What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2024-10-29 · 151 added, 205 removed, 662 unchanged (35% 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, 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.

The following discussion of our financial condition and results of operations as of and for the three months ended March 31, 2025 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, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024 previously filed with the SEC.

Forward-Looking Statements

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• our ability to establish and maintain effective sales, marketing and distribution capabilities;

• the risk of reliance on other parties to manufacture our products, which could result in a short supply of our products, increased costs, and withdrawal of regulatory approval;

• the risk of reliance on other parties to manufacture our products, which could result in a short supply of our products, increased costs, and withdrawal of regulatory approvals;

• our ability to maintain regulatory approvals to market our products;

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• risks relating to our inability to control the development of out-licensed compounds or drug candidates;

• risks relating to our collaborators’ ability to develop and commercialize JAKAVI, OLUMIANT, TABRECTA and the drug candidates licensed from us;

• risks relating to our collaborators’ ability to develop and commercialize drug products and the drug candidates licensed from us;

• costs associated with prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights;

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• risks relating to changes in pricing and reimbursement in the markets in which we may compete;

• risks relating to governmental healthcare reform efforts, including efforts to control, set or cap pricing for our commercial drugs in the U.S and abroad;

• risks relating to governmental healthcare reform efforts, including efforts to control, set or cap pricing for our commercial drugs in the U.S.

• competition to develop and commercialize similar drug products;

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• unanticipated delays or changes in plans or regulatory agency interactions or other issues relating to our large molecule production facility;

• the impact of tariffs and trade conflicts and the effects of any economic slowdown;

• our ability to integrate successfully acquired businesses, development programs or technology;

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• If we are unable to raise additional capital in the future when we require it, our efforts to broaden our product portfolio or commercialization efforts could be limited.

◦ Our marketable securities, short term equity investments and long term equity investments are subject to risks that could adversely affect our overall financial position, and tax law changes could adversely affect our results of operations and financial condition.

• Our marketable securities and equity investments are subject to risks that could adversely affect our overall financial position, and tax law changes could adversely affect our results of operations and financial condition.

• If we are unable to achieve milestones, develop product candidates to license or renew or enter into new collaborations, our royalty and milestone revenues and future prospects for those revenues may decrease.

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MF, considered the most serious of the myeloproliferative neoplasms, can occur either as primary MF, or as secondary MF that develops in some patients who previously had polycythemia vera or essential thrombocythemia.

We estimate there are between 16,000 and 18,500 patients with MF in the United States.

Based on the modern prognostic scoring systems referred to as International Prognostic Scoring System and Dynamic International Prognostic Scoring System, we believe intermediate and high-risk patients represent 80% to 90% of all patients with MF in the United States and encompass patients over the age of 65, or patients who have or have ever had any of the following:

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PV is a myeloproliferative neoplasm typically characterized by elevated hematocrit, the volume percentage of red blood cells in whole blood, which can lead to a thickening of the blood and an increased risk of blood clots, as well as an elevated white blood cell and platelet count.

When phlebotomy can no longer control PV, chemotherapy such as hydroxyurea, or interferon, is utilized.

Approximately 25,000 patients with PV in the United States are considered uncontrolled because they have an inadequate response to or are intolerant of hydroxyurea, the most commonly used chemotherapeutic agent for the treatment of PV.

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.

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In GVHD, the donated bone marrow or peripheral blood stem cells view the recipient’s body as foreign and attack various tissues.

12-month survival rates in patients with Grade III or IV steroid-refractory acute GVHD are 50% or less, and the incidence of steroid-refractory acute and chronic GVHD is approximately 3,000 per year in the United States.

In June 2016, we announced that the FDA granted Breakthrough Therapy designation for ruxolitinib in patients with acute GVHD.

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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;

primary endpoint) and a complete response (CR) rate of 37% (26 out of 71 patients).

The median duration of response (mDOR) was 21.7 months.

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

primary endpoint) and a complete response rate of 37% (26 out of 71 patients).

The median duration of response was 21.7 months.

The most frequent serious adverse reactions were infections (26%), including pneumonia (7%) and febrile neutropenia (6%).

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

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.

The results showed best objective response rate (ORR) of 56.8% (primary endpoint), including a complete response (CR) rate of 39.5% and a partial response rate (PR) of 17.3%, as assessed by an independent review committee.

The median duration of response (mDOR) was 43.9 months after a minimum follow up of 35 months (secondary endpoint).

The results showed best objective response rate of 56.8% (primary endpoint), including a complete response rate of 39.5% and a partial response rate of 17.3%, as assessed by an independent review committee.

The median duration of response was 43.9 months after a minimum follow up of 35 months (secondary endpoint).

MINJUVI together with lenalidomide was shown to provide a clinically meaningful response and the side effects were manageable.

Warnings and precautions for MINJUVI include infusion-related reactions, myelosuppression, including neutropenia and thrombocytopenia, infections and tumour lysis syndrome.

DLBCL is the most common type of non-Hodgkin lymphoma in adults worldwide, comprising 40% of all cases.

DLBCL is characterized by rapidly growing masses of malignant B-cells in the lymph nodes, spleen, liver, bone marrow or other organs.

It is an aggressive disease with ~40% of patients not responding to initial therapy or relapsing thereafter.

We estimate that there are ~10,000 patients diagnosed in the United States each year with r/r DLBCL who are not eligible for ASCT.

In the EU, we estimate there are ~14,000 patients diagnosed each year with r/r DLBCL who are not eligible for ASCT.

In December 2024, we submitted a supplemental Biologics License Application (sBLA) for tafasitamab in relapsed or refractory follicular lymphoma (FL) to the FDA.

PEMAZYRE (pemigatinib)

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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).

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.

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 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 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 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.

In March 2022, PEMAZYRE was approved by the National Medical Products Administration of the People ’ s Republic of China for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with a 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 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).

In September 2024, we announced positive results from the Phase 3 POD1UM-303/InterAACT2 trial of ZYNYZ (retifanlimab) in combination with platinum-based chemotherapy (carboplatin–paclitaxel) for the treatment of adults with inoperable locally recurrent or metastatic SCAC.

In December 2024, the sBLA submission for retifanlimab in advanced/metastatic SCAC was filed with the FDA with approval anticipated in the second half of 2025.

NIKTIMVO (axatilimab-csfr)

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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 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.

We have initiated two combination trials with axatilimab in cGVHD in 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.

In August 2024, we and Syndax announced the FDA approval of NIKTIMVO (axatilimab-csfr) for the treatment of chronic GVHD after failure of at least two prior lines of systemic therapy in adult and pediatric patients.

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In September, we and Syndax announced the New England Journal of Medicine publication of data from the pivotal AGAVE-201 trial of NIKTIMVO in chronic GVHD and the addition of NIKTIMVO to the NCCN Clinical Practice Guidelines in Oncology for the treatment of chronic GVHD.

To facilitate patient dosing and limit product waste, following the FDA’s approval of NIKTIMVO, we, along with Syndax, have submitted to the FDA for the approval of two smaller vial sizes.

Following the potential FDA approval of the new vial sizes, we currently anticipate launching NIKTIMVO in the United States in the first quarter of 2025.

In January 2025, the FDA approved two smaller vial sizes (9mg and 22mg) of NIKTIMVO to facilitate patient dosing and limit product waste.

commercial launch of NIKTIMVO commenced at th e end of January 2025.

Clinical Programs in Hematology and Oncology

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 in combinations.

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.

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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 with data presented demonstrating early signals of clinical activity of both agents in monotherapy and in combination with ruxolitinib.

Phase 2 trials combining ruxolitinib with investigational agents from our portfolio such as INCB57643 (BET) in patients with MF are ongoing with data presented demonstrating early signals of clinical activity in monotherapy and in combination with ruxolitinib.

INCA033989 (mutCALR)

In December 2022, new research detailing the development and mechanism of action of INCA033989, an Incyte-discovered, investigational novel anti-mutant calreticulin (CALR)-targeted monoclonal antibody, was featured in the Plenary Scientific Session at the 64th American Society of Hematology (ASH) Annual Meeting.

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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.

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

In August 2024, we announced positive topline results from the Phase 3 clinical study evaluating tafasitamab in relapsed or refractory follicular lymphoma (FL).

The pivotal Phase 3 inMIND trial evaluating the efficacy and safety of tafasitamab or placebo in combination with lenalidomide and rituximab compared to lenalidomide and rituximab alone, met the primary endpoint of progression free survival (PFS) by investigator assessment in FL.

The trial also met key secondary endpoints of PFS in the overall population by investigator assessment as well as the positron-emission tomography-complete response rate in the FDG-avid FL population.

No new safety signals with tafasitamab were observed.

The full dataset is anticipated to be presented at an upcoming medical meeting in 2024 and we currently expect to file a supplemental Biologics License Application (sBLA) for tafasitamab in combination with lenalidomide and rituximab in FL by the end of 2024.

In December 2024, we announced the full results from the pivotal Phase 3 inMIND trial evaluating treatment with tafasitamab in combination with lenalidomide and rituximab compared with placebo plus lenalidomide and rituximab in patients with relapsed or refractory follicular lymphoma (FL).

The data showed that the study met its primary endpoint by demonstrating a statistically significant and clinically meaningful improvement in progression-free survival (PFS) by investigator assessment in 548 patients with FL.

