3 B-MIND trial is assessing the combination of tafasitamab and bendamustine versus rituximab and bendamustine in r/r DLBCL.

firstMIND is a Phase 1b safety trial of tafasitamab as a first-line therapy for patients with DLBCL, and frontMIND, a placebo-controlled Phase 3 trial evaluating tafasitamab in combination with lenalidomide added to rituximab plus chemotherapy (R-CHOP) as a first-line therapy for patients with DLBCL, is ongoing.

A placebo-controlled Phase 3 trial (inMIND) of tafasitamab added to lenalidomide plus rituximab (R 2 ) in patients with relapsed or refractory follicular or marginal zone lymphomas is ongoing.

In January 2021, the FDA granted orphan drug designation to tafasitamab as a treatment for patients with follicular lymphoma.

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We initiated the FIGHT clinical program to evaluate pemigatinib across a spectrum of cancers that are driven by FGF/FGFR alterations.

The program initially included three Phase II trials – FIGHT-201 in patients with bladder cancer, FIGHT-202 in patients with cholangiocarcinoma, and FIGHT-203 in patients with myeloid/lymphoid neoplasms with FGFR1 rearrangement.

Based on data generated from these trials, we have initiated additional trials including FIGHT-302, a Phase III study in first-line cholangiocarcinoma.

The program initially included three Phase 2 trials – FIGHT-201 in patients with bladder cancer, FIGHT-202 in patients with cholangiocarcinoma, and FIGHT-203 in patients with myeloid/lymphoid neoplasms with FGFR1 rearrangement.

Based on data generated from these trials, we have initiated additional trials including FIGHT-302, a Phase 3 study in first-line cholangiocarcinoma.

FIGHT-207, a solid tumor-agnostic trial evaluating pemigatinib in patients with driver-alterations of FGF/FGFR, is now closed to recruitment.

Based on findings from this study, we have identified populations that may potentially benefit from treatment with pemigatinib and a Phase II trial, FIGHT-209, in patients with glioblastoma is ongoing.

Based on findings from this study, we have identified populations that potentially may benefit from treatment with pemigatinib, and a Phase 2 trial, FIGHT-209, in patients with glioblastoma is ongoing.

Pemigatinib has Breakthrough Therapy designation as a treatment for patients with myeloid/lymphoid neoplasms (MLN) with FGFR1 rearrangement who have relapsed or are refractory to initial chemotherapy.

The Phase III POD1UM-303 trial of retifanlimab in combination with platinum-based chemotherapy as a first-line treatment for patients with squamous cell carcinoma of the anal canal (SCAC) is ongoing.

The Phase 3 POD1UM-303 trial of retifanlimab in combination with platinum-based chemotherapy as a first-line treatment for patients with squamous cell carcinoma of the anal canal (SCAC) is ongoing.

In July 2021, we announced that the FDA issued a complete response letter (CRL) for the BLA of retifanlimab for the treatment of SCAC.

In October 2021, we announced that we withdrew the MAA seeking approval of retifanlimab in SCAC.

The Phase III POD1UM-304 trial is evaluating retifanlimab in combination with platinum-based chemotherapy as a first-line treatment for patients with non-small cell lung cancer (NSCLC).

In November 2021, we highlighted Phase I clinical safety and efficacy data for our oral PD-L1 program which included two compounds, INCB99280 and INCB99318.

The Phase 3 POD1UM-304 trial is evaluating retifanlimab in combination with platinum-based chemotherapy as a first-line treatment for patients with non-small cell lung cancer (NSCLC).

In November 2021, we highlighted Phase 1 clinical safety and efficacy data for our oral PD-L1 program which included two compounds, INCB99280 and INCB99318.

Tumor shrinkage was observed for both oral PD-L1 inhibitors and both were generally well tolerated.

We plan to evaluate INCB99280 in Phase II as monotherapy and in combination with other antitumor agents.

We plan to evaluate INCB99280 in Phase 2 as monotherapy and in combination with other antitumor agents.

Further dose escalation and dose expansion trials are ongoing with INCB99318.

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announced a clinical trial collaboration and supply agreement to investigate the combination of INCB99280 and adagrasib, a KRASG12C selective inhibitor, in patients with KRASG12C-mutated solid tumors.

In July 2023, we initiated t wo Phase I studies evaluating INCB99280 in combination with axitinib (VEGF) and in combination with ipilimumab (CTLA-4).

A Phase II study evaluating INCB99280 in patients with select solid tumors who are checkpoint inhibitor naive was also initiated.

Additionally, we initiated a Phase II study evaluating INCB99280 in metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC.

In July 2023, we initiated t wo Phase 1 studies evaluating INCB99280 in combination with axitinib (VEGF) and in combination with ipilimumab (CTLA-4).

A Phase 2 study evaluating INCB99280 in patients with select solid tumors who are checkpoint inhibitor naive also was initiated.

Additionally, we initiated a Phase 2 study evaluating INCB99280 in metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC.

W e and Replimune Group, Inc.

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RP1 is Replimune’s lead oncolytic immunotherapy product candidate and is based on a proprietary new strain of herpes simplex virus engineered for robust tumor selective replication and genetically armed with a fusogenic protein (GALV-GP R-) and GM-CSF, intended to maximize tumor killing potency, the immunogenicity of tumor cell death and the activation of a systemic anti-tumor immune response.

Indication and status

ruxolitinib XR (QD) (JAK1/JAK2) Myelofibrosis, polycythemia vera and GVHD

ruxolitinib + zilurgisertib (JAK1/JAK2 + ALK2)

Myelofibrosis:

ruxolitinib + INCB57643 (JAK1/JAK2 + BET)

Myelofibrosis:

ruxolitinib + CK0804 1 (JAK1/JAK2 + CB-Tregs)

MPN, GVHD and Oncology Programs Indication and Phase

Ruxolitinib XR (QD)

(JAK1/JAK2) Myelofibrosis, polycythemia vera and GVHD

Ruxolitinib + zilurgisertib

(JAK1/JAK2 + ALK2) Myelofibrosis:

Ruxolitinib + INCB57643

(JAK1/JAK2 + BET) Myelofibrosis:

Ruxolitinib + CK0804 1

(JAK1/JAK2 + CB-Tregs)

Myelofibrosis:

Phase I (LIMBER-TREG108)

Axatilimab (anti-CSF-1R) 2

Chronic GVHD:

Pivotal Phase II (third-line plus therapy) (AGAVE-201)

ruxolitinib + axatilimab 2 (JAK1/JAK2 + anti-CSF-1R)

Pivotal Phase 2 (third-line plus therapy) (AGAVE-201);

BLA under review in the U.S.

Ruxolitinib + axatilimab 2

(JAK1/JAK2 + anti-CSF-1R)

Chronic GVHD:

Phase I/II in preparation

INCA033989 (mCALR) Myelofibrosis, essential thrombocythemia:

tafasitamab (CD19) 3

Phase III (B-MIND)

Phase III (frontMIND)

r/r follicular & marginal zone lymphomas:

Phase III (inMIND)

pemigatinib (FGFR1/2/3) Myeloid/lymphoid neoplasms (MLN):

Phase 2 in preparation

Steroids + axatilimab 2

(Steroids + anti-CSF-1R)

Chronic GVHD:

Phase 3 in preparation

(mCALR) Myelofibrosis, essential thrombocythemia:

(JAK2V617Fi) Phase 1

Pemigatinib (PEMAZYRE)

Myeloid/lymphoid neoplasms (MLN):

approved in the U.S.

Phase III (FIGHT-302)

Glioblastoma:

Phase II (FIGHT-209)

retifanlimab (PD-1) 4

Merkel cell carcinoma:

Cholangiocarcinoma (CCA):

Phase 3 (FIGHT-302)

Tafasitamab (MONJUVI/MINJUVI)

(CD19) Relapsed or refractory diffuse large B-cell lymphoma (DLBCL):

Phase 3 (B-MIND)

First-line DLBCL:

Phase 3 ( front MIND)

Relapsed or refractory follicular lymphoma (FL) and relapsed or refractory marginal zone lymphoma (MZL):

Phase 3 ( in MIND)

Retifanlimab (ZYNYZ) 3

Merkel cell carcinoma (MCC):

approved in the U.S.

