What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-10 compared with 2025-02-10 · 323 added, 230 removed, 1096 unchanged (34% of the section changed)

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Consolidated Statements of Operations for the years ended December 31, 202 5 , 202 4 and 202 3

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 202 4 , 202 3 and 20 2 2

Consolidated Statements of Comprehensive Income for the years ended December 31, 202 5 , 202 4 and 202 3

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 5 , 202 4 and 202 3

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Incyte Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Incyte Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S.

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In addition, we involved our governmental pricing specialists to assist in evaluating management’s methodology and calculations used to measure the estimated rebates.

Evaluating the fair value of the in-process research and development assets acquired in the Escient Pharmaceutics, Inc.

Description of the Matter As described in Note 5 to the consolidated financial statements, on May 30, 2024, the Company acquired all of the outstanding shares of common stock of Escient Pharmaceuticals, Inc.

(“Escient”), a clinical-stage drug development company, for $782.5 million in cash consideration.

The Company determined substantially all of the fair value of the gross assets acquired was concentrated in Escient’s lead clinical-stage molecule, EP262.

Therefore, the Company accounted for the Escient transaction as an asset acquisition under U.S.

The acquired in-process research and development asset for EP262 was valued at $644.8 million, with an additional $34.6 million of fair value allocated to the secondary molecule, EP547.

As both acquired in-process research and development assets do not have an alternative future use at the acquisition date, the Company recognized the full amount of $679.4 million as research and development expenses.

Auditing the Company’s fair value of the in-process research and development assets acquired in the Escient transaction was judgmental due to the significant estimation uncertainty and subjectivity of the significant assumptions used by management in determining the present value of future discounted cash flows.

The significant assumptions used in the calculation of the fair value of the in-process research and development assets of Escient included the amount of future product revenues, the probability of success, and the discount rate.

The fair value calculation of the in-process research and development assets are sensitive to these significant assumptions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of the estimation of the fair value of the in-process research and development assets of Escient.

For example, we tested controls over management’s review of the significant assumptions, such as the amount of future product revenues, the probability of success, and the discount rate, and over the completeness and accuracy of the data used in the valuation.

To test the fair value of the in-process research and development assets, we performed audit procedures that included, among others, evaluating the Company's methodologies used and testing the significant assumptions discussed above.

For example, we compared the significant assumptions used by management to current published scientific studies, industry, market and economic trends, and to other relevant factors.

In addition, to evaluate the probability of success, we considered the phase of development of the in-process research and development assets against third-party data regarding clinical trial success rates.

We also performed various sensitivity analyses of the significant assumptions to evaluate the change in the fair value of the in-process research and development assets resulting from changes in the assumptions.

In addition, we involved our valuation specialists to assist in our evaluation of the methodologies and the discount rates used in the fair value estimate.

/s/ Ernst & Young LLP

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Deferred income tax asset 515,294 762,071

Other assets, net 10,848 52,107

Other assets 18,166 10,848

Total assets $ 6,957,973 $ 5,444,322

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Additional paid-in capital 4,928,049 4,533,437

Accumulated other comprehensive (loss) income ( 13,121 ) 13,106

(Accumulated deficit) retained earnings ( 1,072,881 ) 160,385

Accumulated other comprehensive income (loss) 25,462 ( 13,121 )

Retained earnings (accumulated deficit) 213,769 ( 1,072,881 )

Total stockholders’ equity 5,167,478 3,447,628

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Cost of product revenues (including definite-lived intangible amortization) 372,130 312,068 254,990

Contract dispute settlement ( 242,251 ) — —

Research and development 2,050,152 2,606,848 1,627,594

Selling, general and administrative 1,376,206 1,242,157 1,155,662

Loss on change in fair value of acquisition-related contingent consideration 19,803 29,202 12,149

Asset impairment 76,275 — 5,631

(Gain) loss on change in fair value of acquisition-related contingent consideration ( 6,129 ) 19,803 29,202

(Profit) and loss sharing under collaboration agreements — ( 1,025 ) 2,045

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Interest expense ( 2,428 ) ( 2,280 ) ( 2,551 )

Realized and unrealized gain (loss) on equity investments 116,025 43,893 ( 87,590 )

Gain on equity investments 21,310 116,025 43,893

Other, net 25,110 12,809 13,934

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Other comprehensive income (loss):

Foreign currency translation (loss) gain ( 17,723 ) 25,772 13,065

Unrealized gain (loss) on marketable securities, net of tax 495 4,888 ( 3,918 )

Defined benefit pension (loss) gain, net of tax ( 8,999 ) ( 32,623 ) 25,376

Other comprehensive (loss) income ( 26,227 ) ( 1,963 ) 34,523

Foreign currency translation gain (loss) 24,977 ( 17,723 ) 25,772

Unrealized gain on marketable securities, net of tax 1,648 495 4,888

Defined benefit pension gain (loss), net of tax 11,958 ( 8,999 ) ( 32,623 )

Other comprehensive income (loss) 38,583 ( 26,227 ) ( 1,963 )

Comprehensive income $ 1,325,233 $ 6,388 $ 595,636

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Comprehensive

Income (Loss) Accumulated

Deficit Total

Income (Loss) (Accumulated Deficit) Retained Earnings Total

Stockholders’

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Stock compensation — 216,475 — — 216,475

Other comprehensive income — — 34,523 — 34,523

Other comprehensive loss — — ( 1,963 ) — ( 1,963 )

Net income — — — 597,599 597,599

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Stock compensation — 266,058 — — 266,058

Repurchase of common stock ( 33 ) ( 758,061 ) — ( 1,265,881 ) ( 2,023,975 )

Other comprehensive loss — — ( 26,227 ) — ( 26,227 )

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Stock compensation — 249,346 — — 249,346

Repurchase of common stock ( 33 ) ( 758,061 ) — ( 1,265,881 ) ( 2,023,975 )

Other comprehensive loss — — ( 26,227 ) — ( 26,227 )

Other comprehensive income — — 38,583 — 38,583

Net income — — — 1,286,650 1,286,650

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Other, net 14,857 ( 9,053 ) 16,948

Realized and unrealized (gain) loss on equity investments ( 116,025 ) ( 43,893 ) 87,590

Loss on change in fair value of acquisition-related contingent consideration 19,803 29,202 12,149

(Gain) on equity investments ( 21,310 ) ( 116,025 ) ( 43,893 )

(Gain) loss on change in fair value of acquisition-related contingent consideration ( 6,129 ) 19,803 29,202

Asset impairment 76,275 — 5,631

Changes in operating assets and liabilities:

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Purchases of marketable securities ( 295,507 ) ( 258,370 ) ( 456,020 )

Sale and maturities of marketable securities 231,269 305,784 79,151

Net cash provided by (used in) investing activities 157,517 ( 207,677 ) ( 78,542 )

Maturities of marketable securities 284,631 231,269 305,784

Net cash (used in) provided by investing activities ( 102,610 ) 157,517 ( 207,677 )

Cash flows from financing activities:

Repurchase of Common Stock — ( 2,004,790 ) —

Excise tax paid on repurchase of Common Stock ( 19,100 ) — —

Proceeds from issuance of Common Stock under stock plans 221,762 49,301 35,836

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Payment of contingent consideration ( 20,261 ) ( 21,958 ) ( 23,959 )

Net cash used in financing activities ( 2,021,547 ) ( 20,033 ) ( 794 )

Net cash provided by (used in) financing activities 101,039 ( 2,021,547 ) ( 20,033 )

Effect of exchange rates on cash, cash equivalents, and restricted cash ( 1,709 ) 2,923 ( 6,676 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 1,525,770 ) 262,101 893,960

Net increase (decrease) in cash, cash equivalents, and restricted cash 1,410,218 ( 1,525,770 ) 262,101

Cash, cash equivalents, and restricted cash at beginning of period 1,689,451 3,215,221 2,953,120

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Supplemental Schedule of Cash Flow Information

Income taxes paid $ 373,056 $ 378,206 $ 136,242

Cash paid for contract dispute settlement $ 294,881 $ — $ —

Unpaid purchases of property and equipment $ 4,929 $ 2,597 $ 5,052

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Organization and Business.

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

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

Incyte Corporation (including its subsidiaries, “Incyte,” “we,” “us,” or “our”) is a global biopharmaceutical company engaged in the discovery, development and commercialization of 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), ZYNYZ® (retifanlimab-dlwr), as well as NIKTIMVO™ (axatilimab-csfr), which is co-commercialized.

Our operations are treated as one operating segment.

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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.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.

GAAP”) 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.

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Collection of receivables is assessed within each collaborative partnership on a quarterly basis, including evaluation of each entity’s credit quality, financial health and past history of payment.

Customer product sales receivables are independently evaluated on a monthly basis, on which unusual items or aged receivables are closely monitored for signs of credit deterioration, or indications of payment refusal.

Customer product sales are with specialty pharmaceutical distributors, wholesalers, and certain public and private institutions, some of which whose financial obligations are funded by various government agencies.

Customer product sales receivables are independently evaluated on a monthly basis, where unusual items or aged receivables are closely monitored for signs of credit deterioration or indications of payment refusal.

Customer product sales are with specialty pharmaceutical distributors, wholesalers and certain public and private institutions, some of whose financial obligations are funded by various government agencies.

We also monitor our available-for-sale debt securities for impairment quarterly or more frequently if circumstances warrant.

In the event that the carrying value of a debt security exceeds its fair value, we evaluate whether any impairment is a result of credit loss or other factors.

For investments in an unrealized loss position, we determine whether a credit loss exists by considering information about the collectability of the instrument, current market conditions, the investment issuer’s financial condition and business outlook, and reasonable and supportable forecasts of economic conditions.

An allowance for credit losses would be recorded in our consolidated statements of operations in the event the decline in the investment’s fair value was a result of credit loss, and unrealized losses not related to credit losses would be recorded in other comprehensive income (loss).

Cash and Cash Equivalents.

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Accounts Receivable.

As of December 31, 2024 and December 31, 2023, we had a de minimis amount of allowance for doubtful accounts.

As of December 31, 2025 and 2024, we had a de minimis amount of allowance for doubtful accounts.

We provide an allowance for doubtful accounts based on management’s assessment of the collectability of specific customer accounts, which includes consideration of the credit worthiness and financial condition of those customers, aging of such receivables, history of collectability with the customer and the general economic environment.

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We capitalize inventory after regulatory approval from U.S.

Food and Drug Administration (FDA), European Medicines Agency (EMA) or Japanese Ministry of Health, Labour and Welfare (MHLW) as the related costs are expected to be recoverable through the commercialization of the product.

Food and Drug Administration (“FDA”), European Medicines Agency or Japanese Ministry of Health, Labour and Welfare as the related costs are expected to be recoverable through the commercialization of the product.

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

Raw materials, active pharmaceutical ingredients ("API") and work-in-process inventory are monitored for obsolescence, as applicable, and generally the shelf life of the finished goods inventory is approximately 36 months from the start of manufacturing of the finished goods, with the exception of OPZELURA, ZYNYZ and NIKTIMVO, which currently has an approximate shelf life of 24 months.

Raw materials, active pharmaceutical ingredients (“API”), work-in-process and finished goods inventory are monitored for obsolescence.

We evaluate for potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life.

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Our equity investments consist of investments in common stock of publicly-held companies with whom we have entered into collaboration and license agreements.

We classify our equity investments in common stock of publicly-held companies as either short term investments, for those investments which we intend to sell within one year, or long term investments, for those investments which we intend to hold for longer than one year, on the consolidated balance sheets.

We classify our equity investments in common stock of publicly-held companies as either short term equity investments, for those investments which we intend to sell within one year, or long term equity investments, for those investments which we intend to hold for longer than one year, on the consolidated balance sheets.

As of December 31, 2025 and 2024, all of our equity investments are classified as long term equity investments.

Our equity investments are accounted for at fair value using readily determinable pricing available on a securities exchange on the consolidated balance sheets.

All changes in fair value are reported in the consolidated statements of operations as a realized and unrealized gain (loss) on equity investments.

All changes in fair value are reported in the consolidated statements of operations as a gain on equity investments.

In assessing whether we exercise significant influence over any of the companies in which we hold equity investments, we consider the nature and magnitude of our investment, any voting and protective rights we hold, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationship.

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Property and Equipment, net.

Property and equipment, net is stated at cost, less accumulated depreciation and amortization.

Property and equipment, net is stated at cost, less accumulated depreciation, amortization and impairments.

Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets.

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Other intangible assets, net consist of licensed intellectual property rights acquired in business combinations, which are reported at acquisition date fair value, less accumulated amortization, as well as milestone payments made to collaboration partners incurred at or after the product has obtained regulatory approval.

Milestones payable to collaboration partners are only recognized when the underlying contingency is resolved.

Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method.

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Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed.

Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually as of October 1 or when a triggering event occurs that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more-likely-than-not that the fair value of net assets are below their carrying amounts.

Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually as of October 1 or when a triggering event occurs that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis to determine whether it is more-likely-than-not that the fair value of net assets are below their carrying amounts.

A reporting unit is the same as, or one level below, an operating segment.

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Net Income Per Share.

Our basic and diluted net income per share is calculated by dividing the net income by the weighted average number of shares of common stock outstanding during all periods presented.

Our basic and diluted net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during all periods presented.

Options to purchase stock, restricted stock units and performance stock units are included in diluted earnings per share calculations, unless the effects are anti-dilutive.

Accumulated Other Comprehensive Income (Loss).

Accumulated other comprehensive income (loss) consists of unrealized gains or losses on our marketable debt securities that are classified as available-for-sale, foreign currency translation gains or losses and unrecognized actuarial gains or loss related to our defined benefit pension plan.

Revenue Recognition.

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Product Revenues

Our product revenues consist of sales of JAKAFI, MONJUVI, OPZELURA, PEMAZYRE and ZYNYZ in the U.S., sales of MINJUVI, PEMAZYRE, ICLUSIG and OPZELURA in Europe, sales of OPZELURA in Canada, and sales of PEMAZYRE in Japan.

Product revenues are recognized at a point in time once we satisfy the performance obligation and control is transferred under the revenue recognition criteria as described above.

We sell JAKAFI, MONJUVI, OPZELURA, PEMAZYRE and ZYNYZ to our customers in the U.S., which include specialty and retail pharmacies, specialty distributors and wholesalers.

We sell MINJUVI, PEMAZYRE, ICLUSIG and OPZELURA to our customers in the European Union and certain other jurisdictions, which include retail pharmacies, hospital pharmacies and distributors.

Our customers in the United States include specialty and retail pharmacies, specialty distributors and wholesalers.

Our customers in the European Union and certain other jurisdictions, include retail pharmacies, hospital pharmacies and distributors.

We sell PEMAZYRE in Japan to an exclusive wholesaler.

We recognize revenues for product received by our customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, patient assistance programs, and government rebates, such as the Medicaid Drug Rebate Program and Medicare Part D coverage gap reimbursements in the U.S.

and mandated discounts in Europe.

Product shipping and handling costs are included in cost of product revenues.

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Rebates and Discounts:

Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program in the U.S.

and mandated discounts in Europe in markets where government-sponsored healthcare systems are the primary payers for healthcare.

Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program in the United States and mandated discounts in Europe in markets where government-sponsored healthcare systems are the primary payors for healthcare.

Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers.

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Contracted customers generally purchase the product at a discounted price.

The wholesalers, in turn, charges back to us the difference between the price initially paid by the wholesalers and the discounted price paid by the contracted customers.

The wholesalers, in turn, charge back to us the difference between the price initially paid by the wholesalers and the discounted price paid by the contracted customers.

In addition to actual chargebacks received, we maintain an accrual for chargebacks based on the estimated contractual discounts on the inventory levels on hand in our distribution channel.

If actual future chargebacks vary from these estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment.

Medicare Part D Coverage Gap:

Medicare Part D prescription drug benefit mandates manufacturers to fund a portion of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients.

Our estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from our customers.

Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters.

Medicare Part D Rebates:

Changes to our Medicare Part D prescription drug coverage reimbursements (“Part D Discount Program”) became effective January 1, 2025 pursuant to the Inflation Reduction Act of 2022.

Under the revised Part D Discount Program, manufacturers must give a 10 percent discount on Part D drugs in the initial coverage phase, and a 20 percent discount on Part D drugs in the so-called “catastrophic phase” (the phase after the patient incurs costs above the initial phase out-of-pocket threshold, which is $2,000 beginning in 2025).

The Inflation Reduction Act includes certain exemptions for small biotech drug manufacturers, including Incyte.

These exemptions apply on a drug-specific basis, and qualifying drugs will be exempt from possible negotiation through 2028 and subject to reduced discounts that will be phased-in over a number of years under the new Part D benefit.

Prior to the changes in the Medicare Part D Discount Program effective January 1, 2025, the Medicare Part D prescription drug benefit previously mandated manufacturers to fund 70% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients.

Our estimates for the expected Medicare Part D coverage gap were based on historical invoices received and in part from data received from our customers.

Funding of the Medicare Part D Discount Program is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters.

If actual future funding varies from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment.

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Royalty revenues on commercial sales for capmatinib (marketed as TABRECTA®) by Novartis are based on net sales of licensed products in the licensed territories as provided by Novartis.

Royalty revenues on commercial sales for pemigatinib (marketed as PEMAZYRE®) by Innovent Biologics, Inc.

(“Innovent”) are based on net sales of licensed products in licensed territories as provided by Innovent.

We recognize royalty revenues in the period the sales occur.

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If the license of our intellectual property is determined to be distinct from other performance obligations in the arrangement, the functional intellectual property that is transferred to the collaborative partner at the onset of the arrangement is concluded to have significant standalone functionality and value at the point in time at which the intellectual property is made available to the collaborative partner.

For licenses that are not

distinct from other obligations identified in the arrangement, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time.

For licenses that are not distinct from other obligations identified in the arrangement, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time.

If the combined performance obligation is satisfied over time, we apply an appropriate method of measuring progress for purposes of recognizing revenue from nonrefundable, upfront license fees.

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For each of the three years ended December 31, 2025, we had no revenues from intellectual property licenses recognized over time.

For milestone revenues related to sales-based achievements, we recognize the milestone revenues in the corresponding period of the product sale, in accordance with the guidance of ASC 606-10-55-65 for contracts that include a license to intellectual property and the license is the predominant item to which the product sale relates.

For milestone revenues related to sales-based achievements, we recognize the milestone revenues in the corresponding period of the product sale, in accordance with ASC 606-10-55-65 for contracts that include a license to intellectual property and the license is the predominant item to which the product sale relates.

Subsequent to the transfer of the intellectual property, we may earn milestones through achievement of pre-specified developmental or regulatory events and, as such, milestones are accounted for as variable consideration.

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Cost of Product Revenues

Cost of product revenues includes all product related costs and royalties owed under our collaboration and license agreements, contingent on certain conditions.

In addition, cost of product revenues includes the amortization of our licensed intellectual property for ICLUSIG and the amortization of capitalized milestone payments, using the straight-line method over the respective estimated useful lives, which range between approximately 10 to 14 years.

Cost of product revenues includes all product related costs and royalties owed and profit sharing under certain of our collaboration and license agreements.

In addition, cost of product revenues includes the amortization of our licensed intellectual property for ICLUSIG and the amortization of capitalized regulatory and commercial milestone payments made to third parties, which are capitalized as intangible assets subsequent to regulatory approval using the straight-line method over the respective estimated useful lives, which range between approximately 8 to 14 years.

Cost of product revenues also includes employee personnel costs, including stock compensation, for those employees dedicated to the production of our commercial products.

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Long Term Incentive Plans.

We have long term incentive plans which provide eligible employees with the opportunity to receive performance and service-based incentive compensation, which may be comprised of cash, stock options, restricted stock units and/or performance shares.

The payment of cash and the grant or vesting of equity may be contingent upon the achievement of pre-determined regulatory, sales and internal performance milestones.

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Recent Accounting Pronouncements

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

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

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

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

See Note 17 for additional disclosures.

In December 2023, the FASB issued ASU No.

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

2023-09, “ Income Taxes (Topic 740):

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

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

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

We are currently evaluating the impact that ASU No.

2023-09 will have on our consolidated financial statements and related disclosures.

In March 2024, the SEC issued Release Nos.

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

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

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

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

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.

See Note 14 for additional disclosures.

In November 2024, the FASB issued ASU No.

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

In July 2025, the FASB issued ASU No.

2025-05, “ Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

” This amended guidance applies to all entities and aims to simplify the estimation of expected credit losses for current accounts receivable and contract assets by providing a practical expedient for all companies.

The amendments are effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual periods.

If electing the practical expedient, entities should apply the amendments in this update prospectively.

We are currently evaluating the impact ASU No.

2025-05 will have on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No.

2025-06, “ Intangibles - Goodwill and Other - Internal-Use (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

” This amended guidance applies to all entities and serves to modernize the accounting for software costs that are accounted for under Subtopic 305-40, Intangibles - Goodwill and Other - Internal-Use Software (referred to as “internal-use software”).

The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

Early adoption is permitted as of the beginning of an annual reporting period.

Entities may adopt the new guidance using a prospective, modified, or retrospective transition approach.

We are currently evaluating the impact ASU No.

2025-06 will have on our consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No.

2025-07, “ Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606):

Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract.

” This amended guidance applies to all entities and refines the scope of derivative accounting and clarifies rules for share-based noncash consideration in revenue contracts.

Specifically, this update is intended to address concerns about the application of derivative accounting to contracts that have features based on the operations or activities of one of the parties to the contract and to reduce diversity in the accounting for share-based payments in revenue contracts.

The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

Entities may adopt the new guidance prospectively, or on a modified retrospective basis.

We are currently evaluating the impact ASU No.

2025-07 will have on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No.

2025-10, “ Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities.

” This accounting standard update establishes specific rules for the recognition, measurement, and presentation of government grants received by business entities.

For public business entities, this amended guidance is applicable for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years.

Early adoption is permitted.

Entities may adopt the new guidance using a modified prospective, modified retrospective, or full retrospective approach.

We are currently evaluating the impact ASU No.

2025-10 will have on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No.

2025-11, “ Interim Reporting (Topic 270):

Narrow-Scope Improvements.

” The amendments in this update aim to enhance the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable.

The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods.

Lastly, this updated guidance incorporates a principle that requires entities to disclose significant events since the end of the last annual reporting period.

The amendments in this update apply to all entities that provide interim financial statements and notes in accordance with U.S.

For public business entities, this amended guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted, and the amendments in this update can be applied either prospectively or retrospectively to any or all periods presented in the financial statements.

We are currently evaluating the impact ASU No.

2025-11 will have on our future condensed consolidated financial statements and related disclosures.

As discussed in Note 1, revenues are recognized under guidance within ASC 606.

The following table presents our disaggregated revenue for the periods presented (in thousands):

The following table presents our disaggregated revenues for the periods presented (in thousands):

For the Years Ended,

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PEMAZYRE revenues, net 86,727 81,748 83,642

NIKTIMVO revenues, net 151,636 — —

ZYNYZ revenues, net 66,351 3,185 1,250

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TABRECTA product royalty revenues 26,702 22,746 17,793

PEMAZYRE product royalty revenues 2,171 1,967 1,205

Other product royalty revenues 7,878 2,171 1,967

Total product royalty revenues 636,909 579,329 523,481

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Total revenues $ 5,141,242 $ 4,241,217 $ 3,695,649

For further information on our revenue-generating contracts, refer to Note 7.

For further information on the MINJUVI/MONJUVI revenues, refer to Note 5 and for further information on our revenue-generating contracts, refer to Note 7.

Fair Value of Financial Instruments

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Payments made during the period ( 31,129 ) ( 28,847 )

Change in fair value of contingent consideration 19,803 29,202

Change in fair value of contingent consideration and other adjustments ( 28,722 ) 19,803

Balance at December 31,

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

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

The loss on change in fair value of the contingent consideration during the years ended December 31, 2024 and 2023 was due primarily to fluctuations in foreign currency exchange rates impacting future revenue projections of ICLUSIG and the passage of time.

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

The change in fair value of the contingent consideration during the years ended December 31, 2025 and 2024 was due primarily to updated projections of future net revenues and royalties of ICLUSIG, including the impacts from fluctuations in foreign currency exchange rates, and the passage of time.

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

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Non-Recurring Fair Value Measurements

During the years ended December 31, 2024 and 2023, there were no measurements required for any assets or liabilities at fair value on a non-recurring basis.

During the year ended December 31, 2025, we recorded an asset impairment charge of $ 76.3 million on our consolidated statement of operations relating to our downtown Wilmington, Delaware properties in order to reflect the properties at the lower of their carrying amount or estimated fair value less cost to sell as of December 31, 2025.

Refer to Note 8 for further information on the asset impairment.

During the year ended December 31, 2024 there were no measurements required for any assets or liabilities at fair value on a non-recurring basis.

Concentration of Credit Risk and Current Expected Credit Losses

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In December 2009, we entered into a license, development and commercialization agreement with Lilly.

The above collaboration partners comprised, in aggregate, 19 % and 20 % of the accounts receivable balance as of December 31, 2024 and 2023, respectively.

These two collaboration partners comprised, in aggregate, 17 % and 19 % of the accounts receivable balance as of December 31, 2025 and 2024, respectively.

For further information relating to these collaboration and license agreements, refer to Note 7.

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 these products.

The concentration of credit risk related to our JAKAFI and OPZELURA product revenues is as follows:

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Customer E 11 % 10 % 10 %

Customer F 10 % 10 % 1 %

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

Customers A, B, C, D, E and F comprised, in the aggregate, 52 % and 40 % of the accounts receivable balance as of December 31, 2024 and 2023, respectively.

Customers A, B, C, D and E comprised, in the aggregate, 54 % and 49 % of the accounts receivable balance as of December 31, 2025 and 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 December 31, 2025 according to our accounting policy for applying reserves for expected credit losses, noting minimal history of uncollectible receivables and the continued perceived creditworthiness of our third-party sales relationships, upon which the expected credit losses were considered de minimis.

On February 5, 2024, pursuant to a purchase agreement with 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).

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

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

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

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

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

Since February 5, 2024, we now recognize revenue and costs for all U.S.

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

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

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

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

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

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

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

During the first quarter of 2025, we paid Xencor a development milestone of $ 12.5 million for the FDA acceptance of the Biologics License Application filing for the use of tafasitamab for follicular lymphoma, which was recorded in research and development expense.

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.

This milestone payment was capitalized as an intangible asset and included in other intangible assets, net on the consolidated balance sheet as of December 31, 2025.

The intangible asset will be amortized through cost of product revenues over the estimated useful life of approximately 8 years.

As of December 31, 2025, Xencor is entitled to receive up to an additional $ 145.0 million in future contingent development and regulatory milestones and up to $ 50.0 million in sales milestones.

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

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Escient Pharmaceuticals, Inc.

( “ 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.

Escient’s lead molecule, INCB000262 (formerly EP262), was 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.

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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 on our consolidated statements of operations during the year ended December 31, 2024 related compensation expense of $ 31.5 million associated with the accelerated vesting for certain Escient stock awards in connection with the acquisition.

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 consolidated statements of operations during the year ended December 31, 2024.

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

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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.

The concluded allocated fair values for INCB000262 and INCB000547 were $ 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 consolidated statements of operations during the year ended December 31, 2024.

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Total inventory $ 443,292 $ 407,199

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

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 December 31, 2025, $ 101.1 million of inventory was classified as current on the consolidated balance sheet as we expect this inventory to be consumed for commercial use within the next twelve months.

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We expe ct to sell the pre-commercialization inventory over the next 9 months to 31 months and, as a result, cost of product revenues will reflect a lower average per unit cost of materials.

License Agreements

Collaborative and Other Relationships

In November 2009, we entered into a Collaboration and License Agreement with Novartis.

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

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

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

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

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

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”).

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We recognize sales milestones in the corresponding period of the product sale upon confirmation of net sales milestone threshold achievement by Novartis.

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

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

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 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 consolidated statement of operations for the year ended December 31, 2025.

During the years ended December 31, 2025, 2024 and 2023, such royalties on net sales within the United States totaled $ 88.1 million, $ 131.8 million and $ 122.1 million, respectively, and were reflected in cost of product revenues on the consolidated statements of operations.

At December 31, 2024 and 2023, $ 507.4 million and $ 375.6 million, respectively, of accrued royalties were included in accrued and other current liabilities on the consolidated balance sheets, payment of which is dependent on the outcome of a contract dispute with Novartis.

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

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

At December 31, 2025 and 2024, approximately $ 20.3 million and $ 507.4 million, respectively, of accrued royalties were included in accrued and other current liabilities on the 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 (the trade name used by Novartis for ruxolitinib sales outside of the United States) 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 years ended December 31, 2025, 2024 and 2023 was $ 457.7 million, $ 418.8 million and $ 367.6 million, respectively.

Product royalty revenue related to Novartis’ net sales of TABRECTA worldwide for the years ended December 31, 2025, 2024 and 2023 was $ 26.7 million, $ 22.7 million and $ 17.8 million, respectively.

The Novartis agreement will continue on a program-by-program basis until Novartis has no royalty payment obligations with respect to such program or, if earlier, the termination of the agreement or any program in accordance with the terms of the agreement.

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The agreement may also be terminated by either party under certain other circumstances, including material breach.

We had no milestone and contract revenue under the Novartis agreement for the year ended December 31, 2024.

Milestone and contract revenue under the Novartis agreement was $ 5.0 million and $ 60.0 million for the years ended December 31, 2023 and 2022, respectively.

In addition, for the years ended December 31, 2024, 2023 and 2022, we recorded $ 418.8 million, $ 367.6 million and $ 331.6 million, respectively, of product royalty revenues related to Novartis net sales of JAKAVI outside the United States.

For the years ended December 31, 2024, 2023 and 2022 we recorded $ 22.7 million, $ 17.8 million and $ 15.4 million, respectively, of product royalty revenues related to Novartis net sales of TABRECTA worldwide.

Lilly - Baricitinib

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

Since the inception of the agreement through December 31, 2024, we have recognized and received, in aggregate, $ 149.0 million for the achievement of development milestones, $ 335.0 million for the achievement of regulatory milestones and $ 50.0 million for the achievement of sales milestones.

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.

In October 2025, the parties amended the agreement to enable Lilly to commercialize baricitinib for the treatment of Type 1 diabetes mellitus and to restructure the royalty obligations on net sales of baricitinib, certain developmental and regulatory milestones associated with baricitinib, and the marketing and sales support obligations of Lilly, for which we received an upfront payment of $ 100.0 million.

This upfront payment was recognized in our milestone and contract revenues for the year ended December 31, 2025, resulting from the transfer of functional intellectual property related to Type 1 diabetes mellitus.

Beginning in October 2025, we are now eligible to receive either a fixed royalty amount or tiered royalties based on defined levels of quarterly global net sales, with the tiered royalties up to a rate in the mid-teens.

Since the inception of the agreement through December 31, 2025, we recognized and received, in aggregate, $ 149.0 million for the achievement of development milestones, $ 335.0 million for the achievement of regulatory milestones, $ 50.0 million for the achievement of sales milestones, and $ 100.0 million in October 2025 for the functional intellectual property transfer related to Type 1 diabetes mellitus.

We recognize development and regulatory milestones upon confirmation of achievement of the event, as development and regulatory approvals are events not controllable by us but rather development activities of Lilly and decisions made by regulatory agencies.

We recognize sales milestones in the corresponding period of the product sale upon confirmation of net sales milestone threshold achievement by Lilly.

Product royalty revenue related to Lilly net sales of OLUMIANT outside of the United States for the years ended December 31, 2025, 2024 and 2023, was $ 144.6 million, $ 135.6 million and $ 136.1 million, respectively.

The Lilly agreement will continue until Lilly no longer has any royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms.

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The agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach.

We had no milestone and contract revenue under the Lilly agreement for the years ended December 31, 2024 and 2023.

Milestone and contract revenue under the Lilly agreement was $ 70.0 million for the year ended December 31, 2022.

In addition, for the years ended December 31, 2024, 2023 and 2022, we recorded $ 135.6 million, $ 136.1 million and $ 134.5 million, respectively, of product royalty revenues related to Lilly net sales of OLUMIANT outside the United States.

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

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

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

Under this agreement, we are responsible for all costs associated with discovery, preclinical, clinical development and commercialization activities for the currently active programs.

Agenus will be eligible to receive tiered royalties on global net sales ranging from 6 % to 12 %, for all programs but one, in which Agenus will be eligible to receive 15 % royalties on global net sales.

The agreement may be terminated by us for convenience upon 12 months’ notice and also may be terminated under certain other circumstances, including material breach.

Since the inception of the agreement through December 31, 2024, we have paid Agenus milestones totaling $ 30.0 million and Agenus is eligible to receive up to an additional $ 500.0 million in future contingent development, regulatory and commercialization milestones across all programs in the collaboration.

During 2024, we sold approximately 0.6 million of Agenus Inc.

common stock for proceeds of $ 1.9 million.

As of December 31, 2024, we had no remaining investment in Agenus Inc.

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

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

Under the terms of the agreement, the termination became effective in February 2026.

During 2024, we sold our shares of Agenus Inc.

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

common stock.

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

at December 31, 2023 was $ 10.0 million.

For the years ended December 31, 2024, 2023 and 2022, we recorded realized and unrealized losses of $ 8.2 million, $ 18.9 million, and $ 9.9 million, respectively, based on the sale of shares and change in fair value of Agenus Inc.’s common stock during the respective periods.

For the years ended December 31, 2024, and 2023, we recorded realized and unrealized losses of $ 8.2 million, and $ 18.9 million, respectively, based on the sale of shares and change in fair value of Agenus Inc.’s common stock during the respective periods.

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

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The collaboration encompasses up to ten independent programs.

We hold worldwide exclusive development and commercialization rights to those programs and are responsible for all research, development and commercialization costs, subject to Merus’ option, subject to certain conditions, to co-fund development of up to two of such programs and participate in certain commercialization activities for one of those co-developed programs.

If Merus exercises its co-funding option for a program, Merus would be responsible for funding 35 % of the associated future global development costs and, for certain of such programs, would be responsible for reimbursing us for certain development costs incurred prior to the option exercise.

Merus will also have the right to participate in a specified proportion of detailing activities in the United States for one of those co-developed programs.

For each program as to which Merus does not have commercialization or development co-funding rights, Merus is eligible to receive up to $ 100.0 million in future contingent development and regulatory milestones, and up to $ 250.0 million in commercialization milestones as well as tiered royalties ranging from 6 % to 10 % of global net sales.

For each program as to which Merus exercises its option to co-fund development, Merus is eligible to receive a 50 % share of profits (or sustain 50 % of any losses) in the United States and be eligible to receive tiered royalties ranging from 6 % to 10 % of net sales of products outside of the United States.

If Merus opts to cease co-funding a program as to which it exercised its co-development option, then Merus will no longer receive a share of profits in the United States but will be eligible to receive the same milestones from the co-funding termination date and the same tiered royalties described above with respect to programs where Merus does not have a right to co-fund development and, depending on the stage at which Merus chose to cease co-funding development costs, Merus will be eligible to receive additional royalties ranging up to 4 % of net sales in the United States.

The Merus agreement will continue on a program-by-program basis until we have no royalty payment obligations with respect to such program or, if earlier, the termination of the agreement or any program in accordance with the terms of the agreement.

The agreement may be terminated in its entirety or on a program-by-program basis by us for convenience.

The agreement may also be terminated by either party under certain other circumstances, including material breach, as set forth in the agreement.

If the agreement is terminated with respect to one or more programs, all rights in the terminated programs revert to Merus, subject to payment to us of a reverse royalty of up to 4 % on sales of future products, if Merus elects to pursue development and commercialization of products arising from the terminated programs.

Since the inception of the agreement through December 31, 2024, we have paid and expensed Merus milestones totaling $ 10.0 million.

During 2024, we sold approximately 4.0 million of Merus’ common shares for proceeds of $ 216.1 million.

As of December 31, 2024, we had no remaining investment in Merus’ common shares.

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

For the years ended December 31, 2024, 2023 and 2022, we recorded realized and unrealized gains of $ 106.1 million, an unrealized gain of $ 45.2 million, and an unrealized loss of $ 58.0 million, respectively, based on the sale of shares and change in fair value of Merus’ common shares during the respective periods.

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 years ended December 31, 2024, and 2023, we recorded realized and unrealized gains of $ 106.1 million and $ 45.2 million, respectively, based on the sale of shares and change in fair value of remaining Merus’ common shares during the respective periods.

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

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

The MacroGenics agreement will continue until we are no longer commercializing, developing or manufacturing INCMGA0012 or, if earlier, the termination of the agreement in accordance with its terms.

The agreement may be terminated in its entirety or on a licensed product by licensed product basis by us for convenience.

The agreement may also be terminated by either party under certain other circumstances, including material breach, as set forth in the agreement.

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

This $ 100.0 million milestone payment was recorded as research and development expense in our consolidated statements of operations during the year ended December 31, 2024.

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

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

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

Research and development expenses for the years ended December 31, 2024, 2023 and 2022, also included $ 45.7 million, $ 51.5 million and $ 89.2 million, respectively, of development costs incurred pursuant to the MacroGenics agreement.

At December 31, 2024 and 2023, a total of $ 0.5 million and $ 0.3 million, respectively, of such costs were included in accrued and other liabilities on the consolidated balance sheets.

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.

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

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

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

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

For the year ended December 31, 2024, we recorded a realized gain of $ 30.7 million, based on the sale of shares and change in fair value of MorphoSys AG’s ordinary shares during the period.

For the years ended December 31, 2023 and 2022 we recorded an unrealized gain of $ 22.9 million, and an unrealized loss of $ 21.2 million, respectively, based on the change in fair value of MorphoSys AG's ordinary shares during the respective periods.

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 consolidated statement of operations.

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 years ended December 31, 2024, and 2023, we recorded realized and unrealized gains of $ 30.7 million and $ 22.9 million, respectively, based on the sale of shares and change in fair value of MorphoSys AG’s ordinary shares during the respective periods.

As described in Note 5, subsequent to the asset acquisition, we recognize revenue and costs for all commercialization and clinical development of tafasitamab in the United States.

Our 50 % share of the United States loss for the commercialization of tafasitamab for the years ended December 31, 2023 and 2022 was $ 2.0 million and $ 8.0 million, respectively, and is recorded as (profit) and loss sharing under collaboration agreements on the consolidated statement of operations.

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

Research and development expenses for the years ended December 31, 2023 and 2022, included $ 76.1 million and $ 99.7 million, respectively, of costs for tafasitamab including our 55 % share of the co-development costs.

At December 31, 2023, $ 18.8 million was included in accrued and other liabilities on the consolidated balance sheet for amounts due to MorphoSys under the agreement.

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

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

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

As of December 31, 2025, Syndax is eligible to receive up to $ 207.5 million in future contingent development and regulatory milestones and up to $ 225.0 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.

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The fair market value of our long term investment in Syndax as of December 31, 2025 and 2024 was $ 29.9 million and $ 18.8 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, we recorded an unrealized loss of $ 11.9 million, an unrealized loss of $ 5.5 million, and an unrealized gain of $ 5.1 million, respectively, based on the change in fair value of Syndax’s common stock during the respective periods.

For the years ended December 31, 2025, 2024 and 2023, we recorded an unrealized gain of $ 11.1 million, an unrealized loss of $ 11.9 million, and an unrealized loss of $ 5.5 million, respectively, based on the change in fair value of Syndax’s common stock during the respective periods.

Research and development expenses for the years ended December 31, 2025 and 2024, includes $ 21.9 million and $ 18.8 million, respectively, related to our 55 % share of the co-development costs for axatilimab.

At December 31, 2024 and 2023, $ 2.2 million and $ 1.8 million, respectively, was included in accrued and other liabilities on the consolidated balance sheet for amounts due to Syndax under the agreement.

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 consolidated statement of operations during the year ended December 31, 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.

At December 31, 2025 and 2024, $ 2.4 million and $ 2.2 million, respectively, was included in accrued and other liabilities on the consolidated balance sheet for amounts due to Syndax related to co-development activities under the agreement.

In connection with the United States co-commercialization efforts, Syndax’s 50 % share of profit was $ 44.0 million for the year ended December 31, 2025, which is reflected in cost of product revenues on the consolidated statement of operations.

At December 31, 2025, $ 27.6 million was included in accrued and other liability on the consolidated balance sheet for amounts due to Syndax related to United States co-commercialization activities.

Sun Pharmaceuticals, Inc.

In July 2025, we entered into a settlement and license agreement with Sun Pharmaceuticals, Inc.

(“Sun”), 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, including alopecia areata.

In exchange for the limited license, Sun has paid us an upfront payment upon our transfer of functional intellectual property, which is included in milestone and contract revenues on the consolidated statement of operations for the year ended December 31, 2025, and has agreed to pay to us ongoing royalty payments.

The amount associated with the settlement component is de minimis.

In November 2025, we entered into an exclusive purchase option agreement with Prelude Therapeutics Incorporated (“Prelude”).

Under the terms of the agreement, we secured an exclusive option to acquire Prelude’s mutant selective JAK2V617F JH2 inhibitor program, including Prelude’s library of preclinical candidates.

We paid Prelude a total of $ 60.0 million, comprised of an upfront payment of $ 35.0 million, plus a $ 25.0 million equity investment in Prelude.

The $ 35.0 million upfront payment was recorded in research and development expense during the fourth quarter of 2025.

We purchased 6.25 million shares of Prelude non-voting common stock at a price of $ 4.00 per share.

Of this $ 25.0 million equity investment, approximately $ 17.1 million was expensed in research and development as a premium above fair value of the stock purchase.

The remaining $ 7.9 million is the initial fair value of our investment in Prelude.

We are accounting for our shares held in Prelude at fair value whereby the investment is marked to market through earnings in each reporting period.

Given our intent to hold the investment for the foreseeable future, we have classified the investment within long term investments on the accompanying consolidated balance sheets.

For the year ended December 31, 2025, we recorded an unrealized gain of $ 10.3 million based on the change in fair value of Prelude’s common stock during the period.

The fair market value of our total long term investment in Prelude as of December 31, 2025 was $ 18.1 million.

Prelude expects to advance the JAK2V617F program to pre-defined milestones.

We may elect to exercise our exclusive option during the option period to acquire the program and associated assets from Prelude for $ 100.0 million.

In addition, if we exercise our option, Prelude would be eligible to receive up to $ 775.0 million in additional clinical and regulatory milestones, and single digit royalties on global net sales.

If we elect to not exercise our option to acquire the program, all JAK2V617F global program rights and interests would remain in the sole ownership and control of Prelude.

Other Agreements

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

During the year ended December 31, 2024, we capitalized $ 4.9 million of land, $ 19.5 million of building and parking garage and $ 30.8 million of construction in progress relating to the downtown Wilmington properties.

Subsequent to the purchase, we incurred additional construction costs of approximately $ 28.6 million through December 2025.

During December 2025, the downtown Wilmington, Delaware properties met the criteria to be classified as assets held for sale.

As a result of this classification, we recorded an asset impairment charge of $ 76.3 million on our consolidated statement of operations relating to the downtown Wilmington properties in order to reflect the properties at the lower of their carrying amount or estimated fair value less cost to sell as of December 31, 2025.

The estimated fair value less cost to sell of the properties has been recorded within the Prepaid expenses and other current assets line item on our consolidated balance sheet as of December 31, 2025.

We currently expect to close on the sale of the downtown Wilmington, Delaware properties during 2026.

Depreciation expense, including amortization expense of leasehold improvements, was $ 66.6 million, $ 65.6 million and $ 60.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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Other 2.0 $ 1,400 $ 1,400 $ — $ 1,400 $ 423 $ 977

Amortization expense for the years ended December 31, 2024, 2023 and 2022, was $ 23.6 million, $ 22.5 million, and $ 21.5 million, respectively, and is recorded in cost of product revenues on the consolidated statement of operations.

Amortization expense for the years ended December 31, 2025, 2024 and 2023, was $ 26.7 million, $ 23.6 million, and $ 22.5 million, respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets will be as follows for the years ending December 31 (in thousands):

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Amortization expense $ 27,870 $ 27,870 $ 27,870 $ 6,333 $ 6,333 $ 20,855

There were no changes to the carrying amount of goodwill for the years ended December 31, 2024 and 2023.

There were no material changes to the carrying amount of goodwill for the years ended December 31, 2025 and 2024.

Accrued and Other Current Liabilities

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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.

The Baker Entities purchase was to be at the same price per share as was 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.

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

We paid the excise tax in April 2025.

These costs are recognized within (accumulated deficit) retained earnings on the consolidated balance sheet as of December 31, 2025 as costs to repurchase our common stock.

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2010 Stock Incentive Plan.

In May 2010 the Board of Directors adopted the 2010 Stock Incentive Plan (the “2010 Stock Plan”), which was most recently amended in April 2023, for issuance of common stock to employees, non-employee directors, consultants, and scientific advisors.

In May 2010, the Board of Directors adopted the 2010 Stock Incentive Plan (the “2010 Stock Plan”), which was most recently amended in June 2025, for issuance of common stock to employees, non-employee directors, consultants, and scientific advisors.

Awards under the 2010 Stock Plan include stock options, RSUs and PSUs.

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In reliance on Nasdaq Marketplace Rule 5635(c)(4), stockholder approval was not obtained.

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

In July 2025, we increased the number of shares of common stock reserved for issuance pursuant to the 2024 Inducement Plan from 1,000,000 to 2,000,000 .

Stock Options

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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 .

We grant PSUs with performance and/or service-based milestones with graded and/or cliff vesting over three to six 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.

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Balance at December 31, 2024 8,656,803 $ 67.81

7,165,342 $ 72.17

RSUs granted 3,492,732 $ 69.24

PSUs granted 897,393 $ 59.00

Additional PSUs earned 32,148 $ 70.45

RSUs released ( 2,860,640 ) $ 70.86

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Balance at December 31, 2025 9,275,450 $ 66.86

8,656,803 $ 67.81

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

E ach RSU and PSU grant reduces the available share pool by 2 shares.

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

Balance at December 31, 2024 4,013,611

Additional authorization - 2010 Stock Plan 8,500,000

Additional authorization - 2024 Inducement Plan 1,000,000

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Options, RSUs and PSUs cancelled 1,598,684

Fungible ratio change adjustments 282,731

Balance at December 31, 2025 9,059,040

Employee Stock Purchase Plan.

On May 21, 1997, our stockholders adopted the 1997 Employee Stock Purchase Plan, which was most recently amended in April 2023 (the “ESPP”).

On May 21, 1997, our stockholders adopted the 1997 Employee Stock Purchase Plan, which was most recently amended in June 2025 (the “ESPP”).

Each regular full-time and part-time employee working 20 hours or more per week is eligible to participate after one month of employment.

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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.

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

We estimate forfeiture rates for our options, RSUs and PSUs.

Under the true-up provisions of the stock compensation guidance, we will record additional expense as the awards vest 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.

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Total compensation cost of PSUs granted but not yet vested, as of December 31, 2025, was $ 40.2 million, which is expected to be recognized over the weighted average period of 2.3 years, should the underlying performance conditions be deemed probable of achievement.

Other Comprehensive Income (Loss)

The following tables summarize the activity related to reach component of other comprehensive income (loss) during the years ended December 31, 2025, 2024 and 2023:

(Amounts presented net of taxes) Foreign Currency Translation Gains Net Unrealized Gains on Marketable Securities Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balances at January 1, 2025 $ 26,456 $ 346 $ ( 39,923 ) $ ( 13,121 )

Other comprehensive income before reclassifications 24,977 1,648 9,691 36,316

Net amount reclassified from accumulated other comprehensive loss — — 2,267 2,267

Net other comprehensive income 24,977 1,648 11,958 38,583

Balances at December 31, 2025 $ 51,433 $ 1,994 $ ( 27,965 ) $ 25,462

(Amounts presented net of taxes) Foreign Currency Translation Gains (Loss) Net Unrealized Gains (Losses) on Marketable Securities Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balances at January 1, 2024 $ 44,181 $ ( 149 ) $ ( 30,926 ) $ 13,106

Other comprehensive (loss) income before reclassifications ( 17,725 ) 495 ( 10,471 ) ( 27,701 )

Net amount reclassified from accumulated other comprehensive income (loss) — — 1,474 1,474

Net other comprehensive (loss) income ( 17,725 ) 495 ( 8,997 ) ( 26,227 )

Balances at December 31, 2024 $ 26,456 $ 346 $ ( 39,923 ) $ ( 13,121 )

(Amounts presented net of taxes) Foreign Currency Translation Gains Net Unrealized Gains (Losses) on Marketable Securities Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balances at January 1, 2023 $ 18,409 $ ( 5,037 ) $ 1,697 $ 15,069

Other comprehensive income (loss) before reclassifications 25,772 4,888 ( 33,394 ) ( 2,734 )

Net amount reclassified from accumulated other comprehensive income — — 771 771

Net other comprehensive income (loss) 25,772 4,888 ( 32,623 ) ( 1,963 )

Balances at December 31, 2023 $ 44,181 $ ( 149 ) $ ( 30,926 ) $ 13,106

We are subject to U.S.

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Total provision for income taxes $ 377,801 $ 284,015 $ 236,616

Income taxes paid, net of (refunds) received, consisted of the following for the year ended December 31, 2025 (in thousands):

Year Ended December 31,

Federal $ 178,100

Kentucky 20,798

Tennessee ( 10,836 )

All other states 19,345

Foreign 4,771

Total income taxes paid $ 212,178

Income taxes paid prior to the adoption of ASU 2023-09 for the years ended December 31, 2024 and 2023 were $ 373.1 million and $ 378.2 million respectively.

A reconciliation of income taxes at the U.S.

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Year Ended December 31,

2024 2023 2022

federal statutory rate $ 349,535 21.0 %

State and local income taxes, net of federal benefit(1) 36,394 2.2 %

Foreign tax effects ( 12,607 ) ( 0.8 )%

Effects of changes in tax laws or rates enacted in the current period ( 49,289 ) ( 3.0 ) %

Effect of cross-border tax laws

Foreign-derived intangible income ( 34,240 ) ( 2.1 )%

Research and development tax credits ( 59,998 ) ( 3.6 )%

Changes in valuation allowances 123,243 7.4 %

Nontaxable or nondeductible items 13,528 0.8 %

Changes in unrecognized tax benefits 14,208 0.9 %

Other adjustments ( 2,973 ) ( 0.1 )%

Effective income tax rate $ 377,801 22.7 %

1 State taxes in Kentucky, California, and Delaware made up the majority (greater than 50%) of the tax effect in this category.

Our effective tax rate for the year ended December 31, 2025 was higher than the U.S.

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

deferred tax assets.

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

tax legislation discussed below.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the U.S.

statutory federal income tax rate as follows (in thousands):

Year Ended December 31,

Provision at U.S.

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It also includes a tax benefit associated with the remeasurement of foreign deferred tax assets resulting from the cancellation of a tax holiday.

The 2023 income tax credits in the table above includes a tax benefit associated with the issuance of non-

refundable Swiss income tax credits.

The 2023 income tax credits in the table above includes a tax benefit associated with the issuance of non-refundable Swiss income tax credits.

The 2023 remeasurement of foreign deferred tax assets and the Swiss income tax credits are fully offset with a valuation allowance in the table above.

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Net deferred tax assets $ 515,294 $ 762,071

During the year ended December 31, 2024, the Company’s net deferred tax assets increased by $ 130.2 million.

This was primary due to future deductible temporary differences associated with U.S.

research and development expenses required to be capitalized and amortized under the Tax Cuts and Jobs Act of 2017, partially offset by an increase to a related valuation allowance.

As part of the Escient acquisition, the Company also recorded a net deferred tax asset of $ 44.8 million predominately related to U.S.

net operating losses ("NOLs") and capitalized researched and development costs.

During the year ended December 31, 2025, the Company’s net deferred tax assets decreased by $ 246.8 million.

This was primary due to a deduction associated with the settlement of the Novartis contract dispute and deductions related to previously capitalized domestic research and development expenses arising from the enactment of U.S.

tax legislation discussed below.

As of December 31, 2025, the Company continues to maintain a valuation allowance on certain U.S.

temporary differences, foreign NOLs and the non-refundable Swiss income tax credits granted in the year ended December 31, 2023.

The valuation allowance for deferred tax assets increased by approximately $ 43.4 million during the year ended December 31, 2024 and increased by approximately $ 1.6 billion during the year ended December 31, 2023.

temporary differences, foreign net operating losses (“NOLs”) and the non-refundable Swiss income tax credits granted in the year ended December 31, 2023.

The valuation allowance for deferred tax assets increased by approximately $ 126.5 million during the year ended December 31, 2025 and increased by approximately $ 43.4 million during the year ended December 31, 2024.

The valuation allowance increase during 2025 was primarily due to future deductible temporary differences mainly associated with foreign research and development expenses required to be capitalized and amortized and the effects of translation of our foreign tax assets that require a valuation allowance.

The valuation allowance increase during 2024 was primarily due to future deductible temporary differences mainly associated with U.S.

research and development expenses required to be capitalized and amortized under the Tax Cuts and Jobs Act of 2017 and the acquisition of Escient’s U.S.

NOLs, a portion of which is not more-likely-than-not to be realized as of December 31, 2024.

This was partially offset by the expiration of foreign NOLs with a full valuation allowance.

research and development expenses required to be capitalized and amortized and the acquisition of Escient’s U.S.

NOLs, a portion of which was not more-likely-than-not to be realized as of December 31, 2024.

As of December 31, 2025, we had NOL carryforwards, research and development credit carryforwards and foreign income tax credit carryforwards as follows (in thousands):

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As of December 31, 2025 and 2024, the Company has accrued liabilities of $ 24.3 million and $ 18.7 million, respectively, for interest and penalties related to its uncertain tax positions.

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

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

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federal audit for tax year 2021.

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

Pillar 2 legislation has been enacted in multiple jurisdictions in which we operate and became effective beginning in 2024.

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.

We will continue to monitor additional enactments and guidance as they occur and assess any future impacts in the period they become effective.

On July 4, 2025, the U.S.

enacted legislation 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 have reflected a favorable impact to our effective tax rate and the realizability of certain U.S.

deferred tax assets in our financial statements for the period ending December 31, 2025.

We will continue to evaluate the OBBBA’s various provisions and elections for our tax return filing.

Net Income Per Share

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(in thousands, except per share data) 2025 2024 2023

Basic Net Income Per Share

Basic net income $ 1,286,650 $ 32,615 $ 597,599

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Basic net income per share $ 6.59 $ 0.16 $ 2.67

Diluted Net Income Per Share

Diluted net income $ 1,286,650 $ 32,615 $ 597,599

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Plan participants’ contributions 6,614 5,067

Actuarial loss 17,443 26,682

Actuarial (gain) loss ( 5,251 ) 17,443

Transfer of benefits net of payments from fund ( 4,294 ) 1,382

Expenses paid from assets ( 121 ) ( 101 )

Translation (gain) loss ( 12,102 ) 13,007

Translation loss (gain) 27,680 ( 12,102 )

Benefit obligation, end of year 238,516 195,487

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Expenses paid from assets ( 121 ) ( 101 )

Translation (loss) gain ( 9,034 ) 10,082

Translation gain (loss) 21,188 ( 9,034 )

Fair value of plan assets, end of year 197,357 149,636

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Net periodic benefit cost $ 12,698 $ 8,841 $ 5,074

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

Other changes in the plans assets and the benefit obligation that is recognized in accumulated other comprehensive (loss) income were as follows, net of tax (in thousands):

Year Ended December 31,

2024 2023 2022

Pension liability (asset), beginning of year $ 30,924 $ ( 1,699 ) $ 23,677

Net prior service costs ( 1,474 ) ( 771 ) ( 773 )

Net loss (gain) $ 10,473 $ 33,394 $ ( 24,603 )

Pension liability (asset), end of year $ 39,923 $ 30,924 $ ( 1,699 )

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

We expect to contribute a total of $ 12.6 million to the pension plans in 2026.

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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.

Centers for Medicare and Medicaid Services (“CMS”) alleging that a 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.

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

In addition, as described in Note 7 of the Notes to the Consolidated Financial Statements, we have an outstanding contractual dispute with Novartis relating to royalties on JAKAFI net sales within the United States.

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 I, 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” above.

Additionally, as described in Note 7, we entered into a settlement and license agreement with Sun, resolving patent infringement litigation related to Leqselvi (deuruxolitinib).

Segment Information

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

For our segment, the chief operating decision maker uses net income or loss, that also is reported on the consolidated statements of operations as consolidated net income (loss), 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.

For our segment, the chief operating decision maker uses net income, that also is reported on the 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, 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 consolidated balance sheet as total consolidated assets.

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Cost of product revenues (including definite-lived intangible amortization) 372,130 312,068 254,990

Contract dispute settlement ( 242,251 ) — —

Research and development - internal 1

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General and administrative 281,452 296,729 278,959

Loss on change in fair value of acquisition-related contingent consideration 19,803 29,202 12,149

Asset impairment 76,275 — 5,631

(Gain) loss on change in fair value of acquisition-related contingent consideration ( 6,129 ) 19,803 29,202

(Profit) and loss sharing under collaboration agreements — ( 1,025 ) 2,045

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

During the year ended December 31, 2024, total revenues generated by subsidiaries in the United States was approximately $ 4.0 billion, total revenues generated from subsidiaries in Europe was approximately $ 260.4 million, and total revenues generated from subsidiaries in other countries was approximately $ 6.2 million.

During the year ended December 31, 2023, total revenues generated by subsidiaries in the United States was approximately $ 3.5 billion, total revenues generated from subsidiaries in Europe was approximately $ 175.9 million, and total revenues generated from subsidiaries in other countries was approximately $ 4.9 million.

During the year ended December 31, 2022, total revenues generated by subsidiaries in the United States was approximately $ 3.2 billion and total revenues generated from subsidiaries in Europe was approximately $ 147.0 million.

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

As of December 31, 2023, property and equipment, net was approximately $ 432.3 million in the United States, approximately $ 303.9 million in Switzerland and approximately $ 15.3 million in other countries.

Total Revenues by Geographic Location

Total revenues by geographic region consisted of the following (in thousands):

Twelve Months Ended December 31,

2025 2024 2023

United States $ 4,799,941 $ 3,974,567 $ 3,514,873

Europe 323,734 260,437 175,866

Other countries 17,567 6,213 4,910

Total revenues $ 5,141,242 $ 4,241,217 $ 3,695,649

Property and Equipment, Net by Geographic Location

Property and equipment, net by geographic location was as follows (in thousands):

Dec 31, 2025 Dec 31, 2024

United States $ 406,829 $ 474,095

Switzerland 309,802 277,623

Other countries 14,254 11,693

Total property and equipment, net $ 730,885 $ 763,411

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data