Tafasitamab was generally well-tolerated, and safety was consistent with other CD19 and immunotherapy combination regimens.

In July 2024, we announced positive topline results from both the two Phase 3 clinical studies evaluating retifanlimab, a humanized monoclonal antibody targeting programmed cell death receptor-1 (PD-1), in SCAC and NSCLC.

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The safety analysis from both studies showed retifanlimab was generally well-tolerated with no new safety signals observed.

We plan to share the full datasets from both studies in the second half of 2024.

POD1UM-303 is a Phase 3, global, multicenter, randomized, double-blind study evaluating carboplatin-paclitaxel with retifanlimab or placebo in patients with inoperable locally recurrent or metastatic SCAC who have not previously been treated with chemotherapy.

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The Phase 3 POD1UM-303/InterAACT2 trial for retifanlimab met the primary endpoint of PFS and demonstrated improvement across key secondary endpoints in patients with SCAC receiving retifanlimab in combination with platinum-based chemotherapy (carboplatin-paclitaxel).

Incyte plans to file an sBLA for retifanlimab in SCAC by the end of 2024.

A potential approval in 2025 could represent the first PD-(L)1 antibody for patients with SCAC.

INCB123667 (CDK2)

In the cell cycle, the serine threonine kinase, CDK2, regulates the transition from the G1 phase (cell growth) to the S-phase (DNA replication).

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 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 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 2025.

In September 2024, we presented initial data from the Phase 1 CDK2 inhibitor program at the 2024 ESMO Congress.

Phase 1 data of INCB123667 were presented demonstrating single-agent antitumor activity across a range of doses and regimens, notably in patients with ovarian cancer and endometrial cancer whose tumors overexpress Cyclin E1.

The Phase 1 trial is ongoing with INCB123667 in combination with other agents.

We currently anticipate initiating a pivotal trial in ovarian cancer in 2025.

MPN, GVHD and Oncology Programs Indication and Phase

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(JAK1/JAK2) Myelofibrosis, polycythemia vera and GVHD

Ruxolitinib + zilurgisertib

(JAK1/JAK2 + ALK2i) Myelofibrosis:

Ruxolitinib + INCB57643

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Chronic GVHD:

Phase 3 in preparation

(mCALR) Myelofibrosis, essential thrombocythemia:

(mutCALR) Myelofibrosis, essential thrombocythemia:

(JAK2V617Fi) Myelofibrosis:

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Phase 2 (POD1UM-101, POD1UM-204)

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

(CDK2i) Solid tumors with CCNE1 amplification/Cyclin E overexpression:

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

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Earlier-Stage Development Programs in Hematology and Oncology

In July 2024, we announced a strategic review of our pipeline with an increased focus on high potential impact programs.

We will discontinue further development of both oral, small molecule PD-L1 inhibitors.

Additionally, we plan to forgo further development of our LAG-3 monoclonal antibody, TIM-3 monoclonal antibody and LAG-3xPD-1 bispecific program and in parallel, seek partners to advance further development of these programs.

INCB123667 (CDK2)

In the cell cycle, the serine threonine kinase, CDK2, regulates the transition from the G1 phase (cell growth) to the S-phase (DNA replication).

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.

In September 2024, we presented initial data from the Phase 1 CDK2 inhibitor program at the 2024 ESMO Congress.

The Phase 1 trial is ongoing with INCB123667 in combination with other agents.

We currently anticipate initiating a pivotal trial in ovarian cancer in 2025.

INCB161734 (KRASG12D)

INCB161734 (KRAS G12D)

A Phase 1 study evaluating INCB161734 (KRASG12D) was initiated in the first quarter of 2024.

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Data from the ongoing Phase 1 study is expected in 2025.

INCB186748 (Next-generation KRAS G12D)

INCB186748 is a next-generation KRAS G12D inhibitor that demonstrated high potency, selectivity and oral bioavailability in preclinical studies.

INCB186748 is being evaluated in KRAS G12D mutant tumors.

Inflammation and AutoImmunity (IAI)

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

1 In collaboration with Merus.

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.

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The most common (≥1%) treatment-emergent adverse reactions in patients treated with OPZELURA were nasopharyngitis, diarrhea, bronchitis, ear infection, eosinophil count increased, urticaria, folliculitis, tonsillitis and rhinorrhea.

1 In collaboration with Merus.

In July 2022, we announced that the FDA approved OPZELURA for the topical treatment of nonsegmental vitiligo in adult and pediatric patients 12 years of age and older.

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Vitiligo is a chronic autoimmune depigmenting skin disease characterized by patches of the skin losing their pigment.

It is estimated that there are at least 1.5 million patients diagnosed with vitiligo in the United States, with the majority of patients (approximately 85%) suffering from nonsegmental vitiligo.

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

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Ruxolitinib cream is a potent, selective inhibitor of JAK1 and JAK2 that provides the opportunity to directly target diverse pathogenic pathways that underlie certain dermatologic conditions, including AD, vitiligo, lichen planus, lichen sclerosus, hidradenitis suppurativa (HS) and prurigo nodularis (PN).

In October 2021, we announced the validation of the European marketing authorization application (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 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.

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

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In October 2024, we announced the Phase 3 trial for ruxolitinib cream in mild to moderate HS is on track to initiate in the first half of 2025 following achieving alignment on the study design with the FDA.

Ruxolitinib cream has the potential to provide a new therapeutic option for mild to moderate HS patients.

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

In March 2025, results from two Phase 3 studies (TRuE-PN1 and TRuE-PN2) evaluating ruxolitinib cream in patients with prurigo nodularis were presented in a late-breaking oral session at the American Academy of Dermatology annual meeting.

The TRuE-PN1 study met the primary endpoint of a > 4-point improvement from baseline in Worst-Itch Numeric Rating Scale (WI-NRS4) at Week 12 and all key secondary endpoints.

The TRuE-PN2 study did not reach statistical significance for the primary endpoint, resulting in the key secondary endpoints with nominal p-values.

These key secondary endpoints still demonstrate positive trends for ruxolitinib cream 1.5% versus vehicle.

These data will inform planned discussions with regulatory authorities on submission.

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

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

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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.

In March 2025, positive results from two Phase 3 studies (STOP-HS1 and STOP-HS2) evaluating povorcitinib in patients with HS were presented and demonstrated that both studies met their primary endpoint of Hidradenitis Suppurativa Clinical Response (HiSCR) at Week 12 and at both tested doses (45mg and 75mg).

In addition, at Week 12, patients treated with povorcitinib achieved deep levels of clinical response with a greater proportion achieving HiSCR75, reduction in flares, >3-point decrease in the Skin Pain NRS score and Skin Pain NRS30.

Furthermore, povorcitinib demonstrated rapid onset of response, including rapid skin pain reduction.

These data support the planned regulatory submission of povorcitinib for the treatment of HS worldwide.

Nonsegmental Vitiligo.

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Data for CSU are anticipated in the first half of 2025 and data in asthma are anticipated in the second half of 2025.

In April 2025, we announced positive topline results from the Phase 2 study evaluating povorcitinib in patients with chronic spontaneous urticaria.

The study met the primary endpoint at Week 12 of change from baseline in the Urticaria Activity Score summed over 7 days (UAS7).

Povorcitinib was well tolerated with no new safety signals observed.

These data will support planned discussions with regulatory agencies and will be presented at an upcoming medical conference.

INCB000262 (MRGPRX2) & INCB000547 (MRGPRX4)

As more fully described in Note 6 to the Condensed Consolidated Financial Statements, in May 2024, we acquired Escient Pharmaceuticals, Inc.

As more fully described in Note 6 of Notes to the Condensed Consolidated Financial Statements, in May 2024, we acquired Escient Pharmaceuticals, Inc.

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

Escient’s clinical development portfolio includes INCB000262 , a first-in-class, potent, highly selective, once-daily small molecule antagonist of Mas-related G protein-coupled receptor (MRGPRX2) and INCB000547 , a first-in-class oral MRGPRX4 antagonist.

INCB000262 is a specific, novel mechanism for blocking mast cell activation, independent from IgE, and has been a high priority target to add to our IAI pipeline.

INCB000547 is a first-in-class medicine that entered the clinic in January 2023 and is currently being evaluated in the clinic.

In the Phase 1 healthy volunteer study, INCB000547 was well-tolerated, had low inter-patient PK variability and achieved exposures well above predicted efficacious levels.

INCB000547 is currently in a phase 1b open label study in chronic inducible urticaria (CIndU) and in two randomized phase 2 studies in CSU and AD with data for all three studies expected by early 2025.

INCB000547 is a potent and highly-selective antagonist of MRGPRX4.

MRGPRX4 is expressed on neurons in the dorsal root ganglia and specifically activated by bile acids that are increased in cholestatic patients.

Initial evaluation is being conducted in cholestatic pruritus with clinical proof-of-concept for cholestatic pruritus associated with primary biliary cholangitis (PBC) and primary sclerosing cholangitis (PSC), anticipated by early 2025.

Indication expansion opportunities for both INCB000262 and INCB000547 are under evaluation.

Escient’s clinical development portfolio includes INCB000262 , a potent, highly selective, once-daily small molecule antagonist of Mas-related G protein-coupled receptor (MRGPRX2) and INCB000547 , an oral MRGPRX4 antagonist.

In November 2024, we announced that enrollment was paused in the ongoing Phase 2 study of MRGPRX2 (INCB000262) in CSU.

The decision was made following the observation of certain in vivo preclinical toxicology findings.

These data have been shared with the FDA and at this time, we have no intention to enroll additional patients.

Enrollment in the other INCB000262 proof-of-concept studies in chronic inducible urticaria and AD is complete.

In November 2024, we announced that data from the Phase 2 study evaluating MRGPRX4 (INCB000547) in cholestatic pruritus did not support further development.

IAI and Dermatology Programs Indication and Phase

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Chronic spontaneous urticaria:

(MRGPRX2) Chronic spontaneous urticaria:

Chronic inducible urticaria:

Atopic dermatitis:

(MRGPRX4) Cholestatic pruritus:

(anti-CD122) Vitiligo:

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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

Other Clinical Programs

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

Other Clinical Program Indication and Phase

Zilurgisertib

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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 European Medicines Agency (EMA) for baricitinib as treatment for rheumatoid arthritis.

In January 2016, Lilly submitted a New Drug Application (NDA) to the FDA and a Marketing Authorization Application to the European Medicines Agency (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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In January 2022, Lilly provided a regulatory update on the sNDA based on ongoing discussions with the FDA.

Lilly announced that alignment with the FDA on the indicated population had not yet been reached and given the FDA’s position, there would be the possibility of a Complete Response Letter (CRL).

Lilly announced that alignment with the FDA on the indicated population had not yet been reached and given the FDA’s position, there would be the possibility of a Complete Response Letter.

In January 2020, Lilly announced that baricitinib had been submitted for regulatory review in Europe as a treatment for patients with moderate-to-severe AD.

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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 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.

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 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 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.

NSCLC is the most common type of lung cancer, impacting more than 2 million people per year globally.

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Approved in the U.S., Europe and Japan

Capmatinib (TABRECTA) 3

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Baricitinib (OLUMIANT) licensed to Lilly.

approved as Olumiant in multiple territories globally for certain patients with moderate-to-severe rheumatoid arthritis;

approved as Olumiant in EU and Japan for certain patients with atopic dermatitis.

Capmatinib (TABRECTA) licensed to Novartis.

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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 at Note 8 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 in Note 5 and Note 7 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.

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

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

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

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

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.

In August 2024, Incyte and Syndax announced the FDA approval of NIKTIMVO (axatilimab-csfr) for the treatment of chronic graft-versus-host disease after failure of at least two prior lines of systemic therapy in adult and pediatric patients.

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.

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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, 2024.

There have been no significant changes to our critical accounting policies or estimates during the nine months ended September 30, 2024.

There have been no significant changes to our critical accounting policies or estimates during the three months ended March 31, 2025.

Recent Accounting Pronouncements and Regulatory Updates

In November 2023, the Financial Accounting Standards Board (“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 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.

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 condensed consolidated financial statements and related disclosures.

Results of Operations

We recorded net income of $106.5 million and basic net income per share of $0.55 and diluted net income per share of $0.54 for the three months ended September 30, 2024, as compared to net income of $171.3 million and basic and diluted net income per share of $0.76 in the corresponding period in 2023.

We recorded net loss of $168.6 million and basic and diluted net loss per share of $0.80 for the nine months ended September 30, 2024, as compared to net income of $396.5 million and basic net income per share of $1.77 and diluted net income per share of $1.76 in the corresponding period in 2023.

We recorded net income of $158.2 million and basic net income per share of $0.82 and diluted net income per share of $0.80 for the three months ended March 31, 2025, as compared to net income of $169.5 million and basic net income per share of $0.76 and diluted net income per share of $0.75 in the corresponding period in 2024.

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(in millions) (in millions)

(in millions)

JAKAFI revenues, net $ 709.4 $ 571.8

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MINJUVI/MONJUVI revenues, net 29.6 23.9

NIKTIMVO revenues, net 13.6 —

ZYNYZ revenues, net 3.1 0.5

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TABRECTA product royalty revenues 6.4 5.2

PEMAZYRE product royalty revenues 0.4 0.5 1.8 1.3

Other product royalty revenues 1.3 0.6

Total product royalty revenues 130.6 126.0

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Total revenues $ 1,052.9 $ 880.9

The increase in JAKAFI product revenues for the three months ended September 30, 2024 as compared to the corresponding period in 2023 was comprised of a volume increase of $78.2 million and a price increase of $26.7 million.

The increase in JAKAFI net product revenues for the nine months ended September 30, 2024 as compared to the corresponding period in 2023 reflected a volume increase of $74.8 million and a price increase of $45.6 million.

The increase for the three and nine months ended September 30, 2024 as compared to the corresponding periods in 2023 was primarily driven by an increase in paid demand across all indications.

The increase in OPZELURA net product revenues for the three months ended September 30, 2024 as compared to the corresponding period in 2023 was comprised of a volume increase of $45.8 million and a price increase of $1.7 million.

The increase in OPZELURA net product revenues for the nine months ended September 30, 2024 as compared to the corresponding period in 2023 was comprised of a volume increase of $109.2 million and a price increase of $8.9 million.

The increase in OPZELURA net product revenues for the three and nine months ended September 30, 2024 was driven by continued growth in new patient starts and refills and approximately $20.4 million of net product revenues in the third quarter of 2024 were from Europe.

The increase in MINJUVI/MONJUVI net product revenues for the three and nine months ended September 30, 2024 was driven by the acquisition completed in February 2024, under which we gained exclusive global rights to tafasitamab marketed in the United States as MONJUVI (tafasitamab-cxix).

The increase in JAKAFI product revenues for the three months ended March 31, 2025 as compared to the corresponding period in 2024 was comprised of a volume increase of $98.7 million and a price increase of $38.9 million.

The increase was primarily driven by an increase in paid demand of 10% reflecting continued demand growth in all indications, the positive impact of the Part D redesign under the Inflation Reduction Act, and 7% favorable impact from less de-stocking compared to the first quarter of 2024.

JAKAFI inventory levels were within normal range at the end of the first quarter of 2025.

The increase in OPZELURA net product revenues for the three months ended March 31, 2025 as compared to the corresponding period in 2024 was primarily due to continued growth in new patient starts and refills in the U.S.

prescription paid demand up 24% compared to the first quarter of 2024.

Additionally, $23.5 million of net product revenues during the first quarter of 2025 were from outside of the U.S., driven by continued uptake in Germany and France, as well as growth from the recent launches in Italy and Spain.

The increases were partially offset by a reduction in channel inventory.

OPZELURA inventory levels were within normal range at the end of the first quarter of 2025.

The increase in MINJUVI/MONJUVI net product revenues for the three months ended March 31, 2025 was as a result of the first quarter of 2025 reflecting three months of net product revenues in the U.S., compared to two months of net product revenue in the first quarter of 2024 due to the acquisition of U.S.

rights to MONJUVI, which closed in February 2024.

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

NIKTIMVO net product revenues for the three months ended March 31, 2025 was driven by the commercial launch of the product during the first quarter of 2025.

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

Nine Months Ended September 30, 2024 Discounts and

Fees Government

Three Months Ended March 31, 2025 Discounts and

Fees Commercial & Government

Chargebacks Co-Pay

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Credits/payments for prior period sales (20,169) (118,487) (8,081) (623) (147,360)

Balance at September 30, 2024 $ 20,033 $ 339,496 $ 10,773 $ 17,714 $ 388,016

Balance at March 31, 2025 $ 29,381 $ 406,877 $ 12,540 $ 25,785 $ 474,583

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

Increases in certain government reimbursement rates are limited to a measure of inflation, and when the price of a drug increases faster than this measure of inflation it will result in a penalty adjustment factor that causes a larger sales allowance to those government related entities.

Increases in certain U.S.

government reimbursement rates are limited to a measure of inflation, and when the price of a drug increases faster than this measure of inflation it will result in a penalty adjustment factor that causes a larger sales allowance to those government related entities.

We expect government rebates and chargebacks as a percentage of our gross product sales will continue to increase in connection with any future product price increases greater than the rate of inflation, and any such increase in these government rebates and chargebacks will have a negative impact on our reported product revenues, net.

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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.

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We also adjust our allowance for product returns based on new information regarding actual returns as it becomes available.

We expect our sales allowances to fluctuate from quarter to quarter as a result of the Medicare Part D Coverage Gap, the volume of purchases eligible for government mandated discounts and rebates as well as changes in discount percentages which are impacted by potential future price increases, rate of inflation, and other factors.

We expect our sales allowances to fluctuate from quarter to quarter as a result of the volume of purchases eligible for government mandated discounts and rebates as well as changes in discount percentages which are impacted by potential future price increases, rate of inflation, and other factors.

Product royalty revenues on commercial sales of JAKAVI and TABRECTA by Novartis are based on net sales of licensed products in licensed territories as provided by Novartis.

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.

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 nine months ended September 30, 2024, was derived from a $25.0 million upfront payment received during the first quarter of 2024 upon our transfer of functional intellectual property to CMSHL, and we recognized $18.0 million of upfront and milestone payments from two of our collaboration partners during the three months ended September 30, 2024.

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

Cost of Product Revenues

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(in millions) (in millions)

(in millions)

Product costs $ 27.4 $ 27.4

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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, 2024 as compared to the same periods in 2023 was primarily due to growth in net product revenues, increased royalty expense and increased manufacturing related costs.

The increase in cost of product revenues for the three months ended March 31, 2025 as compared to the same periods in 2024 was primarily due to increased royalty expense.

Operating Expenses

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Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(in millions) (in millions)

(in millions)

Salary and benefits related $ 132.5 $ 122.7

Stock compensation 36.7 36.8

Escient acquisition related compensation expense — — 11.3 —

Escient IPR&D expense — — 679.4 —

Clinical research and outside services 229.4 226.6

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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, 2024 as compared to the corresponding period in 2023 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, 2025 as compared to the corresponding period in 2024 was due primarily to increased 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.

Additionally, as described in Note 6 to the Condensed Consolidated Financial Statements, as part of the Escient acquisition, during the second quarter of 2024, we recognized compensation expense in research and development of approximately $11.3 million associated with the accelerated vesting for certain Escient stock awards in connection with the acquisition on our condensed consolidated statements of operations.

Research and development expenses for the nine months ended September 30, 2024 also include the $679.4 million of expense related to the acquired in-process research and development assets as part of the Escient acquisition, as described in Note 6 to the Condensed Consolidated Financial Statements.

The increase in clinical research and outside services expense for the three months ended September 30, 2024 as compared to the corresponding period in 2023, was primarily due to continued investment in our late stage development assets, additional research and development expenses resulting from the Escient acquisition and timing of certain expenses.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $100.0 million and $101.4 million, respectively, for the three and nine months ended September 30, 2024.

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 for the three and nine months ended September 30, 2024 and 2023 were net of approximately $3.8 million, $25.1 million, $11.3 million and $37.0 million, respectively, of costs reimbursed by our collaborative partners.

The increase in clinical research and outside services expense for the three months ended March 31, 2025 as compared to the corresponding period in 2024, was primarily due to continued investment in our late stage development assets and timing of certain expenses.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $15.5 million and $1.0 million, respectively, for the three months ended March 31, 2025 and 2024.

Research and development expenses for the three months ended March 31, 2025 and 2024 were net of approximately $2.6 million and $17.1 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,

2024 2023 2024 2023

(in millions) (in millions)

(in millions)

Salary and benefits related $ 97.8 $ 83.2

Stock compensation 23.4 22.4

Escient acquisition related compensation expense $ — — 20.2 —

Other contract services and outside costs 204.5 194.7

Total selling, general and administrative expenses $ 325.7 $ 300.3

The increase in salary and benefits related expense for the three and nine months ended September 30, 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 salary and benefits related expense for the three months ended March 31, 2025 as compared to the corresponding period in 2024 was due primarily to increased headcount.

Additionally, as described in Note 6 to the Condensed Consolidated Financial Statements, as part of the Escient acquisition, during the second quarter of 2024, we recognized compensation expense in selling, general and administrative expenses of approximately $20.2 million associated with the accelerated vesting for certain Escient stock awards in connection with the acquisition on our condensed consolidated statements of operations.

The increase in other contract services and outside costs for the three months ended September 30, 2024, as compared to the corresponding period in 2023, was primarily due to the timing of consumer marketing activities and of certain other expenses.

The increase in other contract services and outside costs for the three months ended March 31, 2025, as compared to the corresponding period in 2024, was primarily due to the timing of consumer marketing activities and of certain other expenses.

Loss (gain) on change in fair value of acquisition-related contingent consideration

Acquisition-related contingent consideration, which consists of our future royalty obligations to ARIAD/Takeda, was recorded on the acquisition date, June 1, 2016, at the estimated fair value of the obligation, in accordance with the acquisition method of accounting.

The change in fair value of the acquisition-related contingent consideration for the three and nine months ended September 30, 2024 was a loss of $23.4 million and $23.8 million, respectively, which is recorded in loss (gain) on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

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 loss (gain) 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, 2024 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

The change in fair value of the contingent consideration during the three and nine months ended September 30, 2023 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

Loss and (profit) sharing under collaboration agreements

The change in fair value of the acquisition-related contingent consideration for the three months ended March 31, 2025 and 2024 was a loss of $11.6 million and gain of $0.5 million, respectively, which is recorded in loss (gain) 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, 2025 and 2024 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

Profit sharing from co-commercialization activities

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 loss and (profit) sharing under collaboration agreements on the condensed consolidated statement of operations.

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 a 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 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.

Under the collaboration agreement with Syndax, as described further in Note 8 of the Notes to the Condensed Consolidated Financial Statements, we and Syndax are both responsible for the co-commercialization of axatilimab in the United States and share equally in the profits and losses from those efforts.

We are the principal in the U.S.

axatilimab co-commercialization efforts and record 100% of all product revenues and associated costs in accordance with our profit sharing from co-commercialization activities accounting policy outlined in our Annual Report on Form 10-K for the year ended December 31, 2024.

For the three months ended March 31, 2025, we recorded $13.6 million of revenues from sales of axatilimab and a nominal loss from co-commercialization activities.

Non-operating Income and Expenses

Interest income and other, net

Interest income and other, net for the three and nine months ended September 30, 2024 was $24.2 million and $118.7 million, respectively.

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

The decrease in Interest income and other, net for the three and nine months ended September 30, 2024 primarily relates to a decrease in interest earned on our cash equivalents and marketable securities generally due to lower cash equivalent and marketable securities balance in third quarter of 2024 as compared to the corresponding period in 2023.

Realized and unrealized (loss) gain on equity investments

Realized and unrealized losses and gains on equity investments will fluctuate from period to period, based on sales of securities and the change in fair value of the securities we hold in our publicly held collaboration partners.

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

Interest income

Interest income for the three months ended March 31, 2025 and 2024 was $22.9 million and $46.8 million, respectively.

The decrease in Interest income for the three months ended March 31, 2025 primarily relates to a decrease in interest earned on our cash equivalents and marketable securities generally due to lower cash equivalent and marketable securities balance in first quarter of 2025 as compared to the corresponding period in 2024.

(Loss) gain on equity investments

Losses and gains on equity investments will fluctuate from period to period, based on sales of securities and the change in fair value of the securities we hold in our publicly held collaboration partners.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(in millions) (in millions)

(in millions)

Agenus $ — $ (3.0)

Merus (4.1) (9.1) 106.1 29.5

MorphoSys — 29.9

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Other — (0.3)

Total realized and unrealized (loss) gain on equity investments $ (13.0) $ (26.7) $ 126.2 $ 9.8

Total (loss) gain on equity investments $ (1.3) $ 99.9

Provision for income taxes

The provision for income taxes for the three and nine months ended September 30, 2024 was $50.1 million and $171.5 million, respectively.

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

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.

The provision for income taxes for the three months ended March 31, 2025 and 2024 was $76.0 million and $66.6 million, respectively.

Our effective tax rate for the three months ended March 31, 2025 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.

Liquidity and Capital Resources

At September 30, 2024, we had available cash, cash equivalents and marketable securities of $1.8 billion.

At March 31, 2025, we had available cash, cash equivalents and marketable securities of $2.4 billion.

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

government debt securities.

Additionally, we had short term equity investments of $3.3 million as of September 30, 2024.

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

Net cash used in operating activities for the nine months ended September 30, 2024 was $45.9 million and net cash provided by operating activities for the nine months ended September 30, 2023 was $348.8 million.

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

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

Net cash provided by investing activities was $179.0 million for the nine months ended September 30, 2024, which primarily represented sales of equity investments of $282.9 million and sale and maturities of marketable securities of $207.9 million, offset in part by purchases of marketable securities of $229.0 million, capital expenditures of $68.9 million and payments for intangible assets of $13.9 million.

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, purchases of equity investments of $10.0 million and capital expenditures of $30.2 million, offset in part by the sales and maturities of marketable securities of $224.2 million.

Net cash provided by operating activities for the three months ended March 31, 2025 was $266.1 million and net cash provided by operating activities for the three months ended March 31, 2024 was $218.8 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 sales of long term investments.

Net cash provided by investing activities was $1.1 million for the three months ended March 31, 2025, which primarily represented by sales and maturities of marketable securities of $45.5 million, offset in part by purchases of marketable securities of $41.2 million and capital expenditures of $3.2 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 sales and maturities of marketable securities of $102.2 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 $2.0 billion for the nine months ended September 30, 2024 and was primarily driven by expenditures associated with the share repurchase of $2.0 billion.

Net cash used in financing activities was $20.4 million for the nine months ended September 30, 2023, primarily representing cash paid to ARIAD/Takeda for contingent consideration.

In August 2021, we entered into a $500.0 million, revolving credit and guaranty facility, which was subsequently amended in May 2023 and June 2024 (as amended, the "Credit Agreement").

Net cash used in financing activities was $12.7 million and $12.4 million for the three months ended March 31, 2025 and 2024, respectively, primarily representing cash paid to ARIAD/Takeda for contingent consideration and cash paid for tax withholdings related to restricted and performance share vesting.

In August 2021, we entered into a $500.0 million, senior unsecured revolving credit facility, which was subsequently amended in May 2023 and June 2024 (as amended, the "Credit Agreement").

The June 2024 amendment to the Credit Agreement extended the maturity date of the revolving credit facility from August 2024 to June 2027.

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, 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.

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

The Credit Agreement is described further in Note 15 of Notes to the Condensed Consolidated Financial Statements.

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.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis