What changed in this filing

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Item 1. Financial Statements

2025-04-29 compared with 2024-10-29 · 196 added, 307 removed, 474 unchanged (51% of the section changed)

3 unchanged sentences

(in thousands, except number of shares and par value)

September 30,

2025 December 31,

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Cash and cash equivalents $ 1,941,722 $ 1,687,829

Marketable securities—available-for-sale (amortized cost $ 463,921 and $ 442,816 as of September 30, 2024 and December 31, 2023, respectively;

allowance for credit losses $ 0 as of September 30, 2024 and December 31, 2023)

Marketable securities—available-for-sale (amortized cost $ 465,659 and $ 469,917 as of March 31, 2025 and December 31, 2024, respectively;

allowance for credit losses $ 0 as of March 31, 2025 and December 31, 2024)

466,936 470,263

Short term equity investments 3,344 —

Accounts receivable 823,134 853,154

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400,000,000 shares authorized;

192,798,328 and 224,286,862 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

193,783,446 and 193,434,305 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 4,588,286 4,533,437

Accumulated other comprehensive income 15,655 13,106

(Accumulated deficit) retained earnings ( 1,274,093 ) 160,385

Accumulated other comprehensive loss ( 6,238 ) ( 13,121 )

Accumulated deficit ( 914,678 ) ( 1,072,881 )

Total stockholders’ equity 3,667,563 3,447,628

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Product revenues, net $ 922,274 $ 729,923

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Loss (gain) on change in fair value of acquisition-related contingent consideration 11,572 ( 456 )

Loss and (profit) sharing under collaboration agreements — 1,053 ( 1,025 ) ( 858 )

(Profit) and loss sharing under collaboration agreements — ( 1,025 )

Total costs, expenses and other 847,730 788,991

Income (loss) from operations 146,085 214,705 ( 240,147 ) 433,255

Interest income and other, net 24,195 46,371 118,708 121,912

Income from operations 205,168 91,898

Interest income 22,929 46,770

Interest expense ( 660 ) ( 430 )

Realized and unrealized (loss) gain on equity investments ( 12,982 ) ( 26,654 ) 126,206 9,839

(Loss) gain on equity investments ( 1,343 ) 99,947

Other, net 8,096 ( 2,026 )

Income before provision for income taxes 234,190 236,159

Provision for income taxes 75,987 66,611

Net income (loss) $ 106,456 $ 171,269 $ ( 168,597 ) $ 396,520

Net income (loss) per share:

Net income $ 158,203 $ 169,548

Net income per share:

Basic $ 0.82 $ 0.76

Diluted $ 0.80 $ 0.75

Shares used in computing net income (loss) per share:

Shares used in computing net income per share:

Basic 193,712 224,484

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INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income (loss) $ 106,456 $ 171,269 $ ( 168,597 ) $ 396,520

Net income $ 158,203 $ 169,548

Other comprehensive income (loss):

Foreign currency translation gain (loss) 5,440 ( 17,820 )

Unrealized gain on marketable securities, net of tax 5,463 768 3,463 3,677

Unrealized gain (loss) on marketable securities, net of tax 931 ( 1,746 )

Defined benefit pension gain, net of tax 512 288

Other comprehensive income (loss) 6,883 ( 19,278 )

Comprehensive income (loss) $ 127,531 $ 167,357 $ ( 166,048 ) $ 404,345

Comprehensive income $ 165,086 $ 150,270

See accompanying notes.

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Paid-in Capital Accumulated Other

Comprehensive Income Retained Earnings (Accumulated Deficit) Total

Comprehensive Loss Accumulated Deficit Total

Stockholders’

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Stock compensation — 60,982 — — 60,982

Other comprehensive loss — — ( 19,278 ) — ( 19,278 )

Net income — — — 169,548 169,548

Balance at March 31, 2024 $ 224 $ 5,070,286 $ ( 6,172 ) $ 329,933 $ 5,394,271

Issuance of 71,769 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and performance shares, net of shares withheld for taxes and 291,735 shares of Common Stock under the ESPP

— 13,792 — — 13,792

Issuance of 1,345 shares of Common Stock for services rendered

Stock compensation — 56,637 — — 56,637

Repurchases of common stock ( 33 ) ( 758,061 ) — ( 1,265,778 ) ( 2,023,872 )

Other comprehensive income — — 6,883 — 6,883

Net loss — — — ( 444,601 ) ( 444,601 )

Balances at June 30, 2024 $ 191 $ 4,382,734 $ ( 5,420 ) $ ( 1,380,446 ) $ 2,997,059

Issuance of 1,060,300 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes

1 ( 31,270 ) — — ( 31,269 )

Issuance of 1,242 shares of Common Stock for services rendered

Stock compensation — 77,922 — — 77,922

Repurchases of common stock — — — ( 103 ) ( 103 )

Other comprehensive income — — 21,075 — 21,075

Net income — — — 158,203 158,203

Balances at September 30, 2024 $ 192 $ 4,429,466 $ 15,655 $ ( 1,274,093 ) $ 3,171,220

INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

(unaudited, in thousands, except number of shares)

Balance at March 31, 2025 $ 193 $ 4,588,286 $ ( 6,238 ) $ ( 914,678 ) $ 3,667,563

Stock Additional

Paid-in Capital Accumulated Other

Comprehensive Income Accumulated

Deficit Total

Comprehensive Loss Retained Earnings (Accumulated Deficit) Total

Stockholders’

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Stock compensation — 59,781 — — 59,781

Other comprehensive income — — 5,873 — 5,873

Net income — — — 21,703 21,703

Balances at March 31, 2023 $ 223 $ 4,856,914 $ 20,942 $ ( 415,511 ) $ 4,462,568

Issuance of 59,093 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and performance shares, net of shares withheld for taxes and 216,168 shares of Common Stock under the ESPP

— 13,704 — — 13,704

Issuance of 1,282 shares of Common Stock for services rendered

Stock compensation — 54,928 — — 54,928

Other comprehensive income — — 5,864 — 5,864

Net income — — — 203,548 203,548

Balances at June 30, 2023 $ 223 $ 4,925,626 $ 26,806 $ ( 211,963 ) $ 4,740,692

Issuance of 762,231 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes

1 ( 24,682 ) — — ( 24,681 )

Issuance of 1,278 shares of Common Stock for services rendered

Stock compensation — 47,999 — — 47,999

Other comprehensive loss — — ( 19,278 ) — ( 19,278 )

Net income — — — 169,548 169,548

Balances at September 30, 2023 $ 224 $ 4,949,023 $ 22,894 $ ( 40,694 ) $ 4,931,447

Balances at March 31, 2024 $ 224 $ 5,070,286 $ ( 6,172 ) $ 329,933 $ 5,394,271

See accompanying notes.

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(unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net (loss) income $ ( 168,597 ) $ 396,520

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Net income $ 158,203 $ 169,548

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 22,362 21,947

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Other, net 5,292 2,954

Realized and unrealized gain on equity investments ( 126,206 ) ( 9,839 )

Loss on change in fair value of acquisition-related contingent consideration 23,847 14,144

Loss (gain) on equity investments 1,343 ( 99,947 )

Loss (gain) on change in fair value of acquisition-related contingent consideration 11,572 ( 456 )

Changes in operating assets and liabilities:

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Accrued and other liabilities 74,842 105,465

Net cash (used in) provided by operating activities ( 45,881 ) 348,758

Net cash provided by operating activities 266,067 218,811

Cash flows from investing activities:

Purchase of long term investments — ( 10,000 )

Sale of equity investments 8 —

Capital expenditures ( 3,169 ) ( 9,549 )

Payments for intangible assets ( 13,900 ) ( 15,000 )

Purchases of marketable securities ( 41,236 ) ( 165,808 )

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Cash flows from financing activities:

Repurchases of common stock ( 2,004,790 ) —

Proceeds from issuance of common stock under stock plans 3,239 477

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Effect of exchange rates on cash, cash equivalents, and restricted cash ( 552 ) ( 676 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 1,909,375 ) 275,827

Net increase in cash, cash equivalents, and restricted cash 253,936 132,610

Cash, cash equivalents, and restricted cash at beginning of period 1,689,451 3,215,221

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

Organization and Business

Incyte Corporation (including its subsidiaries, “Incyte,” “we,” “us,” or “our”) is a biopharmaceutical company focused on developing and commercializing proprietary therapeutics.