Phase III (PODIUM-303)

Phase III (POD1UM-304)

Squamous cell anal cancer (SCAC):

Phase 3 (POD1UM-303)

Non-small cell lung cancer (NSCLC):

Phase 3 (POD1UM-304)

MSI-high endometrial cancer:

Phase II (POD1UM-101, POD1UM-204)

INCB99280 (Oral PD-L1) Solid tumors (combination):

Phase 2 (POD1UM-101, POD1UM-204)

(Oral PD-L1) Solid tumors (combination):

Solid tumors (monotherapy):

Cutaneous squamous cell carcinoma (cSCC):

INCB99318 (Oral PD-L1)

Solid tumors:

(Oral PD-L1) Solid tumors:

(CDK2i) Solid tumors with Amplification/ Overexpression of CCNE1:

(KRASG12D) Advanced metastatic solid tumors with a KRAS G12D mutation:

Development collaboration with Cellenkos, Inc.

axatilimab development in collaboration with Syndax.

tafasitamab development in collaboration with MorphoSys.

Clinical development of axatilimab in GVHD conducted in collaboration with Syndax Pharmaceuticals.

Retifanlimab licensed from MacroGenics.

Clinical trial collaboration and supply agreement with Mirati Therapeutics.

Earlier-Stage Development Programs in Hematology and Oncology

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INCB123667 is a novel, potent and selective oral small molecule inhibitor of CDK2 which has been shown to suppress tumor growth as monotherapy and in combination with standard of care, in Cyclin E amplified tumor models, in vivo.

In April 2023, we presented data at the American Association for Cancer Research (AACR) Annual Meeting, demonstrating INCB123667 exhibited significant single-agent activity in vivo, in CCNE1high breast cancer xenograft and patient-derived xenograft models.

INCB123667 is currently being evaluated in a Phase I clinical trial in patients with advanced malignancies including CCNE1high TNBC and HR+HER2- tumors post-CDK4/6 inhibitors.

In April 2023, we presented data at the American Association for Cancer Research (AACR) Annual Meeting, demonstrating that INCB123667 exhibited significant single-agent activity in vivo, in CCNE1 high breast cancer xenograft and patient-derived xenograft models.

INCB123667 currently is being evaluated in a Phase 1 clinical trial in patients with advanced malignancies including CCNE1 high TNBC and HR+HER2- tumors post-CDK4/6 inhibitors.

In January 2024, we disclosed that early clinical activity was observed in patients with amplification/over expression of CCNE1 in a Phase 1 clinical trial, with significant tumor shrinkage observed.

Several patients achieved partial responses (PR) across multiple tumor types including ovarian cancer patients with CCNE1 amplification and/or over expression.

The safety data seen during this disclosure aligns with CDK2 mechanism of action.

Additional data from this trial is anticipated in 2024.

INCA32459 (LAG-3xPD-1)

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INCA33890 (TGFβR2xPD-1)

INCA33890 is a TGFβR2xPD-1 bispecific antibody which has been engineered to avoid the known toxicity of broad TGFβ pathway blockade.

INCA33890 has a 10-fold higher binding affinity for PD-1 relative to TGFβR2, and blocks TGFβ signaling specifically in cells co-expressing PD-1.

In April 2023, we presented preclinical data at AACR which showed INCA33890 inhibits tumor growth in PD-1-resistant mouse models.

In July 2023, we initiated a Phase I study evaluating INCA33890 in patients with select advanced solid tumors.

INCA33890 is a TGFβR2xPD-1 bispecific antibody that has been engineered to avoid the known toxicity of broad TGFβ pathway blockade.

INCA33890 has a 10-fold higher binding affinity for PD-1 relative to TGFβR2, and specifically blocks TGFβ signaling in cells co-expressing PD-1.

In April 2023, we presented preclinical data at AACR that showed that INCA33890 inhibits tumor growth in PD-1-resistant mouse models.

In July 2023, we initiated a Phase 1 study evaluating INCA33890 in patients with select advanced solid tumors.

Our earlier-stage clinical programs in hematology and oncology are included in the table below.

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Modality Candidates

Small molecules INCB123667 (CDK2)

Monoclonal antibodies INCAGN2385 (LAG-3) 1 , INCAGN2390 (TIM-3) 1

Bispecific antibodies INCA32459 (LAG-3xPD-1) 2 , INCA33890 (TGFβR2xPD-1) 2

Bi-specific antibodies INCA32459 (LAG-3xPD-1) 2 , INCA33890 (TGFβR2xPD-1) 2

Discovery collaboration with Agenus Inc.

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Incyte Dermatology launched its first approved product, OPZELURA (ruxolitinib) cream, in October 2021, following FDA approval for atopic dermatitis in September 2021.

OPZELURA was subsequently approved by the FDA and European Commission for vitiligo in July 2022 and April 2023, respectively.

OPZELURA subsequently was approved by the FDA and European Commission for vitiligo in July 2022 and April 2023, respectively.

Incyte’s IAI efforts also include numerous clinical development programs.

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In the United States, we estimate that there are approximately 10 million diagnosed adolescent and adult patients with AD.

The approval of OPZELURA was based on data from two randomized, double-blind, vehicle-controlled Phase III studies (TRuE-AD1 and TRuE-AD 2) evaluating the safety and efficacy of OPZELURA in adolescents and adults with mild to moderate AD.

The approval of OPZELURA was based on data from two randomized, double-blind, vehicle-controlled Phase 3 studies (TRuE-AD1 and TRuE-AD 2) evaluating the safety and efficacy of OPZELURA in adolescents and adults with mild to moderate AD.

Significantly more patients treated with OPZELURA achieved Investigator’s Global Assessment (IGA) Treatment Success at Week 8 (defined as an IGA score of 0 or 1 with at least a 2-point improvement from baseline, the primary endpoint:

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OPZELURA is the first and only FDA approved treatment for repigmentation of vitiligo lesions.

The approval of OPZELURA in vitiligo was based on two randomized, double-blind, vehicle-controlled Phase III studies (TRuE-V1 and TRuE-V2) evaluating the safety and efficacy of OPZELURA in adolescents and adults with nonsegmental vitiligo.

The approval of OPZELURA in vitiligo was based on two randomized, double-blind, vehicle-controlled Phase 3 studies (TRuE-V1 and TRuE-V2) evaluating the safety and efficacy of OPZELURA in adolescents and adults with nonsegmental vitiligo.

Treatment with 1.5% ruxolitinib cream twice daily (BID) resulted in greater improvement versus vehicle for the primary and all key secondary endpoints in both the TRuE-V1 and TRuE-V2 studies.

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The most common (>1%) treatment-emergent adverse reactions in patients treated with OPZELURA were application site acne, application site pruritus, nasopharyngitis, headache, urinary tract infection, application site erythema and pyrexia.

In March 2023, at the American Academy of Dermatology (AAD), long-term 104-week safety and efficacy data for ruxolitinib cream in vitiligo were presented, demonstrating that patients who achieved a high level of facial repigmentation (≥F-VASI90) at Week 52 maintained durable response one year following withdrawal of treatment and that those patients who continued treatment with Opzelura for up to two years demonstrated sustained facial repigmentation and further improvements in facial and total body repigmentation.

In April 2023, we announced that the European Commission approved OPZELURA for the topical treatment of nonsegmental vitiligo with facial involvement in adults and adolescents 12 years and older following a positive opinion from the Committee for Medicinal Products for Human Use (CHMP).

In March 2023, long-term 104-week safety and efficacy data for ruxolitinib cream in vitiligo were presented at the American Academy of Dermatology (AAD) conference, demonstrating that patients who achieved a high level of facial repigmentation (≥F-VASI90) at Week 52 maintained durable response one year following withdrawal of treatment and that those patients who continued treatment with OPZELURA for up to two years demonstrated sustained facial repigmentation and further improvements in facial and total body repigmentation.

In April 2023, we announced that the European Commission had approved OPZELURA for the topical treatment of nonsegmental vitiligo with facial involvement in adults and adolescents 12 years and older following a positive opinion from the CHMP.

In October 2023, new results of a pooled analysis of long-term extension (LTE) data from the pivotal Phase 3 TRuE-V program assessing OPZELURA cream 1.5% in patients 12 years of age and older with nonsegmental vitiligo who previously experienced limited or no response to treatment at Week 24 were presented at the European Academy of Dermatology and Venereology (EADV) Congress 2023 as a late-breaking oral presentation.

These results showed patients who initially experienced limited or no facial or total body repigmentation at six months achieved improved repigmentation after continued treatment with Opzelura for up to two years.

These results showed that patients who initially experienced limited or no facial or total body repigmentation at six months achieved improved repigmentation after continued treatment with OPZELURA for up to two years.

In January 2024, Incyte received approval in France to promote and distribute OPZELURA for vitiligo under a process called “Accès Direct.” This process is intended to allow for early access to a therapy while a final price is negotiated, which is expected to take up to twelve months.

Clinical Programs in Dermatology

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In October 2021, we announced the validation of the MAA for ruxolitinib cream as a potential treatment for adolescents and adults (age ≥12 years) with nonsegmental vitiligo with facial involvement.

In November 2022, we initiated two Phase II trials evaluating ruxolitinib cream in lichen planus and lichen sclerosus.

In November 2022, we initiated two Phase 2 trials evaluating ruxolitinib cream in lichen planus and lichen sclerosus.

Lichen planus is a recurrent inflammatory condition affecting the skin and mucosal surfaces and can result in itchy, purple bumps on the skin.

Lichen sclerosus is a chronic inflammatory skin disease most commonly affecting women and can result in painful ulcers and intense itching.

A Phase II trial evaluating ruxolitinib cream in mild to moderate hidradenitis suppurativa is ongoing and two Phase III trials evaluating ruxolitinib cream in prurigo nodularis were initiated.

Two Phase 3 trials evaluating ruxolitinib cream in prurigo nodularis were initiated in 2023.

We continue to expand the development of ruxolitinib cream into new indications as part of our efforts to maximize the potential opportunity with ruxolitinib cream.

In July 2023, we announced that the Phase III trial (TRuE-AD3) evaluating ruxolitinib cream in pediatric AD patients (age > 2 and <12) had met its primary endpoint.

The study showed significantly more patients treated with ruxolitinib cream 0.75% and 1.5% achieved Investigator's Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control.

In July 2023, we announced that the Phase 3 trial (TRuE-AD3) evaluating ruxolitinib cream in pediatric AD patients (age > 2 and <12) had met its primary endpoint.

The study showed that significantly more patients treated with ruxolitinib cream 0.75% and 1.5% achieved Investigator's Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control.

In October 2023, the expanded results from the pivotal Phase 3 TRuE-AD3 were presented at EADV.

Significantly more patients treated with ruxolitinib cream (0.75% and 1.5%) achieved Investigator’s Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control (non-medicated cream).

We are also developing povorcitinib (formerly INCB54707), which is an oral small molecule selective JAK1 inhibitor.

Povorcitinib is undergoing evaluation in patients with hidradenitis suppurativa (HS), a chronic skin condition where lesions develop as a result of inflammation and infection of the sweat glands.

In October 2020, initial results from the clinical program were presented and a randomized Phase IIb trial of povorcitinib is underway in patients with HS.

In March 2021, we initiated a Phase II trial evaluating povorcitinib in patients with vitiligo.

A Phase II trial evaluating povorcitinib in patients with prurigo nodularis is ongoing.

In August 2022, we presented results from the Phase II trial of povorcitinib in HS.

In December 2022, we initiated two Phase III trials (STOP-HS1 and STOP-HS2) in moderate to severe hidradenitis suppurativa.

In February 2023, 52-week results from the Phase II study evaluating povorcitinib in HS were presented as an oral presentation at the European Hidradenitis Suppurativa Foundation (EHSF) Annual Meeting.

The data demonstrated that longer-term treatment with povorcitinib 75 mg resulted in sustained and durable efficacy across all treatment arms and importantly, 22-29% of patients achieved HiSCR100, which is defined as a 100% reduction from baseline in total AN count with no increase from baseline in abscess or draining tunnel count.

Povorcitinib is currently in two phase III studies in moderate to severe HS.

In March 2023, 36-week results from the Phase IIb study evaluating povorcitinib in patients with extensive vitiligo were presented as an oral late-breaking presentation at the American Academy of Dermatology (AAD) Annual Meeting.

Again, significantly more patients treated with ruxolitinib cream (0.75% and 1.5%) achieved Investigator’s Global Assessment Treatment Success (IGA-TS) than patients treated with vehicle control (non-medicated cream).

In January, 2024, we announced positive topline results from a randomized controlled Phase 2 study evaluating ruxolitinib cream in Hidradenitis Suppurativa (HS).

Ruxolitinib 1.5% cream BID met the primary efficacy endpoint as measured by a change from baseline in abscess and nodule count at Week 16 versus placebo in patients with mild to moderate HS.

Ruxolitinib cream was well tolerated and consistent with its known safety profile.

A Phase 3 study is currently under evaluation.

We also are developing povorcitinib (formerly INCB54707), which is an oral small molecule selective JAK1 inhibitor.

Povorcitinib is undergoing evaluation in patients with hidradenitis suppurativa (HS), nonsegmental vitiligo, prurigo nodularis (PN), asthma and chronic spontaneous urticaria (CSU).

Hidradenitis Suppurativa.

HS is a chronic skin condition where lesions develop as a result of inflammation and infection of the sweat glands.

In October 2020, initial results from the clinical program were presented and a randomized Phase 2b trial of povorcitinib was initiated in patients with HS.

In August 2022, we presented positive results from the Phase 2 trial of povorcitinib in HS.

In December 2022, we initiated two Phase 3 trials (STOP-HS1 and STOP-HS2) in moderate to severe HS.

In February 2023, 52-week results from the Phase 2 study evaluating povorcitinib in HS were presented as an oral presentation at the European Hidradenitis Suppurativa Foundation (EHSF) Annual Meeting.

The data demonstrated that longer-term treatment with povorcitinib 75 mg resulted in sustained and durable efficacy across all treatment arms and that importantly, 22-29% of patients achieved HiSCR100, which is defined as a 100% reduction from baseline in total AN count with no increase from baseline in abscess or draining tunnel count.

Nonsegmental Vitiligo.

In March 2023, 36-week results from the Phase 2b study evaluating povorcitinib in patients with extensive nonsegmental vitiligo were presented as an oral late-breaking presentation at the American Academy of Dermatology (AAD) Annual Meeting.

The data demonstrated that treatment with oral povorcitinib was associated with substantial total body repigmentation in patients with extensive nonsegmental vitiligo, as measured by total Vitiligo Area Scoring Index (T-VASI) scores.

Specifically, the study met its primary endpoint, and patients receiving povorcitinib experienced statistically superior improvements in T-VASI at Week 24 compared to placebo.

In July 2023, we initiated two Phase II trials evaluating povorcitinib in patients with moderate to severe uncontrolled asthma and in chronic spontaneous urticaria.

In October 2023, positive 52-week data from a Phase IIb clinical trial evaluating the safety and efficacy of povorcitinib in adult patients with extensive nonsegmental vitiligo were presented at EADV as a late-breaking oral presentation.

In October 2023, positive 52-week data from a Phase 2b clinical trial evaluating the safety and efficacy of povorcitinib in adult patients with extensive nonsegmental vitiligo were presented at EADV as a late-breaking oral presentation.

Results showed that treatment with oral povorcitinib was associated with substantial total body and facial repigmentation across all treatment groups at Week 52 and further reinforces the efficacy profile and potential of povorcitinib as an oral treatment for patients with extensive nonsegmental vitiligo.

Additionally, we announced in October 2023 that the Phase II, randomized, double-blind, placebo-controlled, dose ranging study evaluating the efficacy and safety of povorcitinib in participants with prurigo nodularis (PN) met its primary endpoint.

A Phase III study in PN is being planned.

Earlier-Stage Development Programs in Dermatology

In November 2022, we acquired Villaris Therapeutics, Inc., an asset-centric biopharmaceutical company focused on the development of novel antibody therapeutics for vitiligo.

INCA034460 is a novel, humanized anti-IL-15Rβ monoclonal antibody designed to target and deplete autoreactive tissue resident memory T cells (TRM) that has demonstrated efficacy as a treatment for vitiligo in preclinical models.

In July 2023, INCA034460 received IND clearance and in October 2023, we announced the first patient was dosed.

Indication and status

ruxolitinib cream 1

Prurigo Nodularis.

In October 2023 we announced that the Phase 2, randomized, double-blind, placebo-controlled, dose ranging study evaluating the efficacy and safety of povorcitinib in participants with PN had met its primary endpoint.

A Phase 3 study in PN is being planned.

Asthma and Chronic Spontaneous Urticaria.

In July 2023, we initiated two Phase 2 trials evaluating povorcitinib in patients with moderate to severe uncontrolled asthma and in chronic spontaneous urticaria.

IAI and Dermatology Programs Indication and Phase

Ruxolitinib cream (OPZELURA) 1

Atopic dermatitis:

Phase III pediatric study (TRuE-AD3)

Phase III (TRuE-V1, TRuE-V2);

Phase 3 pediatric study (TRuE-AD3)

Approved in the U.S.

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Hidradenitis suppurativa:

Phase 3 being evaluated

Prurigo nodularis:

Phase III (TRuE-PN1, TRuE-PN2)

ruxolitinib cream + NB-UVB (JAK1/JAK2 + phototherapy) Vitiligo:

Phase 3 (TRuE-PN1, TRuE-PN2)

Ruxolitinib cream + UVB

(JAK1/JAK2 + phototherapy) Vitiligo:

(JAK1) Hidradenitis suppurativa:

Phase III (STOP-HS1, STOP-HS2)

Phase III planned

Phase 3 (STOP-HS1, STOP-HS2)

Phase 3 (STOP-V1, STOP-V2)

Prurigo nodularis:

Phase 3 to start in 2024

Chronic spontaneous urticaria:

(anti-IL-15Rβ)

Phase I initiated

(anti-IL-15Rβ) Vitiligo:

Phase 1 initiated

Novartis’ rights for ruxolitinib outside of the United States under our Collaboration and License Agreement with Novartis do not include topical administration.

Earlier-Stage Development Programs in Dermatology

In November 2022, we acquired Villaris Therapeutics, Inc., an asset-centric biopharmaceutical company focused on the development of novel antibody therapeutics for vitiligo.

In July 2023, INCA034460 received Investigational New Drug application (IND) clearance and in October 2023, we announced the first patient had been dosed.

Clinical Programs in Other IAI

In May 2022, we initiated a Phase II trial evaluating INCB00928 in patients with fibrodysplasia ossificans progressiva (FOP), a disorder in which muscle tissue and connective tissue are gradually replaced by bone.

The FDA has granted Fast Track designation and orphan drug designation to INCB00928 as a treatment for patients with FOP.

Indication and status

INCB00928 (ALK2) Fibrodysplasia ossificans progressiva:

In May 2022, we initiated a Phase 2 trial evaluating zilurgisertib (INCB00928) in patients with fibrodysplasia ossificans progressiva (FOP), a disorder in which muscle tissue and connective tissue are gradually replaced by bone.

The FDA has granted Fast Track designation and orphan drug designation to zilurgisertib as a treatment for patients with FOP.

Other IAI Program Indication and Phase

Zilurgisertib

(ALK2) Fibrodysplasia ossificans progressiva:

Pivotal Phase 2

Collaborative Partnered Programs

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Rheumatoid arthritis is an autoimmune disease characterized by aberrant or abnormal immune mechanisms that lead to joint inflammation and swelling and, in some patients, the progressive destruction of joints.

Rheumatoid arthritis can also affect connective tissue in the skin and organs of the body.

Rheumatoid arthritis also can affect connective tissue in the skin and organs of the body.

Current rheumatoid arthritis treatments include the use of non-steroidal anti-inflammatory drugs, disease-modifying anti-rheumatic drugs such as methotrexate, and the newer biological response modifiers that target pro-inflammatory cytokines, such as tumor necrosis factor, implicated in the pathogenesis of rheumatoid arthritis.

None of these approaches to treatment is curative;

therefore, there remains an unmet need for new safe and effective treatment options for these patients.

therefore, there remains an unmet need for safe and effective treatment options for these patients.

Rheumatoid arthritis is estimated to affect about 1% of the world’s population.

The Phase III program of baricitinib in patients with rheumatoid arthritis incorporated all three rheumatoid arthritis populations (methotrexate naïve, biologic naïve, and tumor necrosis factor (TNF) inhibitor inadequate responders);

The Phase 3 program of baricitinib in patients with rheumatoid arthritis incorporated all three rheumatoid arthritis populations (methotrexate naïve, biologic naïve, and tumor necrosis factor (TNF) inhibitor inadequate responders);

used event rates to fully power the baricitinib program for structural comparison and non-inferiority vs.

and evaluated patient-reported outcomes.

All four Phase III trials met their respective primary endpoints.

In January 2016, Lilly submitted an NDA to the FDA and an MAA to the EMA for baricitinib as treatment for rheumatoid arthritis.

All four Phase 3 trials met their respective primary endpoints.

In January 2016, Lilly submitted a New Drug Application (NDA) to the FDA and an MAA to the EMA for baricitinib as treatment for rheumatoid arthritis.

In February 2017, we and Lilly announced that the European Commission approved baricitinib as OLUMIANT for the treatment of moderate-to-severe rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to, one or more disease-modifying antirheumatic drugs (DMARDs).

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Atopic Dermatitis.

Lilly has conducted a Phase IIa trial and a Phase III program to evaluate the safety and efficacy of baricitinib in patients with moderate-to-severe atopic dermatitis.

Lilly has conducted a Phase 2a trial and a Phase 3 program to evaluate the safety and efficacy of baricitinib in patients with moderate-to-severe atopic dermatitis.

The JAK-STAT pathway has been shown to play an essential role in the dysregulation of immune responses in atopic dermatitis.

Therefore, we believe that inhibiting cytokine pathways dependent on JAK1 and JAK2 may lead to positive clinical outcomes in AD.

In February 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD1 and BREEZE-AD2, two Phase III studies evaluating the efficacy and safety of baricitinib monotherapy for the treatment of adult patients with moderate-to-severe AD and, in August 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD7, a Phase III study evaluating the efficacy and safety of baricitinib in combination with standard-of-care topical corticosteroids in patients with moderate-to-severe AD.

In February 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD1 and BREEZE-AD2, two Phase 3 studies evaluating the efficacy and safety of baricitinib monotherapy for the treatment of adult patients with moderate-to-severe AD and, in August 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD7, a Phase 3 study evaluating the efficacy and safety of baricitinib in combination with standard-of-care topical corticosteroids in patients with moderate-to-severe AD.

In January 2020, we and Lilly announced that baricitinib met the primary endpoint in both BREEZE-AD4 and BREEZE-AD5, the results of which completed the placebo-controlled data program intended to support global registrations.

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Alopecia areata is an autoimmune disorder in which the immune system attacks the hair follicles, causing hair loss in patches.

In March 2020, Lilly announced that baricitinib received Breakthrough Therapy designation for the treatment of alopecia areata, based on the positive Phase II results of Lilly’s adaptive Phase II/III study BRAVE-AA1.

In March 2021, we and Lilly announced positive results from BRAVE-AA2, the Phase III trial evaluating the efficacy and safety of once-daily baricitinib in adults with severe alopecia areata.

In April 2021, we and Lilly announced positive results from the Phase III portion of BRAVE-AA1.

In March 2020, Lilly announced that baricitinib received Breakthrough Therapy designation for the treatment of alopecia areata, based on the positive Phase 2 results of Lilly’s adaptive Phase 2/3 study BRAVE-AA1.

In March 2021, we and Lilly announced positive results from BRAVE-AA2, the Phase 3 trial evaluating the efficacy and safety of once-daily baricitinib in adults with severe alopecia areata.

In April 2021, we and Lilly announced positive results from the Phase 3 portion of BRAVE-AA1.

In September 2021, we and Lilly announced detailed results from BRAVE-AA1 and BRAVE-AA2 at the European Academy of Dermatology and Venereology Congress (EADV).

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In addition to affecting the skin and joints, it can affect other organs in the body such as the kidneys, the tissue lining the lungs and heart, and the brain.

Lilly has conducted a Phase II trial to evaluate the safety and efficacy of baricitinib in patients with SLE.

Lilly has conducted a Phase 2 trial to evaluate the safety and efficacy of baricitinib in patients with SLE.

Baricitinib’s activity profile suggests that it inhibits cytokines implicated in SLE such as type I interferon (IFN), type II IFN-γ, IL-6, and IL-23 as well as other cytokines that may have a role in SLE, including granulocyte macrophage colony stimulating factor (GM-CSF) and IL-12.

In January 2022, Lilly announced the discontinuation of the Phase III development program for baricitinib in SLE based on top-line efficacy results from two pivotal Phase III trials (SLE-BRAVE-I and –II).

In January 2022, Lilly announced the discontinuation of the Phase 3 development program for baricitinib in SLE based on top-line efficacy results from two pivotal Phase 3 trials (SLE-BRAVE-I and –II).

The primary endpoint of SRI-4 response was reached in SLE-BRAVE-I but was not reached in SLE-BRAVE-II and key secondary endpoints were not met in either study.

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In June 2020, we and Novartis announced that the MHLW approved TABRECTA for METex14 mutation-positive advanced and/or recurrent unresectable NSCLC.

In April 2022, we and Novartis announced a positive opinion from the CHMP based on data from the Phase II GEOMETRY mono-1 study showing an overall response rate (ORR) of 51.6% in a cohort evaluating second-line patients only and 44% in all previously-treated patients with advanced non-small cell lung cancer (NSCLC) harboring alterations leading to MET exon 14 skipping.

In April 2022, we and Novartis announced a positive opinion from the CHMP based on data from the Phase 2 GEOMETRY mono-1 study showing an overall response rate (ORR) of 51.6% in a cohort evaluating second-line patients only and 44% in all previously-treated patients with advanced non-small cell lung cancer (NSCLC) harboring alterations leading to MET exon 14 skipping.

In June 2022, we and Novartis announced the European Commission approval of capmatinib as TABRECTA as monotherapy treatment of adults with advanced non-small cell lung cancer (NSCLC) harboring alterations leading to mesenchymal-epithelial-transition factor gene (MET) exon 14 (METex14) skipping who require systemic therapy following prior treatment with immunotherapy and/or platinum-based chemotherapy.

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Graft-versus-host disease.

In March 2022, we and Novartis announced a positive opinion from the CHMP for ruxolitinib in acute and chronic GVHD, based on data from the Phase III REACH2 and REACH3 trials.

In March 2022, we and Novartis announced a positive opinion from the CHMP for ruxolitinib in acute and chronic GVHD, based on data from the Phase 3 REACH2 and REACH3 trials.

GVHD is a life-threatening complication of stem cell transplants, with no established standard of care in Europe for patients who do not adequately respond to first-line steroid treatment.

In May 2022, we and Novartis announced the EC approval of ruxolitinib as JAKAVI for the treatment of acute or chronic GVHD in patients aged 12 years and older who have inadequate response to corticosteroids or other systemic therapies.

In August 2023, Novartis announced Jakavi was approved for use in graft-versus-host disease after hematopoietic stem cell transplant, in Japan.

Indication and status

baricitinib (Olumiant ® )

(JAK1/JAK2) 1

Atopic dermatitis:

approved in Europe and Japan

Severe alopecia areata:

approved in the United States, Europe and Japan

capmatinib (Tabrecta ® ) (MET) 2

NSCLC (with MET exon 14 skipping mutations):

approved in the United States, Europe and Japan

In May 2022, we and Novartis announced the European Commission approval of ruxolitinib as JAKAVI for the treatment of acute or chronic GVHD in patients aged 12 years and older who have inadequate response to corticosteroids or other systemic therapies.

In August 2023, Novartis announced that JAKAVI had been approved in Japan for use in graft-versus-host disease after hematopoietic stem cell transplant.

Partnered Programs Indication and Phase

Ruxolitinib (JAKAVI) 1

(JAK1/JAK2) 3

Acute and chronic GVHD:

Approved in Europe and Japan

Baricitinib (OLUMIANT) 2

Approved in Europe and Japan

Severe alopecia areata (AA):

Approved in the U.S., Europe and Japan

Capmatinib (TABRECTA) 3

NSCLC (with MET exon 14 skipping mutations):

Approved in the U.S., Europe and Japan

ruxolitinib licensed to Novartis outside of the United States for use in hematology and oncology excluding topical administration.

baricitinib licensed to Lilly.

capmatinib licensed to Novartis.

ruxolitinib licensed to Novartis ex-US for use in hematology and oncology excluding topical administration.

Pending Acquisition

In April 2024, we entered into an agreement and plan of merger with Escient Pharmaceuticals, Inc.

(“Escient”), pursuant to which we will acquire Escient.

Escient is a clinical-stage drug development company advancing novel small molecule therapeutics for systemic immune and neuro-immune disorders.

Escient’s clinical development portfolio includes EP262, a first-in-class, potent, highly selective, once-daily small molecule antagonist of Mas-related G protein-coupled receptor X2 (MRGPRX2) and EP547, a first-in-class oral MRGPRX4 antagonist.

By blocking MRGPRX2 and degranulation of mast cells, EP262 has the potential to effectively treat multiple mast cell-mediated diseases including atopic dermatitis (AD), chronic inducible urticaria (CIndU) and chronic spontaneous urticaria (CSU).

EP262 is in Phase 1b/2 clinical trials for the treatment of AD, CIndU and CSU.

EP547 is in a Phase 1b/2 trial for the treatment of cholestatic pruritis and uremic pruritis.

Upon the terms and subject to the conditions set forth in the merger agreement, we will acquire Escient for consideration of $750.0 million plus Escient’s net cash remaining at the close of the transaction, subject to adjustments set forth in the merger agreement.

The acquisition is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, among other customary conditions, and will become effective promptly following the satisfaction or waiver of these conditions.

License Agreements and Business Relationships

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Below is a brief description of our significant business relationships and collaborations and related license agreements that expand our pipeline and provide us with certain rights to existing and potential new products and technologies.

Additional information regarding our collaboration agreements, including their financial and accounting impact on our business and results of operations, can be found in Note 7 of notes to the condensed consolidated financial statements.

Additional information regarding our collaboration agreements, including their financial and accounting impact on our business and results of operations, can be found at Note 8 of Notes to the Condensed Consolidated Financial Statements.

Out-License Agreements

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In May 2020, we amended our agreement with Lilly to enable Lilly to commercialize baricitinib for the treatment of COVID-19.

In December 2018, we entered into a Research Collaboration and Licensing Agreement with Innovent Biologics, Inc.

Under the terms of this agreement, Innovent received exclusive development and commercialization rights to pemigatinib and our clinical-stage product candidate parsaclisib in hematology and oncology indications in mainland China, Hong Kong, Macau and Taiwan.

In August 2021, we entered into a Collaboration and License Agreement with a subsidiary of InnoCare Pharma Limited.

Under the terms of this agreement, InnoCare’s subsidiary received development and exclusive commercialization rights to tafasitamab in hematology and oncology in mainland China, Hong Kong, Macau and Taiwan.

In April 2022, we entered into a Strategic Alliance Agreement with Maruho Co., Ltd.

Under the terms of this agreement, Maruho received development, manufacturing and exclusive commercialization rights to ruxolitinib cream, and other potential future topical formulations of ruxolitinib, in autoimmune and inflammatory dermatologic diseases in Japan.

CMS Aesthetics Limited

In December 2022, we entered into a Collaboration and License Agreement with CMS Aesthetics Limited, a subsidiary of China Medical System Holdings Limited.

Under the terms of the agreement, CMS received an exclusive license to develop and commercialize, and a non-exclusive license to manufacture, ruxolitinib cream, and potentially other future topical formulations of ruxolitinib, in autoimmune and inflammatory dermatologic diseases, including vitiligo and atopic dermatitis, for patients in mainland China, Hong Kong, Macau, Taiwan and Southeast Asia.

China Medical Systems Holdings Limited

In March 2024, we entered into a collaboration and license agreement with China Medical System Holdings Limited (CMSHL), through a wholly-owned dermatology medical aesthetic subsidiary CMS Skinhealth, for the development and commercialization of povorcitinib, a selective oral JAK1 inhibitor, to research, develop, register and commercialize in mainland China, Hong Kong, Macau, Taiwan and certain countries in Southeast Asia.

In-License Agreements

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Under this agreement, the parties have agreed to collaborate on the discovery of novel immuno-therapeutics using Agenus’ antibody discovery platforms.

In December 2016, we entered into a Collaboration and License Agreement with Merus.

Under this agreement, which became effective in January 2017, the parties have agreed to collaborate with respect to the research, discovery and development of bispecific antibodies utilizing Merus’ technology platform.

The collaboration encompasses up to eleven independent programs.

In January 2022, we decided to opt-out of the continued development of MCLA-145, a bispecific antibody targeting PD-L1 and CD137.

We continue to collaborate with Merus and leverage the Merus platform to develop a pipeline of novel agents, as we continue to hold worldwide exclusive development and commercialization rights to up to ten additional programs.

In October 2017, we entered into a Global Collaboration and License Agreement with MacroGenics.

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MacroGenics has retained the right to develop and commercialize, at its cost and expense, its pipeline assets in combination with INCMGA0012.

In January 2018, we entered into a Target Discovery, Research Collaboration and Option Agreement with Syros Pharmaceuticals, Inc.

Under this agreement, Syros would use its proprietary gene control platform to identify novel therapeutic targets with a focus in myeloproliferative neoplasms and we had received options to obtain exclusive worldwide rights to intellectual property resulting from the collaboration for up to seven validated targets.

In August 2023, we terminated the Target Discovery, Research Collaboration and Option Agreement with Syros, effective as of October 10, 2023.

In January 2020, we entered into a Collaboration and License Agreement with MorphoSys AG and MorphoSys US Inc., a wholly-owned subsidiary of MorphoSys AG, covering the worldwide development and commercialization of MOR208 (tafasitamab), an investigational Fc engineered monoclonal antibody directed against the target molecule CD19.

Under the terms of this agreement, we received exclusive commercialization rights outside of the United States, and MorphoSys and we have co-commercialization rights in the United States, with respect to tafasitamab.

In December 2016, we entered into a Collaboration and License Agreement with Merus.

The collaboration encompasses up to ten independent programs.

In September 2021, we entered into a Collaboration and License Agreement with Syndax covering the worldwide development and commercialization of SNDX-6352 (axatilimab), Syndax’s anti-CSF-1R monoclonal antibody.

In March 2021, axatilimab was granted Orphan Drug Designation by the FDA for the treatment of chronic GVHD and a second designation in April 2021 for treatment of idiopathic pulmonary fibrosis.

Under the terms of this agreement, we received exclusive commercialization rights outside of the United States, and Syndax has co-commercialization rights in the United States with respect to axatilimab.

Axatilimab was granted Orphan Drug Designation by the FDA in March 2021 for the treatment of chronic GVHD and again in April 2021 for the treatment of idiopathic pulmonary fibrosis.

Under the terms of this agreement, we received exclusive commercialization rights to axatilimab outside of the United States, and co-commercialization rights in the United States.

Critical Accounting Policies and Significant Estimates

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For a discussion of our critical accounting policies, refer to “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Form 10-K.

There have been no significant changes to our critical accounting policies or estimates during the nine months ended September 30, 2023.

Recent Accounting Pronouncements

There were no new accounting pronouncements issued nor adopted since our filing of the Annual Report on Form 10-K for the year ended December 31, 2022, which could have a significant effect on our condensed consolidated financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no significant changes to our critical accounting policies or estimates during the three months ended March 31, 2024.

Recent Accounting Pronouncements and Regulatory Updates

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .” This amended guidance applies to all public entities and aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, to enable investors to develop more decision-useful financial analyses.

This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact that ASU No.

2023-07 will have on our annual consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .” This amended guidance applies to all entities and broadly aims to enhance the transparency and decision usefulness of income tax disclosures.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted for any annual periods for which financial statements have not been issued or made available for issuance.

We are currently evaluating the impact that ASU No.

2023-09 will have on our consolidated financial statements.

In March 2024, the Securities and Exchange Commission (SEC) issued Release Nos.

34-99678 “ The Enhancement and Standardization of Climate-Related Disclosures for Investors ” to require public companies to provide certain climate-related information in their registration statements and annual reports.

The compliance dates for the rules amended by this release begin in fiscal year 2025 for large accelerated filers.

On April 4, 2024, the SEC issued an order staying the newly adopted rules.

We are currently evaluating the impact of this release on our financial disclosures.

Results of Operations

We recorded net income of $171.3 million and basic and diluted net income per share of $0.76 for the three months ended September 30, 2023, as compared to net income of $112.8 million and basic net income per share of $0.51 and diluted net income per share of $0.50 in the corresponding period in 2022.

We recorded net income of $396.5 million and basic net income per share of $1.77 and diluted net income per share of $1.76 for the nine months ended September 30, 2023, as compared to net income of $312.2 million and basic net income per share of $1.41 and diluted net income per share of $1.40 in the corresponding period in 2022.

We recorded net income of $169.5 million and basic net income per share of $0.76 and diluted net income per share of $0.75 for the three months ended March 31, 2024, as compared to net income of $21.7 million and basic and diluted net income per share of $0.10 in the corresponding period in 2023.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions) (in millions)

(in millions)

JAKAFI revenues, net $ 571.8 $ 580.0

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PEMAZYRE revenues, net 17.7 22.5

MINJUVI revenues, net 8.3 5.9 28.0 14.8

MINJUVI/MONJUVI revenues, net 23.9 6.5

ZYNYZ revenues, net 0.5 —

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Total revenues $ 880.9 $ 808.7

The increase in JAKAFI product revenues for the three months ended September 30, 2023 as compared to the corresponding period in 2022 was comprised of a volume increase of $16.1 million and a price increase of $0.6 million.

The increase in JAKAFI net product revenues for the nine months ended September 30, 2023 as compared to the corresponding period in 2022 was comprised of a volume increase of $98.8 million and a price increase of $38.1 million.

The JAKAFI net product revenues increase was primarily driven by growth in patient demand and was partially offset by a decrease in inventory.

The increase in OPZELURA net product revenues for the three and nine months ended September 30, 2023 was driven by increased patient demand and expanded coverage.

The increase in MINJUVI net product revenues for the nine months ended September 30, 2023 was driven by the recognition during the second quarter of 2023 of approximately $6.0 million of previously deferred MINJUVI revenue related to the Early Access Program in France, which ended in June 2023.

The decrease in JAKAFI net product revenues for the three months ended March 31, 2024 as compared to the corresponding period in 2023 was comprised of a volume decrease of $17.8 million and a price increase of $9.6 million.

The JAKAFI net product revenues decrease for the three months ended March 31, 2024 as compared to the corresponding period in 2023 was primarily driven by a decrease in channel inventory.

The increase in OPZELURA net product revenues for the three months ended March 31, 2024 as compared to the corresponding period in 2023 was comprised of a volume increase of $26.8 million and a price increase of $2.3 million.

The increase in OPZELURA net product revenues for the three months ended March 31, 2024 was driven by growth in new patient starts and refills.

The increase in MINJUVI/MONJUVI net product revenues for the three months ended March 31, 2024 was driven by the asset acquisition completed in February 2024, under which we gained exclusive global rights to tafasitamab marketed in the United States as MONJUVI (tafasitamab-cxix).

Refer to Note 6 of Notes to the Condensed Consolidated Financial Statements for further information related to the asset acquisition.

Our product revenues may fluctuate from quarter to quarter due to our customers’ purchasing patterns over the course of the year, including as a result of increased inventory building by customers in advance of expected or announced price increases.

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Our revenue recognition policies require estimates of the aforementioned sales allowances each period.

Our milestone and contract revenues for the three and nine months ended September 30, 2023, were derived from a regulatory milestone of $5.0 million under the Novartis collaboration and license agreement.

Our milestone and contract revenues for the nine months ended September 30, 2022, were derived from total regulatory milestones of $60.0 million under the Novartis collaboration and license agreement, regulatory milestones of $70.0 million under the license, development and commercialization agreement with Lilly, and a $5.0 million regulatory milestone under the Innovent research collaboration and licensing agreement.

The following table provides a summary of activity with respect to our sales allowances and accruals (in thousands):

Nine Months Ended September 30, 2023 Discounts and

Three Months Ended March 31, 2024 Discounts and

Fees Government

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Credits/payments for prior period sales (15,864) (72,723) (4,237) (2,689) (95,513)

Balance at September 30, 2023 $ 19,326 $ 197,217 $ 11,396 $ 10,446 $ 238,385

Balance at March 31, 2024 $ 18,366 $ 323,035 $ 13,308 $ 11,744 $ 366,453

Government rebates and chargebacks are the most significant component of our sales allowances.

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Centers for Medicare and Medicaid Services (“CMS”) alleging that a recent regulation issued by CMS on the definition of “line extension” for purposes of the Medicaid rebate program is too broad and has the unintended consequence of treating OPZELURA as a “line extension” of JAKAFI under this program.

We believe that such a reading would be a violation of CMS’s statutory authority and that it would be arbitrary and capricious to treat OPZELURA which, among other differentiators, is indicated to treat entirely different medical conditions and entirely different patient populations than JAKAFI.

As of September 30, 2023, we have accrued approximately $42.9 million within accrued and other current liabilities on the condensed consolidated balance sheet.

The impact on OPZELURA gross to net deductions for the quarter ending September 30, 2023 is approximately 6.6%.

We believe that such a reading would violate CMS’s statutory authority and be arbitrary and capricious given that OPZELURA, among other differentiators, is indicated to treat entirely different medical conditions and entirely different patient populations than JAKAFI.

As of March 31, 2024, we have accrued approximately $73.7 million within accrued and other current liabilities on the condensed consolidated balance sheet, relating to the incremental rebates that would be owed were OPZELURA considered a line extension of JAKAFI.

The impact on OPZELURA gross to net deductions for the quarter ending March 31, 2024 is approximately 7.2%.

If OPZELURA is not treated as a line extension of JAKAFI, this would result in a reversal of our accrual and a lower future gross to net deduction for OPZELURA.

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Product royalty revenues on commercial sales of OLUMIANT by Lilly are based on net sales of licensed products in licensed territories as provided by Lilly.

JAKAVI product royalty revenues for the three months ended September 30, 2023 as compared to the corresponding period in 2022 were impacted by favorable changes in foreign currency exchange rates, and were impacted by unfavorable changes in foreign currency exchange rates for the nine months ended September 30, 2023.

OLUMIANT product royalty revenues for the three and nine months ended September 30, 2023 as compared to the corresponding period in 2022 were impacted by unfavorable changes in foreign currency exchange rates.

In the third quarter of 2022, Olumiant royalties were impacted by a one-time deduction related to securing intellectual property rights.

Product royalty revenues on commercial sales of PEMAZYRE by Innovent are based on net sales of licensed products in licensed territories as provided by Innovent.

Our milestone and contract revenues for the three months ended March 31, 2024, was derived from a $25.0 million upfront payment received upon our transfer of functional intellectual property to CMSHL.

Cost of Product Revenues

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions) (in millions)

(in millions)

Product costs $ 27.4 $ 23.5

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Cost of product revenues includes all product related costs, reserves for obsolescence, employee personnel costs, including stock compensation, for those employees dedicated to the production of our commercial products, royalties under our collaborative agreements and amortization of our licensed intellectual property rights for ICLUSIG and the amortization of capitalized milestone payments.

The increase in cost of product revenues for the three and nine months ended September 30, 2023 as compared to the same periods in 2022 was primarily due to growth in net product revenues.

The increase in cost of product revenues for the three months ended March 31, 2024 as compared to the same periods in 2023 was primarily due to growth in net product revenues.

Operating Expenses

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions) (in millions)

(in millions)

Salary and benefits related $ 122.7 $ 100.4

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We account for research and development costs by natural expense line and not costs by project.

The increase in salary and benefits related expense for the three and nine months ended September 30, 2023 as compared to the corresponding periods in 2022 was due primarily to increased development headcount to sustain our development pipeline.

The increase in salary and benefits related expense for the three months ended March 31, 2024 as compared to the corresponding period in 2023 was due primarily to increased development headcount to sustain our development pipeline.

Stock compensation expense may fluctuate from period to period based on the number of awards granted, stock price volatility and expected award lives, as well as expected award forfeiture rates which are used to value equity-based compensation.

The decrease in clinical research and outside services expense for the three months ended September 30, 2023 as compared to the corresponding period in 2022 was primarily due to a decrease in one-time collaboration related expenses, and the increase in clinical research and outside services expense for the nine months ended September 30, 2023 as compared to the corresponding period in 2022, was due to continued investment in our late stage development assets, partially offset by a decrease in one-time collaboration related expenses.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $3.0 million and $12.7 million, respectively, for the three and nine months ended September 30, 2023.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $33.5 million and $56.0 million, respectively, for the three and nine months ended September 30, 2022.

Research and development expenses for the three and nine months ended September 30, 2023 and 2022 were net of $11.3 million, $37.0 million, $8.7 million and $43.3 million, respectively, of costs reimbursed by our collaborative partners.

The decrease in clinical research and outside services expense for the three months ended March 31, 2024 as compared to the corresponding period in 2023 was primarily due to differences in the timing of certain expenses.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $1.0 million and $2.7 million, respectively, for the three months ended March 31, 2024 and 2023.

Research and development expenses for the three months ended March 31, 2024 and 2023 were net of $17.1 million and $0.6 million, respectively, of costs reimbursed by our collaborative partners.

In addition to one-time expenses resulting from upfront fees in connection with the entry into any new or amended collaboration agreements and payment of milestones under those agreements, research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of preclinical and clinical trial related activities.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions) (in millions)

(in millions)

Salary and benefits related $ 83.2 $ 72.9

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Total selling, general and administrative expenses $ 300.3 $ 315.6

The increase in salary and benefits related expense for the three and nine months ended September 30, 2023 as compared to the corresponding period in 2022 was due primarily to increased headcount.

The increase in salary and benefits related expense for the three months ended March 31, 2024 as compared to the corresponding period in 2023 was due primarily to increased headcount.

This increased headcount was due primarily to the establishment of our dermatology commercial organization.

The increase in other contract services and outside costs for the nine months ended September 30, 2023, as compared to the corresponding period in 2022, was primarily due to expenses related to promotional activities to support the launch of OPZELURA for the treatment of vitiligo.

The decrease in other contract services and outside costs for the three months ended March 31, 2024, as compared to the corresponding period in 2023, was primarily due to the timing of consumer marketing activities and of certain other expenses.

(Gain) loss on change in fair value of acquisition-related contingent consideration

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The fair value of the acquisition-related contingent consideration is remeasured quarterly.

The change in fair value of the acquisition-related contingent consideration for the three and nine months ended September 30, 2023 was a gain of $0.4 million and a loss of $14.1 million, respectively, which is recorded in (gain) loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The gain on change in fair value of the acquisition-related contingent consideration for the three and nine months ended September 30, 2022 was $21.9 million and $12.2 million, respectively, which is recorded in (gain) loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the contingent consideration during the three and nine months ended September 30, 2023 was due primarily to the changes in foreign currency exchange rates included within the updated projections of future net revenues of ICLUSIG and the passage of time.

The change in fair value for the three and nine months ended September 30, 2022 was due primarily to the changes in foreign currency exchange rates included within the updated projections of future net revenues of ICLUSIG.

Loss and (profit) sharing under collaboration agreements

Under the collaboration and license agreement with MorphoSys, which was executed in March 2020, we and MorphoSys are both responsible for the commercialization efforts of tafasitamab in the United States and will share equally the profits and losses from the co-commercialization efforts.

For the three and nine months ended September 30, 2023, our 50% share of the losses and profits for tafasitamab was a loss of $1.1 million and profit of $0.9 million, respectively, as recorded in loss and (profit) sharing under collaboration agreements on the condensed consolidated statement of operations.

For the three and nine months ended September 30, 2022, our 50% share of the losses for tafasitamab was $1.8 million and $9.1 million, respectively, as recorded in loss and (profit) sharing under collaboration agreements on the condensed consolidated statement of operations.

The change in fair value of the acquisition-related contingent consideration for the three months ended March 31, 2024 and 2023 was a profit of $0.5 million and a loss of $6.2 million, respectively, which is recorded in (gain) loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the contingent consideration during the three months ended March 31, 2024 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

(Profit) and loss sharing under collaboration agreements

Under the former collaboration and license agreement with MorphoSys, which was executed in March 2020 and continued through February 5, 2024 as described further in Note 6 of Notes to the Condensed Consolidated Financial Statements, we and MorphoSys were both responsible for the commercialization efforts of tafasitamab in the United States and shared equally the profits and losses from the co-commercialization efforts.

For the period from January 1, 2024 through February 5, 2024, our 50% share of the profits for tafasitamab was $1.0 million, as recorded in (profit) and loss sharing under collaboration agreements on the condensed consolidated statement of operations.

For the three months ended March 31, 2023, our 50% share of the profits for tafasitamab was $1.4 million, as recorded in (profit) and loss sharing under collaboration agreements on the condensed consolidated statement of operations.

Interest income and other, net

Interest income and other, net for the three and nine months ended September 30, 2023 was $46.4 million and $121.9 million, respectively.

Interest income and other, net for the three and nine months ended September 30, 2022 was $11.5 million and $13.3 million, respectively.

The increase in Interest income and other, net for the three and nine months ended September 30, 2023 primarily relates to an increase in interest earned on our cash equivalents and marketable securities.

Unrealized (loss) gain on long term investments.

Interest income and other, net .

Interest income and other, net for the three months ended March 31, 2024 and 2023 was $44.7 million and $32.9 million, respectively.

The increase in Interest income and other, net for the three months ended March 31, 2024 primarily relates to an increase in interest earned on our cash equivalents and marketable securities generally due to higher interest rates.

Unrealized gain (loss) on long term investments.

Unrealized gains and losses on long term investments will fluctuate from period to period, based on the change in fair value of the securities we hold in our publicly held collaboration partners.

The following table provides a summary of those unrealized (losses) gains:

The following table provides a summary of those unrealized gains (losses):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in millions) (in millions)

(in millions)

Agenus $ (3.0) $ (10.6)

Calithera — — (0.2) (0.9)

Merus 70.2 10.4

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Syndax 3.1 (6.2)

Mink (0.2) — — —

Syros 0.1 (0.3) — (2.5)

Total unrealized (loss) gain on long term investments $ (26.7) $ (0.7) $ 9.8 $ (72.1)

Other (0.3) (0.3)

Total unrealized gain (loss) on long term investments $ 99.9 $ (5.3)

Provision for income taxes.

The provision for income taxes for the three and nine months ended September 30, 2023 was $62.5 million and $166.7 million, respectively.

The provision for income taxes for the three and nine months ended September 30, 2022 was $35.8 million and $136.3 million, respectively.

Our effective tax rate for each of the three and nine months ended September 30, 2023 and 2022 was higher than the U.S.

The provision for income taxes for the three months ended March 31, 2024 and 2023 was $66.6 million and $30.2 million, respectively.

Our effective tax rate for each of the three months ended March 31, 2024 and 2023 were higher than the U.S.

statutory rate primarily due to foreign losses with no associated tax benefit (i.e., full valuation allowance) and an increase in our valuation allowance against certain U.S.

federal and state deferred tax assets offset to a lesser extent by tax rate benefits associated with research and development and orphan drug tax credit generations and foreign derived intangible income deductions.

The effective tax rate for the three months ended September 30, 2023 increased as compared to that for the prior year period primarily due to an increase in foreign losses with no associated tax benefit.

The effective tax rate for the nine months ended September 30, 2023 decreased as compared to that for the prior year period primarily due to greater tax benefits recognized in 2023 associated with research and development and orphan drug tax credit generations, partially offset by a decrease in the tax benefit associated with foreign derived intangible income.

federal and state deferred tax assets.

This was partially offset by tax rate benefits associated with research and development and orphan drug tax credit generations and the foreign derived intangible income deduction.

Liquidity and Capital Resources

Due to historical net losses, we had an accumulated deficit of $40.7 million as of September 30, 2023.

We have funded our research and development operations through cash received from customers, sales of equity securities, the issuance of convertible notes, and collaborative arrangements.

At September 30, 2023, we had available cash, cash equivalents and marketable securities of $3.5 billion.

At March 31, 2024, we had available cash, cash equivalents and marketable securities of $3.9 billion.

Our cash and marketable securities balances are held in a variety of interest-bearing instruments, including money market accounts and U.S.

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Available cash is invested in accordance with our investment policy’s primary objectives of liquidity, safety of principal and diversity of investments.

Net cash provided by operating activities for the nine months ended September 30, 2023 was $348.8 million and net cash provided by operating activities for the nine months ended September 30, 2022 was $686.3 million.

The decrease in cash provided by operating activities was due primarily to changes in working capital.

Net cash provided by operating activities for the three months ended March 31, 2024 was $218.8 million and net cash used in operating activities for the three months ended March 31, 2023 was $105.6 million.

The increase in cash provided by operating activities was due primarily to changes in working capital.

Our investing activities, other than purchases, sales and maturities of marketable securities, have consisted predominantly of capital expenditures and purchases of long term investments.

Net cash used in investing activities was $53.2 million for the nine months ended September 30, 2023, which represented purchases of marketable securities of $222.2 million, payments for intangible assets of $15.0 million, capital expenditures of $30.2 million, and purchases of long term investments of $10.0 million, offset in part by the sale and maturities of marketable securities of $224.2 million.

Net cash used in investing activities was $57.6 million for the nine months ended September 30, 2022, which represented purchases of marketable securities of $59.1 million and capital expenditures of $56.6 million, offset in part by the sales and maturities of marketable securities of $58.0 million.

Net cash used in investing activities was $73.1 million for the three months ended March 31, 2024, which represented purchases of marketable securities of $165.8 million, and capital expenditures of $9.5 million, offset in part by the sale and maturities of marketable securities of $102.2 million.

Net cash used in investing activities was $28.6 million for the three months ended March 31, 2023, which represented purchases of marketable securities of $54.9 million, payments for intangible assets of $15.0 million, and capital expenditures of $11.9 million, offset in part by the sales and maturities of marketable securities of $53.2 million.

In the future, net cash used by investing activities may fluctuate significantly from period to period due to the timing of strategic equity investments, acquisitions, and capital expenditures and maturities/sales and purchases of marketable securities.

Net cash used in financing activities was $20.4 million for the nine months ended September 30, 2023, and net cash provided by financing activities was $1.7 million for the nine months ended September 30, 2022, respectively, primarily representing cash paid to ARIAD/Takeda for contingent consideration, offset in part by proceeds from the issuance of common stock under our stock plans.

In October 2019, we entered into an agreement with Wilmington Friends School Inc., to purchase property for $50.0 million, subject to certain closing conditions.

As of September 30, 2023, these conditions had not been met, and we no longer expect the purchase to move forward.

Accordingly, the related assets of approximately $5.6 million have been written off, as recorded on the condensed consolidated statements of operations in selling, general and administrative expenses.

In August 2021, we entered into a $500.0 million, three-year senior unsecured revolving credit facility.

Net cash used in financing activities was $12.4 million for the three months ended March 31, 2024, and net cash provided by financing activities was $4.0 million for the three months ended March 31, 2023, respectively, primarily representing cash paid to ARIAD/Takeda for contingent consideration, offset in part by proceeds from the issuance of common stock under our stock plans.

In August 2021, we entered into a $500.0 million, three-year senior unsecured revolving credit facility, which was subsequently amended in May 2023.

We may increase the maximum revolving commitments or add one or more incremental term loan facilities, subject to obtaining commitments from any participating lenders and certain other conditions, in an amount not to exceed $250.0 million plus a contingent additional amount that is dependent on our pro forma consolidated leverage ratio.

As of September 30, 2023, we had no outstanding borrowings and were in compliance with all covenants under this facility.

income tax payments will increase significantly in 2023 resulting from the full utilization in 2022 of our research and development and orphan drug tax credit carryforwards generated in prior years.

As of March 31, 2024, we had no outstanding borrowings and were in compliance with all covenants under this facility.

Due to the full utilization of our research and development and orphan drug tax credit carryforwards generated in prior years, our U.S.

tax liabilities continue to reflect the adverse impacts of the mandatory capitalization and amortization of research and development expenses as required under the Tax Cuts and Jobs Act of 2017, which eliminated the immediate expensing of such expenses.

11 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis