INCYTE CORP 10-Q

Item 1. Financial Statements INCYTE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except number of shares and par value) June 30, 2025 December 31, 2024* (unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,954,969 $ 1,687,829 Marketable securities—available-for-sale (amortized cost $ 465,456 and $ 469,917 as of June 30, 2025 and December 31, 2024, respectively; allowance for credit losses $ 0 as of June 30, 2025 and December 31, 2024) 466,769 470,263 Accounts receivable 842,892 853,154 Inventory 83,423 58,872 Prepaid expenses and other current assets 295,648 168,912 Total current assets 3,643,701 3,239,030 Restricted cash 1,844 1,622 Long term equity investments 13,313 18,814 Inventory 368,108 348,327 Property and equipment, net 798,543 763,411 Finance lease right-of-use assets, net 29,001 30,803 Other intangible assets, net 126,419 113,803 Goodwill 155,593 155,593 Deferred income tax asset 652,280 762,071 Other assets, net 32,552 10,848 Total assets $ 5,821,354 $ 5,444,322 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 241,094 $ 197,465 Accrued compensation 129,114 188,677 Accrued and other current liabilities 857,094 1,212,048 Finance lease liabilities 4,475 4,419 Acquisition-related contingent consideration 46,842 39,238 Total current liabilities 1,278,619 1,641,847 Acquisition-related contingent consideration 160,158 153,762 Finance lease liabilities 31,760 33,542 Other liabilities 179,914 167,543 Total liabilities 1,650,451 1,996,694 Commitments and contingencies (Note 16) Stockholders’ equity: Preferred stock, $ 0.001 par value; 5,000,000 shares authorized; none issued or outstanding — — Common stock, $ 0.001 par value; 400,000,000 shares authorized; 194,123,265 and 193,434,305 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively 194 193 Additional paid-in capital 4,666,949 4,533,437 Accumulated other comprehensive income (loss) 13,439 ( 13,121 ) Accumulated deficit ( 509,679 ) ( 1,072,881 ) Total stockholders’ equity 4,170,903 3,447,628 Total liabilities and stockholders’ equity $ 5,821,354 $ 5,444,322 * The condensed consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date. See accompanying notes. 3 Table of Contents INCYTE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues: Product revenues, net $ 1,059,414 $ 906,566 $ 1,981,688 $ 1,636,489 Product royalty revenues 151,115 137,193 281,739 263,159 Milestone and contract revenues 5,000 — 5,000 25,000 Total revenues 1,215,529 1,043,759 2,268,427 1,924,648 Costs, expenses and other: Cost of product revenues (including definite-lived intangible amortization) 78,766 76,634 151,954 137,590 Contract dispute settlement ( 242,251 ) — ( 242,251 ) — Research and development 494,917 1,138,380 932,196 1,567,640 Selling, general and administrative 331,022 305,982 656,713 606,238 Loss on change in fair value of acquisition-related contingent consideration 22,761 893 34,333 437 (Profit) and loss sharing under collaboration agreements — — — ( 1,025 ) Total costs, expenses and other 685,215 1,521,889 1,532,945 2,310,880 Income (loss) from operations 530,314 ( 478,130 ) 735,482 ( 386,232 ) Interest income 25,136 41,476 48,065 88,246 Interest expense ( 594 ) ( 657 ) ( 1,254 ) ( 1,087 ) (Loss) gain on equity investments ( 4,151 ) 39,241 ( 5,494 ) 139,188 Other, net 7,307 8,293 15,403 6,267 Income (loss) before provision for income taxes 558,012 ( 389,777 ) 792,202 ( 153,618 ) Provision for income taxes 153,013 54,824 229,000 121,435 Net income (loss) $ 404,999 $ ( 444,601 ) $ 563,202 $ ( 275,053 ) Net income (loss) per share: Basic $ 2.09 $ ( 2.04 ) $ 2.91 $ ( 1.24 ) Diluted $ 2.04 $ ( 2.04 ) $ 2.84 $ ( 1.24 ) Shares used in computing net income (loss) per share: Basic 193,995 218,175 193,853 221,329 Diluted 198,744 218,175 198,526 221,329 See accompanying notes. 4 Table of Contents INCYTE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net income (loss) $ 404,999 $ ( 444,601 ) $ 563,202 $ ( 275,053 ) Other comprehensive income (loss): Foreign currency translation gain (loss) 19,065 407 24,505 ( 17,413 ) Unrealized gain (loss) on marketable securities, net of tax 36 ( 254 ) 967 ( 2,000 ) Defined benefit pension gain, net of tax 576 599 1,088 887 Other comprehensive income (loss) 19,677 752 26,560 ( 18,526 ) Comprehensive income (loss) $ 424,676 $ ( 443,849 ) $ 589,762 $ ( 293,579 ) See accompanying notes. 5 Table of Contents INCYTE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited, in thousands, except number of shares) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity Balances at January 1, 2025 $ 193 $ 4,533,437 $ ( 13,121 ) $ ( 1,072,881 ) $ 3,447,628 Issuance of 363,987 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes — ( 6,215 ) — — ( 6,215 ) Issuance of 1,208 shares of Common Stock for services rendered — 82 — — 82 Stock compensation — 60,982 — — 60,982 Other comprehensive income — — 6,883 — 6,883 Net income — — — 158,203 158,203 Balances at March 31, 2025 $ 193 $ 4,588,286 $ ( 6,238 ) $ ( 914,678 ) $ 3,667,563 Issuance of 64,400 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 261,762 shares of Common Stock under the ESPP 1 13,972 — — 13,973 Issuance of 1,220 shares of Common Stock for services rendered — 82 — — 82 Stock compensation — 64,609 — — 64,609 Other comprehensive income — — 19,677 — 19,677 Net income — — — 404,999 404,999 Balances at June 30, 2025 $ 194 $ 4,666,949 $ 13,439 $ ( 509,679 ) $ 4,170,903 6 Table of Contents INCYTE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED) (unaudited, in thousands, except number of shares) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity Balances at January 1, 2024 $ 224 $ 5,016,122 $ 13,106 $ 160,385 $ 5,189,837 Issuance of 245,228 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes — ( 5,697 ) — — ( 5,697 ) Issuance of 1,359 shares of Common Stock for services rendered — 80 — — 80 Stock compensation — 59,781 — — 59,781 Other comprehensive loss — — ( 19,278 ) — ( 19,278 ) Net income — — — 169,548 169,548 Balances 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 — 80 — — 80 Stock compensation — 56,637 — — 56,637 Repurchases of common stock ( 33 ) ( 758,061 ) — ( 1,265,778 ) ( 2,023,872 ) Other comprehensive income — — 752 — 752 Net loss — — — ( 444,601 ) ( 444,601 ) Balances at June 30, 2024 $ 191 $ 4,382,734 $ ( 5,420 ) $ ( 1,380,446 ) $ 2,997,059 See accompanying notes. 7 Table of Contents INCYTE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Six Months Ended June 30, 2025 2024 Cash flows from operating activities: Net income (loss) $ 563,202 $ ( 275,053 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 45,281 43,995 Stock-based compensation 125,591 116,418 Deferred income taxes 110,071 ( 51,733 ) Other, net ( 3,220 ) 2,588 Loss (gain) on equity investments 5,494 ( 139,188 ) Loss on change in fair value of acquisition-related contingent consideration 34,333 437 Changes in operating assets and liabilities: Accounts receivable 10,726 4,507 Prepaid expenses and other assets ( 148,440 ) ( 39,748 ) Inventory ( 48,099 ) ( 84,976 ) Accounts payable 17,752 38,573 Accrued and other liabilities ( 401,883 ) 27,428 Net cash provided by (used in) operating activities 310,808 ( 356,752 ) Cash flows from investing activities: Sale of equity investments 7 227,257 Capital expenditures ( 22,243 ) ( 63,692 ) Payments for intangible assets — ( 1,400 ) Purchases of marketable securities ( 97,346 ) ( 204,091 ) Maturities of marketable securities 101,807 182,634 Net cash (used in) provided by investing activities ( 17,775 ) 140,708 Cash flows from financing activities: Repurchases of common stock — ( 2,004,687 ) Excise tax paid on repurchase of common stock ( 19,100 ) — Proceeds from issuance of common stock under stock plans 18,123 14,960 Tax withholdings related to restricted and performance share vesting ( 10,366 ) ( 6,865 ) Payment of finance lease liabilities ( 2,245 ) ( 1,782 ) Payment of contingent consideration ( 10,334 ) ( 11,216 ) Net cash used in financing activities ( 23,922 ) ( 2,009,590 ) Effect of exchange rates on cash, cash equivalents, and restricted cash ( 1,749 ) ( 663 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 267,362 ( 2,226,297 ) Cash, cash equivalents, and restricted cash at beginning of period 1,689,451 3,215,221 Cash, cash equivalents, and restricted cash at end of period $ 1,956,813 $ 988,924 Supplemental Schedule of Cash Flow Information Income taxes paid $ 177,919 $ 229,674 Cash paid for contract dispute settlement $ 294,881 $ — Unpaid purchase of intangible asset $ 25,000 $ — Unpaid excise tax on repurchase of common stock $ — $ 19,185 Unpaid purchases of property and equipment $ 4,046 $ 800 Leased assets obtained in exchange for new operating lease liabilities $ 1,768 $ 2,188 Leased assets obtained in exchange for new finance lease liabilities $ 304 $ 1,468 See accompanying notes. 8 Table of Contents INCYTE CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (Unaudited) Note 1. 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 is co-commercialized. Our operations are treated as one operating segment. Note 2. Summary of Significant Accounting Policies Basis of presentation 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 June 30, 2025, the condensed consolidated statements of operations, comprehensive income (loss), and stockholders’ equity for the three and six months ended June 30, 2025 and 2024, and the condensed consolidated statements of cash flows for the six months ended June 30, 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. Although we believe that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024. Principles of Consolidation. The condensed consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries. All inter-company accounts, transactions, and profits have been eliminated in consolidation. Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recent Accounting Pronouncements and Regulatory Updates In December 2023, the FASB issued ASU No. 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures .” This amended guidance applies to all entities and broadly aims to enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024, 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 condensed consolidated financial statements. 9 Table of Contents 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. Note 3. Revenues Revenues are recognized under guidance within ASC 606, Revenue from Contracts with Customers . The following table presents our disaggregated revenue for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 JAKAFI revenues, net $ 763,788 $ 705,973 $ 1,473,200 $ 1,277,812 OPZELURA revenues, net 164,499 121,695 283,204 207,419 ICLUSIG revenues, net 32,729 26,862 62,273 57,205 PEMAZYRE revenues, net 22,192 20,269 40,632 37,945 MINJUVI/MONJUVI revenues, net 31,131 31,116 60,682 54,990 NIKTIMVO revenues, net 36,154 — 49,767 — ZYNYZ revenues, net 8,921 651 11,930 1,118 Total product revenues, net 1,059,414 906,566 1,981,688 1,636,489 JAKAVI product royalty revenues 109,714 99,317 201,859 188,912 OLUMIANT product royalty revenues 33,482 31,702 64,282 62,291 TABRECTA product royalty revenues 6,632 5,298 13,045 10,532 Other product royalty revenues 1,287 876 2,553 1,424 Total product royalty revenues 151,115 137,193 281,739 263,159 Milestone and contract revenues 5,000 — 5,000 25,000 Total revenues $ 1,215,529 $ 1,043,759 $ 2,268,427 $ 1,924,648 For further information on the MINJUVI/MONJUVI revenues, refer to Note 6, and for further information on our revenue-generating contracts, refer to Note 8. Note 4. Fair Value of Financial Instruments The following is a summary of our marketable security portfolio for the periods presented (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value June 30, 2025 Debt securities (government) $ 465,456 $ 1,472 $ ( 159 ) $ 466,769 December 31, 2024 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 June 30, 2025 (in thousands): Total Less than 1 Year 1-5 Years Fair value of debt securities (government) $ 466,769 $ 221,410 $ 245,359 10 Table of Contents Debt security assets were assessed for risk of expected credit losses. As of June 30, 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 FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities. Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement. Recurring Fair Value Measurements Our marketable securities consist of investments in U.S. government debt securities that are classified as available-for-sale. At June 30, 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 three and six months ended June 30, 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): Fair Value Measurement at Reporting Date Using: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of June 30, 2025 Cash and cash equivalents $ 1,954,969 $ — $ — $ 1,954,969 Debt securities (government) — 466,769 — 466,769 Long term equity investments (Note 8) 13,313 — — 13,313 Total assets $ 1,968,282 $ 466,769 $ — $ 2,435,051 Fair Value Measurement at Reporting Date Using: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2024 Cash and cash equivalents $ 1,687,829 $ — $ — $ 1,687,829 Debt securities (government) — 470,263 — 470,263 Long term equity investments (Note 8) 18,814 — — 18,814 Total assets $ 1,706,643 $ 470,263 $ — $ 2,176,906 11 Table of Contents The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as (in thousands): Fair Value Measurement at Reporting Date Using: Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of June 30, 2025 Acquisition-related contingent consideration $ — $ — $ 207,000 $ 207,000 Total liabilities $ — $ — $ 207,000 $ 207,000 Fair Value Measurement at Reporting Date Using: Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2024 Acquisition-related contingent consideration $ — $ — $ 193,000 $ 193,000 Total liabilities $ — $ — $ 193,000 $ 193,000 The following is a roll forward of our Level 3 liabilities (in thousands): 2025 Balance at January 1, $ 193,000 Contingent consideration earned during the period but not yet paid ( 10,761 ) Payments made during the period ( 9,572 ) Change in fair value of contingent consideration 34,333 Balance at June 30, $ 207,000 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 June 30, 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 and six months ended June 30, 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 June 30, 2025 and December 31, 2024, contingent consideration earned but not yet paid was $ 10.8 million and $ 10.0 million, respectively, and was included in accrued and other current liabilities. Note 5. Concentration of Credit Risk and Current Expected Credit Losses In November 2009, we entered into a collaboration and license agreement with Novartis Pharma AG (formerly known as Novartis Pharmaceutical International Ltd.) (“Novartis”). 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, 18 % and 19 % of the accounts receivable balance as of June 30, 2025 and December 31, 2024, respectively. For further information relating to these collaboration and license agreements, refer to Note 8. 12 Table of Contents In November 2011, we began commercialization and distribution of JAKAFI and in October 2021, we began commercialization and distribution of OPZELURA. Our product revenues are concentrated in a number of customers for these products. The concentration of credit risk related to our JAKAFI and OPZELURA product revenues is as follows: Percentage of Total Net Product Revenues for the Three Months Ended Percentage of Total Net Product Revenues for the Six Months Ended June 30, June 30, 2025 2024 2025 2024 Customer A 13 % 15 % 14 % 16 % Customer B 9 % 10 % 10 % 11 % Customer C 20 % 18 % 20 % 18 % Customer D 15 % 13 % 11 % 12 % Customer E 11 % 10 % 10 % 10 % We are exposed to risks associated with extending credit to customers related to the sale of products. Customers A, B, C, D and E comprised, in the aggregate, 50 % and 47 % of the accounts receivable balance as of June 30, 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 June 30, 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 June 30, 2025 and December 31, 2024, we had no allowance for doubtful accounts. Note 6. Acquisitions Tafasitamab 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; therefore, this new agreement gave us all of the remaining global rights to tafasitamab. 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 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. Therefore, the transaction was accounted for as an asset acquisition under U.S. GAAP and the total purchase price, inclusive of direct transaction costs, was allocated to the acquired MONJUVI inventory, in accordance with applicable accounting guidance. 13 Table of Contents 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. 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. In June 2025, we recorded a $ 25.0 million regulatory milestone owed to Xencor for the FDA approval of MONJUVI for the treatment of follicular lymphoma. As of June 30, 2025, this milestone was accrued in accounts payable and capitalized as an intangible asset in other intangible assets, net on the condensed consolidated balance sheet as of June 30, 2025. The intangible asset will be amortized through cost of product revenues over the estimated useful life of 8 years. Xencor is entitled to receive up to an additional $ 149.0 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. Our royalty obligations continue on a country-by-country basis until the later to occur of the expiration of the last valid claim in the licensed patent covering tafasitamab in such country, or 11 years after the first sale thereof following marketing authorization in such country. The term of the Xencor collaboration agreement will continue until all of our royalty payment obligations have expired, unless terminated earlier. The Xencor collaboration agreement may be terminated by either party upon written notice to the other party immediately in the event of the other party’s insolvency or upon 120 days’ written notice for the other party’s uncured material breach (or upon 30 days’ written notice in the case of a breach of a payment obligation). Moreover, we may terminate the Xencor collaboration agreement without cause upon 90 days’ advance written notice to Xencor. In the event that (i) we terminate this agreement for convenience or (ii) Xencor terminates due to our material breach, our challenge of Xencor’s licensed patents or our insolvency, worldwide rights to develop, manufacture and commercialize licensed products, including tafasitamab, revert back to Xencor. Escient Pharmaceuticals, Inc. ( “ Escient ” ) 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 with Escient. 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. We accounted for the Escient transaction as an asset acquisition under U.S. 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 for the quarter 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 ) Total U.S. GAAP Consideration (net of compensation expense) $ 753,511 14 Table of Contents 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 amount of future product revenues, 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 statements of operations during three and six months ended June 30, 2024. Note 7. Inventory Our inventory balance consists of the following (in thousands): June 30, 2025 December 31, 2024 Raw materials $ 32,968 $ 27,590 API and Work-in-process 361,739 331,178 Finished goods 56,824 48,431 Total inventory $ 451,531 $ 407,199 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 June 30, 2025, $ 83.4 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 June 30, 2025, $ 368.1 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. The loss of a supplier, the deterioration of our relationship with a supplier, or any unilateral violation of the contractual terms under which we are supplied components by a supplier could adversely affect our total revenues and gross margins. 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 condensed consolidated statements of operations. At June 30, 2025, inventory with approximately $ 47.4 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 3 to 43 months and, as a result, cost of product revenues will reflect a lower average per unit cost of materials. Note 8. License Agreements Novartis In November 2009, we entered into a Collaboration and License Agreement with Novartis. Under the terms of the agreement, Novartis received exclusive development and commercialization rights outside of the United States to our JAK inhibitor ruxolitinib and certain back-up compounds for hematologic and oncology indications, including all hematological malignancies, solid tumors and myeloproliferative diseases. We retained exclusive development and commercialization rights to JAKAFI (ruxolitinib) in the United States and in certain other indications. 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, 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. 15 Table of Contents 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 June 30, 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 are obligated to pay to Novartis tiered royalties in the low single-digits on future JAKAFI net sales within the United States. On May 11, 2025, we and Novartis entered into a settlement agreement (the “Settlement Agreement”) with respect to litigation initiated by Novartis relating to the duration of royalty payments owed by us to Novartis under the Collaboration and License Agreement. As of March 31, 2025, we had approximately $ 537.1 million of accrued royalties relating to the dispute with Novartis included in accrued and other current liabilities on our condensed consolidated balance sheet. Under the Settlement Agreement, we paid Novartis $ 280.0 million as the settlement of disputed royalties on net sales of JAKAFI in the United States through December 31, 2024, and agreed to reduce by 50 % the royalty rate payable by us on future net sales of JAKAFI in the United States beginning January 1, 2025 for a period defined in the Settlement Agreement. The reduced royalty paid for the quarter ended March 31, 2025, was approximately $ 14.9 million. The difference of $ 242.2 million between the total accrued royalties and the total amount paid by us to Novartis as disclosed above was recorded in Contract dispute settlement on our condensed consolidated statement of operations for three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, such royalties on net sales within the United States totaled $ 18.7 million and $ 48.5 million, respectively, and were reflected in cost of product revenues on the condensed consolidated statements of operations. During the three and six months ended June 30, 2024, such royalties on net sales within the United States totaled $ 34.6 million and $ 57.6 million, respectively, and were reflected in cost of product revenues on the condensed consolidated statements of operations. At June 30, 2025 and December 31, 2024, approximately $ 18.7 million and $ 507.4 million, respectively, of accrued royalties were included in accrued and other current liabilities on the condensed consolidated balance sheets. 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 %. Product royalty revenue related to Novartis net sales of JAKAVI outside of the United States for the three and six months ended June 30, 2025, was $ 109.7 million and $ 201.9 million, respectively. Product royalty revenue related to Novartis net sales of JAKAVI outside of the United States for the three and six months ended June 30, 2024, was $ 99.3 million and $ 188.9 million, respectively. Product royalty revenue related to Novartis net sales of TABRECTA worldwide for the three and six months ended June 30, 2025, was $ 6.6 million and $ 13.0 million, respectively. Product royalty revenue related to Novartis net sales of TABRECTA worldwide for the three and six months ended June 30, 2024, was $ 5.3 million and $ 10.5 million, respectively. Lilly – Baricitinib In December 2009, we entered into a License, Development and Commercialization Agreement with Lilly. Under the terms of the agreement, Lilly received exclusive worldwide development and commercialization rights to our JAK inhibitor baricitinib, and certain back-up compounds for inflammatory and autoimmune diseases. 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 June 30, 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 six months ended June 30, 2025 was $ 33.5 million and $ 64.3 million, respectively. Product royalty revenue related to Lilly net sales of OLUMIANT outside of the United States for the three and six months ended June 30, 2024 was $ 31.7 million and $ 62.3 million, respectively. 16 Table of Contents Agenus 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 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. 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. For the three and six months ended June 30, 2024, we recorded an unrealized gain of $ 3.1 million and $ 0.1 million, respectively, based on the change in fair value of Agenus Inc.’s common stock during the respective periods. Merus In December 2016, we entered into a Collaboration and License Agreement with Merus N.V. (“Merus”). Under this agreement, the parties have agreed to collaborate with respect to the research, discovery and development of bispecific antibodies utilizing Merus’ technology platform. The collaboration encompasses up to ten independent programs. 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 and six months ended June 30, 2024, we recorded realized and unrealized gains of $ 40.0 million and $ 110.2 million, respectively, based on the sale of shares and change in fair value of remaining Merus’ common shares during the respective periods. MacroGenics In October 2017, we entered into a Global Collaboration and License Agreement with MacroGenics, Inc. (“MacroGenics”). Under this agreement, we received exclusive development and commercialization rights worldwide to MacroGenics’ INCMGA0012 (formerly MGA012), an investigational monoclonal antibody that inhibits PD-1. Except as set forth in the succeeding sentence, we have sole authority over and bear all costs and expenses in connection with the development and commercialization of INCMGA0012 in all indications, whether as a monotherapy or as part of a combination regimen. MacroGenics has retained the right to develop and commercialize, at its cost and expense, its pipeline assets in combination with INCMGA0012. In addition, MacroGenics has the right to manufacture a portion of both companies’ global clinical and commercial supply needs of INCMGA0012. Since the inception of the agreement, inclusive of amendments to the agreement, through June 30, 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. In June 2025, MacroGenics sold certain of its rights to such future tiered royalties on and after June 30, 2025 to Sagard Healthcare Partners (Delaware) II LP. MorphoSys 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). Prior to the acquisition, pursuant to a now-terminated collaboration and license agreement, we and MorphoSys agreed to co-develop tafasitamab and to share development costs associated with global and U.S.-specific clinical trials, with Incyte responsible for 55 % of such costs and MorphoSys responsible for 45 % of such costs. 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 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 and six months ended June 30, 2024, we recorded realized and unrealized gains of $ 0.8 million and $ 30.7 million, respectively, based on the sale of shares and change in fair value of MorphoSys AG's ordinary shares during the respective periods. 17 Table of Contents 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. 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. Syndax 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. Each company is responsible for funding any independent development activities. 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 June 30, 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 June 30, 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. 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 June 30, 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 June 30, 2025 and December 31, 2024 was $ 13.3 million and $ 18.8 million, respectively. For the three and six months ended June 30, 2025, we recorded an unrealized loss of $ 4.2 million and $ 5.5 million, respectively, based on the change in fair value of Syndax’s common stock during the respective periods. For the three and six months ended June 30, 2024, we recorded an unrealized loss of $ 4.6 million and $ 1.5 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 six months ended June 30, 2025, includes $ 5.3 million and $ 10.0 million, respectively, related to our 55 % share of the co-development costs for axatilimab. Research and development expenses for the three and six months ended June 30, 2024, includes $ 4.7 million and $ 11.8 million, respectively, related to our 55 % share of the co-development costs for axatilimab. At both June 30, 2025 and December 31, 2024, $ 2.2 million was included in accrued and other liabilities on the condensed consolidated balance sheet for amounts due to Syndax under the agreement. 18 Table of Contents China Medical Systems Holdings Limited In March 2024, we entered into a Collaboration and License Agreement with China Medical System Skinhealth, a wholly-owned dermatology medical aesthetic company and subsidiary of China Medical System Holdings Limited (“CMSHL”), for the development and commercialization of povorcitinib, a selective oral JAK1 inhibitor, in certain indications in certain Asian territories. In March 2024, we recognized an upfront payment under this agreement of $ 25.0 million upon our transfer of the functional intellectual property related to povorcitinib to CMSHL which was recorded in milestone and contract revenues on the condensed consolidated statement of operations during the first quarter of 2024. We are eligible to receive additional potential development and commercial milestones, as well as royalties on net sales of the licensed product in CMSHL’s territory. CMSHL received an exclusive license to develop and commercialize and a non-exclusive license to manufacture povorcitinib in autoimmune and inflammatory dermatologic diseases, including non-segmental vitiligo, hidradenitis suppurativa, prurigo nodularis, asthma and chronic spontaneous urticaria, for patients in mainland China, Hong Kong, Macau, Taiwan and certain countries in Southeast Asia. Other Agreements In addition to the license and collaboration agreements discussed above, we have various other license and collaboration agreements that are not individually material to our operating results or financial condition at this time. Pursuant to the terms of those agreements, we may be required to pay, or we may receive, additional amounts contingent upon the occurrence of various future events such as future discovery, development, regulatory or commercial milestones, which in the aggregate could be material. In addition, if any products related to these collaborations are approved for sale, we may be required to pay, or we may receive, royalties on future sales. The payment or receipt of these amounts, however, is contingent upon the occurrence of various future events, the likelihood of which cannot presently be determined. Note 9. Property and Equipment, net Property and equipment, net consists of the following (in thousands): June 30, 2025 December 31, 2024 Office equipment $ 24,371 $ 23,710 Laboratory equipment 250,456 229,797 Computer equipment 147,445 156,859 Land 16,103 15,395 Building and leasehold improvements 627,244 597,342 Operating lease right-of-use assets 21,894 22,230 Construction in progress 57,401 46,062 1,144,914 1,091,395 Less accumulated depreciation and amortization ( 346,371 ) ( 327,984 ) Property and equipment, net $ 798,543 $ 763,411 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 year ended December 31, 2024, we capitalized $ 4.9 million of land and $ 19.5 million of building and parking garage. As of June 30, 2025 we have $ 39.9 million of construction in progress relating to the downtown Wilmington properties. 19 Table of Contents Note 10. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following (in thousands): June 30, 2025 December 31, 2024 Royalties $ 33,056 $ 519,881 Clinical related costs 146,286 132,446 Sales allowances 541,993 438,053 Sales and marketing 51,313 33,439 Accrued taxes 5,393 23,781 Operating lease liabilities 6,173 5,583 Other current liabilities 72,880 58,865 Total accrued and other current liabilities $ 857,094 $ 1,212,048 For further information on the change in accrued royalties refer to Note 8. Note 11. Stockholders' Equity 2010 Stock Incentive Plan. Under our Amended and Restated 2010 Stock Incentive Plan, as amended (the “2010 Stock Plan”), we may issue common stock to employees, non-employee directors, consultants, and scientific advisors. Awards under the 2010 Stock Plan include stock options, restricted stock units (“RSUs”) and performance shares (“PSUs”). In June 2025, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Stock Plan from 66,453,475 to 74,953,475 . 2024 Inducement Stock Incentive Plan. Our Board of Directors has adopted the Incyte Corporation 2024 Inducement Stock Incentive Plan, as amended (the “2024 Inducement Plan”). In reliance on Nasdaq Marketplace Rule 5635(c)(4), stockholder approval was not obtained. A total of 2,000,000 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. and Felix J. 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. 20 Table of Contents 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 $ 19.1 million for excise taxes on share repurchases in accordance with the Inflation Reduction Act of 2022. We paid the excise tax in April 2025. These costs are recognized within (accumulated deficit) retained earnings on the condensed consolidated balance sheet as of June 30, 2025 as costs to repurchase our common stock. The purchased shares were cancelled and ceased to be outstanding. Note 12. Stock Compensation We recorded $ 64.6 million and $ 125.6 million of stock compensation expense on our condensed consolidated statements of operations for the three and six months ended June 30, 2025, respectively. We recorded $ 56.6 million and $ 116.4 million of stock compensation expense on our condensed consolidated statements of operations for the three and six months ended June 30, 2024, respectively. Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $ 37.7 million, $ 74.4 million, $ 34.5 million and $ 71.3 million for the three and six months ended June 30, 2025 and 2024, respectively. Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $ 26.1 million, $ 49.5 million, $ 21.7 million and $ 44.1 million for the three and six months ended June 30, 2025 and 2024, respectively. Stock compensation expense included within our condensed consolidated statements of operations also included cost of product revenues of $ 0.8 million, $ 1.7 million, $ 0.4 million and $ 1.0 million respectively, for the three and six months ended June 30, 2025 and 2024. Additionally, as described in Note 6, as part of the Escient acquisition, during the three and six months ended June 30, 2024, 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. 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 Six Months Ended For the Three Months Ended For the Six Months Ended June 30, June 30, 2025 2024 2025 2024 2025 2024 2025 2024 Average risk-free interest rates 3.89 % 4.36 % 4.24 % 4.13 % 4.29 % 5.33 % 4.22 % 5.41 % Average expected life (in years) 5.46 5.84 4.89 4.91 0.50 0.50 0.50 0.50 Volatility 31 % 25 % 29 % 30 % 32 % 28 % 37 % 22 % Weighted-average fair value (in dollars) $ 25.04 $ 20.18 $ 23.35 $ 20.59 $ 12.63 $ 10.45 $ 14.49 $ 10.54 The risk-free interest rate is derived from the U.S. Federal Reserve rate in effect at the time of grant. The expected life calculation is based on the observed and expected time to the exercise of options by our employees based on historical exercise patterns for similar type options. Expected volatility is based on the historical volatility of our common stock over the period commensurate with the expected life of the options. A dividend yield of zero is assumed based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. Nonemployee awards are measured on the grant date by estimating the fair value of the equity instruments to be issued using the expected term, similar to our employee awards. 21 Table of Contents Option activity under our 2010 Stock Plan and 2024 Inducement Plan was as follows: Shares Subject to Outstanding Options Shares Weighted Average Exercise Price Balance at December 31, 2024 12,777,974 $ 83.45 Options granted 739,167 $ 71.43 Options exercised ( 65,963 ) $ 63.41 Options cancelled ( 403,571 ) $ 88.42 Balance at June 30, 2025 13,047,607 $ 82.71 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. RSU and PSU award activity under the 2010 Stock Plan and 2024 Inducement Plan was as follows: Shares Subject to Outstanding Awards Shares Grant Date Value Balance at December 31, 2024 8,656,803 $ 67.81 RSUs granted 513,198 $ 70.10 PSUs granted 18,050 $ 70.81 Additional PSUs earned 32,148 $ 70.45 RSUs released ( 508,059 ) $ 81.13 RSUs cancelled ( 169,673 ) $ 66.64 Balance at June 30, 2025 8,542,467 $ 67.67 RSUs and PSUs are granted to our employees at the share price on the date of grant. Each RSU represents the right to acquire one share of our common stock. Each RSU granted in connection with our annual equity awards will vest 25 % annually over four years , while each RSU granted as outstanding merit awards or as part of retention award programs will vest in a single installment at the end of four years , subject to customary retirement provisions that may accelerate the requisite service period for expense recognition purposes. We grant PSUs with performance and/or service-based milestones with graded and/or cliff vesting over three to four years . The shares of our common stock into which each PSU may convert is subject to a multiplier based on the level at which the financial, developmental and market performance conditions are achieved over the service period. Compensation expense for PSUs with financial and developmental performance conditions is recorded over the estimated service period for each milestone when the performance conditions are deemed probable of achievement. For PSUs containing performance conditions which were not deemed probable of achievement, no stock compensation expense is recorded. 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 six months ended June 30, 2025 we recorded $ 6.9 million and $ 10.0 million, respectively, of stock compensation expense for PSUs on our condensed consolidated statements of operations. For the three and six months ended June 30, 2024 we recorded $ 3.5 million and $ 6.9 million, respectively, of stock compensation expense for PSUs on our condensed consolidated statements of operations. 22 Table of Contents The following table summarizes our shares available for grant under the 2010 Stock Plan and 2024 Inducement Plan. Previously, each RSU and PSU grant reduced the available share pool by 2 shares. In June 2025, our stockholders approved an amendment to the 2010 Stock Plan to remove the fungible ratio, and all awards granted under the 2010 Stock Plan after June 10, 2025, the date of our latest annual meeting, will reduce the share reserve on a one -for-one basis. If awards granted under the 2010 Stock Plan on or prior to June 10, 2025 expire, become unexercisable or are forfeited or repurchased after that date, the shares that were subject to those awards will become available for future grant only on a one -for-one basis, even if the original award was a full value award that reduced the share reserve on a two -for-one basis. The 2024 Inducement Plan was amended in June 2025 to remove the provision that stated that any shares issued in connection with awards other than options and stock appreciation rights will be counted against the authorized share limitation as 2.0 shares for every one share so issued and, as a result, all awards granted under the 2024 Inducement Plan will reduce the share reserve thereunder on a one for one basis. Shares Available for Grant Balance at December 31, 2024 4,013,611 Additional authorization - 2010 Stock Plan 8,500,000 Options, RSUs and PSUs granted and issuance of shares for services rendered ( 1,767,811 ) Options, RSUs and PSUs cancelled 733,814 Fungible ratio change adjustments 282,731 Balance at June 30, 2025 11,762,345 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 June 30, 2025, was $ 20.4 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 June 30, 2025, was $ 171.8 million, which is expected to be recognized over the weighted average period of approximately 1.2 years. Total compensation cost of PSUs granted but not yet vested, as of June 30, 2025, was $ 12.1 million, which is expected to be recognized over the weighted average period of 1.1 years, should the underlying performance conditions be deemed probable of achievement. Note 13. Income Taxes For the three and six months ended June 30, 2025 and 2024, we recorded the following provisions for income taxes and effective tax rates as compared to our income (loss) before provision for income taxes (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Income (loss) before provision for income taxes $ 558,012 $ ( 389,777 ) $ 792,202 $ ( 153,618 ) Provision for income taxes 153,013 54,824 229,000 121,435 Effective tax rate 27.4 % ( 14.1 )% 28.9 % ( 79.0 )% Our effective tax rate for the three and six months ended June 30, 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. 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 three and six months ended June 30, 2024 was higher than the U.S. statutory rate primarily due to a non-deductible charge of $ 710.9 million associated with the Escient acquisition. 23 Table of Contents The effective tax rate for the three and six months ended June 30, 2025 was favorable as compared to the three and six months ended June 30, 2024 primarily due to an the non-deductible charge associated with the Escient acquisition in the prior year period. We accrue interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. One or more of our legal entities file income tax returns in the U.S. and in certain foreign jurisdictions. Our income tax returns may be examined by tax authorities in those jurisdictions. Significant disputes may arise with tax authorities involving issues such as the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws and regulations and relevant facts. In the U.S., the statute of limitations remains open beginning with tax year 2021. We are currently under U.S. federal audit for tax year 2021. 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. 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. On July 4, 2025, the U.S. enacted legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA modified key provisions of the Tax Cuts and Jobs Act of 2017, including but not limited to, the expensing of domestic research costs, the deduction for Foreign-Derived Intangible Income, and the Global Intangible Low-Taxed Income regime. The OBBBA introduces multiple elections and features various effective dates, with some provisions effective in 2025 and others in subsequent years. Under ASC 740, entities are required to recognize the impact of new income tax legislation in the period of enactment. We are currently evaluating the OBBBA’s various provisions and elections, including their potential impact on our effective tax rate and the realizability of deferred tax assets, and intend to reflect these effects in our financial statements for the period ending September 30, 2025. Note 14. Net Income (Loss) Per Share Net income (loss) per share was calculated as follows for the periods indicated below: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Basic net income (loss) $ 404,999 $ ( 444,601 ) $ 563,202 $ ( 275,053 ) Weighted average common shares outstanding 193,995 218,175 193,853 221,329 Basic net income (loss) per share $ 2.09 $ ( 2.04 ) $ 2.91 $ ( 1.24 ) Diluted net income (loss) $ 404,999 $ ( 444,601 ) $ 563,202 $ ( 275,053 ) Weighted average common shares outstanding 193,995 218,175 193,853 221,329 Dilutive stock options and awards 4,749 — 4,673 — Weighted average shares used to compute diluted net income (loss) per share 198,744 218,175 198,526 221,329 Diluted net income (loss) per share $ 2.04 $ ( 2.04 ) $ 2.84 $ ( 1.24 ) 24 Table of Contents All stock options and stock awards were excluded from the diluted share calculation for the three and six months ended June 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: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Outstanding stock options and awards 12,368,632 16,067,125 11,955,851 16,148,294 Note 15. Employee Benefit Plans Defined Contribution Plans We have a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code covering all U.S. employees and defined contribution plans for other Incyte employees in Europe and Japan. 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 six months ended June 30, 2025 was $ 5.7 million and $ 11.5 million, respectively. Defined contribution expense for the three and six months ended June 30, 2024 was $ 5.2 million and $ 10.6 million, respectively. Defined Benefit Pension Plans We have defined benefit pension plans for our employees in Europe which provide benefits to employees upon retirement, death or disability. The assets of the pension plans are held in collective investment accounts represented by the cash surrender value of an insurance policy and are classified as Level 2 within the fair value hierarchy. The net periodic benefit cost was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Service cost $ 3,964 $ 2,657 $ 7,606 $ 5,278 Interest cost 476 786 913 1,227 Expected return on plan assets ( 1,819 ) ( 1,961 ) ( 3,491 ) ( 3,444 ) Amortization of prior service cost 226 206 420 407 Amortization of actuarial losses 350 393 668 480 Net periodic benefit cost $ 3,197 $ 2,081 $ 6,116 $ 3,948 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. Note 16. Commitments and Contingencies Commitments In August 2021, we entered into a revolving credit and guaranty agreement, which was subsequently amended in May 2023 and June 2024 (as amended, the “Credit Agreement”), among Incyte Corporation, as borrower, our subsidiary Incyte Holdings Corporation, as a guarantor, a group of lenders (the “Lenders”), and J.P. Morgan Chase Bank, N.A., as administrative agent. Under the Credit Agreement, the Lenders have committed to provide an unsecured revolving credit facility in an aggregate principal amount of up to $ 500.0 million. 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 to the Credit Agreement, subject to obtaining commitments from any participating lenders and certain other conditions, in an amount not to exceed (1) $ 250.0 million plus (2) an additional amount, so long as after giving effect to the incurrence of such additional amount, our pro forma consolidated leverage ratio would not exceed 0.25 :1.00 above our consolidated leverage ratio in effect immediately prior to giving effect to such increase. 25 Table of Contents Loans under the Credit Agreement will bear interest, at our option, at a per annum rate equal to either (a) a base rate (but not less than 1.00 %) plus an applicable rate per annum varying from 0.125 % to 0.875 % depending on our consolidated leverage ratio or (b) a rate based on the secured overnight financing rate (“SOFR”) plus a credit spread adjustment of 0.10 % (but not less than 0.00 %), plus an applicable rate per annum varying from 1.125 % to 1.875 % depending on our consolidated leverage ratio. Commitment fees payable on the undrawn commitment range from 0.15 % per annum to 0.225 % per annum, based on our consolidated leverage ratio. 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 June 30, 2025 and December 31, 2024, we had no outstanding borrowings and were in compliance with all covenants under this facility. Contingencies In the ordinary course of our business, we may become involved in lawsuits, proceedings, and other disputes, including commercial, intellectual property, regulatory, employment, and other matters. The outcome of these disputes, regardless of the merits, is inherently uncertain and it is possible that an unfavorable resolution of these matters could adversely affect us, our results of operations, financial condition or cash flows. We record a reserve for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We have entered into the collaboration agreements described in Note 8, as well as various other collaboration agreements that are not individually, or in the aggregate, significant to our operating results or financial condition at this time. We may in the future seek to license additional rights relating to technologies or drug development candidates in connection with our drug discovery and development programs. Under these agreements, we may be required to pay upfront fees, milestone payments, and royalties on sales of future products. As described in Note 8, we entered into a Settlement Agreement with Novartis during May of 2025, with respect to litigation initiated by Novartis relating to the duration of royalty payments owed by us to Novartis under the Collaboration and License Agreement dated November 24, 2009, as amended, between us and Novartis. We brought a lawsuit against the U.S. Centers for Medicare and Medicaid Services (“CMS”) alleging that a recent regulation issued by CMS on the definition of “line extension” for purposes of the Medicaid rebate program is too broad and has the unintended consequence of treating OPZELURA as a “line extension” of JAKAFI under this program. We believe that such a reading would 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 June 30, 2025, we have accrued approximately $ 165.2 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 June 30, 2025 is approximately 6.6 %. 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, we have various patent disputes and litigation initiated by us related to potential generic or other 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. Note 17. 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. 26 Table of Contents 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 June 30, Six Months Ended June 30, 2025 2024 2025 2024 Product revenues, net $ 1,059,414 $ 906,566 $ 1,981,688 $ 1,636,489 Product royalty revenues 151,115 137,193 281,739 263,159 Milestone and contract revenues 5,000 — 5,000 25,000 Total revenues 1,215,529 1,043,759 2,268,427 1,924,648 Costs, expenses and other: Cost of product revenues (including definite-lived intangible amortization) 78,766 76,634 151,954 137,590 Contract dispute settlement ( 242,251 ) — ( 242,251 ) — Research and development - internal 1 236,686 234,635 465,031 456,731 Research and development - external 2 245,681 223,944 439,115 430,108 Other research and development 3 12,550 679,801 28,050 680,801 Sales and marketing 256,311 229,202 513,963 446,015 General and administrative 74,711 76,780 142,750 160,223 Loss on change in fair value of acquisition-related contingent consideration 22,761 893 34,333 437 (Profit) and loss sharing under collaboration agreements — — — ( 1,025 ) Other segment items 4 125,315 ( 33,529 ) 172,280 ( 111,179 ) Net income (loss) $ 404,999 $ ( 444,601 ) $ 563,202 $ ( 275,053 ) 1. Research and development - internal is comprised of internally generated costs such as salaries, travel, regulatory costs, lab costs, contracting, etc. 2. 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). 3. 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. 4. 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 . 27 Table of Contents Total Revenues by Geographic Location Total revenues by geographic region consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 United States $ 1,132,353 $ 989,029 $ 2,113,910 $ 1,817,193 Europe 78,826 53,586 147,438 105,117 Other countries 4,350 1,144 7,079 2,338 Total revenues $ 1,215,529 $ 1,043,759 $ 2,268,427 $ 1,924,648 Property and Equipment, Net by Geographic Location Property and equipment, net by geographic location was as follows (in thousands): June 30, 2025 December 31, 2024 United States $ 474,384 $ 474,095 Switzerland 310,206 277,623 Other countries 13,953 11,693 Total property and equipment, net $ 798,543 $ 763,411 Note 18. Subsequent Event In July 2025, we entered into a settlement and license agreement with Sun Pharmaceuticals, Inc., resolving patent infringement litigation related to Leqselvi (deuruxolitinib). Under this agreement, we have granted Sun a limited, non-exclusive license in the U.S. with respect to oral deuruxolitinib for certain agreed-upon non-hematology-oncology indications in the U.S., including alopecia areata. In exchange for the limited license, Sun has agreed to pay us an upfront payment plus ongoing royalty payments. 28 Table of Contents