Our portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products JAKAFI® (ruxolitinib), ICLUSIG® (ponatinib), PEMAZYRE® (pemigatinib), OPZELURA® (ruxolitinib cream), MINJUVI® (tafasitamab), MONJUVI® (tafasitamab-cxix), and ZYNYZ® (retifanlimab-dlwr), as well as NIKTIMVO™ (axatilimab-csfr), which was approved for medical use in the United States in August 2024 and will be co-commercialized.

Our portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products JAKAFI® (ruxolitinib), ICLUSIG® (ponatinib), PEMAZYRE® (pemigatinib), OPZELURA® (ruxolitinib cream), MINJUVI® (tafasitamab), MONJUVI® (tafasitamab-cxix) and ZYNYZ® (retifanlimab-dlwr), as well as NIKTIMVO™ (axatilimab-csfr), which is co-commercialized.

Our operations are treated as one operating segment.

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The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The condensed consolidated balance sheet as of September 30, 2024, the condensed consolidated statements of operations, comprehensive income (loss), and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The condensed consolidated balance sheet as of March 31, 2025, the condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the three months ended March 31, 2025 and 2024, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The condensed consolidated balance sheet at December 31, 2024 has been derived from our audited consolidated financial statements.

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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.

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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.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024, and are applicable for disclosures in our Annual Report on Form 10-K beginning with the year ending December 31, 2025.

We are currently evaluating the impact that ASU No.

2023-09 will have on our consolidated financial statements.

In March 2024, the 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.

2023-09 will have on our condensed consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, “ Disaggregation of Income Statement Expenses (DISE).” This new guidance applies to all public entities and requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

Public entities must adopt the new standard prospectively for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption and retrospective application are permitted.

We are currently evaluating the impact ASU No.

2024-03 will have on our consolidated financial statements and related disclosures.

Revenues are recognized under guidance within ASC 606, Revenue from Contracts with Customers .

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

JAKAFI revenues, net $ 709,412 $ 571,839

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MINJUVI/MONJUVI revenues, net 29,551 23,874

NIKTIMVO revenues, net 13,613 —

ZYNYZ revenues, net 3,009 467

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TABRECTA product royalty revenues 6,413 5,234

PEMAZYRE product royalty revenues 414 523 1,838 1,284

Other product royalty revenues 1,266 548

Total product royalty revenues 130,624 125,966

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The following is a summary of our marketable security portfolio for the periods presented (in thousands):

Unrealized Gains

(Losses) Estimated

September 30, 2024

Cost Unrealized Gains Unrealized Losses

March 31, 2025

Debt securities (government) $ 465,659 $ 1,524 $ ( 247 ) $ 466,936

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Debt securities (government) $ 469,917 $ 971 $ ( 625 ) $ 470,263

The table below summarizes the contractual maturities of our available-for-sale debt securities as of March 31, 2025 (in thousands):

Total Less than 1 Year 1-5 Years

Fair value of debt securities (government) $ 466,936 $ 256,929 $ 210,007

Our available-for-sale debt securities generally have contractual maturity dates of between 12 to 18 months.

Debt security assets were assessed for risk of expected credit losses.

As of September 30, 2024 and December 31, 2023, the available-for-sale debt securities were held in U.S.-government backed securities and in Treasury bonds and were assessed on an individual security basis to have a de minimis risk of credit loss.

As of March 31, 2025 and December 31, 2024, the available-for-sale debt securities were held in U.S.-government backed securities and in Treasury bonds and were assessed on an individual security basis to have a de minimis risk of credit loss.

Fair Value Measurements

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government debt securities that are classified as available-for-sale.

Additionally, we have short term equity investments, which we intended to sell within one year, classified as Level 1 that were valued using their respective closing stock prices on The Nasdaq Stock Market.

At September 30, 2024 and December 31, 2023, our Level 2 U.S.

At March 31, 2025 and December 31, 2024, our Level 2 U.S.

government debt securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments.

Our long term equity investments classified as Level 1 were valued using their respective closing stock prices on The Nasdaq Stock Market.

We did not experience any transfers of financial instruments between the fair value hierarchy levels during the nine months ended September 30, 2024.

We did not experience any transfers of financial instruments between the fair value hierarchy levels during the three months ended March 31, 2025.

The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis (in thousands):

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(Level 3) Balance as of

September 30, 2024

March 31, 2025

Cash and cash equivalents $ 1,941,722 $ — $ — $ 1,941,722

Debt securities (government) — 466,936 — 466,936

Short term equity investments (Note 8)

3,344 — — 3,344

Long term equity investments (Note 8)

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(Level 3) Balance as of

September 30, 2024

March 31, 2025

Acquisition-related contingent consideration $ — $ — $ 195,000 $ 195,000

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Contingent consideration earned during the period but not yet paid ( 9,572 )

Payments made during the period ( 9,544 )

Change in fair value of contingent consideration 11,572

Balance at September 30, $ 207,000

Balance at March 31, $ 195,000

The initial fair value of the contingent consideration was determined on the date of acquisition, June 1, 2016, using an income approach based on projected future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment over 18 years, and discounted to present value at a rate of 10 %.

The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations.

The valuation inputs utilized to estimate the fair value of the contingent consideration as of September 30, 2024 and December 31, 2023 included a discount rate of 10 % and updated projections of future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment.

The change in fair value of the contingent consideration during the three and nine months ended September 30, 2024 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

We generally make payments to Takeda Pharmaceutical Company Limited quarterly based on the royalties or any additional milestone payments earned in the previous quarter.

At September 30, 2024 and December 31, 2023, contingent consideration earned but not yet paid was $ 19.3 million and $ 10.3 million, respectively, and was included in accrued and other current liabilities on the condensed consolidated balance sheets.

The valuation inputs utilized to estimate the fair value of the contingent consideration as of March 31, 2025 and December 31, 2024 included a discount rate of 10 % and updated projections of future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment.

The change in fair value of the contingent consideration during the three months ended March 31, 2025 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

We generally make payments to Takeda Pharmaceutical Company Limited quarterly based on the royalties earned in the previous quarter.

As of March 31, 2025 and December 31, 2024, contingent consideration earned but not yet paid was $ 9.6 million and $ 10.0 million, respectively, and was included in accrued and other current liabilities.

Concentration of Credit Risk and Current Expected Credit Losses

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In December 2009, we entered into a license, development and commercialization agreement with Eli Lilly and Company ("Lilly").

The above collaboration partners comprised, in aggregate, 21 % and 20 % of the accounts receivable balance as of September 30, 2024 and December 31, 2023, respectively.

The above collaboration partners comprised, in aggregate, 16 % and 19 % of the accounts receivable balance as of March 31, 2025 and December 31, 2024, respectively.

For further information relating to these collaboration and license agreements, refer to Note 8.

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Product Revenues for the

Three Months Ended Percentage of Total Net

Product Revenues for the

Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Customer A 14 % 17 %

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Customer E 9 % 10 %

Customer F 10 % 10 % 10 % 9 %

We are exposed to risks associated with extending credit to customers related to the sale of products.

Customers A, B, C, D, E and F comprised, in aggregate, 53 % and 48 % of the accounts receivable balance as of September 30, 2024 and December 31, 2023, respectively.

Customers A, B, C, D and E comprised, in the aggregate, 51 % and 52 % of the accounts receivable balance as of March 31, 2025 and December 31, 2024, respectively.

The concentration of credit risk relating to our other product revenues or accounts receivable is not significant.

We assessed our collaborative and customer receivable assets as of September 30, 2024 according to our accounting policy for applying reserves for expected credit losses, noting minimal history of uncollectible receivables and the continued perceived creditworthiness of our third party sales relationships, upon which the expected credit losses were considered de minimis.

As of September 30, 2024 and December 31, 2023, we had no allowance for doubtful accounts.

On February 5, 2024, we entered into a purchase agreement with MorphoSys AG and MorphoSys US Inc., a wholly-owned subsidiary of MorphoSys AG (together with MorphoSys AG, “MorphoSys”), under which we gained exclusive global rights to tafasitamab, a humanized Fc-modified CD19-targeting immunotherapy marketed in the United States as MONJUVI (tafasitamab-cxix) and outside of the United States as MINJUVI (tafasitamab).

We assessed our collaborative and customer receivable assets as of March 31, 2025 according to our accounting policy for applying reserves for expected credit losses, noting minimal history of uncollectible receivables and the continued perceived creditworthiness of our third party sales relationships, upon which the expected credit losses were considered de minimis.

As of March 31, 2025 and December 31, 2024, we had no allowance for doubtful accounts.

On February 5, 2024, pursuant to a purchase agreement with MorphoSys AG and MorphoSys US Inc., a wholly-owned subsidiary of MorphoSys AG (together with MorphoSys AG, "MorphoSys"), we acquired exclusive global rights to tafasitamab, a humanized Fc-modified CD19-targeting immunotherapy marketed in the United States as MONJUVI (tafasitamab-cxix) and outside of the United States as MINJUVI (tafasitamab).

We previously had the rights to tafasitamab outside of the United States under a January 2020 collaboration and license agreement with MorphoSys, which has now been terminated;

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Under the terms of the purchase agreement, we made a payment of $ 25.0 million to MorphoSys and gained global development and commercialization rights for tafasitamab along with MONJUVI inventory.

We will recognize revenue and costs for all U.S.

commercialization and clinical development and MorphoSys will no longer be eligible to receive future milestone, profit split and royalty payments under the now-terminated collaboration and license agreement.

We recognize revenue and costs for all U.S.

commercialization and clinical development and MorphoSys is no longer be eligible to receive future milestone, profit split and royalty payments under the now-terminated collaboration and license agreement.

We evaluated the set of activities and assets acquired under the purchase agreement and concluded that it did not meet the definition of a business because the acquired set did not include a substantive process.

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GAAP and the total purchase price, inclusive of direct transaction costs, was allocated to the acquired MONJUVI inventory, in accordance with applicable accounting guidance.

Under the purchase agreement, we have also become the successor to MorphoSys under its collaboration and license agreement with Xencor, Inc.

Under the purchase agreement, we also became the successor to MorphoSys under its collaboration and license agreement with Xencor, Inc.

(“Xencor”), pursuant to which Xencor granted MorphoSys an exclusive, worldwide license, including the right to sublicense under certain conditions, for tafasitamab.

Xencor is entitled to receive up to $ 186.5 million in future contingent development and regulatory milestones and up to $ 50.0 million in sales milestones.

During the first quarter of 2025, we paid Xencor a development milestone of $ 12.5 million for the U.S.

Food and Drug Administration's acceptance of the Biologics License Application filing for the use of tafasitamab for follicular lymphoma.

Xencor is entitled to receive up to an additional $ 174.0 million in future contingent development and regulatory milestones and up to $ 50.0 million in sales milestones.

Furthermore, Xencor is eligible to receive tiered royalties on global net sales of tafasitamab in the single-digit to sub-teen double-digit percentage range.

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Escient Pharmaceuticals, Inc.

On May 30, 2024 we acquired all of the outstanding shares of common stock of Escient, a clinical-stage drug development company advancing novel small molecule therapeutics for systemic immune and neuro-immune disorders, for $ 782.5 million cash consideration, which included Escient's net cash remaining at the close of the transaction, subject to adjustments set forth in the merger agreement.

Escient’s lead molecule, INCB000262 (formerly EP262), is a first-in-class oral Mas-related G protein-coupled receptor X2 (MRGPRX2) antagonist that has the potential to treat a broad range of inflammatory disorders.

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GAAP because INCB000262 represents substantially all of the fair value of the gross assets acquired.

In addition to the $ 782.5 million closing cash consideration per the terms of the merger agreement, we incurred $ 2.5 million of direct transaction costs that were included in the total consideration to be allocated to the acquired net assets.

Of the $ 785.0 million total consideration, we recognized related compensation expense of $ 31.5 million associated with the accelerated vesting for certain Escient stock awards in connection with the acquisition on our condensed consolidated statements of operations during the three months ended June 30, 2024.

The following table summarizes allocation of the remaining U.S.

GAAP consideration, net of compensation expense, across the net assets acquired (in thousands):

Cash and cash equivalents $ 48,302

Marketable securities 3,988

Prepaid expenses and other current assets 1,663

In-process research and development assets 679,388

Deferred tax asset 44,811

Other non-current assets 4,110

Accounts payable and accrued expenses ( 26,611 )

Other current liabilities ( 1,022 )

Non-current liabilities ( 1,118 )

GAAP Consideration (net of compensation expense) $ 753,511

In-process research and development (“IPR&D”) assets are related to acquired clinical-stage product candidates:

lead candidate, INCB000262, and secondary candidate, INCB000547 (formerly EP547).

The fair value of IPR&D assets was based on the present value of future discounted cash flows, which was based on significant estimates.

These estimates included the number of potential patients and market prices of future product candidates, costs required to conduct clinical trials, future milestones and royalties payable under acquired license agreements, costs to receive regulatory approval and potentially commercialize product candidates, as well as estimates for probability of success and the discount rate.

The concluded allocated fair values for INCB000262 and INCB000547 was $ 644.8 million and $ 34.6 million, respectively.

As both acquired IPR&D assets do not have an alternative future use at the acquisition date, we recognized the full amount of $ 679.4 million as research and development expenses on our condensed consolidated statement of operations during the three months ended June 30, 2024.

Our inventory balance consists of the following (in thousands):

September 30,

2025 December 31,

Raw materials $ 29,873 $ 27,590

Work-in-process 285,504 209,793

API and Work-in-process 351,911 331,178

Finished goods 47,502 48,431

Total inventory $ 429,286 $ 407,199

Inventories, stated at the lower of cost and net realizable value, consist of raw materials, work in process and finished goods.

At September 30, 2024, $ 70.4 million of inventory was classified as current on the condensed consolidated balance sheet as we expect this inventory to be consumed for commercial use within the next twelve months.

At September 30, 2024, $ 298.0 million of inventory was classified as non-current on the condensed consolidated balance sheet as we did not expect this inventory to be consumed for commercial use within the next twelve months.

Inventories, stated at the lower of cost and net realizable value, consist of raw materials, active pharmaceutical ingredients ("API"), work in process, and finished goods, inclusive of freight and inventoriable overhead.

At March 31, 2025, $ 64.0 million of inventory was classified as current on the condensed consolidated balance sheet as we expect this inventory to be consumed for commercial use within the next twelve months.

At March 31, 2025, $ 365.3 million of inventory was classified as non-current on the condensed consolidated balance sheet as we did not expect this inventory to be consumed for commercial use within the next twelve months.

We obtain some inventory components from a limited number of suppliers due to technology, availability, price, quality or other considerations.

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We capitalize inventory after regulatory approval as the related costs are expected to be recoverable through the commercialization of the product.

Costs incurred prior to regulatory approval are recorded as research and development expense in our statements of operations.

At September 30, 2024, inventory with approximately $ 32.3 million of product costs incurred prior to regulatory approval had not yet been sold.

Costs incurred prior to regulatory approval are recorded as research and development expense in our condensed consolidated statements of operations.

At March 31, 2025, inventory with approximately $ 27.7 million of product costs incurred prior to regulatory approval had not yet been sold.

We expect to sell the pre-commercialization inventory over the next 4 to 38 months and, as a result, cost of product revenues will reflect a lower average per unit cost of materials.

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Novartis also received worldwide exclusive development and commercialization rights to our MET inhibitor compound capmatinib and certain back-up compounds in all indications.

Under this agreement, we were initially eligible to receive up to $ 174.0 million for the achievement of development milestones, up to $ 495.0 million for the achievement of regulatory milestones and up to $ 500.0 million for the achievement of sales milestones.

Under this agreement, each company is responsible for costs relating to the development and commercialization of ruxolitinib in its respective territories, with costs of collaborative studies shared equally.

Novartis is also responsible for all costs relating to the development and commercialization of capmatinib.

Initially, we were eligible to receive up to $ 174.0 million for the achievement of development milestones, up to $ 495.0 million for the achievement of regulatory milestones and up to $ 500.0 million for the achievement of sales milestones.

In addition, we were initially eligible to receive up to $ 75.0 million of additional potential development and regulatory milestones relating to graft-versus-host-disease (“GVHD”).

Since the inception of the agreement through September 30, 2024, we have recognized and received, in the aggregate, $ 157.0 million for the achievement of development milestones, $ 345.0 million for the achievement of regulatory milestones, and $ 200.0 million for the achievement of sales milestones.

Since the inception of the agreement through March 31, 2025, we have recognized and received, in the aggregate, $ 157.0 million for the achievement of development milestones, $ 345.0 million for the achievement of regulatory milestones, and $ 200.0 million for the achievement of sales milestones.

We also are eligible to receive tiered, double-digit royalties ranging from the upper-teens to the mid-twenties on future JAKAVI net sales outside of the United States, and tiered, worldwide royalties on TABRECTA net sales that range from 12 % to 14 %.

We are obligated to pay to Novartis tiered royalties in the low single-digits on future JAKAFI net sales within the United States contingent on certain conditions.

During the three and nine months ended September 30, 2024, such royalties on net sales within the United States totaled $ 36.3 million and $ 93.9 million, respectively, and were reflected in cost of product revenues on the condensed consolidated statements of operations.

During the three and nine months ended September 30, 2023, such royalties on net sales within the United States totaled $ 31.1 million and $ 88.0 million, respectively, and were reflected in cost of product revenues on the condensed consolidated statements of operations.

At September 30, 2024 and December 31, 2023, approximately $ 469.5 million and $ 375.6 million, respectively, of accrued royalties were included in accrued and other current liabilities on the condensed consolidated balance sheets, payment of which is dependent on the outcome of a contract dispute with Novartis.

Each company is responsible for costs relating to the development and commercialization of ruxolitinib in its respective territories, with costs of collaborative studies shared equally.

Novartis is also responsible for all costs relating to the development and commercialization of capmatinib.

We had no milestone and contract revenue under the Novartis agreement for the three and nine months ended September 30, 2024.

Milestone and contract revenue under the Novartis agreement was $ 5.0 million for both the three and nine months ended September 30, 2023.

Product royalty revenue related to Novartis net sales of JAKAVI outside of the United States for the three and nine months ended September 30, 2024 was $ 115.7 million and $ 304.7 million, respectively.

Product royalty revenue related to Novartis net sales of JAKAVI outside of the United States for the three and nine months ended September 30, 2023 was $ 96.6 million and $ 263.7 million, respectively.

Product royalty revenue related to Novartis net sales of TABRECTA worldwide for the three and nine months ended September 30, 2024 was $ 5.9 million and $ 16.5 million, respectively.

Product royalty revenue related to Novartis net sales of TABRECTA worldwide for the three and nine months ended September 30, 2023 was $ 4.1 million and $ 13.1 million, respectively.

During the three months ended March 31, 2025 and 2024, such royalties on net sales within the United States totaled $ 29.8 million and $ 23.0 million, respectively, and were reflected in cost of product revenues on the condensed consolidated statements of operations.

At March 31, 2025 and December 31, 2024, approximately $ 537.1 million and $ 507.4 million, respectively, of accrued royalties were included in accrued and other current liabilities on the condensed consolidated balance sheets.

Payment of accrued royalties, if any, is dependent on the outcome of a contract dispute with Novartis pending in the U.S.

District Court for the Southern District of New York.

A trial has been scheduled for May 2025.

Product royalty revenue related to Novartis net sales of JAKAVI outside of the United States for the three months ended March 31, 2025 and 2024 was $ 92.1 million and $ 89.6 million, respectively.

Product royalty revenue related to Novartis net sales of TABRECTA worldwide for the three months ended March 31, 2025 and 2024 was $ 6.4 million and $ 5.2 million, respectively.

Lilly – Baricitinib

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Under this agreement, we were initially eligible to receive up to $ 150.0 million for the achievement of development milestones, up to $ 365.0 million for the achievement of regulatory milestones and up to $ 150.0 million for the achievement of sales milestones.

Since the inception of the agreement through September 30, 2024, we have recognized and received, in aggregate, $ 149.0 million for the achievement of development milestones, $ 335.0 million for the achievement of regulatory milestones and $ 50.0 million for the achievement of sales milestones.

Since the inception of the agreement through March 31, 2025, we have recognized and received, in aggregate, $ 149.0 million for the achievement of development milestones, $ 335.0 million for the achievement of regulatory milestones and $ 50.0 million for the achievement of sales milestones.

We are also eligible to receive tiered, double-digit royalties on future global sales with rates ranging up to the mid-twenties if a product is successfully commercialized.

Product royalty revenue related to Lilly net sales of OLUMIANT outside of the United States for the three and nine months ended September 30, 2024 was $ 34.8 million and $ 97.1 million, respectively.

Product royalty revenue related to Lilly net sales of OLUMIANT outside of the United States for the three and nine months ended September 30, 2023 was $ 29.6 million and $ 95.8 million, respectively.

Product royalty revenue related to Lilly net sales of OLUMIANT outside of the United States for the three months ended March 31, 2025 and 2024 was $ 30.8 million and $ 30.6 million, respectively.

In January 2015, we entered into a License, Development and Commercialization Agreement with Agenus Inc.

and its wholly-owned subsidiary, 4-Antibody AG (now known as Agenus Switzerland Inc.), which we collectively refer to as Agenus.

Under this agreement, which was amended in February 2017, the parties have agreed to collaborate on the discovery of novel immuno-therapeutics using Agenus’ antibody discovery platforms.

Since the inception of the agreement through September 30, 2024, we have paid Agenus milestones totaling $ 30.0 million, and Agenus is eligible to receive up to an additional $ 500.0 million in future contingent development, regulatory and commercialization milestones across all programs in the collaboration.

As of September 30, 2024, we held an investment of approximately 0.6 million shares of Agenus Inc.

Under this agreement, which was amended in February 2017, the parties agreed to collaborate on the discovery of novel immuno-therapeutics using Agenus’ antibody discovery platforms.

In February 2025, we provided Agenus with notice that we are terminating the parties’ agreement based upon a strategic review.

Under the terms of the agreement, the termination will become effective in February 2026, unless Agenus agrees to accelerate the notice period.

Since the inception of the agreement through March 31, 2025, we have paid Agenus milestones totaling $ 30.0 million, and Agenus is eligible to receive up to an additional $ 500.0 million in future contingent development, regulatory and commercialization milestones across all programs in the collaboration.

During 2024, we sold our shares of Agenus Inc.

common stock, and as of December 31, 2024, we had no remaining investment in Agenus Inc.

common stock.

The fair market value of our equity investment in Agenus Inc.

at September 30, 2024 and December 31, 2023 was $ 3.3 million and $ 10.0 million, respectively.

For the three and nine months ended September 30, 2024, we recorded an unrealized loss of $ 6.8 million and $ 6.7 million, respectively, based on the change in fair value of Agenus Inc.’s common stock during the respective periods.

For the three and nine months ended September 30, 2023, we recorded an unrealized loss of $ 5.6 million and $ 15.3 million, respectively, based on the change in fair value of Agenus Inc.’s common stock during the respective periods.

For the three months ended March 31, 2024 we recorded an unrealized loss of $ 3.0 million based on the change in fair value of Agenus Inc.’s common stock during the respective period.

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

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The collaboration encompasses up to ten independent programs.

Since the inception of the agreement through September 30, 2024, we have paid and expensed Merus milestones totaling $ 10.0 million.

During the three months ended June 30, 2024, we sold approximately 3.0 million of Merus’ common shares for proceeds of $ 160.6 million.

During the three months ended September 30, 2024, we sold our remaining approximately 1.0 million of Merus’ common shares for proceeds of $ 55.5 million.

As of September 30, 2024, we had no remaining investment of Merus’ common shares.

The fair market value of our equity investment in Merus at December 31, 2023 was $ 110.1 million.

For the three and nine months ended September 30, 2024, we recorded realized and unrealized losses of $ 4.1 million and realized and unrealized gains of $ 106.1 million, respectively, based on the sale of shares and change in fair value of remaining Merus’ common shares during the respective periods.

For the three and nine months ended September 30, 2023, we recorded an unrealized loss of $ 9.1 million and an unrealized gain of $ 29.5 million, respectively, based on the change in fair value of Merus’ common shares during the respective periods.

Since the inception of the agreement through March 31, 2025, we have paid and expensed Merus milestones totaling $ 10.0 million.

During 2024, we sold our investment of Merus’ common shares, and as of December 31, 2024, we had no remaining investment in Merus’ common shares.

For the three months ended March 31, 2024 we recorded an unrealized gain of $ 70.2 million, based on the change in fair value of remaining Merus’ common shares during the respective period.

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

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In addition, MacroGenics has the right to manufacture a portion of both companies’ global clinical and commercial supply needs of INCMGA0012.

In March 2023, we made a $ 15.0 million regulatory milestone payment to MacroGenics for the FDA approval of ZYNYZ for the treatment of adults with Merkel cell carcinoma.

This milestone payment was capitalized as an intangible asset and included in Other intangible assets, net on the condensed consolidated balance sheet as of September 30, 2024, and is being amortized through cost of product revenues over the estimated useful life of 13.5 years.

On July 24, 2024, the parties amended the agreement, and Incyte agreed to pay MacroGenics $ 100.0 million in exchange for MacroGenics’ agreement that all milestones for squamous cell anal cancer and non-small cell lung cancer have been deemed either achieved or inapplicable and certain future milestones for non-small cell lung cancer were waived.

This $ 100.0 million milestone payment was recorded as research and development expense in our condensed consolidated statements of operations during the three and nine months ended September 30, 2024.

Since the inception of the agreement, inclusive of the July 2022 and July 2024 amendments to the agreement, through September 30, 2024, we have paid MacroGenics developmental and regulatory milestones totaling $ 215.0 million.

Since the inception of the agreement, inclusive of the July 2022 and July 2024 amendments to the agreement, through March 31, 2025, we have paid MacroGenics developmental and regulatory milestones totaling $ 215.0 million.

After these amendments and subsequent payments, MacroGenics will be eligible to receive up to an additional $ 210.0 million in future contingent development and regulatory milestones, and up to $ 330.0 million in sales milestones as well as tiered royalties ranging from 15 % to 24 % of global net sales.

Research and development expenses for the three and nine months ended September 30, 2024 also included $ 15.5 million and $ 40.8 million, respectively, of development costs incurred pursuant to the MacroGenics agreement.

Research and development expenses for the three and nine months ended September 30, 2023 also included $ 12.9 million and $ 42.8 million, respectively, of development costs incurred pursuant to the MacroGenics agreement.

At September 30, 2024 and December 31, 2023, a total of $ 0.9 million and $ 0.3 million of such costs were included in accrued and other liabilities on the condensed consolidated balance sheets.

Research and development expenses for the three months ended March 31, 2025 and 2024 also included $ 7.1 million and $ 12.1 million, respectively, of development costs incurred pursuant to the MacroGenics agreement.

At March 31, 2025 and December 31, 2024, a total of $ 0.0 million and $ 0.5 million of such costs were included in accrued and other liabilities on the condensed consolidated balance sheets.

As described in Note 6, on February 5, 2024, we entered into a purchase agreement with MorphoSys that became effective as of that date, as a result of which we now hold exclusive global rights for tafasitamab, a humanized Fc-modified CD19-targeting immunotherapy marketed in the United States as MONJUVI (tafasitamab-cxix) and outside of the United States as MINJUVI (tafasitamab).

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Each company was responsible for funding any independent development activities, and we were responsible for funding development activities specific to territories outside of the United States.

During May 2024, as part of the Novartis tender offer for MorphoSys AG’s outstanding shares, we sold all of our 3.6 million American Depository Shares, each representing 0.25 of an ordinary share of MorphoSys AG, for proceeds of $ 66.6 million.

The fair market value of our equity investment in MorphoSys AG as of December 31, 2023 was $ 35.9 million.

For the nine months ended September 30, 2024, we recorded a realized gain of $ 30.7 million, based on the sale of shares and change in fair value of MorphoSys AG’s ordinary shares during the period.

For the three and nine months ended September 30, 2023, we recorded an unrealized loss of $ 2.7 million and an unrealized gain of $ 11.4 million, respectively, based on the change in fair value of MorphoSys AG’s ordinary shares during the respective periods.

During 2024, we sold our investment of MorphoSys AG’s ordinary shares, and as of December 31, 2024, we had no remaining investment in MorphoSys AG’s ordinary shares.

For the three months ended March 31, 2024, we recorded an unrealized gain of $ 29.9 million, respectively, based on the change in fair value of MorphoSys AG’s ordinary shares during the respective period.

Our 50 % share of the United States loss or profit for the commercialization of tafasitamab for the period from January 1, 2024 to the asset acquisition on February 5, 2024, was a profit of $ 1.0 million, and is recorded as (Profit) and loss sharing under collaboration agreements on the condensed consolidated statement of operations.

As described in Note 6, subsequent to the asset acquisition, we recognize revenue and costs for all commercialization and clinical development of tafasitamab in the United States.

Our 50 % share of the United States profit or loss for the commercialization of tafasitamab for the three and nine months ended September 30, 2023 was a profit of $ 1.1 million and $ 0.9 million, respectively, and is recorded as (profit) and loss sharing under collaboration agreements on the condensed consolidated statement of operations.

Research and development expenses for the period from January 1, 2024 to the asset acquisition on February 5, 2024, includes $ 10.7 million, related to our 55 % share of the co-development costs for tafasitamab.

Research and development expenses for the three and nine months ended September 30, 2023, includes $ 13.0 million and $ 58.5 million, respectively, related to our 55 % share of the co-development costs for tafasitamab.

At September 30, 2024 and December 31, 2023, $ 0.0 million and $ 18.8 million, respectively, was included in accrued and other liabilities on the condensed consolidated balance sheets for amounts due to MorphoSys under the former agreement.

In September 2021, we entered into a Collaboration and License Agreement with Syndax Pharmaceuticals, Inc.

(“Syndax”), covering the worldwide development and commercialization of SNDX-6352 (“axatilimab”).

Under the terms of our agreement, we received exclusive commercialization rights to axatilimab outside of the United States and share commercialization rights in the United States with Syndax.

We are responsible for leading the commercialization strategy and booking all revenue from sales of axatilimab globally.

Incyte and Syndax share equally the profits and losses from the co-commercialization efforts in the United States.

Sales of axatilimab outside the United States are subject to our royalty payment obligations to Syndax, as set forth below.

We and Syndax have agreed to co-develop axatilimab and to share development costs associated with global and U.S.-specific clinical trials, with Incyte responsible for 55 % of such costs and Syndax responsible for 45 % of such costs.

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In August 2024, we made a $ 12.5 million regulatory milestone payment to Syndax for the FDA approval of NIKTIMVO for the treatment of GVHD.

This milestone payment was capitalized as an intangible asset and included in other intangible assets, net on the condensed consolidated balance sheet as of September 30, 2024, and is being amortized through cost of product revenues over the estimated useful life of 10 years.

Inclusive of an upfront, non-refundable payment, since the inception of the agreement through September 30, 2024, we have made payments of $ 129.5 million to Syndax, which were previously recorded in research and development expense or in other intangible assets, as discussed above.

This milestone payment was capitalized as an intangible asset and included in other intangible assets, net on the condensed consolidated balance sheet as of March 31, 2025, and is being amortized through cost of product revenues over the estimated useful life of 10 years.

Inclusive of an upfront, non-refundable payment, since the inception of the agreement through March 31, 2025, we have made payments of $ 129.5 million to Syndax, which were previously recorded in research and development expense or in other intangible assets, as discussed above.

Syndax is eligible to receive up to $ 207.5 million in future contingent development and regulatory milestones and up to $ 230.0 million in sales milestones as well as tiered royalties ranging in the mid-teens on net sales in Europe and Japan and low double digit percentage on net sales in the rest of the world outside of the United States.

As of September 30, 2024, we held an investment of approximately 1.4 million shares of Syndax common stock.

The fair market value of our long term investment in Syndax as of September 30, 2024 and December 31, 2023 was $ 27.4 million and $ 30.7 million, respectively.

For the three and nine months ended September 30, 2024, we recorded an unrealized loss of $ 1.9 million and $ 3.4 million, respectively, based on the change in fair value of Syndax’s common stock during the respective periods.

For the three and nine months ended September 30, 2023, we recorded an unrealized loss of $ 9.2 million and $ 15.6 million, respectively, based on the change in fair value of Syndax’s common stock during the respective periods.

Research and development expenses for the three and nine months ended September 30, 2024, includes $ 5.8 million and $ 17.6 million, respectively, related to our 55 % share of the co-development costs for axatilimab.

Research and development expenses for the three and nine months ended September 30, 2023, includes $ 5.1 million and $ 16.9 million, respectively, related to our 55 % share of the co-development costs for axatilimab.

At September 30, 2024 and December 31, 2023, $ 1.8 million and $ 1.8 million, respectively, was included in accrued and other liabilities on the condensed consolidated balance sheet for amounts due to Syndax under the agreement.

Syndax’s right to receive royalties in any particular country will expire upon the last to occur of (a) the expiration of patent rights in that particular country, (b) a specified period of time after the first post-marketing authorization sale of a licensed product comprising axatilimab in that country, and (c) the expiration of any regulatory exclusivity for that licensed product in that country.

As of March 31, 2025, we held an investment of approximately 1.4 million shares of Syndax common stock.

The fair market value of our long term investment in Syndax as of March 31, 2025 and December 31, 2024 was $ 17.5 million and $ 18.8 million, respectively.

For the three months ended March 31, 2025 and 2024, we recorded an unrealized loss of $ 1.3 million and gain of $ 3.1 million, respectively, based on the change in fair value of Syndax’s common stock during the respective periods.

Research and development expenses for the three months ended March 31, 2025 and 2024, includes $ 4.7 million and $ 7.1 million, respectively, related to our 55 % share of the co-development costs for axatilimab.

At March 31, 2025 and December 31, 2024, $ 2.1 million and $ 2.2 million, respectively, was included in accrued and other liabilities on the condensed consolidated balance sheet for amounts due to Syndax under the agreement.

China Medical Systems Holdings Limited

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Property and equipment, net consists of the following (in thousands):

September 30,

2025 December 31,

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In May 2024, we purchased additional property in Wilmington, Delaware, including land, office buildings and parking garages for a purchase price of $ 48.7 million.

During the nine months ended September 30, 2024, we capitalized $ 4.9 million of land and recorded approximately $ 47.2 million of construction in progress relating to the office buildings and parking garages.

During the year ended December 31, 2024, we capitalized $ 4.9 million of land and $ 19.5 million of building and parking garage.

As of March 31, 2025 we have $ 33.9 million of construction in progress relating to the downtown Wilmington properties.

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

September 30,

2025 December 31,

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Total accrued and other current liabilities $ 1,375,738 $ 1,212,048

Stockholders' Equity

Stock Compensation

2010 Stock Incentive Plan.

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A total of 1,000,000 shares of common stock are reserved for issuance pursuant to the 2024 Inducement Plan.

Share Repurchase and Modified "Dutch Auction" Tender Offer.

On May 13, 2024 we announced that our Board of Directors approved a share repurchase authorization of $ 2.0 billion.

Subsequently, we commenced a modified “Dutch Auction” tender offer to repurchase shares of our common stock for an aggregate purchase price of up to $ 1.672 billion (the “tender offer”).

We offered to purchase up to $ 1.672 billion in value of our common stock at a price not greater than $ 60.00 per share nor less than $ 52.00 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions set forth in the tender offer documents that were distributed to stockholders.

A modified “Dutch Auction” tender offer allows stockholders to indicate how much stock they wish to tender and at what price within the range described above.

Based on the number of shares tendered and the prices specified by the tendering stockholders, we determined the lowest price per share that enabled us to purchase $ 1.672 billion of common stock at such price.

On June 13, 2024 we completed the tender offer and repurchased 27,866,666 shares at a price of $ 60.00 per share for an aggregate price of approximately $ 1.672 billion, excluding fees and related expenses, pursuant to the tender offer.

In addition, on May 12, 2024, we entered into a separate stock purchase agreement with Julian C.

Baker (a member of our Board of Directors), Felix J.

Baker, and entities affiliated with Julian C.

Baker, including funds advised by Baker Bros.

Advisors LP (collectively, the “Baker Entities”), to repurchase up to $ 328.0 million of our common stock.

This would enable the Baker Entities to maintain their ownership level as of May 9, 2024 of approximately 16.4 % of Incyte’s outstanding common stock.

The Baker Entities purchase was to be at the same price per share as is determined and paid in the tender offer.

On June 26, 2024, we repurchased 5,459,183 shares at a price of $ 60.00 per share for an aggregate price of approximately $ 328.0 million pursuant to the terms of the stock purchase agreement with the Baker Entities.

We account for share repurchases as retirements, whereby it reduces common stock and additional paid-in capital by the amount of the original issuance, with any excess purchase price recorded as a reduction to retained earnings (accumulated deficit).

Any transaction costs, including the excise tax, directly associated with the share repurchases are included as part of the purchase price.

Under this method, the issued and outstanding shares of common stock are reduced by the number of shares of common stock repurchased, and no treasury stock is recognized on the condensed consolidated financial statements.

A total of 33,325,849 common shares were repurchased during June 2024 at a price of $ 60.00 per share for an aggregate purchase price of approximately $ 2.0 billion.

We incurred $ 24.4 million in fees and expenses associated with the share repurchase, which included $ 19.2 million for excise taxes on share repurchases in accordance with the Inflation Reduction Act of 2022.

We currently expect to pay the excise tax in the first half of 2025.

These costs are recognized within (accumulated deficit) retained earnings on the condensed consolidated balance sheet as of September 30, 2024 as costs to repurchase our common stock.

The purchased shares were cancelled and ceased to be outstanding.

Stock Compensation

We recorded $ 77.9 million and $ 194.3 million of stock compensation expense on our condensed consolidated statements of operations for the three and nine months ended September 30, 2024, respectively.

We recorded $ 48.0 million and $ 155.9 million of stock compensation expense on our condensed consolidated statements of operations for the three and nine months ended September 30, 2023, respectively.

Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $ 45.8 million, $ 117.1 million, $ 26.9 million and $ 90.7 million for the three and nine months ended September 30, 2024 and 2023, respectively.

Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $ 31.5 million, $ 75.6 million, $ 20.3 million and $ 62.8 million for the three and nine months ended September 30, 2024 and 2023, respectively.

Stock compensation expense included within our condensed consolidated statements of operations also included cost of product revenues of $ 0.6 million, $ 1.6 million, $ 0.8 million and $ 2.4 million, respectively, for the three and nine months ended September 30, 2024 and 2023.

Additionally, as described in Note 6, as part of the Escient acquisition, during the nine months ended September 30, 2024, we recognized related compensation expense of approximately $ 31.5 million associated with the accelerated vesting for certain Escient stock awards in connection with the acquisition on our condensed consolidated statements of operations.

We recorded $ 61.0 million and $ 59.8 million of stock compensation expense on our condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024, respectively.

Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $ 36.7 million, and $ 36.8 million for the three months ended March 31, 2025 and 2024, respectively.

Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $ 23.4 million and $ 22.4 million for the three months ended March 31, 2025 and 2024, respectively.

Stock compensation expense included within our condensed consolidated statements of operations also included cost of product revenues of $ 0.9 million and $ 0.6 million respectively, for the three months ended March 31, 2025 and 2024.

We utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions:

Employee Stock Options Employee Stock Purchase Plan

For the Three Months Ended For the Nine Months Ended For the Three Months Ended For the Nine Months Ended

September 30, September 30,

For the Three Months Ended For the Three Months Ended

March 31, March 31,

2025 2024 2025 2024

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Options cancelled ( 151,857 ) $ 76.71

Balance at September 30, 2024 13,246,321 $ 83.16

Balance at March 31, 2025 13,103,299 $ 83.13

Our annual stock option grants generally have a 10 -year term and vest over four years , with 25 % vesting after one year and the remainder vesting in 36 equal monthly installments, subject to customary retirement provisions that may accelerate the requisite service period for expense recognition purposes.

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RSUs granted 347,459 $ 71.99

PSUs granted 321,582 $ 65.40

Additional PSUs earned 21,866 $ 83.58

RSUs released ( 444,951 ) $ 83.23

PSUs released ( 105,453 ) $ 83.58

RSUs cancelled ( 109,016 ) $ 67.17

PSUs cancelled ( 7,795 ) $ 83.58

Balance at September 30, 2024 8,683,824 $ 67.79

Balance at March 31, 2025 8,450,295 $ 67.18

RSUs and PSUs are granted to our employees at the share price on the date of grant.

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Compensation expense for PSUs with market performance conditions is calculated using a Monte Carlo simulation model as of the date of grant and recorded over the requisite service period.

For the three and nine months ended September 30, 2024 we recorded $ 12.3 million and $ 19.2 million, respectively, of stock compensation expense for PSUs on our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2023 we recorded $ 4.2 million and $ 13.4 million, respectively, of stock compensation expense for PSUs on our condensed consolidated statements of operations.

For the three months ended March 31, 2025 and 2024 we recorded $ 3.1 million and $ 3.4 million, respectively, of stock compensation expense for PSUs on our condensed consolidated statements of operations.

The following table summarizes our shares available for grant under the 2010 Stock Plan and 2024 Inducement Plan.

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Balance at December 31, 2024 4,013,611

Additional authorization - 2024 Inducement Plan 1,000,000

Options, RSUs and PSUs granted ( 8,792,405 )

Options, RSUs and PSUs granted and issuance of shares for services rendered ( 1,223,546 )

Options, RSUs and PSUs cancelled 369,889

Balance at September 30, 2024 4,000,301

Balance at March 31, 2025 3,159,954

Based on our historical experience of employee turnover, we have assumed an annualized forfeiture rate of 5 % for our options, RSUs and PSUs.

Under the true-up provisions of the stock compensation guidance, we will record additional expense if the actual forfeiture rate is lower than we estimated, and will record a recovery of prior expense if the actual forfeiture is higher than we estimated.

Total compensation cost of options granted but not yet vested, as of September 30, 2024, was $ 26.2 million, which is expected to be recognized over the weighted average period of approximately 1.1 years.

Total compensation cost of RSUs granted but not yet vested, as of September 30, 2024, was $ 280.1 million, which is expected to be recognized over the weighted average period of approximately 1.8 years.

Total compensation cost of PSUs granted but not yet vested, as of September 30, 2024, was $ 25.4 million, which is expected to be recognized over the weighted average period of 1.2 years, should the underlying performance conditions be deemed probable of achievement.

For the three and nine months ended September 30, 2024 and 2023, we recorded the following provisions for income taxes and effective tax rates as compared to our income before provision for income taxes (in thousands):

Total compensation cost of options granted but not yet vested, as of March 31, 2025, was $ 22.2 million, which is expected to be recognized over the weighted average period of approximately 1.1 years.

Total compensation cost of RSUs granted but not yet vested, as of March 31, 2025, was $ 209.7 million, which is expected to be recognized over the weighted average period of approximately 1.5 years.

Total compensation cost of PSUs granted but not yet vested, as of March 31, 2025, was $ 13.7 million, which is expected to be recognized over the weighted average period of 1.4 years, should the underlying performance conditions be deemed probable of achievement.

For the three months ended March 31, 2025 and 2024, we recorded the following provisions for income taxes and effective tax rates as compared to our income before provision for income taxes (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(Loss) income before provision for income taxes $ 156,524 $ 233,799 $ 2,906 $ 563,259

Income before provision for income taxes $ 234,190 $ 236,159

Provision for income taxes 75,987 66,611

Effective tax rate 32.4 % 28.2 %

Our effective tax rate for the three months ended September 30, 2024 was 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.

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.

Our effective tax rate for the nine months ended September 30, 2024 was higher than the U.S.

statutory rate primarily due to non-deductible charges of $ 710.9 million associated with the Escient acquisition.

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

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

federal and state deferred tax assets.

Our effective tax rate for the three months ended March 31, 2025 and 2024 was higher than the U.S.

statutory rate primarily due to an increase in our valuation allowance against certain U.S.

federal and state deferred tax assets and foreign losses with no associated tax benefit (i.e., full valuation allowance).

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.

The effective tax rate for the three months ended September 30, 2024 was unfavorable as compared to the prior year period primarily due to an increase in our valuation allowance against certain U.S.

federal and state deferred tax assets, partially offset by a decrease in foreign losses with no associated tax benefit.

The effective tax rate for the nine months ended September 30, 2024 was unfavorable as compared to the prior year period primarily due to the non-deductible charges associated with the Escient acquisition.

As described in Note 6, as part of the Escient acquisition, we recorded $ 44.8 million of deferred tax assets predominately related to net operating losses and capitalized researched and development costs.

The balance of our unrecognized tax benefits (including penalties and interest) increased by $ 22.5 million during the nine months ended September 30, 2024.

This movement was primarily driven by net increases related to prior period tax positions of $ 6.1 million, increases related to current period tax positions of $ 2.8 million, increases related to acquired reserves of $ 9.1 million, and $ 4.7 million of interest and penalties.

The effective tax rate for the three months ended March 31, 2025 was unfavorable as compared to the prior year period primarily due to an increase in our valuation allowance against certain U.S.

federal and state deferred tax assets, partially offset by a decrease in foreign losses with no associated tax benefit and an increase in tax credit generations.

We accrue interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

We do not expect any significant decreases in unrecognized tax benefits within the next 12 months.

One or more of our legal entities file income tax returns in the U.S.

6 unchanged sentences

The Organization for Economic Cooperation and Development Pillar 2 guidelines, which were supported by over 130 countries worldwide, are designed to impose a 15% global minimum tax on adjusted financial results.

Certain aspects of Pillar 2 took effect on January 1, 2024, while other aspects go into effect on January 1, 2025.

We are evaluating the potential impact of Pillar 2 on our business, as many of the countries in which we operate are enacting legislation implementing Pillar 2.

Although many aspects of Pillar 2 remain to be clarified, at this time there are no material impacts on our effective tax rate .

Net Income (Loss) Per Share

Net income (loss) per share was calculated as follows for the periods indicated below:

We have evaluated the impact of Pillar 2 on our business, and determined there are no material impacts on our effective tax rate at this time.

As countries we operate in enact legislation implementing Pillar 2, we will assess the impact on our financial statements in the period of enactment.

Net Income Per Share

Net income per share was calculated as follows for the periods indicated below:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Basic net income (loss) $ 106,456 $ 171,269 $ ( 168,597 ) $ 396,520

Basic net income $ 158,203 $ 169,548

Weighted average common shares outstanding 193,712 224,484

Basic net income (loss) per share $ 0.55 $ 0.76 $ ( 0.80 ) $ 1.77

Diluted net income (loss) $ 106,456 $ 171,269 $ ( 168,597 ) $ 396,520

Basic net income per share $ 0.82 $ 0.76

Diluted net income $ 158,203 $ 169,548

Weighted average common shares outstanding 193,712 224,484

Dilutive stock options and awards 4,485 2,735

Weighted average shares used to compute diluted net income (loss) per share 195,838 226,167 211,763 225,756

Diluted net income (loss) per share $ 0.54 $ 0.76 $ ( 0.80 ) $ 1.76

All stock options and stock awards were excluded from the diluted share calculation for the nine months ended September 30, 2024 because their effect would have been anti-dilutive, as we were in a net loss position.

The potential common shares that were excluded from the diluted net income (loss) per share computation are as follows:

Weighted average shares used to compute diluted net income per share 198,197 227,219

Diluted net income per share $ 0.80 $ 0.75

The potential common shares that were excluded from the diluted net income per share computation are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Outstanding stock options and awards 11,075,503 13,165,842

4 unchanged sentences

Employees may contribute a portion of their compensation, which is then matched by us, subject to certain limitations.

Defined contribution expense for the three and nine months ended September 30, 2024 was $ 5.2 million and $ 15.8 million, respectively.

Defined contribution expense for the three and nine months ended September 30, 2023 was $ 5.0 million and $ 14.6 million, respectively.

Defined contribution expense for the three months ended March 31, 2025 and 2024 was $ 5.8 million and $ 5.4 million, respectively.

Defined Benefit Pension Plans

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Service cost $ 3,642 $ 2,621

4 unchanged sentences

Net periodic benefit cost $ 2,919 $ 1,867

The components of net periodic benefit cost other than the service cost component are included in Interest income and other, net on the condensed consolidated statements of operations.

The components of net periodic benefit cost other than the service cost component are included in Other, net on the condensed consolidated statements of operations.

We expect to contribute a total of $ 10.1 million to the pension plans in 2025 inclusive of the amounts contributed to the plan during the current period.

8 unchanged sentences

We may, at our option, prepay any borrowings under the Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty, subject to customary exceptions.

As of September 30, 2024 and December 31, 2023, we had no outstanding borrowings and were in compliance with all covenants under this facility.

As of March 31, 2025 and December 31, 2024, we had no outstanding borrowings and were in compliance with all covenants under this facility.

Contingencies

7 unchanged sentences

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 September 30, 2024, we have accrued approximately $ 106.9 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 September 30, 2024 is approximately 6.7 %.

As of March 31, 2025, we have accrued approximately $ 145.4 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, 2025 is approximately 7.3 %.

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.

In addition, as described in Note 8, we have an outstanding contractual dispute with Novartis relating to royalties on JAKAFI net sales within the United States.

In addition, as described in Note 8, we have an outstanding contractual dispute with Novartis relating to royalties allegedly owed or the amount of royalties owed on JAKAFI net sales within the United States, as well as various disputes related to potential generic competition for our products, as described under Part II, Item 1A.

“Risk Factors—Risks Relating to Commercialization of Our Products— Competition for our products could harm our business and result in a decrease in our revenue” below.

Segment Information

We operate in one operating segment, and therefore one reportable segment, focused on the global discovery, development and commercialization of proprietary therapeutics.

We manage business activities on a consolidated basis through the development and commercialization of oncology and dermatology products, which are sold to U.S.

and international customers.

Our determination that we operate as a single operating segment is consistent with the financial information regularly reviewed by the chief operating decision maker for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods.

Our chief operating decision maker is the Chief Executive Officer.

The accounting policies for our single operating segment are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2024.

Our single operating segment generates revenues from the development and commercialization of oncology and dermatology pharmaceutical products, which are developed by our research and development department, as well as from product royalties, milestone and contract revenues from the out-licensing of our intellectual property to third parties.

For our segment, the chief operating decision maker uses net income or loss, that also is reported on the condensed consolidated statements of operations as consolidated net income, to allocate resources (including employees, property, and financial resources), predominantly during the annual budget and forecasting process.

The chief operating decision maker also uses consolidated net income or loss, along with non-financial inputs and qualitative information, to evaluate our performance, establish compensation, monitor budget versus actual results, and decide the level of investment in our various operating activities and other capital allocation activities.

The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets.

Net income for our segment was as follows (in thousands):

Three Months Ended

Product revenues, net 922,274 729,923

Product royalty revenues 130,624 125,966

Milestone and contract revenues — 25,000

Total revenues 1,052,898 880,889

Costs, expenses and other:

Cost of product revenues (including definite-lived intangible amortization) 73,188 60,956

Research and development - internal 1

228,345 223,096

Research and development - external 2

193,434 205,164

Other research and development 3

Sales and marketing 257,652 216,813

General and administrative 68,039 83,443

Loss (gain) on change in fair value of acquisition-related contingent consideration 11,572 ( 456 )

(Profit) and loss sharing under collaboration agreements — ( 1,025 )

Other segment items 4

46,965 ( 77,650 )

Net income $ 158,203 169,548

Research and development - internal is comprised of internally generated costs such as salaries, travel, regulatory costs, lab costs, contracting, etc.

Research and development - external is comprised of specific program spend with external vendors (i.e.

contract manufacturing organization, contract research organization and lab vendors for clinical, technical operations and toxicology services).

Other research and development is comprised of all other costs including certain one-time costs resulting from the acquisition of IPR&D assets and one-time development milestone expenses.

Other segment items is comprised of interest income, interest expense, realized and unrealized (gain) loss on equity investments, other, net, and provision for income taxes.

During the three months ended March 31, 2025, total revenues from the United States were approximately $ 981.6 million, total revenues from Europe were approximately $ 68.6 million, and total revenues from other countries were approximately $ 2.7 million.

During the three months ended March 31, 2024, total revenues from the United States were approximately $ 828.2 million, total revenues from Europe were approximately $ 51.5 million, and total revenues from other countries were approximately $ 1.2 million.

As of March 31, 2025, property and equipment, net was approximately $ 469.6 million in the United States, approximately $ 282.7 million in Switzerland and approximately $ 13.0 million in other countries.

As of December 31, 2024, property and equipment, net was approximately $ 474.1 million in the United States, approximately $ 277.6 million in Switzerland and approximately $ 11.7 million in other countries.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements